Case Name: John Reid, adm'r, vs. The Bank of Tennessee et al.
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1853-12
Citations: 1 Sneed 262
Docket Number: 
Parties: John Reid, adm’r, vs. The Bank of Tennessee et al.
Judges: 
Reporter: Tennessee Reports
Volume: 33
Pages: 262–275

Head Matter:
John Reid, adm’r, vs. The Bank of Tennessee et al.
Mechanic’s Lien. Repairs upon mortgaged property, made after mortgage registered, on the credit of mortgagor. A mortgagee is entitled to priority of payment over the lien of a mechanic for work done and materials furnished at the request and on the credit of the mortgagor, after notice of the existence of the prior lien; and the registry of the mortgage is sufficient notice thereof.
EBOM DAVIDSON.
This • was a bill filed in chancery at Nashville, by John Reid as administrator, with the will annexed of R. F. L’Hommedieu, deceased, against the creditors and heirs of said decedent, suggesting the insolvency of said estate, and praying to administer the assets pro rata among the creditors. It appears that the whole of said estate consisted in an interest in a large mill and dis tillery establishment in the vicinity of Nashville and the personalty appurtenant thereto. The Bank of Tennessee held a mortgage upon this property for the payment of a debt of $20,000 owing it by said decedent and his partners in the ownership of this establishment. This mortgage was duly registered in the register’s office of the county of Davidson. Pending the existence of the mortgage, the mill and distillery were partially destroyed by fire, and John Huff, a party to this suit, repaired the same, furnishing the materials therefor at the -request and on the credit of the mortgagors, without the knowledge of the mortgagee. Upon the filing of this bill, ITuff filed his petition asserting his mechanic’s lien, and asking priority over the mortgagee in payment. Chancellor BbieN decreed in. his favor, and the bank appealed.
JohN Reid, for the Bank of Tennessee.
Reid was appointed administrator of R. F. L’Hom-medieu. He suggested the insolvency of the estate in the county court of Davidson, and then filed, a bill in the chancery court against the heirs and creditors, suggesting the insolvency, and praying that the estate should be wound up under the directions of the latter court.
L’Hommedieu had no property in this State, (neither real nor personal,) in. his individual capacity. The only property he owned in this State was his interest in the property owned by the firm of R. F. L’Hom-medieu & Co. The only property owned by the firm of R. F. L’Hommedieu & Co., was a piece of ground adjacent to Nashville, upon which was erected a mill for manufacturing flour and distilling spirits, and some personal property connected with tbe mill, wbicb was not worth more than a few hundred dollars. Under the order of the court the personal property was sold and did not pay the costs, and left the mill as the only property to be divided among the creditors. The bill which was filed by Keid in the chancery court, to wind up the estate, was filed 5th March, 1847.
On the 1st of April, 1846, (before Mr. L’Homme-dieu’s death,) the mill and ground upon which it was erected, were conveyed to Henry Thayer, m trust, to secure him against loss for having endorsed four bills of exchange, each for $5,000, which were drawn by L’Hommedieu & Co., on E. F. L’Hommedieu, at Cincinnati, and which were discounted by the Bant of Tennessee. The bank being the holder and owner of these bills of exchange, had the right to come into a court of equity and have this property sold and subjected to the payment of its debt.
After this property had been so mortgaged to pay these bills the mill burnt down. They were- subsequently rebuilt by L’Hommedieu & Co., without the knowledge or consent of the bank. Huff was employed by L’Hommedieu & Co. to do the brick work.
When Eeid filed his bill in the chancery court, suggesting the insolvency of the estate, he made the Bank of Tennessee a party defendant. The bank answered and set up its claim and the mortgage, or deed of trust to secure. The claim was allowed, and the property ordered to be sold, and the bank became the purchaser, bidding the amount of its debt. Huff filed his petition in the cause as one of the creditor's, against tbe administrator and tbe Bank of Tennessee, alleging tbat be bad a lien upon tbe mill and ground for work and materials done and furnished as a mechanic; tbat although tbe lien of tbe bank was prior in point of time to bis, yet be bad, by bis work, enhanced tbe value of tbe property, and in equity and conscience, ought to be preferred.
Tbe case was beard before Chancellor Cahal upon this point, and be was of opinion tbat tbe bank ought to' be preferred, and so decreed. Erom this decree Huff appealed to this court, and tbe supreme court, at its December Term, reversed tbe cause upon tbe ground tbat all tbe parties who were interested bad not been included in tbe bill, or for some other informality. Tbe Court did not touch tbe question as to which of these parties, (tbe bank or Huff,) bad tbe better lien on this property. After tbe cause was remanded, it wás beard before Chancellor Brien upon this point, and be was of tbe opinion tbat Huff ought to be preferred. Erom bis decree tbe bank has appealed, and tbe cause is again before this court to be decided on this point.
