157 N.W. 834 | N.D. | 1916
Lead Opinion
This is a trial de novo, and the facts upon which this ■opinion is based are either undisputed or determined by us. The defendant coal company at all the times hereinafter mentioned was the owner of the N. W. of section 15, 156-94, and apparently was the lessee of the N. E. ¿ of section 16, adjoining. This latter tract is a ■school section. On the 13th of November, 1908, the coal company made a contract with the St. Anthony & Dakota Elevator Company to furnish ■certain building materials to the value of $1,145.90, which were to be used in erecting buildings at or near the opening of the mine. The first •of the lumber was furnished November 13th and the last, December 24, 1908. All of said lumber was used in the erection of a cook house, bunk houses, entrance shed, engine house, dining room, and barns, but said buildings were placed upon section 16, adjoining, being some 200 feet from the line. There is no evidence that any of the lumber was used in the coal mine upon section 15, the testimony being that native trees were cut for posts for this purpose. The first' consignment of lumber was upon the grounds on the 13th of November, 1908. On the 8th of December, 1908, the coal company made, executed, and delivered a real estate mortgage upon said N. W. jjj of section 15, securing the sum of $2,-■500. Through a clerical error the description was written the S. W. ■£ instead of the N. W. and the same was recorded with the register of ■deeds on the 11th of December, 1908. The managing agent of the loan company did not visit the premises before taking the loan, but testifies that he was vice president and treasurer of the plaintiff company; that he personally negotiated the loan represented by the note and mortgage in this case; that his negotiations were with Mr. Kay, the manager of the coal mine; that before making the loan he made no inspection whatever ■of the property.
He was then asked:
Q. Did you learn from Mr. Kay or anybody else at the time that the loan was made, that there was being material furnished by the defendant or anybody else for the construction of the buildings or other improvements on the N. W. \ of section 15 ?
(The question was read.)
A. No, sir. I did not.
Q. You understood that there was being material furnished for the improvements on the mining property ?
A. Yes, sir.
Q. And did you know, or were you informed at that time by Mr. Kay or anybody else, that a part of their mining property was in section Id or any other than the land covered in the mortgage ?
A. Yes, sir.
Q. When did you first see the mining property in question ?
A. I think it was — it was the following spring or summer. The summer of 1909.
Q. You were out there, went in and saw the place?
A. Yes, sir.
Q. Hid you go into the mine out there ?
A. Yes, sir. I went all through it.
Q. On either of these occasions what, if any, improvements in the way of buildings or other improvements in which building material of any kind was used did you find oh the northwest quarter of 15 ?
A. There were no buildings or any improvements whatever on the northwest of 15 or any material was used outside.
Q. When you first visited the mining property or this property which you had this mortgage on in June, 1909, did you observe the buildings in connection with the mining camp there ?
A. I did.
Q. In what direction from the northwest of 15 were the buildings of the mining company at that time ?
A. West from the northwest quarter of 15.
Q. When you were out there last Saturday, was it for the purpose of having the lines between these two quarter sections run, and determine on what property these buildings -were ?
A. Yes, sir.
A. No, sir.
Upon cross-examination:
Q. I believe you said at the time this mortgage was made you knew about the material being furnished to the coal mine, did,you?
A. I didn’t know exactly what material or what was being furnished.
Q. You knew some was being furnished ?
A. I know that he had some bills that he had incurred that he had to pay with this money, but I didn’t know what bills they were.
Q. Did Mr. Kay give you the name of any of the people whom he was owing ?
A. I don’t remember that he did.
Q. You remember he stated to you he was owing the St. Anthony & Dakota Elevator Company any money?
A. I don’t think so, at that time.
Despondent insists that this evidence fails to show knowledge upon the part of Mr. Peck that materials were being furnished for which a lien might possibly be claimed upon section 15. It is true, Mr. Peck answers his own attorney to the effect that he did not know that a lien would be claimed on section 15, and he also testifies in the same manner that he did not know that- any materials were being furnished for use upon the northwest quarter of 15. This comes a long way, however, from denying knowledge that materials were being used upon the coal mine, and, in fact, he so states in the testimony above quoted: “You understood that there would be material furnished for the improvement of the mining property? A. Yes, sir.” His testimony as a whole convinces a majority of the court that he was in possession of such facts regarding this building material as constituted notice in law that a lien might be claimed. December 15th the mining company paid the elevator company $258.05, leaving a balance at that time of $887.85. No other payments have been made. On the 17th of February, 1909, the elevator company filed a mechanic’s lien describing the property as “a certain shed adjoining to entrance to mine, an engine
“1. If such buildings, erections or improvements are upon a single farm, tract or lot, upon' all such buildings, erections and improvements and the farm, tract or lot upon which the same are situated.
