E. K. Wood Lumber Co. v. Higgins

McCOMB, J. After trial before the court without a jury, in an action to foreclose a mechanic’s lien, plaintiff appeals from that portion of the judgment which was in favor of defendant Deep Well Colony Estates, Incorporated (hereinafter referred to as “Deep Well Colony Estates’’).

Defendant Higgins was engaged as a general contractor in Palm Springs, California. For several years, as a contractor he had purchased, on an “open book account,” lumber from plaintiff lumber company for use on various jobs. From time to time he made payments on this “open book account,” and plaintiff had never filed a mechanic’s lien for a deficiency in payment upon completion of any of his jobs.

In November 1955 Higgins contracted with defendant Deep Well Colony Estates to construct a house for in excess of [93]$56,265 on property owned by Deep Well Colony Estates called the “Dart” property.

In performance of this contract, between November 23,1955, and May 25, 1956, Higgins purchased lumber from plaintiff for use in the construction of the house, at an agreed reasonable value of $7,196.19.

On February 27, 1956, from funds paid by Deep Well Colony Estates, Higgins paid plaintiff $1,975.66, leaving a balance due of $5,220.53.

Early in May 1956 Deep Well Colony Estates requested an accounting from Higgins with respect to advances made for payment of labor and materials.

About May 10, 1956, Higgins met with Charles B. Howe, controller of plaintiff, and Wilbur Place, its employee, to arrange settlement of his account and to make certain that no mechanic’s lien would be filed on this job. At such time Higgins was indebted on his general open account to plaintiff in the amount of $9,487.06, of which $5,220.53 was on account of the house he was constructing for Deep Well Colony Estates. Higgins advised plaintiff that he could not pay his entire obligation and that he did not wish a lien placed upon the house he was building for Deep Well Colony Estates, and he offered to give a promissory note to be paid when he sold another house in which he had an interest. One of plaintiff’s officers visited the house, which Higgins stated he had up for sale. Thereafter, an officer of plaintiff stated to Higgins that the note “would take care of it,” that is, would be a substitute for the mechanic’s lien. Thereupon Higgins’ attorney transmitted a note to plaintiff in the sum of $9,487.06, accompanied by a letter which read in part: “I am enclosing a promissory note in the payment of $9,487.06, with interest at the rate of 5%, payable on or before one year from its date or on sale of Mr. Higgins’ home whichever occurs first.” (Italics added.)