Court Opinion

ID: 3842083
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:11:28.190415+00
Date Added: 2024-06-11T13:45:50.333487
License: Public Domain

Petition for rehearing denied November 10, 1932                        ON PETITION FOR REHEARING
Counsel for respondent have joined with them several other eminent counsel and presented a brief to the court asking for a rehearing, contending that this court erred in holding:
"(1) The statute intended that such priority of liens should cover such structures, additions or repairs as may be detached from the land or the permanent buildings thereon without diminishing the value they had at the time a prior mortgage was recorded. This appears to be a reasonable and equitable construction to be placed upon the statute.
"(2) That the construction placed upon said statute was not in conflict with the decision of Cooper Mfg. Co. v. Delahunt, 36 Or. 403
(51 P. 649, 60 P. 1)."
The decision in Cooper Mfg. Co. v. Delahunt, supra, was written by the late Judge Robert S. Bean. Counsel in their petition for rehearing say:
"Judge Bean further states that the law provides that the lien created by the act is preferred to all prior liens on the land when the building is altered or repaired.
"This language is plain and definite. For over thirty years this interpretation has been acquiesced in by the law making department of our state and business generally."
Since writing our opinion, our attention has been called to an unpublished opinion of the late Judge Robert S. Bean, delivered orally on February 7, 1927, in the District Court of the United States for Oregon, in Stockton Box Co., plaintiff, v. ShastaView Lumber and Box Co., defendant, in which the same statute was under consideration.
"The contention of plaintiff, as I understand it, is that this statute was only intended to give priority *Page 667 
for work or labor performed in the erection or repair of a building which had been constructed on the land after the date of the mortgage, or after the mortgage lien had attached and not to the repair of a building which is described in the mortgage as part of the property covered thereby.
"The language of the statute is not clear and the Supreme Court of the State, as far as I am advised, has never construed this section. In Cooper Mfg. Co. v. Delahunt, 36 Or. 403, 60 P. 1, the court had before it for consideration the question of whether work performed in the construction of a building on real property after a mortgage had attached was within the terms and provisions of the statute. In that case, however, the building was constructed after the mortgage had attached, and the only question was whether the statute intended to give a lien for the construction of such building or was confined to repair and alteration thereof, and it was held that it applied to the construction of a building as well as alteration and repair. There is some language in the opinion, taken from the text, which would indicate that the court was of the opinion that the mechanic's lien took precedence over a prior recorded mortgage — a mechanic's lien for a construction of a building on the premises took precedence over a prior recorded mortgage, but in this, as in all cases, the language must be interpreted with reference to the facts before the court. It seems to me that it cannot be supposed that the legislature intended to impair the validity of a valid lien without clearly so stating in the statute. To provide that the mechanic should have a lien for the alteration of a building that was covered by a prior mortgage might, in some instances, absolutely destroy the mortgagee's security.
"The states of Iowa, Missouri and Arkansas have statutes very similar to ours, and in each of these states it has been held that a mechanic's lien does not take precedence or priority on a building on the land at the time the mortgage was given. As far as I have been able to ascertain there is no provision in the Oregon *Page 668 
statute by which a mortgagee can protect himself against such a lien. There is provision by notice for the owner of the property, and a method by which the owner may protect himself but not a mortgagee, and the mortgage, at the time this material was furnished and the labor performed was of record, was a lien upon the property and was notice to the lien claimant of the existence of the mortgage, and under those circumstances one who repairs or alters a building upon which there is a valid mortgage does so with knowledge of the existence of the mortgage. To hold otherwise would be, as said in the Supreme Court of Missouri in one of its cases, to put it in the power of the mortgagor to destroy the security by causing the building to be improved at an expense which the estate improved would not be able to pay. And therefore I take it that the plaintiff is entitled to a decree in this case and the mechanic's lien is subject to the plaintiff's mortgage."
We could not put the matter in clearer or more definite terms.
The petition for a rehearing will be denied. *Page 669