173 Ind. 535 | Ind. | 1910
There was a decree in the court below marshaling the assets of a corporation organized for building purposes, whose sole property consisted of real estate with a theater building situate upon it. The property was ordered
This appeal is prosecuted by appellants Ward, Sweatman and the Harris Construction Company, who were in class B, and the Dollar Savings Bank and Trust Company, Trustee, of class C, against all the other parties to the decree in the court below, including John H. Dicken, receiver of the property.
The main suit was begun by Yarnelle, appellee, as a mechanic’s lien holder for a foreclosure of his lien. To this suit he made defendants the Dollar Savings Bank and Trust Company, Trustee, the National Bank of Wabash, and others. The banks filed cross-complaints, and all the laborers and materialmen filed cross-complaints, or independent suits to foreclose their liens. The parties designated under class A filed petitions in the main cause, in which a receiver had been appointed, to be allowed to remove the property put into the building by them. These independent suits were eonsoli
The appellants named in the assignments of errors are Ward, the Dollar Savings Bank and Trust Company, Trustee, Sweatman and the Harris Construction Company, and all the other parties to the decree below are named as appellees. The appellants have assigned errors separately under that designation of parties.
We are confronted at the threshhold of the ease by the motion of Dicken, receiver, to dismiss each of the appeals. He assigns as causes: (1) That the interests of Ward, Sweatman and the Harris Construction Company are adverse to those of the savings bank, and that neither of them has been named as appellee in the assignment of error of the savings bank; (2) that the latter has named no parties to the decree as either coappellants, or eoappellees. The same motion is addressed to the appeal of each of the other appellants.
So far as appellants Ward, Sweatman and the Harris Construction Company are concerned, no notice of the motion has been given. Ward was given priority over the savings bank, as were all the other parties below of classes A and B, and appellees here, but Ward, the Harris Construction Company, and Sweatman claimed more than they were awarded, so that in both ways they were adverse in interest to the savings bank, as was its interest adverse to them, and the interest of said bank, as well as the interest of the three other appellants, was adverse to all the other parties to the decree. The appeals of Ward and the Dollar Savings Bank and Trust Company, Trustee, were term-time appeals, and it was not necessary that any action should be taken as to their co-parties, or that they should be named either as appellants or appellees. §675 Burns 1908, Acts 1895, p. 179. Keiser v. Mills (1904), 162 Ind. 866; Gunn v. Haworth (1902), 159
By coparties is meant not coparties plaintiff or defendant, but coparties to the decree. Kaufman v. Preston (1902), 158 Ind. 361; Hadley v. Hill (1881), 73 Ind. 442; Hildebrand v. Sattley Mfg. Co. (1900), 25 Ind. App. 218.
The appeals of Sweatman and the Harris Construction Company were vacation appeals, and notice was given under §681 Bums 1908, §640 R. S. 1881. Therefore as to Ward and the savings bank it was not necessary that they make Sweatman and the Harris Construction Company appellees, because they join in the appeal, and assign errors along with the former, and all the other parties were named appellees. Sweatman and the Harris Construction Company gave notice to all parties adverse to them, and join all as appellees who do not join in the appeal.
The appellants,-in effect, assign errors against each other, and directly against all the appellees. It was not necessary that there be more than one title to the assignment of errors, for, under that title, all who desired might join in the appeal, and assign errors. Breyfogle v. Stotsenburg (1897), 148 Ind. 552. The motion to dismiss the appeal is overruled.
The Dollar Savings Bank and Trust Company, Trustee, is put in the paradoxical position of insisting upon a reversal of the decree, while insisting that as the cestuis que trustent were not made parties to the proceedings below, they cannot be bound by the decree. It appears from the evidence that the savings bank is named as trustee for a series of bonds, of which $24,500 are held by another corporation not a party to the suit, and $500 by appellant Sweatman. It is not claimed that the mortgagee, trustee, is not a proper party, and the question of a defect of parties was not raised by demurrer or answer. It is sufficient to say that if the failure to make the bondholders parties results in
It is urged against the saving's bank that it has no status here by virtue of §4031 Burns 1908, §2988 R. S. 1881, owing to the fact that it is a nonresident of the State. That question is also for the first time sought to be raised on this appeal. There was no answer or demurrer to the cross-complaint of said savings bank, nor any assignment of error which presents the question. There was jurisdiction of the subject of the action by statute, and the only relief sought by the savings bank was the protection of the lien of the mortgage, and to that extent certainly it had a nominal, if not a pecuniary, interest and a right to be heard, and that right could be asserted under an answer even of general denial. City of Covington v. Ferguson (1906), 167 Ind. 42.
