We are asked here to determine whether a real-estate mortgage in excess of the value of the lot described therein, given to secure a construction loan recorded prior to the commencement of any work or the furnishing of any material, has priority over subsequently filed mechanics’ liens. We hold such mortgage has priority.
Plaintiff, holder of the real-estate mortgage, brought this action to foreclose. Mortgagors and all materialmen who had filed mechanics’ liens were made defendants. All defendants except Iowa Lumber Company and Johnson County Ready Mix defaulted. Ottumwa Brick & Tile Company did not file its mechanic’s lien until after the foreclosure action was commenced. It intervened, but for our purposes here it will be referred to as a defendant. The trial court interpreted the mechanic’s lien statutes as awarding priority to the mechanics’ lienholders. The mortgagee has appealed.
Two houses on two separate lots are involved. Although the dates and amounts vary, the essential factors are identical. The facts will be stated broadly enough to apply to both. Mr. and Mrs. Campbell are the owners of the lots. Mr. Campbell is in the contracting business and built both houses. Prior to the commencement of any work, they arranged to borrow money from plaintiff for part of the purchase price of the lots and the construction of homes thereon. The amount of the loans were more than four times the value of the vacant lots on which the mortgages were given. The mortgages were duly recorded.
Later, defendants furnished materials to Campbell on open *146 account which were actually used in the construction of the homes. The loan proceeds were disbursed through the attorney for plaintiff. A portion was used for partial payment on the lots. Some went to materialmen for which mechanic’s lien waivers were received, but the largest disbursements went to Mr. Campbell directly. These disbursements to him were made before the ninety-day period for filing mechanics’ liens had expired. Defendants did not file their liens until long after the ninety-day period.
I. Priority as between this mortgagee and the mechanics’ lienholders must be determined by a consideration of the following sections of the 1962 Code of Iowa:
“572.18 Mechanics’ liens shall be preferred t0‘ all other liens which may attach to or upon any building or improvement and to the land upon which it is situated, except liens of record prior to the time of the original commencement of the work or improvements, * *
“572.20 Mechanics’ liens, including those for additions, repairs, and betterments, shall attach to the building or improvement for which the material or labor was furnished or done, in preference to- any prior lien, encumbrance, or mortgage upon the land upon which such building or improvement was erected or situated.”
“572.21 In the foreclosure of a mechanic’s lien when there is a prior lien, encumbrance, or mortgage upon the land the following regulations shall govern:
“1. Lien on original and independent building or improvement. If such material was furnished or labor performed in the construction of an original and independent building or improvement commenced after the attaching or execution of such prior lien, encumbrance, or mortgage, the court may, in its discretion, order such building or improvement to be sold separately under execution, and the purchaser may remove the same in such reasonable time as the court may fix. If the court shall find that such building or improvement should not be sold separately, it shall take an account of and ascertain the separate values of the land, and the building or improvement, and order the whole sold, and distribute the proceeds of such sale so as to secure to the *147 prior lien, encumbrance, or mortgage priority upon the land, and to the mechanic’s lien priority upon the building or improvement.
“2. Lien on existing building or improvement for repairs or additions. If the material furnished or labor performed was for additions, repairs, or betterments upon any building or improvement, the court shall take an accounting of the values before such material was furnished or labor performed, and the enhanced value caused by such additions, repairs, or betterments; and upon the sale of the premises, distribute the proceeds of such sale so as to secure to the prior mortgagee or lienholder priority upon the land and improvements as they existed prior to the attaching of the mechanic’s lien, and to the mechanic’s lienholder priority upon the enhanced value caused by such additions, repairs, or betterments. In case the premises do not- sell for more than sufficient to pay off the prior mortgage or other lien, the proceeds shall be applied on the prior mortgage or other liens.”
In spite of frequent comments by this court on the confusing and conflicting language of these sections, they have, with one exception, hereinafter discussed, remained in substantially the same form since their enactment in 1876 by the Sixteenth General Assembly. The courts have consistently interpreted these sections, albeit occasionally with reluctance, to grant priority to the prior lien when the premises are sold as a unit and the proceeds are insufficient to pay off the prior liens. German Bank v. Schloth (1882),
The language most frequently considered controlling in the cited cases is the last sentence of the quote set forth above: “In case the premises do not sell for more than sufficient to pay' off the prior mortgage or other lien, the proceeds shall be applied on the prior mortgage or other liens.”
