South-Western Legal Studies in Business

Public Purpose Organizations Exempt from Mechanics' Liens in Pennsylvania
Description

Pennsylvania appeals court held that a private, non-profit organization that performs public functions is exempt by state law from mechanics' liens being imposed on its property as a result of its contractor not paying its suppliers.

Topic Real and Personal Property
Key Words

Mechanics Liens; Exemption; Public Purpose Organization

C A S E   S U M M A R Y
Facts

The Humane Society, a nonprofit organization, built an animal shelter in Erie County, Pennsylvania. The contractor who built the shelter failed to pay suppliers for materials provided. Unable to collect from the contractor, the suppliers filed mechanics' liens against the Society for the value of their materials. The Society defended that it was exempt from such liens. The trial court upheld that view and dismissed the actions. Plaintiffs appealed.

Decision

Affirmed. As the shelter serves a public purpose, it is exempt from mechanics' liens. A factor critical to the determination of whether an organization serves a purely public purpose as to render it exempt from liens is the manner in which the organization uses the property. Factors considered are: 1) does the public have access to the services provided by the entity; 2) does the entity perform a governmental function or proprietary function; 3) does the entity operate to earn a profit; and 4) whether allowing execution of the liens would disrupt an essential public service. Since the Society provides a public service of providing shelter, adoption and neutering services. It also helps enforce animal cruelty laws of the state and local government. Since it performs law-enforcement functions, its officers take an oath sworn before a judge.

Citation

Carter-Jones Lumber Co. v. Northwestern PA Humane Society, ---A.2d--- (2006 WL 3819364, Commonwealth Court, Pa., 2006)

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