39 Neb. 397 | Neb. | 1894
In this case the plaintiff filed a petition in the district court of Douglas county, Nebraska, praying the foreclosure of a mortgage on “lot No. fourteen (14), block three (3) of Summit Place, an addition to the city of Omaha, as surveyed, platted, and recorded, said lot being sixty-eight (68) feet front on Earnam street and one hundred thirty-two (132) feet on Thirty-first street, together with all the appurtenances thereunto belonging, in the sum of $4,761.27,” alleging that the same was given for a portion of the purchase price of the premises mortgaged. The mortgage contained the following statement in regard to its being given to secure a part of the purchase money: “ This mortgage being given to secure a portion of the purchase money of said premises.” The mortgage also contained the following statement in reference to incumbrances, and the use of the money derived from the prior mortgages to pay for improvements, thereafter to be placed upon the lots: “That they are free from incumbrance except as follows, to-wit: One mortgage on the west half of said lot for $4,000, payable five years after date and bearing interest at seven per cent per annum; one other mortgage of $200 on said west
Of the defendants, E. Lillian' Goodman filed an answer and cross-petition, asking the foreclosure of a mortgage on the “east half of lot fourteen (14), in block three (3), in Summit Place, an addition to Omaha, Nebraska, as surveyed, platted, and recorded, being a part of the southeast quarter of the northwest quarter of section twenty-one (21), in township fifteen (15), range thirteen (13) east, of the sixth principal meridian, with all the appurtenances thereto belonging,” being a part of the same property covered by the Lowe mortgage. The Goodman mortgage was in the sum of $3,500, and was one of the mortgages described in the Lowe mortgage and to which it was made subject. (See statement herein copied from Lowe mortgage, referring to this mortgage and its priority.) Eliza Marvin, guardian, filed a cross-petition, alleging ownership of the $4,000 mortgage to which that of plaintiff was made subject, covering a portion of the property included in the Lowe mortgage, “the west half of lot fourteen (14), in block three (3), in Summit Place, an addition to Omaha, Nebraska, as surveyed, platted, and recorded, being a part of the southeast quarter of the northwest quarter of section twenty-one (21), in township fifteen (15), range thirteen (13) east, of the sixth principal meridian, with all the appurtenances thereto
The several answers of the mechanics’ lien holders prayed for the foreclosure of the mechanics’ liens, and that they might be declared prior to the mortgages of Goodman and Bates, Marvin and plaintiff. Meyer & Raapke filed, an answer alleging the ownership of a judgment, against the principal defendant, John Riley, and praying that the judgment be established as a lien against the premises in controversy, etc., but on the trial discovered that the defendant Riley in this case was not the one against whom they had judgment and offered no proof.
John Riley, the principal defendant, did not answer and was defaulted. A trial was had and proof offered of the various mortgages and mechanics’ liens and evidence introduced bearing upon the question of the priority of the several liens of the mortgages and mechanics’ liens, and a decree rendered ordering the sale of the property to satisfy the liens and establishing their priority, as follows:
“The court further finds that the order of priority of the several mortgages and liens as above described is as follows:
“First — That the mortgage of defendant E. Lillian Goodman is the first lien upon the east one-half of said lot,*402 and the mortgage of David M. Marvin, testamentary guardian of Walter T. Marvin, a minor, is the first lien upon the west one-half of said lot.
“Second — The two mortgages of the defendant Charles C. Bates are the second lien on the said premises.
“Third — The mortgage of the plaintiff is the third lien upon said premises.
“Fourth — The mechanics’ liens of the defendants Nell Seiroe, Balfe & Reed, George A. Hoagland, Freeman J. Ham, the Omaha Coal, Coke & Lime Company, and McBryan & Carter are fourth in the order of priority, and are equal to each other in the point of priority and shall share pro rata.”
The case comes here on appeal by the several parties defendant who sought foreclosure of the mechanics’ liens, their complaint being against that portion of the decree in which they are postponed in priority to the mortgages in suit, and more particularly that of Sophia Lowe. , There is no claim made that the mortgages are not prior in point of time to the commencement of any labor or furnishing of material for the houses, either in the execution or recording.