Three distinctive features of the instant case limit the number of cases which are directly in point. (1) This case involves a construction loan in which the lender loaned a sum of money known to be greatly in excess of the value of the vacant lots described in the mortgage with the expectation that the mortgagor would use the funds to construct improvements thereon. (2) The improvements were original and independent buildings, not additions or repairs to existing buildings. (3) It was stipulated they were not removable and should be sold as part of the real estate.
The first opportunity we had to consider the statutes enacted in 1876 was in German Bank v. Schloth (1882),
“Counsel for Graves argue that such a construction should be put upon the whole section, that upon a sale of the property, whatever sum may be realized, an accounting shall be had as to the enhanced value caused by the' additions, and as to the value of the property before they were made, and the materialman shall have a prior lien upon the amount thus ascertained as to the enhanced value covered by the additions, and the mortgagee, or other prior lienholder, shall have a prior lien upon the amount of the value of the property before the additions. But this construction is in conflict with the plain language of the provision above quoted. Counsel’s arguments are based upon the justice of the construction, and the fact that it seems to be in accord *149 with other provisions of the section. This may all be. The plain language we have quoted must be regarded as a limitation upon the language preceding it in the same section, to the effect that if the premises do not sell for more than enough to pay off the prior mortgage or other lien, the accounting and distribution of proceeds of sale shall not be required. In this view it is not in conflict with any other words of the statute. We must enforce the provision as it reads and cannot wrest its meaning on the ground that another construction would be more equitable, and would not be in conflict with other provisions of the same statute. It must be admitted that par. 4, section 2135, is obscure and capable of adverse construction. The interpretation we adopt gives more nearly full effect to all its language, ut res magis valeat quam pereat. It also gives the language -quoted the force of a proviso which has- effect without being directly contrary to the purview of the statute, though limiting its application. This is the office of a proviso. A different interpretation would wholly nullify the language under consideration.”
In Curtis Bros.
&
Co. v. Broadwell (1885),
“It cannot be doubted that, if this section does not stand in the way, a prior mortgage will prevail against a subsequent mechanic’s lien for buildings or improvements which become a part of the realty. Under the plain language of the section, it is obvious that the same rule applies alike to improvements, betterments or additions to buildings, and to new and independent structures. It cannot be questioned that the building for which the materials were furnished by plaintiffs did become a part of the real estate. They are therefore subject to the mechanic’s lien, imder the rule of German Bank v. Schloth.”
These cases were followed consistently in many decisions including Kiene v. Hodge (1894),
Appellees concede this was the rule until the Extra Session of the Fortieth General Assembly in which the Code Revision of 1924 was enacted. Prior to the Code of 1924 the
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lauguage of sections 572.20 and 572.21 was contained in one subsection. The identical language was reenacted but was divided into its present form. It is appellees’ contention the placement of the provisions relating to new construction in a separate sub-paragraph from the provisions dealing with additions and repairs has the effect of making the troublesome last sentence apply only to additions and repairs because it appears only in that subsection. We disagree with appellees’ contention for three reasons. (1) “Compilation and codification are not legislation. The intention to accomplish a change in the meaning and effect of a statute by a revision must be clear and unmistakable.” Concurring opinion in Jones v. Mills County,
II. A contention similar to the one urged upon us here was made in Jones v. Mills County, supra. In this case, which also involved the 1924 Code revision, we said on pages 1379, 1380:
“While the law as it now appears in a separate section (6962) might be so understood, upon investigation it will be found that sections 6960, 6961, and 6962 were originally all in one section bearing the title ‘Unknown or Deceased Owners’, (see section 1353, Code 1897) and this meaning is traceable in all the corresponding sections back to section 461, Code 1851. The law was separated into three distinct sections by the editors of the Code of 1924, but there is nothing to indicate that the legislature intended to change the meaning which this court had for many years applied to this provision of the statute.
