Superior Lumber Co. v. Sutro

California Court of Appeal May 14, 1979 No. Civ. 52419Published

Before: Files

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Holding. A mechanics lien cannot be enforced when the lien claimant and the property owner are found to be one and the same entity, as the law does not authorize an owner to assert a lien against their own property.

Issues

Whether a mechanics lien is enforceable when the claimant and the property owner are the same entity.
Whether an owner may assert a priority lien against their own property for materials they furnished.

Disposition. reversed

Quotations verified verbatim against the opinion

“We have concluded that the trial court’s finding that the lien claimant and the owner were “one entity and indivisible” precludes enforcement of the claim, and therefore reverse the judgment.”

“Nothing in either the Constitution or the Civil Code indicates any intent that the owner shall have a lien for the materials which he furnishes.”

“The simple answer is that the mechanics lien law does not authorize an owner who has lost its property through a trustee’s sale, to assert a priority claim against that property for the value of materials which it furnished.”

Opinion

FILES, P. J.

This appeal arises out of consolidated actions foreclosing mechanics liens on two condominium projects.

Appellant is a lender who took the property on foreclosure of a trust deed.

We have concluded that the trial court’s finding that the lien claimant and the owner were “one entity and indivisible” precludes enforcement of the claim, and therefore reverse the judgment.

The appeal has come up on a clerk’s transcript only, so we must assume that substantial evidence supports the trial court’s findings of fact.

Urbanetics Financial Corporation (hereinafter Urbanetics) constructed two residential condominium buildings. Robert Sutro and Edwin S. Bingham, Jr., as trustees of Sutro Mortgage Investment Trust (hereinafter Sutro) loaned money to Urbanetics, receiving trust deeds on the condominium projects as security. The trust deeds were recorded after the commencement of the work of improvement.

[956]

Plaintiff Superior Lumber Company (hereinafter Superior) supplied lumber and other wood products which went into the construction.

Urbanetics defaulted in the payment of interest to Sutro and filed a proceeding in the United States District Court for arrangement of debts under chapter XI of the Bankruptcy Act. With the consent of the bankruptcy court, Sutro proceeded to foreclose its trust deeds by a trustee’s sale, through which Sutro acquired the two properties. After Sutro had sold all of the condominium units, its actual loss, excluding interest which accrued after the trustee’s sale, was $447,000.

Meanwhile, Superior had recorded a claim of lien for the unpaid balance allegedly due it of the price of the materials it had furnished. These actions to foreclose the liens followed.

The findings describe the relationship between Superior (plaintiff) and Urbanetics as follows:

“1. Plaintiff is a

de facto

Superior Lumber Co. v. Sutro

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FILES, P. J.

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