The mortgages of Goodman, Marvin, and Bates were executed July 25, 1889, and recorded July 29, 1889. The mortgage to plaintiff was executed July 27, 1889, and recorded July 30, 1889, and no labor was performed on the houses or material furnished for them until the month of August 1889. Nor do the mechanics’ lien holders claim that they did not know of the existence of the mortgages, or that they were not informed as to their recitals and contents, but the contention is made that, inasmuch as the plaintiff waived her right of priority and allowed her. purchase-money mortgage to be postponed to the Marvin, Goodman, and Bates mortgages, under the statement in her mortgage that it was done in order that money might be obtained through the medium of the loans secured by the Good
The following facts are established by the evidence: That the sale from Sophia Lowe to Riley was effected between Riley and one Fred Lowe, who acted for Sophia Lowe; that the agreement between them was that the mortgage which was to be taken by plaintiff (the one sought
Section 1, article 1, chapter 54, Compiled Statutes, 1893, entitled “ Mechanics’ and Laborers’ Liens,” provides as follows: “Any person who shall perform any labor, or furnish any material or machinery or fixtures for the erection, reparation, or removal of any house, mill, manufactory, or building or appurtenance, by virtue of a contract or agreement, expressed or implied, with the owner thereof or his agents, shall have a lien to secure the payment of the same upon such house, mill, manufactory, or building or appurtenance, and the lot of land upon which the same shall stand.” It will be noticed that two of the necessary elements entering into a claim for a lien for the performance of labor or furnishing of material by virtue of this section are a contract, expressed or implied, and this with the owner of the property to be affected by the lien. It is not controverted in the case at bar that the parties declaring upon mechanics’ liens had furnished material or performed labor in the improvement of the premises sought to be subjected to ■the liens in this case, and it is admitted that the contracts for such labor and furnishing of material were made with John Riley, the owner of „ the premises. There is some testimony to the effect that the property was bought by his brother, Bernard Riley, and for some purpose was deeded to John. With this we have nothing to do here, and will hereafter refer to Riley, or John Riley, to whom the deed on its face was made, as the owner. The mortgagees in this casé were not in any sense owners of the premises upon which the buildings were erected. They derived no title to the property by the mortgages and no other or further right than if any default was made in their conditions, to 'subject the property by legal procedure to the payment of
In Phillips, Mechanics’ Liens [2d ed.], sec. 225, p. 378, the general principle governing contests for priority between lien-holders and mortgagees is stated as follows: “ The governing principle upon which the adjudications in contests for priority have been based is, that vested rights of purchasers or incumbrancers, and, reciprocally, the liens of mechanics, are not affected or displaced, when once attached, by other rights subsequently accruing. The priorities of each are jealously protected from hostile interference. The law imposes on mechanics, like other persons, the necessity to ascertain for themselves the nature of the interest in
In the case of Hill v. Aldrich, 50 N. W. Rep. [Minn.], 1020, a case in which the owner of a lot sold it on time with the understanding that the party purchasing was to build a house on the lot, the vendor to lend her $1,000, it was held “ that the vendor’s mortgage was bona fide and prior to any lien on the premises for material furnished to the vendee for the construction of the building;” and in the body of the opinion, Mitchell, J., in passing upon the case, says: “There is no ground for imputing to the phrase ‘bona fide,’ as used in this statute, any other than its usual and established meaning. Huntington certainly paid a full and valuable consideration for the mortgage. The arrangement between him and Mrs. Aldrich was one they had a right to make, and violated no rule of law or good morals. Mrs. Aldrich had a right to buy a lot on time and borrow money with which to improve it, and Huntington had an equal right to sell the lot on time .and also lend the purchaser the money with which to improve it. That the building would enhance the value of the mortgage security, and that this fact was the inducement for Huntington’s "selling on time and lending part of the money with which to construct the building, certainly cannot affect the good faith of the transaction, as no one could have been misled or deceived by it. The deed and mortgage were
