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08/27/87 Edward Electric Company, v. Automation

August 27, 1987





518 N.E.2d 172, 164 Ill. App. 3d 547, 115 Ill. Dec. 647 1987.IL.1247

Appeal from the Circuit Court of Cook County; the Hon. Thomas J. Wynn, Judge, presiding.


JUSTICE JIGANTI delivered the opinion of the court. JOHNSON and LINN, JJ., concur.


This case arises out of the construction of a package-handling system for Emery Air Freight, Inc. Through a series of cross-claims, counterclaims, motions and orders, the matter arrives at this stop of its judicial journey as a consolidated appeal from two separate orders of the trial court. The first order involves the notice requirements under the Mechanics' Liens Act. (Ill. Rev. Stat. 1985, ch. 82, par. 1 et seq.) The second involves the denial of a motion to compel arbitration.

With regard to the first appeal, Edward Electric, the plaintiff-subcontractor, brought an action under the Mechanics' Liens Act (Ill. Rev. Stat. 1985, ch. 82, par. 1 et seq.) against Emery; Anchor Conveyors, which acted as Emery's contractor; Automation, Inc., which was retained by Anchor to perform work on the Emery facility and which also entered into a subcontractual relationship with Edward; American National Bank and Trust, as trustee; and Sun Life Assurance Company of Canada, the mortgagee. The property to which Edward seeks to attach its mechanic's lien was first owned by La Salle National Bank as trustee. La Salle then leased the property to Emery, who was to install the package-handling system on the property.

Several dates are significant for the resolution of this appeal. On June 26, 1984, La Salle conveyed title to American National Bank and Trust Company, as trustee. Also on that date, American National executed a mortgage with Sun Life, which was recorded on June 27, 1984. Within four months after completion of the work by Edward, on January 17, 1985, Edward served notice of claim for mechanic's lien on Automation, Anchor, Emery and La Salle. Also at that time, Edward filed its notice and claim for lien in the office of the recorder of deeds of Cook County. No notice was given to either American National or Sun Life. On July 2, 1985, Edward brought this action to enforce its mechanic's lien. Emery, American National and Sun Life moved to dismiss various counts of Edward's complaint on the grounds that Edward had not given proper notice as required by the Mechanics' Liens Act, and that, therefore, Edward failed to perfect its mechanic's lien against the defendants. The trial court granted the motions of American National and Sun Life and also denied Edward's motion for leave to join La Salle National Bank as a necessary party. Edward now appeals.

The Mechanics' Liens Act is in derogation of the common law and therefore its provisions must be strictly construed. (Water Products Co. of Illinois, Inc. v. Gabel (1983), 120 Ill. App. 3d 668, 673, 458 N.E.2d 594.) A mechanic's lien is valid only if each statutory requirement of the Act is scrupulously observed. (First Federal Savings & Loan Association v. Connelly (1983), 97 Ill. 2d 242, 246, 454 N.E.2d 314.) The burden of proving that each requisite has been satisfied is on the party seeking to enforce the lien. 26 Ill. L. & Prac. Mechanics' Liens sec. 212, at 427 (1956).

The relevant provisions of the Act to be examined in this case are sections 7, 24, 25 and 28. These sections govern the procedures to be followed by contractors and subcontractors in perfecting liens against owners of the subject property and other third parties such as incumbrancers and purchasers. To determine whether proper notice was given by Edward, the pivotal question to be resolved is whether American National should be characterized as an "owner of record" under section 24 or as "purchaser" under section 7. Under the statutory scheme of the Mechanics' Liens Act, if American National is deemed to be an "owner of record," then Edward was required to serve notice upon American National. However, if American National is characterized as merely a "purchaser," section 7 of the Act only required that within four months after completion of the work, Edward either bring an action to enforce its lien or file in the office of the recorder of deeds a claim for lien.

The starting point of the analysis begins with section 28, which sets forth the requisites as to perfecting liens by subcontractors. (Ill. Rev. Stat. 1985, ch. 82, par. 28.) This section provides in pertinent part:

"If any money due to the laborers, materialmen, or subcontractors be not paid within 10 days after his notice is served as provided in sections 5, 24, 25, and 27, then such person may either file a claim for lien or file a complaint and enforce such lien within the same limits as to time and in such other manner as hereinbefore provided for the contractor in section 7 and sections 9 to 20 inclusive, of this Act . . .."

Edward argues that under section 28, its lien against American National and Sun Life has been perfected because the requirements of sections 7 and 24 referred to in that provision have been satisfied. Section 24 in essence requires that a subcontractor give notice to the owner of record and lending agency, if known, within 90 days after completion of the work. Edward contends that American National was a "purchaser," rather than "owner of record," and that therefore Edward only needed to file its claim or bring an action against American National within four months after completion of the work. Edward argues that since American National is not the owner of record, it satisfied section 24 by giving notice to La Salle because La Salle was the owner of record.

In support of its analysis and Conclusion, Edward propounds two rationales; the first relates to the time at which a mechanic's lien is deemed to attach and the second is based upon the case of Niles Construction Co. v. La ...

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