Middletown Savings Bank v. Fellowes

| Conn. | Feb 15, 1875

Foster, J.

The contention in this case is as to priority of lien ; the plaintiffs claiming as mortgagees, and the defendant Phelps under a mechanic’s lien for materials 'furnished and services rendered.

The claim of each party is founded in the highest equity. The amounts involved are large, so large that the property, though found to he worth $50,000, is insufficient for their payment. ¥e have endeavored to give the question that careful consideration which its importance demands.

On the 12th of June, 1869, the premises in question belonged, and for a long time previously had belonged, to the lato Mr. R. C. Smith. On that day he conveyed the same to Messrs. II. &, S. Bissell—they to Mr. Fellowes, one of the defendants, and he, by deed of mortgage, to the plaintiffs, as security for a loan of money then made by them to him. That money was used in payment for the property. These deeds of conveyance were all delivered on the same day, at one interview, and in the order here given. The committee finds that the whole was substantially one transaction. The deeds were all taken to the town clerk’s office for record at the same time, by Mr. Camp, the plaintiffs’ treasurer. The bank had previously agreed to make the loan, provided the title was satisfactory, without any knowledge that the proceeds of the loan were to be applied in payment for the property. Such application of the money was not a condition of making the loan, and though Mr. Camp knew that such application was to be made, at the time he took the mortgage deed, neither he, nor any other officer of the bank, know it before. The examination of the title, on the 12th day of June, 1869, by Mr. Camp, showed that Mr. Smith had a good title; and the deeds from him to the Bissells, and from them to Fellowes, made a clear and unincumbered title in him on the record.

The Messrs. Bissell liad made a contract to purchase the premises in question of Mr. Smith, some time prior to the making of the conveyance. And they had contracted to sell the premises to Mr. Fellowes, and had given him a bond 'for a deed dated September 19th, 1868.

On the 1st of May, 1869, by the consent and permission of Mr. Smith, who was then in possession of the premises, and who remained in possession till June 12th, 1869, Mr. Phelps, one of the respondents, under a parol contract with Mr. Fellowes, commenced furnishing materials for the construction and repairs of the buildings and fences. On that day a quantity of lumber was delivered on the premises by him for that purpose. On the 13tli of May, Mr. Phelps made a small charge for cartage, and on the 15th, he commenced work on the promises, which continued from day to day to the 12th of June following. The labor done, prior to the 12th of June, was wholly on the fence which enclosed the lot; nothing was done on the buildings. Mr. Phelps afterwards continued to furnish labor and materials for the buildings till November 29th, 1870. The certificates of lien were filed January 27th, 1871.

The contract for the work and materials was wholly oral. There was no understanding as to the amount of labor to be performed or of materials to be supplied; the same was to depend upon the directions of Mr. Fellowes, from time to time, but the whole job was to be done by Mr. Phelps. The amount actually expended in work and materials was largely in excess of what either party anticipated at the commencement.

Which of these liens is now entitled to the priority? We think that of the mortagees. The principle is well established in this state, that our land records should show the title to real estate. The experience of every year shows this to be a wise and salutary policy. It has no doubt been impaired, to some extent, by our statute giving a lien to mechanics and material men, which statute of course is to be enforced according to its true intent and meaning. That the records should continue to show the title to lands, is also a rule still to be enforced, unless there are controlling reasons to the contrary.

We think that these mortgagees, the present plaintiffs, on the 12th of June, 1869, on the delivery to them of the deed of Mr. Fellowes, took the title of Mr. Smith, who, up to that time, was well seized and possessed of the premises. It stands on the same ground, substantially, as though the deed had been given the plaintiffs directly from Mr. Smith himself. There were, it is true, intermediate conveyances,, but the committee finds that the whole was substantially one transaction.

That the plaintiffs, under these circumstances, supposed they had obtained the first lien on the property, and that their grantor, Eellowes, intended to give them such a lien, and supposed he had done so, cannot, we think, reasonably be doubted. It is incredible that' the plaintiffs would have loaned $30,000 on this property had they supposed that the defendant Phelps had already a lien upon it, which, when his work was finished, would amount to nearly $40,>000. To charge Mr. Eellowes with a design to give this mechanics’ lien a priority to the mortgage is imputing to him a design to commit a fraud. He must have known that the plaintiffs would not have made the loan except on the faith that he conveyed to them a clear unincumbered title, according to the covenants in his deed. The case does not find that the money loaned was to be applied in payment for the property, but we think it does find that Mr. Eellowes received a clear title, and was to convey a clear title.

