591. Maximum Amount of Liens in Aggregate

When Contract Price Fixed.3

Whenever a contracting owner makes any valid contract with a fixed contract price, the aggregate amount recoverable from the owner by all in section 1183 of the code, "is not used in contradistinction from 'price' or 'agreed value.' It cannot possibly have been the intention that a contractor, materialman, or laborer, who agrees for a certain sum, can have a lien for a greater sum upon the ground that the value of what he furnished is greater. It is probably true that where a subcontractor, materialman, or laborer agrees with the original contractor for more than he is entitled to, upon the understanding that it shall be made out of the property, there would be such a fraud as would vitiate the claim. But aside from such a case, we think that the word 'value' in the above provision is to be construed so as to mean 'agreed value' in cases where there is an agreed value': Jewell v. McKay, 82 Cal. 144, 150, 23 Pac. 139. (This quotation presumably refers to the phrase the earlier time it is used in the code section.)

3 When the contract price is fixed, the amount for which the contracting owner can be rendered liable is limited by the terms of the contract, unless statutory or equitable requirements are violated; and the legislature has no power to increase the owner's liability: Knowles v. Joost, 13 Cal. 620; McAlpin v. Duncan, 16 Cal. 126; Bowen v. Aubrey, 22 Cal. 566, 571; Dore v. Sellers, 27 Cal. 588, 593; Whittier v. Wilbur, 48 Cal. 175; Renton v. Conley, 49 Cal. 185; Wells v. Cahn, 51 Cal. 423; Dingley v. Green, 54 Cal. 333; Rosecranz v. Wagner, 62 Cal. 151, 154; Latson v. Nelson (Cal.), 11 Pac. C. L. J. 589 (construed in Kellogg v. Howes, 81 Cal. 170, 177); Whittier v. Hollister, 64 Cal. 283, 30 Pac. 846; Turner v. Strenzel, 70 Cal. 28, 30, 11 Pac. 389; Wiggins v. Bridge, 70 Cal.

lienors other than the original contractor upon all liens enforceable thereunder cannot exceed a fund consisting of that portion of the contract price already due the contractor, but neither paid. 437, 11 Pac. 754; Walsh v. McMenomy, 74 Cal. 356, 359, 16 Pac. 17; Kellogg v. Howes, 81 Cal. 170, 177, 6 L. R. A. 588, 22 Pac. 509; Grieg v. Riordan, 99 Cal. 316, 319, 33 Pac. 913; McDonald v. Hayes, 132 Cal. 490, 495, 64 Pac. 850; Stimson Mill Co. v. Eraun, 136 Cal. 122, 124, 125, 89 Am. St. Rep. 116, 68 Pac. 481. See, also, Harmon v. San Francisco etc. R. R. Co., 86 Cal. 617, 620, 25 Pac. 124; O'Donnel v. Kramer, 65 Cal. 353, 4 Pac. 204.

Arerment. Thus an averment is necessary that some money is due, or to become due, the contractor from the owner: Whittier v. Hollister, 64 Cal. 283, 30 Pac. 846.

So the provision added to the Code of Civil Procedure, section 1183, by amendment of April 15, 1880, reading: This lien shall not be affected by the fact that no money is due, or to become due, on any account made by the owner with any other party," was declared unconstitutional in Latson v. Nelson (Cal.), 11 Pac. C. L. J. 589.

Code of Civil Procedure, section 1183, as enacted, in effect May 17, 1885; and amended, in effect March 15, 1887, provides: "In case of a contract for the work between the 87n reputed n87{ owner and his contractor, the lien shall extend to the entire contract price, and such contract shall operate as a lien in favor of all persons, except the contractor, to the extent of the whole contract price; and after all such contracts are satisfied, then as a lien for any balance of the contract price in favor of the contractor."

