Bent & Co. v. Barnett , 90 Ky. 600 ( 1890 )

JUDGE PRYOR

delivered the opinion of the court.

W. A. Barnett, the father and statutory guardian of his infant children, five in number, entered into an agreement with one Shryock, by which he leased to Shryock a three-story brick building in the city of Louisville for the term of seven years, the lease to bégin on the first of January, 1876. The object of the lease was to enable Shryock, who was an architect, to reconstruct the building and then rent it out, and apply the rental to a lien held by the Herberts for the purchase money, and to the payment of the costs of reconstructing the building, that cost being estimated at near fifteen thousand dollars. Barnett had purchased in his own right the interest of the Herberts in this property, which was nine thirty-seconds, - at the price of four thousand five hundred dollars, for which, he gave his notes. He also owned one-sixth of twenty-three thirty-seconds by inheritance from one of his children. The five children ■owned the remaining interest in the building, and this was its condition as to title when the guardian made the lease to Shryock. Barnett then made a contract as guardian, and in his own right, for he then had an interest in the property, with the appellants, J. M. Bent & Go., to execute the stone worlc on the building, for which he was to be paid seven thousand three hundred and ninety-three dollars and fifty cents, and for this he executed notes; he also gave a lien on the rents and a mechanic’s lien on the property. He made contracts with other parties for work and materials, the entire building costing, before its completion, the sum of twenty-one thousand nine hundred and fifty-nine dollars and six cents. In January, 1876, he executed another lease to Shryock and Bent, in his own right and as guardian, for the term of seven years, under which the lessees were to rent out the building and pay taxes, insurance and repairs; to pay the infants a certain sum per month (fifty dollars), and the balance to be applied to the payment of the costs of reconstruction, the debts that had already been incurred, as well as those thereafter incurred necessary to the completion of the building, and also to pay the Herbert heirs the purchase money due them by him, Barnett.

One of the material men, Robert Biggs, shortly after this lease was made, filed his petition in the Louisville Chancery Court to enforce his mechanic’s lien under a contract with Barnett. When this petition was filed the children, by Thornbery, their next friend, tiled their petition against their father, who was their statutory guardian, alleging that they were suffering for the necessaries of life, and had, or were receiving, no-income from their estate. The cases were consolidated, and the creditors who had worked upon and furnished materials in erecting the building asserted their liens. The heirs of Herbert filed their petition or asserted their claims for the purchase money due them by the-guardian, and after this purchased back their interest, thereby divesting Barnett of the title he had received from them. The consolidated causes were submitted' to the chancellor, who enforced the lien of the Herbert heirs, and a mechanic’s lien on the one-sixth of.' twenty-three thirty-seconds of the building that came to Barnett by inheritance, in favor of certain mechanics and material men who had complied with the-law, and further directed that from the renting under1 the lease to Shryock and Benton the taxes, insurance and repairs were to be paid, fifty dollars a month to-the children, and the balance of the rents to be paid out to the workmen and material men in proportion-to their respective claims.

Bent & Co., it seems, had furnished material and employed labor on the building, and, at the expiration of the seven years’ lease, had received nothing for their work and material furnished. They them tendered a supplemental petition, alleging that the-work they did on the building was necessary to make-it habitable; that it had greatly enhanced its value,, and nothing had been received by them from the-rents. They asked that the property be placed in the hands of a receiver, and the rents applied to the payment of their debts. They also claim that Barnett was a co-tenant with his children, and had the right to make the improvement, and, therefore, they were entitled to be substituted to his rights, so that they could compel the children as co-tenants to contribute to the costs of reconstruction. A general demurrer was filed to the petition as amended, and .sustained by the vice-chancellor, and the appellants declining to plead further, their petition was dismissed, •except as to their claim against Barnett in his individual right. Barnett, it seems, had gone into bankruptcy, and had but little, if any, estate when these •contracts with reference to the construction of the building were made and executed.

The question presented is, were the plaintiffs, .on the facts alleged, entitled to relief ?

We have had some difficulty in reaching a conclusion in this case, as the record of the former hearing, to which the supplemental petition was filed, as well .as the pleading itself, presents a case so full of equity •as to disturb the conscience of the chancellor in the attempt to deny all relief, and on the other hand the guardian, without any authority from the chancellor, has incumbered the realty of the infants to an extent that if the property itself could be subjected to the payment of the cost of construction, it would take from them the entire building. The building was not only uepaired, but reconstructed. It was, in fact, a new building reared upon the site of the old, and the fact that the father was a co-tenant with his infant chil-dren did not authorize the expenditure, and if they had been adults their co-tenant could make no such expenditure, and then require contribution from co-tenants,. unless they had in some manner consented to the change. This is not a case of mere ordinary repairs, where, for the preservation of the property,' one tenant causes the repairs to be made, and, therefore, the right of one tenant to make such an improvement and then ask for contribution from his co-tenant is not involved in this case. (Freeman on Co-tenancy, section 262; 1 Washburn on Real Property, 421.)

The father, being both the natural and statutory guardian of the infants, conceived that it was necessary to reconstruct an old dilapidated building that would soon cease to yield an income to his children, and with a view of advancing their interests, in the best of faith, entered into this contract with the appellants, who, in like good faith, have executed the contract, and expended over seven thousand dollars in enhancing the value of this property, the rents of which are now being enjoyed by these children, who have now arrived at the age of twenty-one years. They have expended hot one cent for an improvement, out of which, if the facts alleged are true, they are receiving a handsome income, and but for which the building would have been valueless, and the entire property worth no'more than the value of the ground upon which the new building stands.