The only errors properly assigned by the appellants arise upon their several motions for a new trial.
There was a trial and general finding, fixing the priorities of the parties by classes as indicated, and the questions for determination arise upon the action of the court below in marshaling the assets among the various lien holders, as was done by the classification herein stated.
The Wabash Eagles Building Association was the owner of a lot in the city of Wabash, upon which it had begun the erection of a four-story brick theater building. It had progressed with the construction to the point where the structure was about ready for the roof, when on December 15,
The court below determined the ease upon three general propositions: (1) That where there were those who had placed their property in the theater building so as to become parts of the building after a mortgage lien had attached, under a contract retaining title, with the right of removal, and removal would result in the practical dismantling of the theater as such, instead of permitting removal the court directed that the property remain, and that the whole property be sold, and upon sale that the value of the property be paid out of the proceeds of the sale, as the primary charge against such proceeds; (2) that those who were entitled to mechanics’ liens, some of whom had liens which, by virtue of contracts made or work done or materials furnished prior to the execution of the mortgage, had priority over it, and that those claims drew to them the remainder of the claim, and also all the mechanics’ lien holders, by the doctrine of relation, and by virtue of the provisions of the statute that there should be no priority among the holders of mechanics’ liens, and that as the building could not, by reason of its character, be removed from the real estate without severe loss, the lien should attach to the proceeds of the whole property, and gain priority over the mortgage lien; (3) that the mortgage liens
As to the first proposition, the claimants of that class have no equitable lien, for the rule is well established that where there is no statutory lien there is no equitable lien. Slack v. Collins (1896), 145 Ind. 569; Cincinnati, etc., R. Co. v. Shera (1905), 36 Ind. App. 315.
Nor do the claimants base their claim upon any equitable grounds, but rely upon ownership of the property, or conditional sales. The claim is made upon purely legal grounds — a claim of legal title. The decree is based upon equitable grounds. It does not appear by the evidence that the removal of this property will injure the building or the property itself. The decree seems to proceed upon the theory that its removal would affect the use as a theater, and that upon equitable grounds the property ought not to be removed. It is true that suits for the foreclosure of mechanics’ liens are of an equitable character, and in the nature of proceedings in rein. Albrecht v. Foster Lumber Co. (1890), 126 Ind. 318; Scott v. Goldinghorst (1890), 123 Ind. 268; City of Crawfordsville v. Barr (1879), 65 Ind. 367; Close v. Hunt (1846), 8 Blackf. 254; Reichert v. Krass (1895), 13 Ind. App. 348.
Conceding that there may be equitable considerations for allowing the value of these appurtenances of the building, as against the property, or the fund arising from its sale, the claims are of no higher character than the statutory claims of mechanics or laborers. So far as the
Hartley, AYolfrum, Carpenter Brothers, and King, MeNamee & Hipskind, severally had furnished material, but in small amounts, as compared with their whole claims, prior to the execution of the mortgage, and also after its execution, without any agreement or obligation to do so prior to the execution of the mortgage.