The claim of Mr. Phelps, being for materials furnished rand labor done, is, as we have already remarked, one of the highest equity; but the lien for its payment must attach to the premises, subject to the lien created by the mortgage. Mr. Pfielps must be presumed to know, that on the 1st of May, 1869, when he commenced furnishing the materials and began work on the fence, Mr. Eellowes had no legal title to the property. Indeed the case finds as much in the words—“ Said Phelps supposed that Eellowes would acquire a good and unincumbered title.” Even his bond for a deed was not from Mr. Smith, the owner of the estate, but from the Messrs. Bissell, who had only a contract or bond for a deed. Precisely what interest this gave Mr. Eellowes in the land, or whether it gave him any, we do not think it necessary to determine. It can hardly be said that he had a perfect, equitable title, before he paid or offered to pay the Messrs. Bissell the purchase price of the property, after they .became possessed -of the legal title.

That an equitable title, under certain circumstances, will uphold a mechanics’ lien, was recognized by us in the recent case of Botsford v. N. Haven, Middletown & Willimantic R. R. Co., 41 Conn., 454" court="Conn." date_filed="1874-10-15" href="https://app.midpage.ai/document/botsford-v-new-haven-middletown--willimantic-railroad-6579904?utm_source=webapp" opinion_id="6579904">41 Conn., 454. In that case, Blakeslce, the owner of the land, offered to give' it to the company if they would locate a depot upon it. The company agreed to the terms, erected the depot, and employed the plaintiff, Botsford, to build the chimneys and do the plastering for the building. He did the work, and filed his lien. We sustained it as against the company, and against mortgagees of the company. The work thus done was necessary to perfect the equitable title of the company to the land, being in effect a part of the purchase price. Till it was done the company had no claim to have the legal title conveyed to them; and so, when it came, that title only could come charged with the lien. The owner of the land consented to a decree against him.

Now the acquisition of the title, equitable and legal, to these premises, by Mr. Fellowes, and his mortgage ot the same in fee to the plaintiffs, was all one single transaction. Even if Mr. Phelps, prior to this time, June 12th, 1869, had furnished materials, or had done work which would entitle him to a lien, there was no point of time in which that claim for a lien could slip in and take precedence of the mortgage. No work however had been done on the buildings prior to this time, but only upon the fence around the lot. There are serious doubts, to say the least, whether that furnished grounds for a lien.

If Mr. Phelps supposed that Mr. Fellowes would acquire a good and unincumbered title, the land records were open to him, and he could readily have seen, any time after the 12th of June, 1869, that simultaneously with acquiring title Mr. Fellows had conveyed it, free from incumbrances, to these plaintiffs. If he had counted on his lien on the property as his security for materials furnished and labor done,, prudence certainly would seem to have dictated that, on learning these facts, he should have terminated his work. The amount of his charges was then comparatively small. Instead of ending his work however he continued it. He did much more. “ The amount actually expended in work and materials was largely in excess of what either party anticipated at the commencement.” We might perhaps be warranted in saying that if a new contract was not entered into, the old one was so changed and enlarged as hardly to be recognized. By the first arrangement, the barn on the premises was to be repaired. That plan was given up, and a new barn was built. It is by no means certain that had the original understanding as to the amount of expenditures been carried out, the property would not have been ample to pay both these incumbrances. Could the mechanics’ lien, equitably, be thus increased to the prejudice of the mortgagees ?

We certainly shall regret the fact, should it prove to be so, that the defendant Phelps should fail to obtain payment for his labor and materials. Still, we are of opinion that the plaintiffs, the mortgagees, are entitled to priority of lien. There are numerous cases which bear upon the question, directly or remotely, and the weight oí authority, we think, strongly supports the views we have here expressed. We refer only to Thaxter v. Williams, 14 Pick., 49; Holbrook v. Finney, 4 Mass., 568; Hayes v. Fessenden, 106 Mass., 228" court="Mass." date_filed="1870-11-15" href="https://app.midpage.ai/document/hayes-v-fessenden-6416330?utm_source=webapp" opinion_id="6416330">106 Mass., 228. The statutes of different states, upon this subject, differ somewhat in their phraseology and meaning, and so decisions in one state may not be strictly applicable in another.

The Superior Court is advised to render judgment for the plaintiffs, and to pass a decree in conformity with the views here expressed.

In this opinion Carpenter and Phelps, Js., concurred; Park, C. J., and Pardee, J., dissented.