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Smart Summary

Factual and Procedural Background

The plaintiff, Harrison Construction Company, brought suit in the Circuit Court of Greenbrier County to enforce a builder's lien against real estate owned by the defendant, Greystone Hotel Company. The circuit court sustained a demurrer to the plaintiff's bill, questioning the sufficiency of the affidavit attached to the notice of the plaintiff's lien. The court certified the question of the affidavit’s sufficiency to the Supreme Court of Appeals of West Virginia for decision.

Legal Issues Presented

  1. Whether the affidavit attached to the notice of lien, made by the superintendent of the plaintiff corporation without explicit authorization stated therein, was sufficient under the statute.
  2. Whether a superintendent of a corporation has implied authority to make an affidavit to perfect a builder’s lien on behalf of the corporation.
  3. Whether the affidavit must explicitly show the affiant’s authority to act for the corporation.

Arguments of the Parties

Demurrant's Arguments

  • The affidavit was fatally defective because it did not expressly show that the affiant, Mr. Perrin, was authorized to make it.
  • The superintendent’s duties do not customarily include making affidavits or similar administrative acts for the corporation.
  • Relying on Napier v. Mozena Coal Company, the demurrant argued that the superintendent’s authority is limited and does not extend to such affidavits.
  • Relied on Quesenberry v. Loan Association to argue that the affidavit must be made by an officer conversant with the facts and that mere agency is insufficient without explicit authority shown.

Plaintiff's Arguments

  • The superintendent, as an officer in charge of the work, is the corporate representative most likely to have requisite knowledge and authority to make the affidavit.
  • Under the principle in Napier v. Mozena Coal Company, the superintendent has implied authority to perform acts reasonably necessary to effectuate corporate results, including making affidavits to protect the corporation’s interests.
  • The affidavit complies with the statutory form and the statute does not require express authorization to appear in the affidavit.
  • Corporations act through their officers, and affidavits made by officers are prima facie authorized acts of the corporation, as supported by the reasoning in American Soda Fountain Company v. Stolzenbach.
  • The plaintiff ratified the act of the superintendent by claiming the benefit of the lien and seeking to enforce it in court.
  • The statute was intended to provide a simple and quick method to perfect liens, and technical formalities not prescribed by statute should not be imposed.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Napier v. Mozena Coal Company, 86 W. Va. 220 Implied authority of a superintendent to perform acts reasonably necessary to effectuate corporate results. Supported the conclusion that the superintendent had implied authority to make the affidavit to protect the corporation’s interests.
Quesenberry v. Loan Association, 44 W. Va. 512 An affidavit must be made by an officer conversant with the facts; mere agency without knowledge is insufficient. Distinguished because the superintendent was shown to be conversant with the facts, unlike the attorney in that case.
American Soda Fountain Company v. Stolzenbach, 16 L.R.A. (N.S.) 703, 68 A. 1078 An affidavit by a corporate officer is prima facie authorized by the corporation; no need for express authority to be stated. Adopted to hold that the superintendent’s affidavit was the act of the corporation and did not require express authority in the affidavit.
Bank of Toronto v. McDougall, 15 U.C.C.P. 475 Supports the principle that corporate officers inherently have authority to act for the corporation. Referenced as supportive authority for the court’s reasoning on corporate officer authority.
Shears v. Jacobs, 35 L.J.C.P. N.S. 241 English authority on corporate officer authority to act on behalf of corporation. Used to bolster the general principle that officers act as the corporation’s inherent agency.
Shaft v. Phoenix Mut. L. Ins. Co., 67 N.Y. 544 Authority of corporate officers to perform acts within their implied powers. Listed among cases supporting the court’s liberal construction of corporate officer authority.
Sumner v. Dalton, 58 N.H. 295 Similar authority on corporate officer powers. Referenced in support of the principle that officers may act without express authority stated.
Yost v. Commercial Bank, 94 Cal. 494, 29 P. 858 Supports the inherent authority of corporate officers. Used to reinforce the court’s reasoning on implied authority.
Merrill v. Montgomery, 25 Mich. 73 Corporate officer authority to act on behalf of corporation. Included among supporting precedents.
Gerhard Hardware Co. v. Texas Cotton Press Co., 26 S.W. (Tex.) 168 Supports principles of corporate officer authority. Referenced as part of the body of law supporting the court’s holding.
Kentucky Jeans Clothing Co. v. Bohn, 104 Ky. 387 Corporate officer authority for acts within corporate capacity. Used as supporting authority.
Bullock Beresford Mfg. Co. v. Hedges, 76 Ohio St. 91 Supports the inherent authority of corporate officers. Included among cited authorities.
Commercial Nat. Bank v. Hutchinson, 87 N.C. 22 Supports principles of corporate officer authority. Referenced as part of the supporting legal framework.
Knabbs Appeal, 10 Penn. St. 186 Statutes requiring strict compliance should be construed liberally to avoid technicalities that frustrate intended remedies. Quoted to emphasize the need for a practical, non-technical approach to mechanic's lien statutes.
Rainey v. Freeport Smokeless C. C. Co., 58 W. Va. 381 Substantial compliance with mechanic's lien statute is sufficient. Applied to support the sufficiency of the affidavit.
U.S. Blowpipe Co. v. Spencer, 61 W. Va. 191 Substantial compliance and sufficiency of affidavit on its face. Applied to hold the affidavit met statutory requirements.
Walters v. Goldberg, 108 N.Y.S. 992 The affidavit serves to verify the correctness of the lien notice by someone with requisite knowledge. Used to explain the purpose of the affidavit and why the form used was sufficient.
Old Settlers' Inv. Co. v. White, (Cal.) 110 P. 922 When statute requires an affidavit of a corporation, any officer or agent may make it. Supported the court’s liberal construction allowing the superintendent’s affidavit.
Reed v. Bagley, (Neb.) 38 N.W. 827 Mechanic's lien statutes should be liberally construed to enable parties to obtain their rights. Supported the court’s approach favoring liberal construction of the statute.

