130 Minn. 214 | Minn. | 1915
Action to foreclose a mechanic’s lien on a hotel property in War-road, Roseau county. A number of lien claimants answered, asserting liens, and the defendant Gregory Co., a mortgagee, answered, asserting the priority of its mortgage, and asking a foreclosure.
1. The defendant Gregory Co. had a mortgage on the property for $9,000. This mortgage was on the face of the record subsequent to all the lien claims, it having been executed long after the commencement of the construction to help Ornes carry the building to completion. The Gregory Co. claim is that the Bowe-Burke Co. agreed that the mortgage should take precedence of all the liens and that it would discharge them all. This claim raises a seriously contested issue. The court found that such an agreement was made.
This mortgage was executed on March 4, 1914, and was for $12,-000. It was not then delivered nor was the transaction then complete. It was all in negotiation. Ornes was falling behind and the banker at Warroad was trying to finance the deal by letting a first mortgage go to the Gregory Co., and taking a second one himself or getting it taken by others, thus getting Bowe-Burke paid and the liens discharged. Negotiations were protracted, the amount and terms of the mortgage were changed, security was added, and all was in confusion, a work of so great labor was it to frame this mortgage. A mass of correspondence tells in an indefinite way what was done. One time or another the deal was practically broken off. There was some talk of including the hotel furniture. The BoweBurke contract price was $25,370 and extras brought it up to $25,-466.50, and there was due it, on the basis of a completed construction, $16,958. The mortgage was finally reduced from $12,000 to $9,000 by an arbitrary credit on the original mortgage, it being agreed that the amount of the loan should be $9,000. The insurance was arranged. The surety bond given by Bowe-Burke to Ornes was assigned to the Gregory Company. A farm which Ornes had homesteaded was put into the mortgage. The proceeds of the mortgage, amounting to $8,500, were paid to Bowe-Burke Co. about April 4, 1914. At that time it had received from Ornes in cash and by way of allowances $8,098, and when the $8,500 was paid
The evidence is indefinite and uncertain as to just what the status of the mortgage was to be. It is unreasonable to suppose that the Gregory Co. would take a second mortgage on this property with all the liens outstanding. The Bowe-Burke Co., when the work was complete, would have a- first lien of some $17,000. But Ornes was behind and it was in trouble. The liens of the subcontractors had to be paid. There was some reason why it might find it advisable to get $8,500 in cash and- let the mortgage take first place. The court has found that the understanding was that the Gregory mortgage was to be first and that Bowe-Burke agreed that it should take precedence of the lien claims and that it would discharge them. Its finding is sustained.
2. Counsel claims that a judgment in a mechanic’s lien foreclosure cannot be entered in the first instance in favor of the lien claimants and against the principal contractor, nor until the sale of the premises subject to the lien. In this we agree with counsel. The principle is settled by Thompson v. Dale, 58 Minn. 365, 59 N. W. 1068. As we read the judgment entered it is not a judgment which can presently be docketed and. personally enforced against Bowe-Burke Company. It is an adjudication of the amounts due and of the priorities with a determination of the relative rights of the parties. Npon the coming in of the report of sale there will be judgment and execution for such deficiencies as there may be. This we think is the fair construction of the judgment; and the construction we give is the law of the case and determines what the parties may do under the judgment entered.
3. The court adjudged liens to the amount of $4,292.10, exclusive of interest and costs, to be first liens, the sum of $3,470 hereafter mentioned being of equal priority but not adjudged to be a lien, the $9,000 Gregory Co. mortgage with interest and costs a second lien, and the balance remaining due to Bowe-Burke Company, $8,868.50, exclusive of interest and costs, a third lien. The so-called first liens were direct obligations of the Bowe-Burke Co., and if paid,
4. The contract between Bowe-Burke Co. and Peter Ornes was the form of contract in general use by builders and architects and contained this provision in typewriting':
“In the event it is the desire of the owner to have a surety bond on this work, same will be furnished by the contractor and paid for by the owner.”
Ornes afterwards decided that he wanted a surety bond and requested it from the Bowe-Burke Company. It was given and the Bowe-Burke Company paid $126.85 for it. It claims that it has a lien for the cost of the bond. We are of the opinion that the cost of the bond is not a lienable item. If it had been included in the general contract price it might be. It is recoverable from Ornes but it is not a lienable claim. It is not apparent that the respondents are much concerned in this point, but their position seems correct.
5. The mortgage includes a quarter section of land. The court denied the appellant’s motion to so find. The judgment, however, gives the appellant a right to subrogation to this mortgage. If a contingency arises making the mortgage available to Bowe-Burke
No statutory costs.
Order and judgment affirmed.