In Morony’s Appeal, cited in' brief for appellee Sophia Lowe, 24 Pa. St., 372, the syllabus is as follows: “A mortgage given with a bond, and in common form and immediately recorded, and intended to secure the payment of a sum of money which the mortgagee then contracted to loan to the mortgagor for the purpose of enabling him to erect houses on the mortgaged property, and which was to be advanced in proportion to the progress of the work, is valid, though the contract of loan be not referred to in the mortgage, nor recorded; and it ranks as a lien for the amount loaned, from the date of its record and not from the date of the actual advances; and this is so though the mortgagor contracted to apply the money to the payment of the builders, and had, in part, failed to do so, and they had entered their liens;” and in the opinion it is stated: “If the owners of these liens trusted Montgomery without examining the state of the records, the law provides no relief from the consequences of their negligence, and morality does not demand that it shall and even charity will not allow it at the expense of more careful men. . If they did examine the records, then they found the lien of Cadwalader standing good against Montgomery, and honesty forbids
Since the commencement of this action this court has decided the case of Henry & Coatsworth Co. v. Fisherdick, 37 Neb., 207, in which decision it was held that where one furnishes money to build a house, for which he took a mortgage upon the premises whereon the erection was to be made, the record of such mortgage gave it priority to the rights of material-men and mechanics who began to confer value upon the mortgaged property after the record of the mortgage; and this was a case where the agreement was with the mortgagee to build on the lots mortgaged, and the money, the proceeds of the loan, to be held by the mortgagee and paid out only upon the presentation to it of receipted bills for labor and material, — a much stronger ease for and in favor of allowing 'the claims of liens prior to the mortgage lien than is the one at bar as between the Bates and Goodman, Marvin and Lowe mortgages, and the mechanics’ liens. (See also Platt v. Griffith, 27 N. J. Eq., 207; Choteau v. Thompson, 2 O. St., 114; Martsolf v. Barnwell, 15 Kan., 612; Wisconsin Planing Mill Co. v. Schuda, 39 N. W. Rep. [Wis.], 558; Crowell v. Gilmore, 18 Cal., 370; Mechanics Mill & Lumber Co. v. Denny Hotel Co., 32 Pac. Rep. [Wash.], 1073.) We believe the correct rule to be that the record of a bona fide mortgage entitles it to priority as a lien over the liens of mechanics and material-men, who, after the recording of the mortgage, commenced to labor upon or furnish material
We do not believe there has been anything shown which could require that the liens of the Goodman, Marvin, and Bates mortgages should be postponed to those of the mechanics’ lien holders; and as to Mrs. Lowe, Mr. Riley’s contract with her, set forth in her mortgage and.of record, plainly evidenced that she would have no control of the money to be obtained from the loans, or its appropriation; that she wholly relied upon him to fulfill his promise in regard to improvements and to use the loan funds in paying for them, and if he failed to do so, then she to be left with any remedy the law would afford her. The evidence does not show that any of the parties claiming liens for labor or material ever examined the records or made any investigation to ascertain the condition of the title, whether incumbered or not, or that there were any inquiries made; and the conclusion must be that they relied upon Riley as owner of the property and whatever lien they might be able to acquire and hold as against the premises; or if they in fact did examine the records (which the evidence does not disclose), they discovered that the plaintiff was relying solely upon the honesty and promise of Riley to apply the money loaned in the manner and to the purpose agreed upon, and in furnishing material and performing labor they placed reliance in the same condition of affairs and must be held bound by such action.
The counsel for appellants, the lien-holders, cite the case of Bohn Mfg. Co v. Kountze, 30 Neb., 719, and Millsap v.
We think the facts as developed in this case entitle the plaintiff’s mortgage lien to the position which she agreed it should take, and that the appellants have selected, by their own choice, their place in the list of liens and must keep it. We conclude the decree of the lower court was right and answered the demands of justice and equity in the case and it is
Affirmed.