Motion Picture Herald (Apr-Jun 1931)

66 Better Theatres Section April 11, 1931 (contractors) as a result of his termination of the contract without cause." Breach of Contract CONVERSELY, it is Well established that a contractor who breaches a contract is liable in damages to the theatre ■owner, and in many instances he is not entitled to payment for the work completed "when the breach occurred. For example, in Mitchell vs. Holomon (120 So. 672), a contractor entered into a contract with the owner of a lot, whereby the former agreed to construct a theatre for a stipulated sum. Soon after the construction work had begun and the frame of the building was partly completed the contractor abandoned the work without good cause. The theatre owner sued the contractor to recover an amount equal to the payments which he had made, plus damages sustained as a result of the contractor's breach. The contractor contended that he Avas entitled to payments for the labor and material he had furnished in completing the portion of the building before he had breached the contract. However, the court held the owner entitled to recover damages from the contractor and refused to allow the contractor any payment for the partly completed work. Measure of Damages VARIOUS courts have consistently held that where a contractor's completed work is reasonably adapted for the purposes for Avhich it is intended, and the defects are such as may be remedied at a reasonable expense without materially interfering with the rest of the structure, the proper measure of damages for which the contractor is liable is the actual expenses necessary to make the work conform with the plans and specifications. On the other hand, it is important to know that where the defect is a radical deviation from the original contract and repairs may still leave the finished work quite different from the plans and specifications, the situation is changed. In other words, where the defects can be remedied only by reconstructing a substantial portion of the building, the measure of damages is the difference between the value of the building, as constructed by the contractor, and what its value would have been if the contractor had constructed the building in accordance with the plans and specifications. IV Mechanic's Liens PRioRiri OF Lien GENERALLY SPEAKING, a mechanic's lien is prior to a mortgage, if the work is started before the mortgage on the property is recorded. For illustration, in Lawrence vs. Wright (124 So. 697), it was disclosed that a seller sold to a contractor material to be used in the construction of a building. Before the building was completed, but after the first load of material was delivered on the grounds, the owner of the property mortgaged it. Later the property owner failed to pay for the material. The seller filed a mechanic's lien and duly recorded it. The holder of the mortgage contended that for the reason that the building contract was not recorded his mortgage was prior to the lien. However, the court held the lien prior to the mortgage. Also, in Miller vs. Dean (29 S. W. [2d] 736), it was disclosed that a person held a mortgage on a building. The owner of the building, without consent of the holder of the mortgage, contracted to have the building torn down and a new one constructed. It was agreed that the contractor should use a part of the material from the old building. After the job was completed the contractor filed a lien against the property to secure paj'ment. In this case the court held the lien enforceable not to exceed the difference between the values of the property before and after the new building was completed. This court said: "The fact remains that, after the old structure was torn down, then the only security the mortgagee had for his loan was the land and the salvage. . . . An improvement Avas erected Avhich had not theretofore existed and AA-hich added a value to the land. This being true, aa'c think the general rule should be applied which gives priority to the liens of mechanics and materialmen upon the improvement, but not upon the land. ... It must be held that the mortgagor (oAvner) had no right to contract for a lien superior to the lien upon the salvage Avithout the consent of the mortgagee. . . . We must hold that the lien of the holder of the mortgage upon the improvement is superior to the liens of mechanics and materialmen only to the extent of the value of the salvage that Avas actually used in erecting the improA'ement." Filing Mechanic's Liens ALL STATES have enacted laws specifying the time after completion of a construction job, Avhen a mechanic's lien must be filed. A lien properly filed Avithin this period ahvays is valid. So held the higher court in the case of Western Co. vs. Fisher (273 Pac. 19). The facts of the case are that a property OAvner made a contract AA'ith a contractor Avho believed he had completed his Avork and left the job on May 6. On July 5, at the request of the OAA'ner, the contractor sent his workmen to repair certain defects in the construction of the building. When the OAvner failed to pay the contract price, the contractor filed a mechanic's lien on August 10, within the statutorv period of ninetv davs from July 5. ' The OAvner contended that the contractor had forfeited his right to a lien because he had failed to file it Avithin 90 days from the day the job Avas first completed, Avhich he argued Avas on May 6. HoAA'ever, the contractor contended that the job Avas not completed until on July 5, the day he had finished making the necessary repairs. The higher court held the lien valid. Also, in another leading case, Stidger vs. McPhee (15 Colo. App. 252), a higher court held a construction job to be uncompleted until a slight change AA^as made in a door. This court said that an OAvner Avho demands a contractor to make changes based on the contract cannot later complain and say that the work was completed before the final changes, alterations or repairs required in the contract were completed. Purpose of Lien Laws THE POLICY of the lien laAV is to protect material men, subcontractors and laborers against loss for labor done and materials furnished in building, repairing, or altering any house or other improvement on real estate, to the extent of the balance due the original contractor at the time notice is given to the OAvner of the property. It is important to knoAV that a material man ahvays is entitled to recover payment from a theatre oAvner Avho makes payments to a contractor after the material man sends notification to the theatre owner that the contractor OAves a balance for building materials. This important rule of the law is applicable although the contractor performed Avork and used the materials after notice Avas sent co the theatre owner by the material man. For instance, in Beeson Company vs. Burtner (155 S. E. 733), it was disclosed that on December 20, a material man sent notification to an OAvner that the contractor OAved money for materials used in the construction work. AfterAvard the contractor performed other Avork, and the OAvner did not retain the amount due the contractor. In holding the material man's lien effective Avith respect to all money due t\he contractor from the date notice was sent, the court said : "It is immaterial Avhether the contractor had been paid up in full for Avork done to the time notice AA'as filed by the material man. The fact that he continued the Avork under the same contract Avill make the fund thereafter earned subject to the material man's lien. . . . The fact that the AA'ork for Avhich these payments were made AA'as done af'-er notice is immaterial. The Avork Avas ci e by the contractor, under the contract, ana the payments AA^ere made for this Avork." I When Dwner Need Not Pay for "Building Material UNDER ORDINARY circum stances a theatre owner is obligated to pay for all materials, utilized to improve his property, except such material that the contractor purchases Avithout knoAvledge or authority of the OAvner. For example, in a late case 156 S. E. 87, i it was disclosed that a material man furnished stone to a contractor Avho used it in construction Avork. After the property owner had accepted the structure and paid the contractor it Avas learned that the latter had failed to pay for the stone. The material man sued the owner on the contention that the laAv implies that a property OAvner Avill pay a reasonable amount for all materials used to improve his property. HoAA'CA'er, the court refused to hold the OAvner required to pay for the stone, because it Avas shoAvn that the OAvner had not authorized the contractor to purchase it.