The statute provides that “where the owner has only a leasehold interest, or the land is encumbered by mortgage, the lien, so far as concerns the buildings erected by said lien holder, is not impaired by forfeiture of the lease for rent or foreclosure of mortgage; but the same may be sold to satisfy the lien, and removed within ninety days after the sale by the purchaser” (§8296 Burns 1908, Acts 1889, p. 257, §2), and that “all liens so created [by the notice] shall relate to the time when the mechanic or other person began to perform labor or furnish the materials or machinery, and shall have priority over all liens suffered or created thereafter, except the liens of other mechanics and material men, as to which there shall be no priority.” §8298 Burns 1908, Acts 1883, p. 140, §4. It is by virtue of these sections that the order of priority fixed by the court is sought to be upheld, and it is insisted that as the claims which arose prior to the execution of the mortgage were by the statute given priority of lien upon the real estate and building, and as there can be no priority among mechanics’ lien holders, therefore the later claims must be tacked to the former, to avoid some having priority over others. The statute must receive a reasonable construction. The provision for the attaching of the lien “when the mechanic or other person began to perform labor or furnish the materials or machinery, and shall have priority over all liens suffered or created thereafter except,” etc., clearly recognizes the priority of all liens suffered or created theretofore. But the statute is there dealing with incumbrances which antedate the beginning of an improvement or the furnishing of material, incumbrances which are sacred, under the Constitution, from impairment, and not tQ eases like the one before us where
The statute by its terms recognizes classes of lien holders in its provision for priority over after-accruing liens, necessarily implying inferiority to prior liens, and just as necessarily creating classes, if the facts create classes, but putting the classes on an equality. This rule is in consonance with the preservation of the rights of others, and just to all persons affected. The provision for the lien’s relating to the time when the work was begun or when the material was furnished serves two purposes. (1) To fix a definite period from which to calculate, and (2) as furnishing notice in some degree, as ordinarily the fact of the performance of labor or the furnishing of material is an open and obvious one, and distinctly so, with respect to new buildings. Except for the giving, by statute, of a prior lien upon the building, as distinct from the real estate, priority of the mortgage would not he affected by the enhanced value of the land, by reason of the improvement, and it would take precedence on both the real estate and the building. Building, etc., Assn. v. Coburn (1898), 150 Ind. 684; Erwin v. Acker (1890), 126 Ind. 133; Troth v. Hunt (1847), 8 Blackf. 580; Zehner v. Johnston (1899), 22 Ind. App. 452; Carriger v. Mackey (1896), 15 Ind. App. 392; Thorpe Block Sav., etc., Assn. v. James (1895), 13 Ind. App. 522; 27 Cyc., 236.
The mortgage upon the real estate, if not upon the building, would have priority, even though the contract antedates the mortgage, if the latter precedes any work done or material furnished under the contract. This is the practical effect of the wording of our statute, as to the time the lien begins, so far as priority on the real estate is concerned. 27 Cyc., 245.
Under the code of 1852 (2 R. S. 1852, p. 182), there was no provision that the lien should relate back, and it was held
In the absence of the statute, a claimant’s right to priority on a building depends upon its susceptibility of removal, otherwise it is postponed to the prior encumbrance on the land. 27 Cyc., 254.
The statute contemplates different conditions of the realty at different times, or as affected differently at the time that workinay be begun or material furnished. They may be stated: (1) As cases where there is no building on the land when the improvement begins, and the land is unincumbered, and so remains. There the liens attach to both realty and the improvement, without distinction or priority, among the materialmen or laborers. (2) Cases where there is no building, but there is a leasehold, or where the land is encumbered. There the existing incumbrances take priority on the land, and the materialman and laborer claim equally upon the building or improvement. (3) Where some labor is performed or material is furnished prior to the execution of a mortgage, in which event, upon the filing of a notice within the statutory period, though after the mortgage is given, the lien relates back of the mortgage to the time when the work is begun or the material furnished, and gains priority both as to the land and the building. (4) Where the improvement is made after the mortgage is executed, but under a prior contract for the improvement, and
The lien in no event can reach beyond the “right, title, and interest of the owner,” whether it be of the real estate or the building, and can only arise from contract with such owner, for it is manifest that the owner of a life estate cannot improve the remainderman out of his property. The contract is not made with the mortgagee or incumbrancer, but with the owner, to the extent of his “right, title and interest.” The provision for the lien’s relating back is personal to each claimant, and they cannot unite in filing notice of liens. McGrew v. McCarty (1881), 78 Ind. 496.