“2. If such buildings, erections or improvements are upon separate farms, tracts or lots, upon all such buildings, erections and improvements and the farms, tracts or lots upon which the same are situated; but upon the foreclosure of such lien the court may in the cases provided for in this subdivision, apportion the amount of the claim among the several farms, tracts or lots, in proportion to the enhanced value of the same produced by means of such labor, or materials, if such apportionment is necessary to protect the rights of third persons.”
We have set forth these various statutory provisions because we believe much of the confusion upon the subject of mechanic-lien law arises over the failure to notice the distinction between statutes in the various states. The mortgagee in his brief states its claims as follows: “The position of the plaintiff is that if the elevator company has a lien on the N. W. ¿ section 15, it is inferior to the lien of plaintiff’s mortgage, because the mortgage was taken in good faith without notice of any lien or any right to a lien in favor of the appellant.”
As already stated, our statute is more favorable to the lien than any of those announced in the notes; for it not only gives a lien for materials
(2) The next and most important question — the only one really .argued in the briefs — is whether the mechanic’s lien held by the lumber company is superior to the mortgage held .by the loan company. We have already cited our statute, § 6242, Rev. Codes 1905, Comp. Laws 1913, § 6822, reciting that the lien shall be superior to all encumbrances filed or docketed subsequent to the commencement of such
From tbe first case we quote: “One lien or tbe other must be superi- or ; and tbe legislature, in its wisdom, bas seen proper to require that tbe mortgagee should take care of tbe mechanic’s lien — usually insignificant in amount as compared with tbe mortgage — rather than that tbe mechanic, often a day laborer, should take care of tbe mortgage of tbe capitalist.-”
From tbe second case (Danner) we quote: “Tbe strife is between a mortgagee of real property and tbe bolder of a mechanic’s lien thereon. So far, tbe mortgagee bas been successful. . . . Tbe appellant does not challenge tbe correctness of this ruling, so far as tbe land itself is concerned, but insists that bis lien upon tbe building on tbe land is superior to that of tbe respondent’s mortgage. . . . Tbe statute gives tbe lien priority with respect to tbe entire erection.” In tbe Barras Case tbe court says: “Tbe sole controversy in tbe case is whether the mortgage constitutes a prior lien. . . . Plaintiff’s mortgage was executed and recorded on February 24, 1897. A building known as Tbe ‘French College’ was then in process of construction on tbe premises covered by such mortgage. Tbe building was commenced on December 9, 1896, and was not completed until March 24, 1898. Three mechanics’ liens were filed against tbe premises. 'They-were filed approximately a year after plaintiff’s mortgage was recorded, — tbe exact date not beiiig material, — and were for labor and material furnished long subsequent to tbe recording of tbe mortgage. ... If this were an action between tbe mortgagee and tbe lien claimants, in wbicb tbe latter were seeking to make their lien relate back, tbe principle would be applicable, and, undoubtedly, such lien claimants could, by appropriate proceedings, have claimed and established their liens as prior to tbe mortgage upon tbe strength of tbe fact that tbe building was being erected when tbe mortgage was given.” ,
From tbe St. John Case we quote: “It will be observed that tbe em tire controversy is between parties asserting conflicting interests in the
See also Kay v. Towsley, 113 Mich. 281, 71 N. W. 490; also four-case notes as follows: 12 L.R.A. 33; 13 L.R.A. 705; 14 L.R.A. 306; 2 L.R.A. (N.S.) 615.
It follows that the mechanic’s lien in the case at bar is superior to the mortgage if the mortgage was taken while the buildings were in course of erection. Upon this point we have already quoted the evidence. It is undisputed that the lumber was upon the ground on the 13th of November, 1908, almost a month before the mortgage was taken. We have also quoted the testimony of the managing agent of the loan company that, at the time the loan was made, he knew that buildings were being erected in connection with the coal mine, and that the property was on both 15 and 16. He also knew that the money was to be used in paying for these improvements. This, we think sufficient to show that the buildings were being erected at the time the mortgage was taken, and under the well-settled law the lien is superior to the mortgage.
