Court Opinion

ID: 8749211
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:19:37.093099+00
Date Added: 2024-06-11T17:00:51.323748
License: Public Domain

SANBORN, Circuit Judge
(dissenting). I am unable to concur in the view of the majority that it is the duty of this court to substitute in the act of the legislature of Arkansas of 1895 the use of a mortgage loan in the place of the purpose of it as the test of the superiority of its lien.
The portion of that act which controls this question reads: “That in all cases where said prior lien or incumbrance or mortgage was given or executed for the purpose of raising, money or funds with which to make such erections, improvements or buildings, then said lien shall be prior to the lien given by this act.” Acts Ark. 1895, pp. 2x7, 220. The opinion of the majority makes it read: “That in, all cases where said prior lien or incumbrance or mortgage was given or executed for money or funds which were actually used to make such erections, improvements or buildings, then said lien shall be prior to the lien given by this act';” or “that in all cases where said prior lien or incumbrance or mortgage was given or executed for the purpose of raising money or funds -with which to make such erections, improvements or buildings, then said lien shall be prior to the lien given by this act, except in cases in which the money is not used for the purpose for which it was raised.” But what warrant have the courts to substitute use for purpose in the statute of Arkansas or to add this exception to the act of its legislature? The legislature of Arkansas said nothing about the use or application of the money raised by these mortgages. That body declared that the purpose of the loan should determine its superiority. Why should the courts strike out the test which the legislature provided and insert another? It is said that this ought to be done to effect the intention of the legislature. But is the intention of that body in-adopting a statute to be determined by the opinions of judges as to. what it might or ought to have said, or is it to be found in that which is clearly expressed? Is it permissible for the "courts to presume or believe that the legislature intended one thing when it clearly-expressed another, and are courts allowed to substitute their presumption and belief for the actual legislation? The general rule that it is the purpose of the construction of statutes to learn and give-effect to the intention of the legislative body which enacted them is familiar. But this rule is nothing but a broad general proposition,, which is limited and qualified by the established rules and principles of the law that peremptorily prohibit the courts from imputing to. any legislative body an intention, or from- construing or interpolating into a plain statute the expression of an intention, which the legislature has not fairly set forth in the law which it has enacted. The proviso of section 3 which has been quoted is the only portion of this-statute which states, or undertakes to state, the test which shall determine the superiority of the liens of prior mortgages over the subsequent liens of mechanics, and this proviso unequivocally declares, that that test shall in all cases be the purpose for which the mortgage-*13was given. The provision of section io that any one interested as mortgagee or trustee may apply to a contractor or a subcontractor for a list of all the parties doing work or furnishing material for improvements and for a statement of the amount due to each of such persons does not seem to me to indicate that the legislature intended by that section to change the test it had plainly declared in section 3. If that body had such an intention it could easily have declared it, and section 10 contains no such declaration. In my opinion that, section has two other objects: (1) To enable mortgagees whose mortgages were not given for the purpose of raising money to make the improvements to protect themselves against subsequent liens, an end which they could only attain by paying off such liens or causing them to be paid; and (2) to furnish a ready way for mortgagees to ascertain the names of the necessary parties to suits for the foreclosure of their mortgages. Whatever may have been its purpose, however, it contains nothing inconsistent with the plain declaration of the proviso of section 3, and, on familiar principles, an inconsistent intention and expression ought not to be construed into section 10 for the purpose of creating a conflict between that section and section 3, which the terms of those sections do not disclose. There is nothing in any of the sections of the act, nothing in the first, second, third, fourth, fifth, or tenth sections, to which the majority refer, which declares in terms that the purpose of the loan shall not be the test of its superiority or that the use of its proceeds shall be. There is nothing in any of these sections or in any part of the act inconsistent with the unambiguous declaration of the proviso of section 3, and therefore nothing, in my opinion, to warrant the repeal or modification of the plain words of that section. The following considerations persuade me to this conclusion:
1. It is the intention expressed in the statute, and that alone, to which courts may give effect. They may not assume or presume purposes and intentions that the terms of the statute do not indicate or express, and then enact provisions to accomplish these supposed intentions. A secret intention cannot be legally interpreted into a statute which is plain and unambiguous, and which does not express it. The legal presumption is that the legislature expressed its intention and its whole intention, that it intended what it expressed, and that it intended nothing more. U. S. v. Wiltberger, 5 Wheat. 76, 94, 5 L. Ed. 37; Bennett v. Worthington, 24 Ark. 487, 494; Tynan v. Walker, 35 Cal. 634, 95 Am. Dec. 152; Alexander v. Worthington, 5 Md. 471; Maxwell v. State, 40 Md. 293; Smith v. State, 66 Md. 215, 7 Atl. 49; Johnson v. Southern Pac. Co. (C. C. A.) 117 Fed. 462; Insurance Co. v. Champlin (C. C. A.) 116 Fed. 858; Cold Blast Transp. Co. v. Kansas City Bolt & Nut Co., 52 C. C. A. 25, 114 Fed. 77, 81, 57 L. R. A. 696; Railway Co. v. Bagley, 60 Kan. 424, 431, 56 Pac. 759; Woolsey v. Ryan, 59 Kan. 601, 54 Pac. 664; Davie v. Mining Co., 93 Mich. 491, 53 N. W. 625, 24 L. R. A. 357; Vogel v. Pekoc, 157 Ill. 339, 42 N. E. 386, 30 L. R. A. 491; Campbell v. Lambert, 36 La. Ann. 35, 51 Am. Rep. 1; Turnpike Co. v. Coy, 13 Ohio St. 84; Stensgaard v. Smith, 43 Minn. 11, 44 N. W. 669, 19 Am. St. Rep. 205.
