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Malkov Lumber Co. v. Serafine Builders

AUGUST 6, 1971.

MALKOV LUMBER COMPANY, INC., PLAINTIFF-APPELLANT,

v.

SERAFINE BUILDERS, INC., DEFENDANT-APPELLANT — (MARSHALL SAVINGS AND LOAN ASSOCIATION, ET AL., APPELLEES.)



APPEAL from the Circuit Court of Cook County; the Hon. JOHN J. LUPE, Judge, presiding.

MR. JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 29, 1971.

This is an appeal by plaintiff, Malkov Lumber Company, Inc., hereinafter called Malkov, and by Serafine Builders, Inc., hereinafter called Serafine, from an order dismissing their complaint and counterclaim, respectively, for foreclosure of mechnics' liens upon the motion of Marshall Savings and Loan Association, John R. Henson, receiver and Donald D. Swope, receiver, collectively hereinafter called Marshall. Subject to the same order of dismissal was the separate complaint for foreclosure of a mechanic's lien filed by Edmeir, Inc., hereinafter called Edmeir, but Edmeir did not appeal.

Malkov, as a subcontractor of Serafine, filed its complaint, numbered 66-CH-3466, to foreclose a mechanic's lien against certain property of Marshall in June 1966. Named as parties defendant to this complaint were Serafine and Marshall. Marshall filed an appearance in this case in July 1966. Edmeir, another subcontractor of Serafine, filed its complaint, numbered 67-CH-1814, to foreclose a mechanic's lien in February 1967. Named as parties defendant to the Edmeir complaint were Serafine and Marshall. Marshall filed an appearance in this latter case in March 1967. Serafine, a defendant in both foreclosure actions, appeared in Edmeir's case, 67-CH-1814, and filed its motion for consolidation of that case with case number 66-CH-3466 commenced by Malkov. Pursuant to this motion the court consolidated the Edmeir case with and into the Malkov case, as number 66-CH-3466. On April 24, 1967 Serafine filed its answer and a counter-claim for foreclosure of a mechanic's lien. Named as party defendant to Serafine's counter-claim was Marshall.

From the complaint of Serafine it appears that Serafine and Marshall entered into an agreement dated March 1, 1965 under which Serafine was to construct a building on the concerned real estate, commonly known as Sahara Towers, for an agreed sum of $324,405.00; that the labor and material required by the contract was furnished by Serafine and accepted and paid for by Marshall; that during the course of compliance with the contract there were certain additional contracts between the parties for construction of a cocktail lounge and conversion of the sixth floor to individual living quarters; and that the sums agreed to by the parties for these extras had not been paid for and by reason thereof Serafine prayed that it be decreed to be entitled to a mechanic's lien and for foreclosure thereof.

After some unexplained delay and a rule upon them to plead, on September 15, 1967, Marshall filed motions based on Supreme Court Rule 48 (1) (e). (Ill. Rev. Stat., ch. 110, par. 48 (1) (e)) to dismiss the complaint of Malkov and the counter-claim of Serafine. The motions were based upon the failure of Malkov and Serafine to join as defendants or otherwise necessary parties claiming an interest in the premises sought to be foreclosed on prior to the tolling of the two year period of limitations provided in section 9 of the Mechanic's Lien Act. (Ill. Rev. Stat., ch. 82, par. 9.) Alternatively, the motions alleged the failure of Malkov and Serafine to intervene in mechanic's lien foreclosure suits previously pending in the same court against the subject premises during the two year limitation period available to Malkov and Serafine to commence foreclosure of their liens. Attached to the motions was the affidavit of an attorney for Marshall stating that an examination of the records of the court and the records of Chicago Title and Trust Company revealed the names of the following who claimed an interest in the real estate involved in the cause:

(A) Edmeir, Inc., pursuant to a mechanic's lien claim filed with the Recorder of Deeds of Cook County and involved in an action pending the court entitled Edmeir, Inc. v. Marshall Savings and Loan Association number 64-CH-5280 which has been referred to Master McGah;

(B) All Style Iron Products, Inc., pursuant to a mechanic's lien claim filed with the Recorder of Deeds of Cook County and involved in an action pending in the court entitled All Style Iron Products, Inc., v. Exchange National Bank, et al, 64-CH-2271, which has been referred to Master McGah;

(C) David Schiff, pursuant to a mechanic's lien claim filed with the Recorder of Deeds of Cook County and involved in the action referred to in Paragraph (B);

(D) Edward Hines Lumber Company pursuant to a mechanic's lien claim filed with the Recorder of Deeds of Cook County and also involved in the action identified in Paragraph (B) above.

