Westall v. Wood

212 Mass. 540 | Mass. | 1912

Rugg, C. J.

The defendant executed and delivered a mortgage on real estate. It was agreed that the amount to be lent on the mortgage should be advanced from time to time to pay for the purchase price of the land and for the erection of a building thereon as its construction progressed. At the time of the execution and delivery of the mortgage, the defendant requested of the mortgagee an order to enable him to buy materials for the building, stating that he had no means to get them without an order. The mortgagee demanded assurance that the materials, if so procured, should be used on the mortgaged premises, and the defendant agreed that they should be so used. The defendant and a representative of the mortgagee then went to the office of a lumber company, where again it was agreed that the materials to be delivered should be used in the construction of a building upon the mortgaged premises. Thereupon a list of the required material was delivered to the lumber company, and the representative of the mortgagee accepted an order by the defendant to pay therefor. It was agreed further that the money so paid should constitute a part of the consideration of the mortgage, but there was no specific engagement that a lien for the price should attach to the material. The material was delivered upon the land, but later the defendant removed a large part of it, which he now claims to hold as his own free from any adverse right.

1. It is plain that an express agreement between the parties to the effect that a charge in the nature of a lien in favor of the mortgagee should attach to the materials so bought would be valid and enforceable in equity against the parties and their privies, and others who are volunteers or who take with notice. Pinch v. Anthony, 8 Allen, 536. See Providence Bank v. Benson, 24 Pick. 204, 210. But an equitable hen does not of necessity rest exclusively upon an express agreement. It may arise from circumstances of such nature as to require the presumption upon general considerations of justice as between those conducting commercial transactions according to a reasonable standard of integrity that an equitable lien was meant. Equity looks at the substance, and not at the form. If the arrangement between the parties, interpreted in the light of the conditions in which they were placed, indicates a contemporaneous intention to adjust their rights upon a basis which can be established only by resort to the equitable principle of lien or pledge, then, in the absence of an intervening adversary interest, such an intent will be executed in chancery. Hurley v. Atchison, Topeka & Santa Fe Railway, 213 U. S. 126. Society of Shakers at Pleasant Hill v. Watson, 15 C. C. A. 632, 639; 68 Fed. Rep. 730. Schermerhorn v. Gardenier, 107 App. Div. (N. Y.) 564, affirmed 184 N. Y. 612. Dufur Oil Co. v. Enos, 59 Ore. 528. Garrison v. Vermont Mills, 154 N. C. 1. Connolly v. Bouck, 98 C. C. A. 184; 174 Fed. Rep. 312.

The irresistible conclusion from the facts disclosed upon this record is that the parties intended that the materials furnished by the lumber company to the defendant should become subject to the lien of the mortgage. Their conduct and conversation forbid the inference that the purchase and delivery of the materials constituted an independent enterprise, which was to stand or fall by itself. They show rather that the main purpose of the loan was to enable the defendant to build a house upon his land, but as ancillary to that main purpose (he being without money, credit or ability to procure in the market the material for a house) that the credit of the mortgagee was extended to the end that the defendant might go forward in the prosecution of his plan. The material so purchased-was to be delivered upon the land and attached to it as a part of the building. The understanding was that the material should never go off the land, but should continue upon the land and become a part of the real estate. This was not expressed with such accuracy in the device adopted by the parties that it can be enforced in an action at law, but, there being no doubt as to their real object, even though inartificially expressed, it ought to be treated in a chancery court as creating an equitable lien, in order to effectuate the aim of the parties and to prevent the perpetration of a fraud. Sexton v. Kessler & Co. 225 U. S. 90, 96, 97. Something more is found here than a mere isolated stipulation to apply certain property to a stated use. The fundamental agreement was the advancing of money to the defendant to be secured by a mortgage upon land in order that he might build a house thereon. The particular arrangement was subsidiary to that dominant design from which it took its color. The mortgagee had no intention of advancing money or credit, except upon the security of the mortgage, and the defendant does not contend that he had any agreement for obtaining money from the mortgagee except upon that security. The mortgage had been duly executed and delivered, and, at the time the mortgagee became obligated to pay for the materials, both parties must have supposed, if they were acting with common honesty, that the incident constituted an advancement of money upon the strength of their pre-existing agreement under the mortgage. Falmouth National Bank v. Cape Cod Ship Canal Co. 166 Mass. 550, and Elmore v. Symonds, 183 Mass. 321, are distinguishable in their facts, although both these cases recognize the doctrine of equitable lien.

2. The entry by the mortgagee for the purpose of foreclosing the mortgage is an immaterial circumstance upon the facts found by the Superior Court. It affords no defense to this suit. It does not appear that the condition had not been broken. At all events, it must be assumed that the entry was made lawfully.

3. According to the finding of facts, the title to the mortgage is held exclusively for the plaintiff’s benefít by an employee named Stickney. But Stickney is not a party to these proceedings, and may not be bound by the finding. She is, however, a necessary party. Complete justice cannot be done to the parties before the court without her. If the decree entered in the Superior Court should be affirmed, she would not be barred from asserting claims under the mortgage against the defendant. Under these circumstances, this court may decline to proceed to final decree at this stage. Northampton National Bank v. Crafts, 145 Mass. 444, 447. Stickney should be joined as a party, and the decree must be reversed for this purpose. If she is so joined and waives the right to be heard, within twenty days from the date of this rescript, a new decree may be entered in form the same as that appealed from, together with costs of this appeal. Otherwise, the cause is to stand for further hearing upon issues raised by Stickney.

So ordered.