(3) Section 6238, Eev. Codes 1905, Comp. Laws 1913, § 6818, above quoted, gives authority to the court, upon the foreclosure, to apportion the amount of the claim in proportion to the enhanced value of the tract if necessary to protect the rights of third persons. 'Whether the statute contemplates the assessment of a certain amount against the buildings when situated upon lands belonging to a stranger is not clear. However,
Concurrence in Part
(dissenting, but concurring in result). Do not draw the same deductions from the testimony of the witness Peck as have the majority. This witness has denied explicitly all knowledge that material was being furnished for improvements upon the northwest of 15. And there is no proof of knowledge on his part that this land in 15, upon which he supposed he had taken his mortgage, was used in connection with and as a part of the mining property on 16, as both the entrance to and the dump of the mine and all buildings adjacent to it were entirely upon section 16. The finding of fact upon which is predicated the decision (to quote from the majority opinion) — “his (Peck’s) testimony as a whole convinces a majority of the court that he was in possession of such facts regarding this building material as constituted notice in law that a lien might be claimed” upon the northwest quarter of section 15' — ■ seems to me to be utterly without foundation in the proof, unless the testimony be distorted and warped into something never intended by the witness. The simple fact that a loan of $2,500 was made by plaintiff upon this bare quarter section ought to be sufficient proof that plaintiff never suspected any possible facts existing that would warrant a claim by anybody of a mechanic’s lien upon improvements on this land, notwithstanding that he may have understood that the elevator company had furnished material for the improvement of a mining property upon a different section altogether and upon which a miner’s lien (as distinguished from a mechanic’s lien) perhaps might have been filed. As for knowledge that the loan was to pay outstanding bills, any business man would have a right to assume that the reason a loan is made is that the mortgagee may pay up his indebtedness. Nor can I see anything in Peck’s testimony to warrant any finding of evasiveness on his part, as would appear to be the conclusion of the majority from the emphasis that has been placed upon his statement that he did not know that a lien would be claimed on section 15, the property upon which he took his
Nor can I wholly agree to the construction of our mechanics’ lien laws as based upon the assumed hypothesis of notice had by plaintiff that materials were being furnished. These statutes are broad enough without indulging in any presumption of fact upon which to further extend them. And the construction announced seems to me to be an enlargement upon the statute already sufficiently broad. “The laborer is worthy of his hire,” and the materialman is likewise entitled to security for all improvements for which he has furnished materials, not only as against the purchaser of such materials, but as against those with actual notice of the source of such improvements, and also those who are by the improvements in course of erection constructively warned of the sale and use made of such materials; but further than this equity should not go toward awarding a preferential or privileged lien to the material-man. And as well illustrative of this, the only distinguishing feature
Under the proof and a proper construction of the mechanics’ lien laws, I affirm that had plaintiff taken its mortgage upon the northwest quarter of 15 and recorded the same in order that the materialman might have had constructive notice thereof before it perfected its mechanics’ lien thereon, the loan company’s mortgage would have had priority over this mechanic’s lien. Smith v. Barnes, 38 Minn. 240, 36 N. W. 346. A careful analysis of the very authorities cited in the majority opinion will refute the conclusions there drawn. L.R.A.1915E, 302, annotating Thompson-McDonald Lumber Co. v. Morawetz, 127 Minn. 277, 149 N. W. 300, is cited in the majority opinion. It illustrates the application made of authority. The case cited shows the extremes to which constructions enlarging mechanic’s lien laws may lead. Are we headed the same way and is this case not the opening wedge ? The following is from the annotator’s note thereto at page 302, viz.: “Under the rule adopted by the court in Thompson-McDonald Lumber Co. v. Morawetz, the owner is not safe unless he is protected by a bond, in settling with his contract- or after ninety days (or other period for filing liens) has expired since the -last delivery of material upon the premises, even if the record is
But it was as unnecessary to construe the mechanics’ liens laws in this case as it was to indulge in the assumption that the loan was made with notice of a right in the lumber company to an inchoate lien. The mechanic’s lien was fully perfected without notice of the mortgage and before any mortgage as to the holder of it was either created or recorded. As to the mechanic’s lien holder plaintiff’s mortgage was not created until the recording of the decree of reformation in 1912, while the mechanic’s lien had been perfected by filing the claim therefor in 1909. “The reformation (of a mortgage) was the creation of a mortgage as to the land which had been omitted from the mortgage as drawn,” as to intervening bona fide lien holders without notice. Chapman v. Fields, 70 Ala. 403. In Provost v. Bebman, 21 Iowa, 419, it is said: “This right of redemption might arise and exist on the ground that, by reforming tho mortgage so as to make it include property not before described in it there is in effect created a mortgage as to such property at least; and to hold that the prior decree of foreclosure barred the right of redemption would be to create a mortgage and cut off the equity of redemption at a single stroke. This a court of equity would not do.” See also White v. Schaffer, 97 Md. 359, 54 Atl. 974; Wheeler v. Kirtland, 23 N. J. Eq. 13; Blodgett v. Hobart, 18 Vt. 414; Hawkins v. Pearson, 96 Ala. 369, 11 So. 304; Davenport v. Sovil, 6 Ohio St. 459; Van Thorniley v. Peters, 26 Ohio St. 471; Straman v. Rechtine, 58 Ohio St. 443, 51 N. E. 44. With the law established beyond possibility of question, that the mechanic’s lien has priority over the mortgage because of the wrong description in the mortgage necessitating its reformation, making it as to the elevator company the subsequent creation of a mortgage thereby; and under the affirmative proof that the elevator company had no notice whatever that plaintiff had loaned upon the security of northwest quarter