Tbe question, and tbe only question now to be decided, is, which debt ought to be first paid out of tbe proceeds of tbe mill and ground upon which it is erected: tbat due to tbe bank of Tennessee or tbat due to John Huff? Tbe property only sold for enough to pay tbe debt of tbe bank. If, therefore, tbe debt of tbe bank is to be preferred, Huff loses bis debt. If Huff is to be preferred, then to tbe extent of bis debt, tbe bank loses. Tbe property was mortgaged to tbe bank before Huff struck a lick upon tbe building. Huff was employed, not by tbe bank, but by L’ Iiommedieu & Go. Tbe mortgage was spread upon tbe records of tbe country, and tbe bank, so far from assenting to tbe work being done by Huff did not even know tbat be was employed. Huff, however, contends tbat be advanced the value óf tbe property. How is tbis? I tbink tbe lien of tbe bank is to be preferred. 7 Yerg. R., 168. Gillespie vs. Bradford et al. 8 Smede’s & Marshall’s R., 451.
R. N. WilliaMS, for Huff:
Tbe question intended to be presented for decision upon tbis record is, whether or not Huff, by virtue of tbe mechanic’s lien, given by our statutes, is entitled to pay for work done by him, as a mechanic, by contract with the equitable owner, in repairing, or rebuilding in part, a bouse situate upon a lot tbat had been previously conveyed by deed of trust to secure the payment of debts, equally with, or in preference to tbe beneficiaries in the deed. Tbe case was before the court at the December Term, 1848, but went off on other points without touching this. There has been no difficulty or litigation as to the amount of the account. The only question is as to tbe manner of payment. Tbe deed was made to Henry Thayer on tbe 1st April, 1846; soon after which time the mill and distillery were burnt. Thayer then bad only tbe lot with the ruins left by tbe fire, as security for his endorsements, amounting to $20,000.
There was no obligation on the part of R. R L’ Iiommedieu & Co., to rebuild or repair the houses. Their own interest prompts them to do so, and they employ Huff to do it. The repairs are made, and greatly enhance the value of the lot, and to the same extent, of course, the security of Thayer, for the benefit of the bank.
All t]ie parties claiming to be the creditors, trust in the first instance, to the personal responsibility of E. E. L’ Hommedieu & Oo., and expect their debts to be paid by them, and look to the lot and improvements upon it as security in the event of failure of the firm to pay promptly. Huff insists that the lien given him by statute, is of equal dignity with the lien of Thayer created by deed, at least so far as his labor had enhanced the value of the property. Thayer still has what his deed gave him, and is it not inequitable to give him Huff’s labor in addition, for no new consideration on his part, to the exclusion of Huff?
The depositions- of George ~W. Neely, J. M. Hughes, John L. Stewart and George W. Smith, mechanics, who saw the work done by Huff, prove that the property was enhanced in value the whole price of his work. The report of the clerk shows, from the evidence of witnesses, that the claim was for repairs. Huff asks nothing from the lot on which Thayer had a claim; but only a small part of the value which has been added to it by his brick and mortar. Much the larger portion of his debt has been paid by the estate of L’ Hommedieu, and by the firm before his death. Has he so blended and confused his work with what was already there, as to be compelled, by the doctrine of confusion of goods, to lose what he has .done? Clearly not, because the additional value which be has created is easily ascertained. The work was not done, it is true, by any contract with tbe trustee, but by contract with bis agents in possession of the property, who are presumed to have acted by bis consent, if not with bis direct sanction, and by bis authority.
It has been frequently held that persons were entitled to compensation for valuable improvements made upon lands under invalid contracts for their purchase, or ’under parol gifts, or declarations of intention to give, which were not afterwards carried into effect. In this class of cases compensation is made for improvements upon the ground that they benefit the land, increase its value; and it would be inequitable to allow the legal owner to receive this increased value, created upon his property at the expense of another, without objection on his part, or induced by his conduct, at the expense and to the injury of the innocent intended purchaser or donee. Does not Huff occupy a position equally favorable ? Is he not as much entitled to compensation for the increased value he has created, as the intended donee or purchaser? The cases are analogous, and it is insisted that they rest upon the same principle.
Meigs, for Huff.