Court's Reasoning and Analysis

The court focused on the sufficiency of the affidavit attached to the notice of lien, which was made by the plaintiff’s superintendent, Mr. Perrin. The circuit court had held the affidavit defective for failing to expressly show that Perrin was authorized to make it. The Supreme Court of Appeals rejected this, reasoning that a superintendent, as a corporate officer in charge of the work, is the most appropriate person to make such an affidavit because he is likely to be conversant with the facts and responsible for protecting the corporation’s interests.

The court distinguished prior cases cited by the demurrant, noting that the key requirement is that the affiant have knowledge of the facts, not that express authority be recited in the affidavit. The court cited extensive authority, including a New Jersey decision, to support the principle that affidavits by corporate officers are prima facie authorized acts of the corporation and do not require explicit statements of authority.

Moreover, the court emphasized the legislative intent behind the builder’s lien statute: to provide a simple, quick, and non-technical procedure for contractors to secure liens. The affidavit complied with the statutory form and fulfilled its purpose of verifying the lien notice under oath by a knowledgeable person. The plaintiff’s conduct ratifying the superintendent’s act further confirmed the validity of the affidavit.

Accordingly, the court held that the affidavit was sufficient and that the demurrer should be overruled.

Holding and Implications

The judgment of the circuit court sustaining the demurrer was reversed, and the demurrer to the plaintiff's bill was overruled.

This decision directly reinstates the plaintiff's ability to enforce the builder's lien based on the affidavit made by its superintendent. The court did not establish new precedent beyond affirming established principles favoring liberal construction of mechanic’s lien statutes and recognizing the implied authority of corporate officers to act on behalf of the corporation without express authorization recited in affidavits. No broader legal implications beyond the case’s facts were discussed.

HARRISON CONSTRUCTION Co. v. GREYSTONE HOTEL CO.

HATCHER, JUDGE:

The plaintiff brought suit in the Circuit Court of Greenbrier County to enforce a builder's lien against real estate owned by the defendant. A demurrer to the plaintiff's bill was sustained. The circuit court, on its own motion, certified here for our decision, the question arising on the sufficiency of the affidavit to the notice of the plaintiff's lien.

The notice is in the exact form prescribed in paragraph b of section 3 of chapter 75 of the Code. It is signed "Harrison Construction Company, Incorporated, By L. B. Perrin, Supt." The affidavit to the notice is also in the statutory form. It is as follows:

"L. B. Perrin, being first duly sworn, upon his oath says that the statements contained in the foregoing notice of lien are true, as he verily believes."

The circuit court took the view that the affidavit was fatally defective because it did not show that Mr. Perrin was expressly authorized to make it.

