LIENS.

[Lucas Circuit Court,

February 23, 1901.]

Haynes, Parker and Hull, JJ.

#### Thomas H. Walbridge v. Charles W Barrett et al.

1. Vendors’ Liens — Mechanics’ Liens — Mortgages—Priority.

A vendor’s right to be paid the balance of the purchase money is superior to the lien of a material man; and if the xormer, for a valuable consideration, before a judicial sale Ox >ne property, conveys the legal title to another, the latter becomes vested with the rights and interests of the vendor, and the lien of such original vendor, where the property is mortgaged by his vendee, passes to the mortgagee. Mutual Aid B. & L. Co. v. Gashe, 56 Ohio St., *27¿>,*followed.

2. Same — Rule of Priority Applied.

Under the rule that a vendor’s lien, by virtue of subsequent conveyance to and mortgage by vendee, passes to the mortgagee, the latter, where property was sold for part cash down and the balance to be paid in installments, and vendor conveyed to vendee to enable him to mortgage and . borrow money to build on the property, and who absconded after obtaining money by mortgage, in a suit to marshal liens, is entitled to priority to the amount of the vendor’s lien as against the holders of mechanics’ liens, though the latter attached prior to the execution of the mortgage.

*6353. Agreement to Postpone Vendor’s Lien to Mortgage.

An agreement by such vendor with the mortgagee of his vendee, that he would postpone his vendor’s lien to the mortgage, does not extend to mechanics’ liens or defeat the priority of the vendor’s lien in favor of the mortgagee.

4. Vendor Receiving Mortgage Money and Paying to Vendee.

The fact that the vendor of land for which the purchase price had not been paid’, who had executed deeds to enable the vendee to raise money to build on the property, received the mortgage money and paid it over to the vendee, who absconded shortly after, without paying his creditors, does not make the vendor responsible therefor to holders of mechanics’ liens.

5. Money Paid on Another Contract — Not Available.

Where such vendor, after conveyance to and mortgage by his absconding vendee, received from the latter certain sums of money, proceeds of the mortgage, to apply on another contract, the money so received cannot be deducted from the amount of the vendor’s lien or reached in case at bar.

Appeal.

*H. C. Rorick,*for mortgagee.

*King & Tracy,*for the plaintiffs.

*Ray & Cordell; McDonald; Reno; Southard & Southard*and others, for the defendants.

Haynes,i J.

This ■ action, above entitled, and N. G. Secor against Chas. W. Barrett, were heard together. Mrs. Secor is a sister of Mr. Walbridge, and he transacted the whole business that was done in regard to the matters in controversy here, and the cases were submitted to us the same as if they were one case.

The actions were submitted to us on questions of the marshalling 'of liens. The facts, briefly, are: That Walbridge was the owner of some property in the city of Toledo which was subdivided into six lots. He sold the same to Barrett, at a certain price, no part of the purchase price being paid down, but it was agreed that the price should be paid as Barrett should build upon the property, he stating that he expected to build upon the property soon. The first payment was to be made when the houses should be completed up to a certain point; the second, when the roofs were on the houses, and the balance when the houses were completed. Barrett in fact went into possession of the property immediately and commenced to build, and to put six buildings upon the property, one on each lot. It was further agreed between Walbridge and Barrett that if Barrett should want to mortgage the property for the purpose of raising money, Walbridge would convey the property to Barrett by deed. Soon after Barrett went into possession of the property and commenced to build, he desired to mortgage the property, and thereupon Walbridge executed deeds and delivered them to Mr. Rorick, — through whom Mr. Barrett was negotiating loans; the loans were negotiated, the mortgages made and the deeds and mortgages were placed on record at the same time. At the time that the money was paid in on the mortgages, quite a sum of the money was paid over by Rorick to Walbridge and Walbridge paid over to Barrett the principal part, or perhaps all of the money, and Barrett paid off a few of the laboring men, put the balance of the money; *636in his pocket, left the country and has never been heard of since. The property, I believe, had been sold, or portion of it, and actions have been brought to enforce liens upon the property, and thus the questions arise which we have here.

Many of the questions have been argued to us, with a great deal of earnestness and ability, and we have endeavored to consider them all, but I do not undertake ff> go through and discuss all the questions which have arisen or may arise in the minds or judgment of counsel. We think the well established principles of law as laid down by the Supreme Court of Ohio, are sufficient to guide us to a determination of the rights of the parties in this case. The decree in this case will be substantially this:

1. The costs and taxes and assessments, if there are any mentioned in the petition which are a lien upon the property and which are payable according to the statute.