Was it, then, to the interest of the infants that the improvement should be made? And if so, to what extent should the income of the property be charged in order to reimburse the expenditure made by the appellants ?

If the father of the appellees had made the investment out of his own means instead of the means of others, thereby enriching his children at the expense of his creditors, a chancellor would have subjected the income to the extent of the enhanced value to the payment of his debts, and when he induces others to invest their means in improving property for . the benefit of those who have the right to look to him not only to see that their property is so managed as to make it productive, but whose claims ■ upon him for support and maintenance can not be disregarded, we see no reason why, if it results in enriching the children, or so enhancing the value of their property as to increase the income of their estate, those making the improvements should not at least share with them in the increased income caused by the improve.ments made.

Are the infants to become the recipients of such an investment from the funds of a stranger upon the idea that it was a voluntary donation from the father, and the material man or laborer required to look to him for payment? Will that which enhanced the value of the building and the income from it be regarded as an unreasonable burden upon the property of the infants, when the contractor and builder asks only for an appropriation of a part of the increased income caused by his labor and material to the payment of his debt? He has worked no harm to the infants, but leaves them in a much better condition than they were before the improvement was made, and if'so, ought the chancellor, in equity and good conscience, deny all relief? We think not. The guardian is entitled to the care and management of all the estate of the ward, real and personal, and >by our statute may lease the real estate until the ward arrives at age, provided the lease is not for a ■longer term than seven years. (Sec. 6 of art. 2, chap. 48, Gen. Stat.) His leasing of the estate in this instance was for the benefit of the wards, and upon • arriving at age, if the cost of the improvement from which these benefits flow has not been paid, the chancellor should adopt some means of reimbursing the expenditure when it works no other injury to the ward than taking from him a part of the income ■originating from the appellants’ material and labor.

In the case of Graham v. Bank, 5 B. M., 45, the .guardian of the infants, as in this case, leased a lot •of ground in the city of Louisville to Dupont for a term of years, Dupont agreeing to build a house upon it at a cost of three thousand five hundred dollars, •and to pay an annual ground' rent of two hundred dollars. The rent, was paid to the guardian, and the •building erected by the lessee. The children, or one •of them, on becoming of age, repudiated the contract ■of leasing, and this court held that the child becoming ■of age, having received the ground rent, it would be inequitable to permit him to enter without making a fair remuneration to the extent the land had been actually and beneficially ameliorated.

In the case of Athey v. Knotts, 6 B. M., 24, where the father had made improvements on the land of his infant son that greatly enhanced its value, this •court, referring to the case of Graham v. Bank, held that if the son, when arriving at age, should see proper to enter, “the vice chancellor, nnder all the circumstances, should require him to do what was equitable in regard to the improvements, and until that period the creditor of the father was entitled to an equitable portion of the rent, to be applied in discharge of his claim.”

In Hobbs v. Harlan, 10 Lea, 268, it was said: “If a guardian, with the view to increase the annual rents of his wards, put improvements, such as houses, upon their land, he will be allowed to reimburse himself for the principal sum thus expended, without interest, out of the increased rentals, but not out of the corpus of the estate or the ordinary rentals.” The fact that the children are now of age, and in possession, can make no difference. If the appellants have an equitable claim upon the rents of this property, if should be enforced. It was expressly agreed in writing that these parties should have a lien, or become entitled to the rents in discharge of the debt, and their right to file a notice, etc., of an intention to assert a lien, or the evidences of their debt, as required by the mechanic’s lien law, was expressly waived; that is, the appellants were to have a lien whether they filed their claim or not; and while this could not affect others, it was binding, as between the guardian and the appellants, to the extent they conld contract.

The vice-chancellor, in his judgment rendered in 1878, recognized the existence of these liens, and the right of the creditors to the rents. The lease had seven years to run from its date, and at the expiration of the seven years the chancellor’s judgment, to the extent it had gone, had performed its functions, but the rents paid no part of appellants’ debt. It was not a final judgment, that is, a judgment determining that if the seven years’ lease fails to pay you, the creditors are without remedy. The original agreement with the guardian as to liens and the right to the rents-until the debts were satisfied still existed, and while-it was not binding on the infants, the original judgment enforced the lien, and. gave' to the appellants*the benefit of the lease upon equitable grounds. While-there is no question before the court except as to the supplemental petition, that petition is based on the-facts developed in the original case, and the judgment rendered upon these facts. It. is apparent that the estate of the infants (now adults) can not be burdened with the interest accruing on these notes, nor should they be compelled to pay more than the actual cost of furnishing the stone for which the notes were given,, without interest, and this should be paid out of the-enhanced rental value of the property by reason of the improvements, after deducting therefrom the insurance, taxes and cost of keeping the premises in repair.

These views upon the facts presented in the original action are not to preclude any defense the appellees may have to the recovery. We simply adjudge that the facts stated, if true, entitle the party to relief, and if no defense exists, it should be granted as herein indicated.

Judgment reversed, and remanded with directions, •to overrule the demurrer, and for proceedings consistent with this opinion.