It is contended for the demurrant that the duties of a superintendent of a corporation are closely circumscribed by custom and law, and do not include the making of an affidavit for his company or other such "administrative duties." The case of Napier v. Mozena. Coal Company, 86 W. Va. 220, is cited. In that case, it was held that the power of a superintendent was not restricted to acts within the express scope of his authority, but included such other acts as by implication were reasonably necessary to effectuate the results authorized, in the usual and customary manner. The principle underlying this holding opposes, rather than supports the demurrant's contention. If a superintendent has the implied power therein stated in relation to contractual matters, a fortiori, should he have the implied power to render a service, entirely beneficial to his company and designed to protect it from loss, in a matter where no contractual rights are involved.

The demurrant also relies on the case of Quesenberry v. Loan Association, 44 W. Va. 512. That case denied the right of an attorney therein to make an affidavit for the defendant corporation. The decision, however, was not based on the fact that an attorney, as a representative of the corporation, could not properly make an affidavit for it. The affidavit therein was quashed because there was nothing to show or import that the attorney was conversant with the facts contained in the affidavit. The opinion of the court, in part, is as follows:

"The affidavit offered by defendant was not made by any officer of the corporation who might be expected to know anything of the indebtedness between the parties. It seems to be the law that, where a pleading of a corporation is to be sworn to, it must be by the president or some officer conversant with the facts. This affidavit was made by the attorney at law of the defendant. What would he know of the indebtedness, unless he would show that he was personally cognizant of the facts? Doubtless there are instances in which an attorney may make affidavit for a corporation; but this is an instance where the affidavit calls for personal knowledge of the facts, — the account between the parties, — if any instance does."

The gist of this holding is that the official title of the one making the affidavit is immaterial provided he be conversant with the facts. Apply that principle to the Perrin affidavit. Being an artificial person, the plaintiff, of necessity, acts through its officers and agents. A superintendent in charge of its work is recognized as a regular and important part of its corporate machinery. He is the representative of the corporation on the job. He is the one who keeps in touch with the work performed. No officer or agent of the corporation would ordinarily know more about the local situation than the superintendent. He is the officer most likely to know the desirability or the necessity of taking the lien permitted by the statute. It is his duty to act promptly in case of emergency to safeguard, as far as may be, the interests of his employer. No reason appears why a superintendent, when conversant with the facts, is not a proper official to make an affidavit for the corporation. The notice states that Mr. Perrin was the superintendent of the plaintiff. The affidavit is attached to and is a part of the notice. It was therefore not necessary to repeat in the affidavit his official connection with the company.

The demurrant also argues that Mr. Perrin is not an officer of the corporation, but its agent. His right as an agent to perfect the lien in question is not denied, but demurrant contends that his authorization as such agent should appear in the affidavit. We know of no better answer to this contention than is found in the faultless logic of Judge Dill of the New Jersey court in the case of American Soda Fountain Company v. Stolzenbach, 16 L.R.A. (N.S.) 703, 68 A. 1078. That was a case involving the validity of an affidavit made on behalf of a corporation by its vice-president. It was there held that the affidavit of the officer was, in legal contemplation, the affidavit of the corporation; that he was prima facie acting properly and by authority of the corporation, and that special allegation of his authority in the affidavit was unnecessary. We quote with approval from the opinion:

"The fallacy of the argument of the defendant in error is that it fails to note the distinction between a corporate act, performed through the intermediation of a person specially empowered to act as its agent or its attorney, and a like act done immediately by the corporation through its own administrative officers — its inherent agencies. The right of an artificial person to empower and employ agents or attorneys is identical with that of a natural person, — each is governed alike by the law of principal and agent. The fundamental difference between the natural and artificial person is that the latter, even when not acting as a principal through the intermediation of an agent, acts through some agency, inherent in its corporate form. Normally, such agency inheres in the natural persons who hold and administer the offices of the corporation. The analogy of a natural body having head and members holds good in the case of the artificial body, the common and declared law recognizing that the officers are the means — the hands, the head, by which corporations normally act. * * * Hence, when a corporation does not go outside of its corporate machinery and capacity in doing a corporate act, it is a confusion of terms and of ideas to say that it is acting through an agent when the fact is that it is acting through an agency, and in chief. The distinction is not merely verbal and hence trivial, but, on the contrary, marks the wide difference that exists between acting for oneself by an inherent faculty and the employment of another person to act for one in one's stead."

