Cox v. Western Pacific Railroad

When Contract is Entire and not Severable.—If a contractor agrees with a railroad company to grade a section of its road, and do all work necessary to make the road ready for the cross-ties and iron equipments, and to receive a fixed sum for the work, to he paid from time to time as the work progresses, at the prices fixed and estimates of work done, made by an Engineer, the contract is entire, and the provision for payments from time to time as the work progresses does not make it severable. But one Mechanics’ Lien Allowed under an Entire Contract.— Neither a contractor nor a sub-contractor can, from time to time, as the work progresses, file successive liens for work done on an entire contract. In such case but one lien can be acquired, and that must be filed within the time specified in the statute after the completion of the work. Lien on Part oe a Bailroad.—A lien for work or materials cannot he acquired on a portion of a railroad, but must be filed on the entire road. The contractor who grades a section only of the road cannot file a lien on that section alone.

Appeal from the District Court of the Third Judicial District, Alameda County. The Western Pacific Railroad Company is a corporation, formed on the 13th day of December, 1862, to build a railroad from a point at or near the City of San José, where it connected with the San Francisco and San José Railroad, through the Counties of Santa Clara, Alameda, San Joaquin, and Sacramento, to the City of Sacramento, a distance of one hundred and twenty-three miles, and there to connect with the Central Pacific Railroad. On the 10th day of December, 1864, Charles McLaughlin entered into a contract with the railroad company to grade its roadbed, from the terminus, near San José, to Sacramento, and to construct all superstructures, buildings, machinery, and all other things necessary to place the road in complete working order. The road was to be completed from the terminus, near San José, for a distance of twenty-five miles, within one year fom December 1st, 1864, and the remainder to be completed within four years from the last named date. The corporation contracted to pay him for the work and material, five millions and four hundred thousand dollars. Payments were to be made as the work progressed and the materials were furnished, at estimates made by the Engineer of the company. On the 7th day of January, 1865, McLaughlin entered into a contract with Jerome B. Cox, Thomas J. Arnold, and Jackson E. Myers, under the name of Cox, Myers & Co., by which they were to grade that part of the road from the terminus, near Ban José, to Stockton, a distance of seventy-four and one quarter miles, and to do the masonry work and all things necessary for placing the cross-ties and iron equipments on the track; and McLaughlin was to pay them therefor the sum of nine hundred thousand dollars. The work was to be completed from the terminus, near San José, for a distance of twenty miles, in nine months from the 1st day of January, 1865; and the next section of twenty miles within nine months thereafter; and the next, or third section of twenty miles, within nine months thereafter, and the balance within six months from the completion of the third section. The payments were to be made as the work progressed, and materials were furnished, at amounts fixed by the estimates of the Chief Engineer of the company. The Engineer was to examine and report from time to time as the work progressed, as often as once a month, if required. It was further provided in the contract, that upon the completion of the first section of twenty miles to the acceptance of the Engineer, and upon the approval of the Board of Directors, the same should be accepted and received as fully completed, and that thereafter, upon the completion of each section, it should be, in the same manner, received as fully completed. Cox, Myers & Co. completed the first section of the railroad according to the terms of their contract, but were prevented from doing any more work by the failure of McLaughlin to pay them for the work completed. On the 15th day of June, 1866, Cox & Arnold, to whom Myers had sold his interest in the contract, sent to B. F. Mann, McLaughlin’s attorney in fact, the following notice: “ San Francisco, June 15th, 1866. “ To B. F. Mann, Esq., attorney in fact for Charles McLaughlin: “Sir: You are hereby notified that in consequence of the non-payment of the estimate of June 5th, 1866, for work done on the Western Pacific Eailroad under our contract with you, dated January 7th, 1865, we are compelled to suspend work entirely from this date on said railroad, and will proceed to make a settlement of accounts with you in accordance with the terms of said contract. “COX & ARNOLD.” To this note Mann, as agent of McLaughlin, replied on the following day, as follows: “San Francisco, June 16th, 1866. “ Messrs. Cox & Arnold, successors to Cox, Meyers ¿f Co.: “ Cents: Your letter of the fifteenth instant, giving me notice that in consequence of the non-payment of the estimate of June 5th, 1866, for work done on the Western Pacific Eailroad, under your contract with me, dated January 7th, 1865, you are compelled to suspend work entirely on said railroad, and will proceed to make a settlement of accounts with me, in accordance with the terms of said contract, has been received. “ In reply, I hereby notify you that I do not recognize your right to suspend work on said railroad without having first received my orders so to do, and I hereby forbid such suspension. “ Bespectfully, “C. McLAUGHLIN, “ By B. F. Mann, his attorney in fact. “ Received June 16th, at 12:35.” There was due Cox, Myers & Co., for the work completed, the sum of one hundred and fifty thousand seven hundred and eighty-two dollars and eighty-nine cents, in gold coin of the United States, which sum was fixed by the report of the Chief Engineer. The plaintiffs filed a lien on said completed section, and this action was brought to enforce the same. The complaint alleged that the Central Pacific Bail-road Company claimed to have an interest in the railroad. The Court below rendered judgment for the plaintiffs, enforcing the lien for said sum, and legal interest, on the first section of the road. The defendants appealed. The other facts are stated in the opinion.