2. The amount of the vendor’s lien will be ascertained and will be allowed to the mortgagee.

3. The liens of mechanics and material men and contractors will be paid.

4. The balance, if any remains, to the mortgagees.

In Mutual Building & Loan Company v. Gashe, 56 Ohio St., 273, 295 [46 N. E. Rep., 985], the principle is laid down by the Supreme Court which we follow here. That was a case which went from Lucas county. We had taken a certain cour.se in the case and in respect to this particular matter, the court said we were in error, and they reversed us, and now we will follow the Supreme Court. The principle laid down there is, that a vendor’s lien, unpaid, passes to the mortgagee and he is entitled to it, that is, he is entitled to the amount of the vendor’s lien upon his mortgage to the exclusion of the lienholders under the mechanic’s lien law. That is the matter, in brief. And, therefore, after paying the costs of the suit, we allow the amount of the vendor’s lien in this case to pass to the mortgagee, and give them the benefit of it. But the mortgagees having taken their mortgages subsequent to the commencement of the mechanics’ liens, the mechanics’ liens would otherwise be prior to the mortgages; so that after the amount of the vendor’s lien is awarded to the mortgagees the holders of the liens, under the mechanic’s lien law, will come in for the balance that remains due upon their contracts, and when the amount of the liens is paid off, if there is anything left, the mortgagees may have it, and by that time, as near as I can understand, the money will be exhausted.

Campbell v. Sidwell, 61 Ohio St., 179 [55 N. E. Rep., 609],. which has been cited, we think, has no application to this case whatever. We think the whole case is solved in substance by the position that I have mentioned. I will say, however, that there was one question raised and argued by counsel in which it was claimed that inasmuch as Walbridge had agreed with the mortgagees (and I should have stated that he did so agree), that he would postpone his vendor’s lien to the mortgage, that that waiver should extend to the whole of the mechanics’ liens. Mahngren v. Phinney, 50 Minnesota, 457, 52 N. W., 915, was cited to us; but counsel who have cited it have overlooked something'in that case, because, in fact, that decision is the very reverse of what is claimed for it. Prior to that, there had been a decision holding the doctrine claimed by counsel, but that decision was overruled by Mahngren v. Phinney, 50 Minn., 457, 52 N. W., *637915, and, at any rate, we hold that that rule has no application and we find no authority for so holding.

'There was in this case a question raised which we should probably notice, and that is, that at the time the money was paid over by the mortgagees to Mr. Waldbridge, under an arrangement between them, Mr. Walbridge received from Barrett some $2,000 or $3,000 of that money upon another contract that he had for the sale of property, not upon this contract, nor upon this land; and we had considerable discussion whether that could be reached in any way in this case; but we are unable to see how it can be reached here, because, to take that out to apply upon the vendor’s lien would be simply to take it out of the mortgagees, which would be unjust and would not be right, because all these matters transpired after the mortgage had been executed and the mortgagees had their lawful lien upon the premises. Whatever questions there may be between the mortgagees and Walbridge in regard bo that matter, they do not arise here, and we will not pass upon them.,

It has been suggested that the amount of money placed in the hands of Walbridge ought to be held for the payment of these liens, but we know of no principle of law that would require us to hold, that Walbridge should be liable to the mechanics’ lienholders for the amount of that money received by him. He had not undertaken with them at any time or in any manner, to see that whatever money was paid on the mortgages, or paid by Barrett, or received by Barrett, or from any other source whatever, should be applied in payment of the amount of the mechanics’ liens and we know of no legal obligation on his part to do so, unless he had volunteered to do it. He paid this money over to Barrett.' It was a serious mistake, there is no doubt about it, but we think it is very clear that he honestly expected that Barrett would receive it and use it and would go forward in the business which he had undertaken and would carry out his contracts; we think that in all that he acted honestly, even if he erred in judgment. It seems that when Barrett got the money in his pocket the temptation was too strong and the money led him away and he forgot to return. But we are unable to see how, under any legal principles, that matter should be charged in any manner to Mr. Walbridge. Walbridge was in no wise bound to receive this money from the mortgagees or to hold it. It seems that Rorick did pay it over to Walbridge and it was passed through his hands, but that was a matter between him and Walbridge. So that after a very full and lengthy discussion of this matter, we came to the conclusion we have in the premises, and are very clear in our minds that it is in accordance with the principles of law already established by the Supreme Court, and which we are bound to follow, and the decree will be as I have Stated.

In regard to Caspar Sacks and his claim, Mr. Sacks was sworn and gave testimony to sustain it. It was said by counsel that they would look into the matter and perhaps offer some further testimony, but we have never heard anything in regard to it, and so the claim of Mr. Sacks will be as stated in his answer.