Opinion
No. 77-872
Decided September 21, 1978. Opinion modified and as modified petition for rehearing denied October 19, 1978. Certiorari denied January 8, 1979.
In mechanics' lien action by manufacturer of heating and air conditioning equipment, trial court granted property owner summary judgment, and lien claimant appealed.
Reversed
1. MECHANICS' LIENS — Materials — Delivered to General Contractor — At Its Direction — Could Not Be Used — Another Project — Proof of Delivery — Sufficient — Establish Lien — Material's Supplier. Although heating and air conditioning subcontractor was involved in different projects, materials that were subject of mechanics' lien action were delivered to the general contractor of the pertinent construction project at that contractor's direction and thus could not have been used by the subcontractor for another contract; consequently, since the general contractor is an agent of the property owner for the purposes of the mechanics' lien statute, proof of delivery to the general contractor's warehouse was sufficient to perfect the lien claim by the supplier of the materials.
Appeal from the District Court of the City and County of Denver, Honorable Harold Reed, Judge.
Law, Nagel Clark, Jeffrey L. Beattie, for plaintiff-appellant The Trane Company.
Yegge, Hall Evans, Jeffrey B. Stalder, for defendants-appellees Cherry Hills III Development Corp. and Stalder Sons Construction Co., Inc.
Appellant, The Trane Co., a manufacturer of heating, ventilating, and air conditioning equipment, asserted a mechanic's lien against certain real property owned by Cherry Hills III Development Corp. The property owner's motion for summary judgment was granted by the trial court, and Trane appeals. We reverse and remand.
Cherry Hills III, developer of a southeast Denver condominium project, hired Stalder and Sons Construction Co., Inc. (Stalder), as general contractor for the project. Stalder hired Comfort Trane Air Conditioning Co. (Comfort Trane) as subcontractor for the heating and air conditioning work. Comfort Trane was a "trade name" dealer in air conditioning products and purchased most of its equipment from Trane. The project was to be built in three phases. Phase I of the project was completed. Comfort Trane purchased the heating, ventilating, and air conditioning equipment from Trane and sold it to Stalder as needed. However, before Phase II of the project was begun, Stalder, Comfort Trane, and Trane negotiated an agreement for the purchase and sale of heating and air conditioning equipment to be used in Phase II in order to assure that the equipment would be available and to establish its price. Trane shipped the equipment to Comfort Trane which in turn delivered it to Stalder's warehouse. Comfort Trane invoiced Stalder and was paid in full. Later, Stalder entered into an oral contract with Comfort Trane for additional units. These, too, were ordered from Trane, delivered to Comfort Trane, redelivered to Stalder's warehouse, and invoiced to Stalder, who paid in full.
The following circumstances gave rise to Trane's mechanics' lien claim: Comfort Trane had financial difficulties and eventually declared bankruptcy. While Comfort Trane had made periodic payments to Trane, these payments were not applied to the account for the equipment purchased for Cherry Hills III. Cherry Hills III also experienced financial difficulties and all construction ceased. Thus, the equipment supplied by Trane and stored in Stalder's warehouse was neither delivered to the construction site nor incorporated in the project.
Trane sought to foreclose its mechanic's lien against Phase II of the project, asserting that since the equipment was delivered to the contractor's warehouse at the request of the contractor and was intended to be used in the project, its claim was sufficiently perfected to meet the requirements of § 38-22-101(1), C.R.S. 1973, which provides in part that every person furnishing materials directly to the owner to be used in the construction shall have a lien upon the property. It also provides that every contractor shall be held to be the agent of the owner for the purposes of this article.
Cherry Hills III and Stalder moved for summary judgment, asserting that Stalder's payment to Comfort Trane was, as a matter of law, binding on Trane, that the lien was not timely filed, and that lack of delivery to the job site was fatal to the lienor's claim. The trial court denied the appellees' motion on the issues of payment and timeliness but granted summary judgment on the basis of lack of delivery, concluding that the decision of this court in American Factors Associates, Ltd. v. Triangle Heating Sheet Metal Co., 31 Colo. App. 240, 503 P.2d 163 (1972), mandates dismissal of a mechanics' lien claim in the absence of physical delivery of the equipment to the project site. We disagree.
[1] The factual situation out of which the action in American Factors grew is distinguishable from that which gave rise to the instant case. In American Factors, the subcontractor to whom the items were delivered was involved in other projects besides the construction project against which the lien was asserted. This court ruled that given that circumstance, lack of proof of delivery to the job site was fatal to the lienor's claim. In the instant case, however, although the subcontractor, Comfort Trane, may have been involved in different projects, the materials were delivered to the general contractor at that contractor's direction and, hence, could not have been used by Comfort Trane for another project. By directing Comfort Trane to deliver to the contractor's warehouse the items ordered for Phase II, the contractor made its warehouse a part of the job site for the project. Under these circumstances proof of delivery to the general contractor's warehouse is sufficient to perfect the lienor's claim, see Kobayashi v. Meehleis Steel Co., 28 Colo. App. 327, 427 P.2d 724 (1970), since the general contractor is an agent of the property owner for the purposes of the mechanics' lien statute. Section 38-22-101(1), C.R.S. 1973.
The judgment is reversed and the cause is remanded to the trial court for trial on the remaining issues.
CHIEF JUDGE SILVERSTEIN and JUDGE SMITH concur.