300 S.W. 375 | Ark. | 1927
On March 1, 1920, J. H. Fine owned a five-acre tract of land, which he contracted to sell to C. H. Law for the sum of $1,500, of which $35 was cash in hand paid and the balance was to be paid in monthly installments of $35 each, all evidenced by the notes of *673 Law to the order of Fine, and bearing interest at the rate of eight per cent. per annum. The contract of sale provided that the title should remain in Fine until the consideration had been fully paid, and that, if Law should default in his payments, or any of them, Fine should have the option of declaring the contract void, and that "all sums paid thereon shall be forfeited to the said party of the first part as rent for said property, and as liquidated damages by reason of his possession of the same, and the said party of the first part shall be entitled to immediate possession of the said property, which the said party of the second part hereby agrees peaceably to yield." It was further provided in the contract of sale that if and when Law had made all the payments as agreed, Fine should convey the land to him by warranty deed.
Upon the execution of this contract and the payment of the $35 as there recited, Law took possession of the land, and he soon thereafter contracted with Dyke Brothers for certain material to be used in repairing an old building on the land which could not be occupied without the repairs. Dyke Brothers furnished building material to the value of $169.42, which Law used in repairing the building. Fine was aware of the fact, but was not a party to that contract. Law made two of the deferred monthly payments, and then defaulted, and failed thereafter to make any other payment. The building material was not paid for, and Dyke Brothers brought this suit, and alleged that they are entitled to a lien upon the said building and upon one acre of land surrounding it, and prayed that this lien be declared and foreclosed.
After Law made default, Fine elected to declare the sale contract void, and took possession of the land. After doing so, he sold the land to C. W. Dameron, who made application for a loan on the security of the land to a building and loan association. The building and loan association declined to make the loan unless and until Fine had indemnified it against the claim of Dyke *674 Brothers for a lien. This Fine did by making a cash bond in the sum of $175. Service was had upon Law by the publication of a warning order, and he made no appearance in the case. Fine answered, and set up the contract of sale above referred to, and alleged default thereunder, and denied that Law had authority to create a lien for any material used in the repairs or for other purposes.
The court denied the claim for a lien against the land, but adjudged that the plaintiffs were entitled to a lien on the $175 in the hands of the building and loan association, and directed the association to pay the money into the registry of the court in satisfaction of the plaintiffs' claim. Fine excepted to that order, and has appealed, and Dyke Brothers have perfected a cross appeal from the order refusing to declare a lien in their favor on the improvement and the adjacent ground.
The facts in the case of Gunter v. Ludlam,
What was there said on the question of estoppel is also applicable here. It was there said that mere knowledge on the part of the vendors that labor and material were furnished for the construction of the building, or even their consent thereto, in the absence of some affirmative act which indicated a willingness to subordinate their claim to that of the subsequent lienors, was not sufficient to operate as an estoppel. It was there further said:
"Ludlam was in possession of the property as a mortgagor, and had an alienable interest upon which he could create a lien, therefore his construction of the building and the creation of a lien for labor and material was referable to his own interest in the property, and acquiescence on the part of appellants as mortgagees did not constitute such an affirmative act as would operate as an estoppel to the claim of a superior lien."
The doctrine of that case was reaffirmed in the case of Judd v. Rieff,
"The effect of the sales and purchase contract under review, in equity, was to create a mortgage in favor of the vendor, Mrs. Judd, to secure the purchase money. Wicker, in effect, became the vendee and equitable owner and mortgagor and Mrs. Judd the mortgagee. Fairbairn v. Pofahl,
Dyke Brothers do not ask that their right to a lien be perfected to the extent of Law's interest in the land; on the contrary, the relief asked is that it be adjudged that they are entitled to a lien on the building into the repair of which their material entered and upon an acre of land surrounding the building. The court properly denied this relief.
Dyke Brothers insist, on their cross-appeal, that there was no vendor's lien in favor of Fine, as opposed to their claim for a lien as materialmen, for the reason that Fine has declared the contract void, and did not do this until after the material had been furnished. In reply to this argument it may be said, first, that Fine could not declare the contract void until Law had defaulted in his payments. The cases of Gunter v. Ludlam and Judd v. Rieff, supra, hold that no estoppel arises against the vendor who does no affirmative act to induce the lien claimant to advance the credit upon which the lien is claimed, and Fine did no affirmative act.
It is true, as cross-complainants insist, that Fine has declared the contract of sale canceled, but Law's rights are derived from the contract, and these rights were only those of a vendee in possession who had given a mortgage back as security for the debt, and, as was decided in the cases cited, the holder of this equitable mortgage has a lien superior to that of a lien claimant whose rights are derived from a contract with the equitable mortgagor, and, as we have also herein said, Dyke Brothers are not asking relief against Law's interest, but claim an absolute and paramount lien against the improvement and the land itself, but this, under the cases herein cited, they do not have. *677
In the case of Judd v. Rieff, supra, it was said that
"In Imboden v. Citizens' Bank,
Cross-appellants insist a lien should be declared in their favor on the building, for the reason that the testimony does not show that the improvement into which their material went is not separable from the original building without injury thereto. In answer to this contention it may be said, first, that we do not so understand the testimony. The material did not go into a new building separable from another which could be removed without injury to the existing building. On the contrary, we understand that the material was used in the repair of an old building, and was not a separable improvement. But, if the testimony does not establish this fact one way or the other, as cross-appellants insist it fails to do, they have to that extent failed to make the pro of required, for the burden is on them to prove facts entitling them to a lien. St. L. I. M. S. Ry. Co. v. Love,
While the court was correct in refusing to declare a lien on the land or the building, we think it was error to declare the cash deposited with the building and loan association as a bond subject to the demand of the lien claimants. The purpose of the cash bond was to indemnify the building and loan association. The bond was not executed for the benefit of Dyke Brothers, and they were not parties to it. The money belonged to and was deposited by Fine, and it is certain the statute gives no lien on money. To subject money belonging to Fine to the payment of the debt the court has, in effect, held *678 Fine liable for the debt, and there is no authority for so holding.
It follows therefore that the decree denying a lien against the land and the improvement should be affirmed, and the portion thereof subjecting the cash bond to the payment of the debt should be reversed, and it is so ordered.