“In the case of Dennis v. School District,
“See, also, In re Will of Evans,
See also: State v. Oge,
Here, there is nothing but the editorial division to indicate legislative intent. This is not sufficient to clearly show the legislature intended, by this procedure, to make such a fundamental change in the law which had existed for 50 years.
III. There is force and logic in the statutory interpretation urged upon us by appellees. Had there been such painstaking research in Anfinson v. Cook (1938),
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Appellees point out correctly that Crawford-Fayram Lumber Co. v. Mann (1927),
Even though the authority upon which the Anfinson decision is baaed was misconstrued, the cases cited in Division I show we have consistently awarded priority to the prior lienholder. The legislature has had forty years and twenty regular sessions to change these frequently castigated sections of the Code, but has not seen fit to do so. The Uniform Commercial Code enacted by the Sixty-first General Assembly makes no changes in the mechanic’s lien law as it relates to real estate. It cannot be said the legislature is dissatisfied with the interpretation placed on these sections by this court.
“Where a particular interpretation has been placed on a statute by the court, and the legislature at its subsequent meetings has left the statute materially unchanged, it is presumed that the legislature has acquiesced in that interpretation.” 82 C. J. S. 549, Statutes, section 316. It has been held failure to amend a statute for twenty years raises a strong presumption of legislative satisfaction with the interpretation given it by the courts. Ex parte Rogers,
In the face of this inaction by the legislature in such an important and active field of law, we are reluctant to change an interpretation with which the construction industry, the financial institutions and their legal advisors have lived for nearly ninety years.
“It is of greatest importance that the law should be settled. Fairness to the trial courts, to the legal profession, and above all to the citizens generally demands that interpretations once made should be overturned only for the most cogent reasons. The law should be progressive; it should advance with changing* conditions. But this does not mean that its forward progress should be over the dead bodies of slain and discarded precedents. Legal authority must be respected; not because it is venerable with
*153
age,
but because it is important that courts, and lawyers and their clients may know what the law is and order their affairs accordingly.” Stuart v. Pilgrim,
IY. We do not believe “cogent reasons” found by the court in the Pilgrim case to require a change in statutory interpretation are present here. Support for the present interpretation can be found in the conflicting and confusing provisions of the statute. This is an area in which it is more important that the settled law remain settled than that our interpretation be changed to one which may, in some instances, be more equitable.
Equities which might favor a mechanic’s lienholder whose work or material has enhanced the value of the security of a prior lienholder are not present in a construction loan. There is no inequitable windfall of increased security here because the loan was made with the expectation that the proceeds would be used to construct the improvement. The mortgagee was counting on the improvement to provide adequate security for the loan.
The prior lien must, of course, be recorded before it takes priority. A laborer or a supplier can protect himself by examining the records before furnishing labor or material on the project in question and by making satisfactory arrangements for payment. This results in no greater inequity than is likely to occur under any of our statutes in which a person is charged with notice of transactions properly recorded.
Appellees argue the mortgagee is in effect a trustee of the loan proceeds of a construction loan for the benefit of the materialmen and its conduct in paying the loan proceeds to the mortgagor directly was so inequitable the lienholders should prevail regardless of the statutory interpretation. We do- not agree. Mortgagee’s duties to the public were discharged when it complied with the recording statutes. It is not required to disburse the funds in any particular manner. This is not to say material-men could not by taking appropriate action place the mortgagee in the position of a trustee. A trustee relationship, however, does not automatically grow out of a construction loan.
There is no showing these lienholders relied on the funds in the hauds of the mortgagee or their mechanics’ liens. Failure to *154 file the liens until long after the 90-day period had expired, and in one instance until after the foreclosure was commenced, indicates, they were relying on Campbell’s credit rather than any * lien rights they might have had.
Y. Of the nine cases cited by appellee in which priority was accorded the mechanic’s lien, four involved independent buildings which were determined to be removable. Tower v. Moore (1898),
For the reasons hereinabove set forth, this ease is herebjr reversed and remanded to the trial court for judgment in accordance herewith. — Beversed and remanded.