But the claim of each relates to the time he begins work or furnishes material, and there is no question of tacking the claims by which the last claimant becomes related to the same period of time as the first claimant in point of service or furnishing, but it is by virtue of the equality provision of the statute that the right is conferred. There is no privity of estate or privity in law between the various lien holders, and the legislature probably went as far as it felt justified in going, in the provisions of the act for the relating back of the claims, in view of our registration laws, and in justice to other persons. While the law ought to receive a liberal interpretation in the interest of the laborer, and the materialman, as the special objects of its concern, yet it must be interpreted in the light of the rights of other persons, and the rights of claimants among themselves. The object is equality as near as may be, but it must be equality, all other things considered, and with the construction of the court below, the rank of a security obtained by contract with the owner may be entirely re
The history of the legislation on this subject, in this State and elsewhere, evidences a due regard for prior rights, as conferred by the registration laws. The object of the legislation was to intervene in favor of the mechanic or laborer, and secure to him a return for what he has done in enhancing the value of the land, and still not to injure prior lien holders. Wimberly v. Mayberry (1891), (Ala.) 14 L. R. A. 305, and notes.
The claims of Parkhurst Manufacturing Company, Toomey-Volland Scenic Company, and the American Seating Company, cannot have priority over, or be preferred to the mortgage of the savings bank, and they cannot have equitable priority over the statutory mechanics’ liens. If the property furnished can be removed without injury to the building — that is, has not become such a part of it that its removal would injure the building, they should have the right of removal if they so elect; but if the property has so far become a part of the building that its removal would injure such building, and not simply stop the operation of the theater, then, having voluntarily consented to, or put themselves in this position, they cannot be heard to claim the removal of their property, because they voluntarily contract with reference to a condition which they help to create, and they should not be permitted to injure the building. They occupy a position analogous to one who sells property, and retains title, when he knows the purpose is to sell to others. Winchester Wagon Works, etc., Co. v. Carman (1887), 109 Ind. 31.
It is claimed that because the Parkhurst Company filed notice of a mechanic’s lien it waived its vendor’s lien. Conceding without deciding that the company could waive title by prosecuting an action to a final determination, which would amount to an election, simply filing-notice of a mechanic’s lien falls far short of an election and waiver of the title.
As against the American Seating Company it is insisted that because after the contract for the seating was made, which antedated the mortgage, and before the seats were delivered, the company executed to the savings bank a waiver of a mechanic’s lien, the latter was deceived and misled into believing that the sale was absolute, and that the company is estopped from claiming the property. We are not pointed to any evidence upon the subject to indicate any misleading statement or act upon which any one acted to his, or its detriment. The waiver of a mechanic’s lien by the company was entirely consistent with its position as retaining title.
Appellee Yarnelle was awarded $5,624 as principal in class B. Of this sum $397.12 accrued prior to the execution of the mortgage, and after the execution of the mortgage and up to January 3, 1906, material of the value of $737.10 was furnished by him. On January 3, 1906, it is claimed that he executed a waiver of his right to a mechanic’s lien. That instrument recites that for the purpose of enabling the savings bank “to secure a first and prior
All the other claimants set out in class B had claims which arose after the execution of the mortgage without any prior obligation, including such portion of the claims of Hartley, Carpenter Brothers, Wolfram, King, McNamee & Hipskind, as are later in date than the mortgage lien.
