Court: APPEALS COURT OF MASSACHUSETTS
Citation: 8 Mass. App. Ct. 719
Parties: WARREN BROTHERS COMPANY vs. PEERLESS INSURANCE
COMPANY.
County: Suffolk
Hearing Date: October 16, 1979
Decision Date: November 16, 1979
Judges: BROWN, DREBEN, & KASS, JJ.
A claimant against a statutory lien bond must first file a notice of contract under G. L. c. Section 4, in order to maintain his claim. [720-723]
CIVIL ACTION commenced in the Superior Court on November 21, 1975.
Page 720
The case was heard by Irwin, J., on a master's report.
Peter F. Davis for the plaintiff.
Peter J. Gagne for the defendant.
KASS. J. Must a claimant against a statutory (G. L. c. 254, Section 12, as
amended by St. 1973, c. 801, Section 4) lien bond first have filed a notice of
contract under G. L. c. 254, Section 4, to maintain his claim? We hold that he
must.
The facts necessary to decision are undisputed. Warren Brothers Company
(Warren) was a sub-subcontractor employed to do paving on a construction job in
Beverly. Its contract was with Mayco Construction, Inc., which, in turn, was a
subcontractor of the general contractor, Fortin-Reliable Construction Joint
Venture Company. Warren never filed a notice of contract under G. L. c. 2254,
Section 4. Neither Mayco or the general contractor paid Warren for its labor
and materials, and Warren brought a claim against the bonding company which
furnished a statutory lien bond on behalf of the general contractor. A Superior
Court judge ruled that compliance with Section 4 was a condition precedent to
recovery against the lien bond and entered judgment against Warren.
The form of lien bond is prescribed by G. L. c. 254, Section 12, and the
language accordingly required to appear in the bond provides that the principal
"desires to free said land from liens for all labor . . . and materials
entitled to lien protection" and that the bond "is made for the use
and benefit of all persons entitled to file the documents for lien
protection" as provided in c. 254. Section 12 goes on to say that after
the bond is recorded "no lien under this chapter shall thereafter attach
in favor of any person entitled to the benefit of such bond" and that if a
lien bond is defective in form, no party to such a bond shall be discharged
from liability to any person who has "in good faith allowed his lien to be
dissolved by lapse of time in reliance on the bond." The words
"entitled to file documents for lien protection" and the other quoted
statutory language appear to presuppose compliance with those steps which
establish eligibility for asserting a lien, i.e., filing a
Page 721
notice of contract and giving notice thereof to the owner of the affected land.
G. L. c. 254, Section 4.
But to so conclude, Warren argues, is to ignore the legislative context in
which Section 12 entered the statutory scheme. The present text of Section 12
was inserted by Section 9 of St. 1972, c. 774, entitled "An Act expediting
payments to general contractors and to subcontractors and improving the flow of
funds in the construction industry." That act, among other things,
liberalized, from the point of view of the subcontractor, the circumstances in
which, and the procedures by which, subcontractors might prosecute contract
claims on public works, and allowed recovery of legal fees incurred in pursuit
of such claims (St. 1972, c. 774, Section 5); it authorized filing notices of
contract for work and materials already furnished, thus enabling subcontractors
to perfect liens for their entire jobs, rather than only for work and materials
furnished subsequent to the filing of a notice of contract (St. 1972, c. 774,
Sections 6, 7, and 8);1 and it declared
waivers of lien against public policy and void and unenforceable (St. 1972, c.
774, Section 11).
Warren reasons that since the Legislature substantially broadened the ability
of subcontractors to assert liens, the revised lien bond provisions which
appear in Section 12 constituted a necessary adjustment to the danger
confronting owners and mortgagees that construction projects they owned or
financed would be subjected to major encumbrances until all subcontractors had
completed their work. Neither waivers of lien nor the absence on the record of
notices of contract offered any comfort; the Section 12 lien bond compensated
for these burdensome risks. If we accept Warren's theory, we are to read
Section 12 lien bonds as an entire substitute for the lien machinery which c.