Previous enactments are found in the Code of 1183 as enacted 1872 and repealed May 29, 1874, in Stats. 1862, c. 297, sec. 1, and in Stats. 1855, c. 130, sec. 3. Liens-61

4

him nor assigned by him to a bona fide assignee for value, together with that portion thereafter to become due [but deducting in case the contract price does not exceed one thousand dollars any premature payments which may actually have been made], the amount of the fund to be de

4 Neither Paid, nor Assigned to a Bona Fide Assignee for Value: See section 585, note 12.

5 Deducting, When the Contract Price does not Exceed One Thousand Dollars, any Premature Payments. Where the contract price of an original contract which was in writing was less than one thousand dollars, the court held the payment of installments is subject to change by the agreement of the owner and contractor, both as to time and amount, as in the case of private contracts relating to other matters. If it were otherwise-if the provisions as to the time and amount of payments, and the penalty imposed upon the owner for having anticipated payments, were intended to apply to contracts where the price is less than one thousand dollars-we may safely assume that the statute would have required them to be in writing and recorded, or, in other words, would have made no distinction based upon the amount of the contract price': Southern California Lumber Co. v. Jones, 133 Cal. 242, 65 Pac. 378, in department. So, where a contract in which the contract price was less than one thousand dollars provided that the price was payable in four installments, and after three had become due and had been paid and before the final payment had become due, notice of a lien-claim was given the contracting owner, but such final payment had been prematurely made before such notice was given, the notice created no liability on the part of the contracting owner.

This conclusion seems, however, to disagree with at least three earlier cases, one of them being decided in bank, and two of them by the former supreme

termined as soon as the aggregate amount required to be withheld in consequence of liens which have been perfected and of equitable subrogations of lien-claimants to moneys in the contracting owner's possession equal the moneys

court. These cases were decided before the enactment of the present section 1184 of the Code of Civil Procedure, when all original contracts were on the sime basis as contracts in which the contract price does not exceed one thousand dollars are at present. In Walsh v. McMenomy, 74 Cal. 354, 359, 16 Pac. 17, in bank, the court says: "When a contract is made by the owner for the construction of a building, by the terms of which a part of the contract price is not due until after the building is completed, and when materials have been furnished for and used in the construction, presumably in view of such contract, and when therearter, and with notice thereof, the owner pays his original contractor before the building is completed and before the money is due, he must be held liable to the materialman to the extent of the money prematurely paid. To hold otherwise would be to enable the owner to practice a fraud, and the contract, instead of a chart for the direction of materialmen, subcontractors, and laborers under the original contract, would become a delusion and a fraud. We think that this conclusion is fairly deducible from Renton v. Conley, 49 Cal. 185, Quale v. Moon, 48 Cal. 478, and other adjudicated cases."

Where a materialman perfected a lien for materials furnished an original contractor, the court sustained a demurrer of the answer of the contracting owner on the ground, among others, that "the answer does not aver.... that the sum paid by the defendant [the owner] to the builder, before the abandonment by him of his work and contract, was due when the same was paid': Stats. 1868) Quale v. Moor, 48 Cal. 478, 482.

which should thereby be intercepted. Where, however, the owner of the liened property contests the foreclosure action without reasonable cause, the necessary incidents of the judgment establishing the liens may be allowed over and above the amount of this fund.6

592. Amount of Lien not Reduced by Contracting Owner's Equities.

No lien of any subcontractor, materialman, or laborer can be defeated or diminished

(1) by any premature payment upon the contract price of, or alteration of, any original contract [in which the contract price exceeds one thousand dollars], nor

"Where the owner had made payments to the contractor in good faith, under and in pursuance of the contract, before receiving notice, either actual or constructive, of the liens, the materialmen and laborers could not charge the buildings with liens, exceeding the balance of the contract price remaining unpaid when notice of the lien was given": (Stat. 1868) Renton v. Conley, 49 Cal. 185, 188.

Where the contracting owner retains the money remaining unpaid on the contract price in his own possession (instead of depositing it in court), and without cause or right raises a contest on every point and fights the case through to the end, thereby delaying the lienors in recovering money to which they were justly entitled, and putting them to unnecessary expense, the lienors' costs and counsel fees are properly allowed and made payable out of the property ordered to be sold beyond and in addition to the amount of the fund remaining unpaid in the contracting owner's hands: De Camp Lumber Co. v. Tolhurst, 98 Cal. 631, 635, 34 Pac. 428.