The mortgage purports to have been executed for the purpose of raising funds to complete a building and to equip it, and the evidence discloses that it was about ready for the roof when the mortgage was executed. It was then a substantial part of the real estate, and as between the owner and the mortgagee was real estate, so that we are compelled to take into account the condition of the building. It is not sufficient to postpone the mortgage lien to say that the mortgagee was bound to know that it must be completed, for those who performed labor and furnished material after the mortgage was executed were equally bound to take notice of the mortgage and the disclosed purposes of its execution, and could not ignore them. Field v. Campbell (1905), 164 Ind. 389. They all engaged in a common enterprise, and none of them are in a situation to claim priority; their equities are equal. Brooks v. Burlington, etc.,
We infer from the finding of the court, that the removal of the building is impracticable, and, under the peculiar facts in the case, we think it ought not to be removed. The mortgage provides that it is executed to enable the association to “pay for improvements now in the course of erection and completion on its real estate, and further to construct, extend and better the equipment and improvement, * * * and to pay outstanding obligations. ” The face of the mortgage shows on the one hand the realization that further labor and material were necessary to complete the building, and its terms are a virtual assent, if not an invitation, that this should be done, with the accompanying knowledge that the laborers and materialmen were entitled to liens. On the other, it is notice to the laborer and materialman of a specific lien. If the building had not been begun when the mortgage was executed, the statute would have fixed the priority, but here we have a ease where the structure, manifestly of considerable dimensions, was about ready for the roof. The savings bank was not called on to take a mortgage for its protection, but voluntarily did so, knowing that the building in its then condition was practically worthless for any purpose as a building, and that it must be completed. Its action was an invitation to materialmen and laborers to complete the structure, and they in turn had notice of the specific lien and its terms. In good conscience neither ought to have priority over the other. The contribution of each increased the security of the other. In some states it has been held that where the mortgage is given for the purpose of constructing a building, and the money is so used, the mortgage has priority both as to the land and building. Kiene v. Hodge (1894), 90 Iowa 212, 57 N. W. 717; Wroten’s Assignee v. Armat (1879), 31 Gratt. 220.
That however is a different proposition from the taking
The terms of the mortgage amount to an agreement that the proceeds shall be applied on construction account, and the materialmen and laborers had a right to have it so applied, and if the money was turned over to the association, and by it diverted to other purposes, and was not applied on construction by it or by the mortgagee, the latter could have little claim in equity to share in the fund arising from the property. But if the savings bank made payments on account of labor and material in the building, as it was entitled to do, and had practically ‘agreed under the mortgage to do, or the money was in fact so applied, then, upon the clearest principles of equity and justice, the claims so paid and the rights to liens for them should be taken as embraced in the specific lien of the mortgage, not upon the ground of subrogation, but on the ground of keeping the claim and the accompanying right to a lien alive for the protection of the mortgagee, and all the more must this be true if at the time the mortgage was given or the money advanced the property was not equal in value to the money advanced. The other lien claimants are in no worse position than they would have been if no mortgage had been given and the claims of those who had been paid from the fund had filed notice of their claim, so that the case should stand as the substitution of one specific lien for the right to other specific liens- It has been held that mortgages given for future advances take precedence over mechanics’
The Smith-Hubbard Lumber Company filed a notice of lien June 15, 1906, and on June 15, 1907, filed an amended complaint making the savings bank a party, and was in time to hold a lien. §§240, 1350 Burns 1908, §§240, 1280 R. S. .1881.
Appellee Creighton did not file any pleading making the savings bank a party until more than one year after the filing of the notice to hold a mechanic’s lien, which recited that the debt was due, and no attempt was made to show that credit was given — which is held to be necessary in the notice. Schneider v. Kolthoff (1877), 59 Ind. 568.