254 erects. In support of such a construction of the statute Warren calls to
attention that line of decisions
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1 The notices of contract must be filed
before completion of the work covered by the contract.
Page 722
which stands for the principle that where "the statutory purpose is
remedial in nature, it should be broadly construed to effectuate its
self-evident policies." M. Lasden, Inc. v. Decker Electrical Corp., 372
Mass. 179, 183 (1977). See Warren Bros. Rds. Co. v. Joseph Rugo, Inc., 355
Mass. 382, 386 (1969); LaBonte v. White Constr. Co., 363 Mass. 41, 45 (1973);
Manganaro Drywall, Inc. v. White Constr. Co., 372 Mass. 661, 664 (1977);
Floors, Inc. v. B.G. Danis of New England, Inc., 7 Mass. App. Ct. 356, 358
(1979), further appellate review granted 378 Mass. 799 (1979); and C.C.&T.
Constr. Co. v. Coleman Bros., ante 133, 137-138 (1979).
While the over-all statutory purpose of St. 1972, c. 774, was to facilitate the
collection of subcontractors' claims, that was not, however, the objective of
the ninth section of that act, which amended the lien bond provision, G. L. c.
254, Section 12. Rather, the purpose of that provision, as previously in effect
and as revised by St. 1972, c. 774, Section 9, was to benefit an owner of land
(or anyone possessing an interest in that land) by furnishing means to keep his
title free from liens. See Rockwell v. Kelly, 190 Mass. 439, 440 (1906).2 Prior to the 1972 act, a Section 12 bond served
to discharge only liens based on personal labor; the revised Section 12
broadened the scope of protection in a very significant manner. We find no
implication in the legislation, however, of an intent to expand the class of
lien claimants to subcontractors and materialmen who have not filed a notice of
contract. Had that been the legislative intent, the language prescribed for the
lien bond would have been cast so as to have the bond run to the benefit of
anyone furnishing labor or materials. See G. L. c. 149, a 29, which requires a
payment bond in lieu in lien rights on construction of public works. See also
the form of labor and materials payment bond in Parker and Adams. The A.I.A.
Standard Contract Forms and the Law 107 (1954), and a similar form in 1 Dib,
Forms and Agreements for
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2 Decided under R.L. c. 197, Section 28,
the predecessor of G. L. c. 254, Section 12.
Page 723
Architects, Engineers and Contractors c. 4, Section 8 (1979). Instead, a
Section 12 bond runs to the "benefit of all persons entitled to file the
documents for lien protection."
To be entitled to lien protection under c. 254, a subcontractor must file a
notice of contract under Section 4. Pratt & Forest Co. v. Strand Realty
Co., 233 Mass. 314, 318 (1919). Prunier v. Schulman, 261 Mass. 417, 418 (1927).
See Evans Products Co. v. D. J. Dev. Corp., 6 Mass. App. Ct. 306, 307 (1978).
The Prunier case emphasizes that the notice must be filed not only with the
appropriate registry but a copy of the notice must be given to the owner of the
land affected. The function of the notice is to establish who are potential
claimants. This is a subject in which the principal (the general contractor)
and the surety (the bonding company) on the lien bond have a lively interest.
Without such a notice they may well not know who the sub-subcontractors are and
have no basis for holding back an appropriate retainage from the intervening
subcontractor. Warren overlooks this practical consideration when it argues
that the filing of a lien bond makes compliance with G. L. c. 254, Section 4, a
useless formality, serving no purpose other than to clutter the registries of
deeds.
Moreover, that portion of Section 12 which protects a subcontractor against a
defect in a lien bond "who has in good faith allowed his lien to be
dissolved by lapse of time in reliance on the bond" makes sense only if
there is a lien subject to dissolution by reason of the failure to take the
follow-up steps required by c. 254 for perfecting a lien. As we have seen, no
lien exists for a subcontractor unless the notice provisions of Section 4 have
been complied with.
Judgment affirmed.
Page 724
END OF DECISION