The instant case was assigned to Judge Lupe. On August 9, 1968, the attorney for Malkov appeared before Judge Covelli (Judge Lupe apparently being unavailable that day) and obtained an order consolidating their case, 66-CH-3466, with the previously pending cases, numbers 64-CH-5280 and 64-CH-2271. The order recited that the consolidation of the cases "shall be without prejudice to the matters raised in briefs of the parties pending before the court." Those "matters" were the failure of Malkov and Serafine to join as defendants in their complaint and counter-claim all parties interested in the premises within the two year period of limitation. On August 26, 1968 Serafine and Malkov filed a joint motion to strike the motion of Marshall to dismiss their complaint and counter-claim on the grounds that the order of August 9, 1968 consolidating their case with numbers 64-CH-5280 and 64-CH-2271 rendered the issue presented to the court in Marshall's motion moot. On September 26, 1968 Judge Lupe entered an order vacating the order of consolidation entered by Judge Covelli and serving case 66-CH-3466 from cases 64-CH-2271 and 64-CH-5280. On December 5, 1968, after argument and consideration of briefs, the court entered the order which is the subject of this appeal, granting the motions of Marshall to dismiss the complaint of Malkov, the counterclaim of Serafine and the complaint of Edmeir, in effect denying their claim to mechanics' liens. The order further granted Malkov, Serafine and Edmeir twenty-eight days to file amended complaints at law and ordered the case transferred from the chancery division to the law division of the circuit court of Cook County.

Section 9 of the Mechanic's Lien Act provides in part that suit shall be commenced or answer filed within two years after the completion of the contract or completion of the extra or additional work, or furnishing of extra or additional material thereunder. Section 11 of the Act provides in part that a plaintiff in a mechanic's lien complaint shall make all parties interested, of whose interest he is notified or has knowledge, a party defendant to the proceeding. The same rule is made to apply in the case of cross-petitioners with regard to any person of whose interest they have knowledge, and who are not already parties to the suit or action. "Parties in interest" within the meaning of the statute are described as persons entitled to liens under the Act whose claims are not, as well as are, due at the time of the commencement of the suit, all persons who may have any legal or equitable claim to the whole or any part of the premises upon which a lien is asserted, or persons who are interested in the subject matter of the suit. Section 11 further provides that any such interested persons may, on application to the court wherein the suit is pending, be made or become parties at any time before final judgment.

• 1 Defendants maintain that sections 9 and 11 of the Act and the case of Granquist v. Western Tube Co., 240 Ill. 132, 88 N.E. 468 (1909), conjoined with North Side Sash & Door Co. v. Hecht, 295 Ill. 515, 129 N.E. 273 (1920), justify the action of the trial court and require affirmance on this appeal. The Granquist case was an interpretation of the requirement of section 11 that all persons interested in the concerned premises be made a party to any complaint or cross-complaint for foreclosure of a mechanic's lien. Granquist had filed a petition for mechanic's lien alleging facts showing his own entitlement thereto and stating, upon information and belief, that the firm of Porter & Trask also had or claimed a lien upon the same premises for materials furnished and averring that their lien, if any, was subject to the lien of Granquist. Porter & Trask were not made parties to the Granquist action but had commenced their own suit for foreclosure of their mechanic's lien. (Cf. Porter & Trask v. Western Tube Co., 240 Ill. 151, 88 N.E. 472). Porter & Trask did not make Granquist a party to their case. In both cases the owner of the premises objected to proceeding for want of proper parties. Both Granquist and Porter & Trask, in their respective cases, contended the question of proper parties had been waived. In both cases decrees were entered granting liens as prayed and the Appellate Court affirmed. Upon appeal to the Supreme Court both cases were reversed. The court commented: "The case at bar illustrates the practice that would prevail if appellee's contention were sustained. Here appellee filed his bill and Porter & Trask filed another. There were two hearings in the circuit court, two decrees entered on the same day, two appeals to the Appellate Court, and both cases have been appealed to this court. If two claimants for liens can thus carry on separate suits, any number who happen to be sub-contractors might do the same thing. The statute in relation to liens, under which these petitions are filed, gives no sanction to such practice." The oft quoted and, as far as our search discloses, uniformly followed, holding of that case is "* * * that the legislature never contemplated there should be a separate suit by each contractor or sub-contractor for the purpose of having a lien established in his favor, but that the statute contemplates but one suit, and that all persons who are known to have any interest, either legal or equitable, in the land, or any claim for a lien against it, should be joined, either as complainants or defendants, in such suit, so that the court will be able to adjust all equities and render a decree in relation to the distribution of the proceeds, in case a sale is had, according to the rights of the several claimants. If appellee's position is sustained it is easy to see how the owner may be harrassed with numerous suits for liens, thereby unnecessarily increasing the costs and expenses to the owner and imposing a large amount of unnecessary litigation upon the courts."

The North Side Sash & Door Co. case dealt with the failure of a complaint for foreclosure of a mechanic's lien to state a cause of action within the two year period of limitations contained in the statute. The original complaint was filed within the two year period of limitations but failed to state a cause of action in not alleging that the last delivery of material was made within four months before the filing of the complaint. In holding that an amendment made after the period of limitation had expired changing the date of the last delivery to a time within the four month period amounted to the filing of a new suit, the court stated: "The time fixed for commencing an action under the Mechanic's Lien act is a condition of the liability and operates as a limitation of the liability itself and not of the remedy, alone. The provision of the statute creating the lien, requiring suit to be brought within four months, is more than an ordinary statute of limitations. It goes to the existence of the right itself. It is a condition attached to the right to sue at all. It is a condition precedent to the right of recovery granted by the act that the action be brought within four months after the date of the last delivery of materials. ...


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