The Bank of Tennessee discounted four bills of exchange, each for $5,000, drawn on the 31st of March, 1816, by U Hommedieu & Co., on B. E. L’Homme-dieu, endorsed by Henry Thayer, payable in twelve, thirteen, fourteen and fifteen months after date. To secure tbe payment of these bils, L’ Hommedieu & Co. executed a deed of trust upon their mill and distillery near Nashville, on the 1st of April, 1846. On the - day of --■, 1846, the mill and distillery were burnt, and nothing remained to the bank to secure the repayment of these bills but the personal responsibility of L’ Hommedieu, and the naked lot on which the establishment had stood.
On the 18th of May, 1846, V Hommedieu & Co. contracted with John Huff, bricklayer, to rebuild the mill and distillery, which he did for the price of $2,133 27 cents, all of which, except $799 21 cents, was paid. Eor this balance he claims a lien upon the mill and distillery. And the question is: Whether the bank is entitled to priority over Huff? The Mechanic’s lien is given by the act of 1825, ch. 37, Avhere the building is erected “ by special contract with the owner of the land.”
The contract here, was made with the mortgagor, and the work done between the 8th of May and 26th of December, 1846, before either of the bills, to secure payment of which the bank held the deed of trust, became due. The deed of. trust was not to be enforced till a bill became due, and was permitted to remain unpaid.
A mortgagor, while in possession, may exercise the rights of an owner, provided he does nothing to impair the security. 4 Kent’s Com., 161, 3d ed. 2 Story’s Eq., § 1017.
A mortgagor is not bound to repair buildings consumed by fire. Cmnpbell vs. McGoinb, 4 Johns. Oh. R., 534-542.
But if be does repair, in tbe exercise of tbe rights of owner, if these repairs clo not impair but enhance tbe security, ought tbe mortgagee to receive tbe benefit unaffected by tbe legal lien of tbe mechanic? Ought not tbe rule to apply in such case, qui sentit convino-dim, sentí/re débet et onus? 2 Story’s Eq., Ju. § 1234 -1241.
It cannot be said that tbe mechanic looks to tbe owner, with whom be contracts personally. Tbe presumption is tbe other way: i. e., that be looks to tbe security given him by law.
2. Almost tbe entire value of this property consists in tbe mill and distillery, tbe building of which enhanced tbe value of tbe land on which they are situated, to tbe entire amount of tbe cost of their construction.
This enhanced value is added to tbe land by tbe labor of tbe builder, and enures to tbe benefit of the two cestids que trust, L’Hommedieu & Co., and tbe bank. They are to be regarded as tenants in- common of tbe estate. But tbe legal estate, out of which their equity arises, is improved in value by tbe labor of tbe builder, acting under a , contract with one of them; and now, shall they enjoy this enhanced value, tbe one by paying, tbe other by - receiving so much more of tbe debt, without mutually paying for tbe builder’s labor; tbe one by paying and tbe other by receiving less of tbe debt.
3. If a manufactory is put into tbe bands of a trustee, for tbe mutual benefit of two persons, are the laborers employed in it not entitled to pay for their labor before any dividend is made of tbe profits ?
4. Owners are bound pro bono pubUco, to maintain bouses and mills, wbicb are for habitation and use of men. Cote upon Lit., 200, b. And, therefore, if there be two tenants in common, or joint tenants of a house or mill, and it fell into decay, and the one is willing to repair, and the other will not, he that is willing shall have a writ de repa/ratíone faciendo,. Id.
If two or more make a joint purchase, and after-wards one of them lays out a considerable sum of money in repairs and improvements, and dies, this shall be a lien on the land, and a trust for the representatives of him who advanced it. Zalee vs. Gibson, 1 Eq. Oa. Ab., 291, cited Eonblq, book 2, ch. 4, § 2, note g. 3 Paige, 545, cited 4 Bouvier’s Insts., § 3961-1.
A mortgagee in possession, has a right to erect new buildings on the site of the old, ■ and for the same purposes as were served by them. Eor, in such case, the new buildings are merely substitutions for those which were too ruinous, to be any longer useful. And on ascertaining what is due on the mortgage, the mortgagee will be allowed the costs of such repairs or improvements. 3 Powell, Mort. 957, a, note 2. 2 Spence Eq., 648. And it must follow, that if a mechanic had made such improvements or repairs, the mortgagor would not be allowed to redeem without paying his bills.
Now, the mortgagor is the real owner of the property in equity, and if in jwssession he not only has a right but it is his duty to keep the corpus of the property from becoming a less adequate security for the debt than it was when the incumbrance was created.
If the property was a mill or habitation, the common law, it seems, made it the duty of the owner to keep tbe mill or habitation in a useful state, merely pro bono publico / tliat is, where no particular person, but only the public at large, had an interest in the estate. Can it be less the owner’s duty then, to re-jtair a mill or dwelling in which another has acquired a right ?