The New Jersey decision is supported by the Canadian court in Bank of Toronto v. McDougall, 15 U. C. C. P. 475, by an array of English decisions, a leading case being Shears v. Jacobs, 35 L. J. C. P. N. S. 241, and by many American cases, among which are: Shaft v. Phoenix Mut. L. Ins. Co. 67 N.Y. 544, 23 Am. Rep. 138; Sumner v. Dalton, 58 N.H. 295; Yost v. Commercial Bank, 94 Cal. 494, 29 P. 858; Merrill v. Montgomery, 25 Mich. 73; Gerhard Hardware Co. v. Texas Cotton Press Co. 26 S.W. (Tex.) 168; Kentucky Jeans Clothing Co. v. Bohn, 104 Ky. 387; Bullock Beresford Mfg. Co. v. Hedges, 76 Ohio St. 91; Commercial Nat. Bank v. Hutchinson, 87 N.C. 22.

The bill herein alleges that the plaintiff "perfected and preserved" the lien in question. On demurrer, full credence is given to this allegation. The reasonable intendment whereof is that the act of Mr. Perrin in signing the notice and swearing to the affidavit was the very act of the plaintiff. The conduct of the plaintiff has been entirely consistent with this allegation. The record discloses no objection by it to the act of its superintendent. On the contrary, it has ratified, claimed the benefit of, and is now in court seeking to enforce the lien secured to it by him. Its conduct, as well as its positive allegation, in this respect, confirms the implication of law that the act of its superintendent in perfecting this lien was the act of the corporation.

Construction work is usually, if not invariably, begun with confidence in the owner's ability to pay. As long as that confidence exists, a statutory lien is seldom perfected. The taking of such a lien usually means a breach in the friendly relations theretofore existing between the contractor and the owner. It is the last resort of the contractor. In consequence of which, the contractor will usually postpone filing his notice as long as the statute permits. When final determination is made to perfect the lien, little, if any time is ordinarily left under the statutory limit. In few instances will time remain in which to call a director's meeting and have express authority given to a representative of the corporation to file the statutory notice. The Legislature passed the statute with full cognizance of the situation usually surrounding the taking of the lien. It clearly intended to provide a builder with a simple, as well as quick method of securing a lien for work done and materials furnished. To effectuate this purpose, a simple and short form of notice and affidavit is furnished which the statute says is sufficient. We should not make technical and involved, a procedure which was designed to be simple and free from technicalities.

In discussing the Mechanic's Lien law of Pennsylvania, the court of that state said:

"Adherence to the terms of the statute is indispensable, but the rule must not be pushed into such niceties as serve but to perplex and embarrass a remedy intended to be simple and summary, without, in fact adding anything to the security of the parties having an interest in the building sought to be incumbered."
Knabbs Appeal, 10 Penn. St. 186.

Our own court has on more than one occasion held that a substantial compliance with the requirements of the mechanic's lien statute is all that is necessary. Rainey v. Freeport Smokeless C. C. Co. 58 W. Va. 381; U.S. Blowpipe Co. v. Spencer, 61 W. Va. 191.

The affidavit in question complies "upon its face" with the. provisions of our statute. It thus conforms to the rule announced in U.S. Blowpipe Co. v. Spencer, supra. The object of having an affidavit to the notice, is that the correctness of the statements appearing therein may be verified by someone having requisite knowledge and information. The good faith of the affiant is tested by his solemn oath. The validity of the lien is thereby assured. Walters v. Goldberg, 108 N.Y.S. 992. The purpose of the statute would be effectuated no better if the affidavit herein stated express authority in the affiant. Why, therefore, should we require something in the affidavit not mentioned or implied by the statute? No suggestion is offered of any useful purpose that would be served thereby. No reason has been advanced warranting the view that the Legislature contemplated express action by the directors in such case.

We find no decision in this State entirely in point. The decisions of other courts are influenced by the requirements of the respective statutes under consideration. In the many cases cited in the briefs herein, we find none made upon a statute exactly like ours. However, certain general principles of law in regard thereto are well established, which support our conclusion. One is that such a statute "is to be construed liberally to enable parties to obtain their rights." Opinion, Reed v. Bagley, (Neb.) 38 N.W. 827. Another is that "when an affidavit is required of a corporation and no particular officer is designated in the statute to make it, it may be made by any one of its officers or agents." Old Settlers' Inv. Co. v. White, (Cal.) 110 P. 922.

The decisions of our court qualify the latter rule to this extent: the officer making the affidavit should have requisite knowledge and information of the facts verified. In this case, the law implies that Mr. Perrin had requisite knowledge and information of the statements in the notice. A liberal construction of the statute upholds the Perrin affidavit.

The judgment of the circuit court will therefore be reversed and the demurrer to the plaintiff's bill overruled.

Reversed.

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CONSTRUCTION CO. v. HOTEL CO
(Apr 21, 1925)