261 F. 810 | S.D. Ohio | 1919
The bankrupt company purchased certain real estate on which to erect a building for the conduct of its business. Jones, its vice president and one of its directors, advanced it money and also became liable for a considerable sum on its notes. The money and the proceeds of the notes were applied toward the construction of such building, the contracts for which were made by the company. On April 27, 1917, he took a deed to the premises from the company, at which time he executed and delivered to it an instrument which recites that the title to the real estate was held by him as trustee as security for advancements made and to be made to the company and to secure him for liabilities incurred by him on its notes and other obligations, and that he would reconvey the premises to the company whenever he was repaid and relieved from liability or so secured by second mortgage as would protect him. Such instrument was not recorded, but his deed was duly entered of record, after which work on the building proceeded under previously made and partly fulfilled contracts.
In early November, the company, believing it could sell enough stock to clear up its indebtedness asked for a reconveyance of its property. An accounting was had between Jones and the company about November 5, and it was found that, after deducting his unpaid stock subscription, there was due him $95,500. It was agreed that he should reconvey the property and should receive “a vendor’s lien” for the sum due him. About November 19 notes were given him by the company for the above named amount, and at the same time he executed and delivered a deed to the corporation for the premises, in which deed the notes were described, and the amount thereof by some provision (apparently adequate, but not appearing in the record) made a lien on such realty. On December 14 the company made a contract with Yoerger for certain electrical work on the building, on the performance of which Yoerger entered on the day following, and which he fully completed on February 20, 1918.
The company did not file for record its deed from Jones until January 16, 1918. At the time of the delivery of such deed there was due from tiie company about $16,000, of which Jones was ignorant. The sum ripened into mechanics’ liens, none of which are here in dispute. Yoerger perfected a mechanic’s lien on the premises for the unpaid sum due him. The referee held the lien of Jones to be superior to that of Yoerger, and that Yoerger should prorate with
Whether his deed to the company with such reservation is, under the circumstances surrounding its execution, in fact a new mortgage for a new consideration, within the rule stated in Walters v. Walters, 73 Ind. 425, 429, 430, and Jones, Mortgages (5th Ed.) ,§ 527a, need not be decided. A vendor’s lien is invisible, and not recordable, and is not the same as the express lien often reserved in deeds, or conveyances for the payment of purchase money, or as strict mortgages or deeds of trust securing it, or as security held by a vendor who has duly given a title bond, or as a lien reserved in a deed for money advanced or loaned. White v. Downs, 40 Tex. 225, cited in 29 Am. & Eng. Ency. Law, 734.
If is indispensably necessary to the existence of a vendor’s lien that the parties should stand in the relation toward each other of vendor and vendee of real estate, the purchase money of which has not been wholly paid. The pure relation of debtor and creditor, or of buyer and lender, is incompatible with the existence of this species of lien, which is not the result of any agreement or any intention of a vendor or vendee, but is a simple equity raised by the courts for the benefit of the vendors of real estate. Hecht v. Spears, 27 Ark. 229, 11 Am. Rep. 784, 786; Royal Consolidated Min. Co. v. Royal Consolidated Mines, 157 Cal. 737, 110 Pac. 123, 137 Am. St. Rep. 165, 172; Tiernan v. Beam, 2 Ohio, 383, 384, 385, 15 Am. Dec. 557; Neil v. Kinney, 11 Ohio St. 58, 66, et seq.; Whetsel v. Roberts, 31 Ohio St. 503, 505; Chilton v. Braiden’s Adm’x, 67 U. S. (2 Black) 458, 460, 17 L. Ed. 304.
We are not here concerned with a vendor’s lien, or with the ordinary , mortgage loan made by a lender to a mortgagor after the commencement of an improvement on the lots purchased, or a mortgage to secure unpaid purchase money for real estate conveyed by a vendor to a vendee. The lien which Jones has is for money advanced by him, prior to the execution of the deed in which his lien is reserved, for che erection of the bankrupt’s building.
“They [the several mechanic’s liens] shall be preferred to all other titles, Hens or incumbrances, which may attach to or upon such construction, excavation, machinery, or Improvement, or to, or upon the land upon which they are situated, which shall either be given or recorded subsequent to the commencement of said construction, excavation, or improvement.”
The above section thus abrogates the previously existing rule as to mortgages given after the performance of work or the furnishing of material by one or more contractors and before work is performed or material furnished after such mortgage has been given, for which former rule and its application see Choteau v. Thompson, 2 Ohio St. 130; Ohio Savings, Loan & Investment Co. v. Johnson, 10 Ohio Cir. Ct. Dec. 752 (20 Ohio Cir. Ct. R. 96); Treadway & Marlatt’s Ohio Mech. Lieu Law, pp. 122, 131, 147.
An order may be taken in accordance with the foregoing.