But if it is his duty to repair, and he employs a mechanic to furnish materials and do the work, shall the incumbrancer, to whom the duty was owing, and for whose security the work was done and the materials provided, take the property discharged of the lien, to which it would have been subject if the incum-brance had not existed?
And what the mortgagor was bound to do for the public good, and in conscience for the benefit of the mortgagee, shall not be done at the expense of the innocent laborer, who was employed by an owner and possessor, thus bound; and moreover, vested with the right, on his own account, to maintain the integrity of his property.
Such being the right and duty of the mortgagor, he is such an “owner” of the ground as can make a contract with the mechanic for repairs and improvements, in virtue of which the lien is given by our acts of assembly. Meigs’ Dig., § 1258. And this he can do without consulting the mortgagee; for, as the mortgagee would have no right or power to forbid the work, there can be no purpose in giving him notice.
In short, it is equally unreasonable to imagine that he would be disposed to forbid it, and to hold that he can have a right to the labor without compensating the laborer.

Opinion:
TotteN, J.,
delivered tbe opinion of tbe court.
Tbe plaintiff, as administrator, with tbe will annexed of said L'Hommedieu, deceased, filed a bill in chancery to administer the assets of bis intestate to tbe creditors pro rata, under the insolvent law. Tbe Bank of Tennessee was a creditor of said intestate for $20,000; to secure the payment of which it held a mortgage on a lot of land on which was erected a flour mill and distillery near Nashville* The mortgage was executed by said intestate and others. The bank set up its lien, and the land was sold to the bank for $20,000, and the same was credited on its debt. The defendant, Iluff, filed his petition in said suit, claiming to be a creditor of said intestate for $799.21, for brick work done by him- as a mechanic, on said lot of land. It appears that after said mortgage was executed and registered, the buildings on said land were destroyed by fire; and said intestate and those interested with him, employed said Huff to- do brick work in rebuilding and repairing the same. The demand of said Huff is for a balance due on that account, and he claims that he has a priority over the mortgagee for work done as a mechanic, on the premises.
The mechanic has a lien by statute for one year, upon any lot or tract of land for work done or materials furnished at the instance of the " owner," in building or repairing any house or fixture thereou. Meigs' Dig., § 1258.
Now, the mortgagor, it is true, is the real owner of the land in equity, and if he employ mechanics to make improvements upon it they acquire a lien thereon for payment. Eor tbe mortgagee is considered as a 'creditor, not owner; and the only interest he has in the land, consists in a lien or security for the payment of his debt. It is a mere chattel interest. The mortgagor may exercise the rights of owner, if he do not commit waste or otherwise impair the security. Brady vs. Waldran, 2 John. Ch. R., 148. But, "in ordinary cases he is not bound to repair and keep the estate in good order; and there is no instance in which a court of equity has undertaken to correct permissive waste, or to compel the mortgagor to repair." 4 Kent's Com., 162. Campbell vs. McComb, 4 Johns. Ch. Rep., 534. It is true, that one of two joint tenants, or tenants in common, may make proper and reasonable repairs of houses or mills, on an estate in which they have a community of interest, and be entitled to contribution from the other, because they are equally owners of the estate, entitled- to its use and enjoyment; and because, as Lord Ooke says, owners are bound pro bono publico, to maintain houses and mills, which are for habitation and use of men. Co. Litt., 200, b. 4 Kent, 370. But this rule applies to the case of joint owners, and can have no application to the case before us; for the mortgagee is not owner in the sense of the rule.
The mortgagor was under no obligations to the mortgagee to repair the buildings destroyed by fire. It was at his discretion to repair them or not in view of his own interest. Nor was the mortgagee bound to concur in making the repairs, or liable in any sense, for the expense, without his consent.
The case then results in this: That the repairs were made at the request of the mortgagor, and upon Ms credit. The mechanic was also entitled to a lien on the mortgagor's interest in the land as a security for payment. But ás there was. a prior lien of which the mechanic had notice, and as the interest of the mortgagor is subject to that lien, the mechanic could acquire no greater or higher interest by his contract with the mortgagor than- that which the mortgagor possessed. The mechanic knew, or might have known of the existence of the prior lien, and has no cause to complain that it is entitled to a priority of payment. Under a different rule, it would be in the power of the mortgagor to destroy the security by erecting costly improvements, the expense of which, the estate improved would not be able to pay.
We are of opinion that the mortgagee is entitled to priority of payment over the lien of the mechanic for work dbne and materials furnished, after notice of the existence of the prior lien. The registry of the mortgage is such notice.
The Chancellor held a different opinion; his decree will therefore be reversed.
Decree reversed.