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First Federal Sav. & Loan Ass'n v. Connelly





Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Albert J. Green, Judge, presiding.


Rehearing denied September 30, 1983.

At issue in this case is whether a mechanic's lien claimed by the defendant Henry B. Rossi against property held by a land trustee has priority over a mortgage which existed prior to the filing of the lien. Four apartment buildings were being constructed by defendant John Connelly when Rossi's lien was filed. The plaintiff, First Federal Savings & Loan Association of Chicago (First Federal) held prior mortgages on three of them and alleges that Rossi's lien is unenforceable against it because the information contained in the claim failed to comply with the filing requirements of the Mechanics' Liens Act (Ill. Rev. Stat. 1979, ch. 82, par. 7). This case involves one of the three buildings on which First Federal holds mortgages. We hold that the filing statement contained sufficient information to comply with the statute's requirements and thus Rossi's lien is not unenforceable against First Federal for that reason.

The lien challenged in this case represents the balance due on an oral contract under which Rossi agreed to deliver and install wall-to-wall carpeting in the four apartment buildings being constructed by Connelly. The parties agreed on a total price of $12,102 for the carpeting and its installation in the four buildings. Rossi filed his claim for a mechanic's lien on June 3, 1980. The filing statement claimed a blanket lien of $12,102 against the four properties without apportionment of this total contract price among each of the four buildings. The statement also set forth that Rossi completed all work under the contract on or about March 15, 1980. It did not, however, specify a separate completion date for each building.

Six weeks after Rossi filed his lien, First Federal filed a complaint in the circuit court of Cook County seeking to foreclose on its mortgage on one of the four buildings covered by Rossi's lien notice. Later, in an amended complaint, First Federal included Rossi as a defendant seeking the exclusion of his rights of redemption. First Federal moved for the entry of an order determining the priority of liens between First Federal, as prior mortgagee, and Rossi, as mechanic's lien claimant; the motion alleged that Rossi's lien was subordinate to its mortgage because the lien claim he filed did not separately disclose the date that work was completed on each building, and failed to apportion the total contract price among the four buildings based on the materials and labor furnished to each. The circuit court held on the pleadings and without receiving any evidence that Rossi's mechanic's lien was subordinate to First Federal's mortgage, and the appellate court affirmed (107 Ill. App.3d 298).

Section 1 of the Mechanics' Liens Act of 1903 provides that any person who, under a contract with the owner of a lot or tract of land, furnishes labor, materials or fixtures for the construction, alteration or repair of the property "is known under this Act as a contractor, and has a lien upon the whole of such lot or tract of land * * * and in case the contract relates to 2 or more buildings, on 2 or more lots or tracts of land, upon all such lots and tracts of land and improvements thereon for the amount due to him for such material, fixtures, apparatus, machinery, services or labor, and interest from the date the same is due * * *." (Emphasis added.) Ill. Rev. Stat. 1979, ch. 82, par. 1.

This lien attaches as of the date of the contract, but the lien is unenforceable against third parties unless the contractor complies with section 7, which provides:

"No contractor shall be allowed to enforce such lien against or to the prejudice of any other creditor or incumbrancer or purchaser, unless within 4 months after completion * * * he or she shall either bring an action to enforce his or her lien therefor or shall file in the office of the recorder of deeds of the county in which the building, erection or other improvement to be charged with the lien is situated, a claim for lien, verified by the affidavit of himself or herself, or his or her agent or employee, which shall consist of a brief statement of the contract, the balance due after allowing all credits, and a sufficiently correct description of the lot, lots or tracts of land to identify the same * * *." Ill. Rev. Stat. 1979, ch. 82, par. 7.

"As mechanics' liens were not recognized by the common law or in equity but exist only by virtue of statutes creating them and providing a method for their enforcement, such statutes must be strictly construed with reference to those requirements upon which the right depends." (Schmidt v. Anderson (1911), 253 Ill. 29, 33; Robinette v. Servite Fathers (1977), 49 Ill. App.3d 585, 586.) The lien is valid only if each of the statutory requirements is scrupulously observed. Once the contractor has complied with the statutory prerequisites, however, the Mechanics' Liens Act should be liberally construed in order to carry out its remedial purpose. (Ill. Rev. Stat. 1979, ch. 82, par. 39.) This court has recognized that the purpose of the Act "is to permit a lien upon premises where a benefit has been received by the owner and where the value or condition of the property has been increased or improved by reason of the furnishing of labor and materials." Colp v. First Baptist Church (1930), 341 Ill. 73, 76-77.

We believe that the claim for lien filed by Rossi fully complies with the requirements of section 7. The claim was properly verified and sufficiently described the contract which provided for the delivery and installation of the carpeting. It recited that the balance due on the contract was $12,102. It adequately described the four tracts of land covered in the claim by listing their street addresses and legal descriptions.

Finally, nothing in the claim for lien suggests that the carpet installation was completed in any of the buildings other than on the date set forth in the claim, that is on or about March 15, 1980; nor has First Federal offered any evidence that the work was completed earlier than that date in any of the buildings.

Sections 1 and 7 specifically authorize the filing of a single claim statement covering multiple parcels. Section 7 provides: " * * * In the event the contract relates to 2 or more buildings on 2 or more lots or tracts of land, then all of these buildings and lots or tracts of land may be included in one statement of claims for a lien." (Ill. Rev. Stat. 1979, ch. 82, par. 7.) Nothing in the language of section 7 requires that the filing statement contain different information when it covers multiple parcels.

First Federal, however, claims, and the appellate court held, that in mechanics' liens claim filings involving multiple parcels this court's decision in Schmidt v. Anderson (1911), 253 Ill. 29, added two requirements to those provided by the statute. First Federal interprets Schmidt as requiring that in such cases the contractor filing the mechanic's lien must apportion the contract price among each of the various parcels based on the services and materials furnished to each. First Federal also interprets Schmidt as requiring that a claim statement covering multiple parcels must separately disclose the date that the claimant completed work on each parcel of the multiple parcel contract. The appellate court agreed with First Federal's interpretation of Schmidt and held that Rossi's mechanic's lien claim failed to comply with these judicially created requirements; the court for this reason concluded that Rossi's lien was unenforceable as to First Federal and subordinate to First Federal's mortgage claim.

We disagree with the way the appellate court applied Schmidt. In that case a contractor filed a mechanic's lien claim against four houses which had been improved under a single contract. The contractor claimed a blanket lien against all four houses for the contract price and did not apportion that amount among them. Evidence presented in Schmidt showed that, at the time the contractor filed his claim, work had been completed on three of the houses more than six months earlier and on one of the houses (the Oak Street house) less than four months earlier. The party challenging the lien claim argued that the filing was tardy with respect to the three houses because section 7 of the Mechanics' Liens Act requires that before a lien is enforceable against a third party it must be filed "within 4 months after completion." (Ill. Rev. Stat. 1979, ch. 82, par. 7.) The claimant responded that sections 1 and 7 of the Act ...

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