As to one not made a party to a complaint until after the expiration of the year for filing, the bar is complete, and is not averted by filing an amended, complaint making him a party, for as to him the date of computation is the date of filing. Appellee Creighton is therefore not entitled to a mechanic’s lien. School Town of Monticello v. Grant (1885), 104 Ind. 168; Floyd v. Floyd (1883), 90 Ind. 130; Seibs v. Engelhardt (1885), 78 Ala. 508; Watson v. Gardner (1887), 119 Ill. 312, 10 N. E. 192; Benniit v. Wilming
Appellant Harris Construction Company, a corporation, on September 8, 1905, entered into a written contract with the building association to furnish the working tools, and to superintend the construction of the building for a certain per cent of the cost. On December 19, 1905, the company executed a written waiver of all right to a mechanic’s lien, and consented to the priority of the mortgage of the savings bank. This agreement is subsequent in time, and no consideration is shown, nor does its terms run to the mortgagee, nor is it shown that it was acted on, nor are any elements of estoppel shown. Prior to June 28, 1906, payment had been made on this agreement to the extent of $1,000 on an alleged claim of $3,318.80, but when paid, or by whom, is not shown. There is a controversy in the evidence as to when the work of superintendence ended, the construction company claiming that it ended June 27, 1906, and the defendants claiming March 27, 1906. The notice of lien was filed August 14, 1906, and suit begun for foreclosure August 13, 1907. The right to a lien was denied under the evidence, but whether by reason of the waiver, or lapse of time, or from lack of right to a lien we cannot determine. There is no evidence as to what the work consisted of, or what the superintendence involved, except as shown by the written agreement that it was “to superintend the construction of said building, and, without expense to first party, to furnish all tools, tackle, hoists and appliances necessary for the rapid erection of said building,” and to furnish a competent foreman of all trades which might be employed in the erection of said building, with full power in the name of the building association to make the contracts for such labor and material as might be needed in the construction of the building. Treated as a contractor,
As a corporate entity it could not perform labor itself, and therefore could not fall within the class of ‘ ‘ all persons performing labor,” which, as we held in the case of Indianapolis, etc., Traction Co. v. Brennan, supra, does not include contractors, and is restricted to those who are commonly known as laborers. The statute being one in derogation of the common law, is to be strictly interpreted as to those who are entitled to make avail of its provisions, but is to be liberally interpreted in their favor when they fall within its provisions. Furnishing tools, or machinery, or appliances for carrying on the work does not authorize a lien. Oppenheimer v. Morrell (1888), 118 Pa. St. 189, 12 Atl. 307; Basshor v. Baltimore, etc., R. Co. (1885), 65 Md. 99, 3 Atl. 285.
We think the construction company was not a laborer within the letter or spirit of the act, and is not entitled to a lien.
Appellee Henley filed his notice of lien on uune 15, 1906. He did not file a complaint against the savings bank until December 23, 1907, and is in the same category with appellee Creighton, and is not entitled to a lien.
Appellant Sweatman filed his notice of lien on June 18, 1906. His complaint was filed October 24, 1907. He claims that on or about May 21, 1906, a credit was given until sometime in October, 1906, no date of the extension being fixed. His notice did not state that credit had been extended, but stated that the demand was due. The most that is shown, is that there was a promise to pay sometime in October, acquiesced in by Sweatman. It was held in the cases of Wade v. Reitz (1862), 18 Ind. 307, and Schneider v. Kolthoff, supra, that as between the claimant and subsequent purchasers, if credit is given, the notice must so show. The same thing
As against the other encumbrancers, appellant Sweatman is not entitled to a lien, but as against the owner, if credit was given, and his complaint was filed within one year from the expiration of the credit, he is. Appellant Ward had a contract dated May 22, 1905, with the building association to superintend the work of construction at a fixed price. The work under this contract began June 3, 1905, and ended April 1, 1907, and the amount claimed was $930. He filed notice of lien on March 22, 1907.
The decree below seems to be right upon both the foregoing claims arising under the first and second paragraphs of the complaint — and appellant Ward seems to have recovered upon the third paragraph, or for the work done by him under an open contract for plastering — but the decree is erroneous as against the savings bank, as to the question of priority.
Appellants Beitman, Wolf & Co. were allowed a lien for $396.03 out of a total claim for $534.24. The three principal items of the bill of particulars are for carpets, aggregating $397.75; the remainder of the claim is made up of items such as making and laying carpets, furnishing rugs, curtains, curtain poles, draperies, stand covers, pails, mops, brushes, oil, and other small items, and for telephone and telegraph messages, and supplies generally used in caring for the building. We are not able to discover a single item of the bill which is the subject of a mechanic’s lien, and the claim stands, as exhibited by the bill of particulars, without any explanation.
The decree is affirmed as to appellants Ward, the Harris Construction Company, and Sweatman, and reversed as to the savings bank, with instructions to the court below to sustain the motion for a new trial by the savings bank, and for further proceedings not inconsistent with this opinion. Ap