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Dunlop v. Mcatee

AUGUST 12, 1975.




APPEAL from the Circuit Court of Kane County; the Hon. JOHN A. KRAUSE, Judge, presiding.


The instant action was brought to foreclose a mechanics' lien claim for a $1,825.38 balance due for heating and plumbing materials and services furnished by the plaintiff as a subcontractor. On the defendants' motion, the trial court held (1) that a "no lien" provision in the basic agreement between the owners and the contractor, filed with the recorder of deeds under the statute, barred any mechanics' lien; and (2) that Crane G. McAtee signed the acceptance of plaintiff's proposal as agent for Crane M. Construction Co., and not individually. As a result, the trial court gave the plaintiff leave to file an amended complaint at law against the corporate contractor; dismissed the complaint to foreclose the mechanics' lien claim; dismissed Crane G. McAtee, president of said contractor, as an individual defendant; and found no just cause to delay enforcement or appeal.

On appeal, the plaintiff contends (1) that the said provision barring liens, although filed with the recorder as provided by statute, was not legally effective to bar them because beneficiaries under an Illinois land trust are, as a matter of law, not "owners" within the meaning of our mechanics' lien statute; and (2) that the contract between him as subcontractor and the contractor was so executed as to make both the corporation and its president individually liable thereon as a matter of law. We disagree on both points and affirm.

In May of 1969 the defendant Batavia Bank, as trustee of its land trust No. 198, took title to the property here involved. The beneficiaries were the defendant Crane M. McAtee and his wife and Maurice P. Raizes, who were jointly given the complete management and control of the property. In July of 1971, Raizes, as agent for said beneficiaries, entered into a written agreement with the Crane M. Construction Co., an Illinois corporation, of which Crane M. McAtee was president, under which Crane, as contractor, undertook to do certain construction work on the premises here involved, which were therein legally described. This agreement expressly provided that no liens or claims could be filed by said contractor or any subcontractors, and the document was duly filed with the county recorder of Kane County on July 23, 1971, under the provisions of the Illinois Mechanics' Lien Act (Ill. Rev. Stat. 1971, ch. 82, § 21), which provides that such a provision, if so recorded, is effective and bars such liens.

On November 16, 1971, the plaintiff's proposal for furnishing heating and plumbing materials for the property was accepted, the acceptance being worded as follows:

"Crane M. Construction Co.,

by C.G. McAtee."

On that same day the plaintiff signed and delivered a waiver of lien for materials in which he recited that he "had been employed by Crane M. Construction Co." to furnish plumbing and heating material and labor for said premises. On December 8, 1971, the corporate style of the contractor was officially changed to McAtee Design and Construction Co. and the plaintiff, in March of 1972, executed and delivered further waivers of lien in which he stated that his contract was with that company.

On November 7, 1972, the plaintiff filed a complaint to foreclose a mechanics' lien, alleging that he had, as subcontractor, furnished materials and labor on the premises totaling $11,975.38 and had been paid only $10,150, leaving a balance due of $1,825.38, for which he claimed a lien. He made McAtee, the bank, the present owners of the premises and the local savings and loan, which holds a mortgage, defendants.

On the defendants' motion, the trial court made the findings and took the actions set out in the first paragraph of this opinion.

The plaintiff's first contention is that the agreement between the beneficiaries and the corporate contractor Crane M. Construction Co., expressly barring liens, although duly filed with the county recorder as provided for in the Mechanics' Lien Act, was not here legally effective to bar liens because beneficiaries under an Illinois land trust are not "owners" within the meaning of said Act.

Plaintiff cites Taylor v. Gilsdorff (1874), 74 Ill. 354, and Levine v. Pascal (1968), 94 Ill. App.2d 43, 236 N.E.2d 425, for this contention. Although the dissent in Taylor in some ways reflects the plaintiff's position, the majority, at page 357, expressly holds that Frank Taylor, as one of the beneficiaries, was "an owner, within the meaning of the statute." And Levine had nothing whatsoever to do with the Mechanics' Lien Act and involved only security interests under the Uniform Commercial Code.

• 1 The Illinois courts have repeatedly and consistently held that a holder of an equitable interest in the land, including a beneficiary under a land trust, is an "owner" within the meaning of the Illinois Mechanics' Lien Act, and we again so hold. Paulsen v. Manske (1888), 126 Ill. 72, 75, 18 N.E. 275; Springer v. Kroeschell (1896), 161 Ill. 358, 363, 43 N.E. 1084; Sorg v. Crandall (1908), 233 Ill. 79, 84, 84 N.E. 181; Hacken v. Isenberg (1919), 288 Ill. 589, 594, 124 N.E. 306.

• 2 In passing it should be noted that, even were we to hold that such a beneficiary is not an "owner," the plaintiff's claim here would still fail because it is likewise well established under Illinois law that the lien of a subcontractor can only exist by virtue of a contract between a contractor and an "owner." (Kelly v. Johnson (1911), 251 Ill. 135, 95 N.E. 1068; North Side Sash & Door Co. v. Goldstein (1918), 286 Ill. 209, 121 N.E. 563; Douglas Lumber Co. v. Chicago Home ...

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