*14In U. S. v. Wiltberger, 5 Wheat. 76, 94, 5 L. Ed. 37, Chief Justice Marshall said:
“The intention of the legislature is to be collected from the words they employ. Where there is no ambiguity in the words, there is no room for construction. The case must be a strong one, indeed, which would justify a court in departing from the plain meaning of words, especially in a penal act, in search of an intention which the words themselves did not suggest. To determine that a case is within the intention of a statute, its language must , authorize us to say so. It would be dangerous, indeed, to carry the principle that a case which is within the reason or mischief of a statute is within its provisions, so far as to punish a crime not enumerated in the statute, because it is of equal atrocity or of kindred character with those which are enumerated.”
It would not be less dangerous to strike down any or all liens of mortgages which are superior in date and right to mechanics’ liens, and which are not denounced by a statute, because they are within the mischief which it was intended to remedy, or within its reason and are of a kindred character with those which it clearly enumerates and invalidates.
In Maxwell v. State, 40 Md. 293, the supreme court of that state said:
“Courts must not, even to give effect to what they may suppose to be the intention of the legislature, put upon the provision of a statute a construction not supported by the words, even although the consequence should be to defeat the object of the act.”
In Alexander v. Worthington, 5 Md. 472, that court said:
“The courts cannot imagine an intent, and bend the letter of the act to it.”
And again in Smith v. State, 66 Md. 215, 7 Atl. 49, it said:
“Even when a court is convinced that the legislature really meant and intended something not expressed by the phraseology of' the act, it will not deem itself authorized to depart from the plain meaning of the language, which is free from ambiguity.”
In Tynan v. Walker, 35 Cal. 634, the supreme court of California declared that the argument that the legislature intended to include a case that was not within the terms of a statute because it was within-its reason was
—“A most dangerous and pernicious mode of reasoning, which amounts to judicial legislation, and overturns the maxim that courts are authorized to declare the law only, arid not to make it. If they may add at all to the exceptions provided for in the statutes, under the pretense that the,case before them is of equal equity with those given in the statutes, who is to fix the limit to their interpolation or establish the line between legislative and judicial function? If they may add one to the list of excepted cases, by a parity of reasoning they may add another, and so on until the entire body of the statute has become emasculated and the will of the judiciary substituted for that of the legislature. * * * It is an universal principle of construction that courts must find the intent of the -legislature in the statute itself. Unless some ground can be found in the statute for restraining or enlarging the meaning of its general words, they must receive a general construction, and the courts cannot arbitrarily subtract from or add thereto.”
And the supreme court of Arkansas, whose legislature enacted this statute, declared in Ex parte Trapnall, 6 Ark. 9, 12, 42 Am. Dec. 676, that:
“Effect must, if possible, be given to the object and intention of the legislature, but to ascertain that object and intention we must first have recourse *15to the language employed in the act, and, if that he clear and unambiguous, we can proceed no further in the inquiry.”
Apply the rule which these authorities announce to the statute in hand. It declares without uncertainty or doubt that the liens of prior mortgages whose proceeds were raised for the purpose of making improvements upon the mortgaged property are superior to subsequent mechanics’ liens. It says “that in all cases where said prior lien or incumbrance or mortgage was given or executed for the purpose of raising money or funds with which to make such erections, improvements or buildings, then said lien shall be prior to the lien given by this act.”- The contention is that it intended to except from that declaration the liens of all such prior mortgages the proceeds of which were not actually used to make the improvements. In other words, the argument is that the legislature enacted that the purpose of the loan should be the test of its superiority when it intended to provide that the use of the loan should constitute that test. But the difference between purpose and use is patent in common parlance, in legislation, and in the law. Statutes which authorize the issue of municipal bonds invariably specify the purpose for which they may be issued and sold. If issued for that purpose they are valid; if for any other purpose, they are void. But it is a well-established principle, which has been uniformly and repeatedly sustained by the decisions of this court, that the fact that the proceeds of such bonds have not been used for the purpose for which they have been raised constitutes no defense to the bonds. The test of their validity is the purpose for which the proceeds were obtained, not the use to which they were applied. City of Huron v. Second Ward Sav. Bank, 30 C. C. A. 38, 43, 86 Fed. 272, 277, 49 L. R. A. 534; National Life Ins. Co. v. Board of Education of City of Huron, 10 C. C. A. 637, 644, 62 Fed. 778, 784; West Plains Tp. v. Sage, 16 C. C. A. 553, 566, 69 Fed. 943, 946; Commissioners v. Beal, 113 U. S. 227, 240, 5 Sup. Ct. 433, 28 L. Ed. 966; Cairo v. Zane, 149 U. S. 122, 137, 13 Sup. Ct. 803, 37 L. Ed. 673; Maxcy v. Williamson County Court, 72 Ill. 207. The legislature of Arkansas could not have been ignorant of the difference between purpose and use when it enacted this statute. It had undoubted power to choose whether the purpose of raising the proceeds of the mortgage loans or their use should determine the superiority of the liens of the mortgages. It chose and clearly provided that the purpose should constitute the test. This was a positive declaration. that the use should not constitute it, for the expression of one alternative is the exclusion of the other, and it seems to me that it left no tenable ground for the position that the legislature intended that any other test than that which it plainly expressed should determine the superiority of the liens of such mortgages. The legal presumption becomes conclusive that the legislature meant what it so clearly expressed, and that it meant nothing else.
2. Where the legislature makes no exception from the plain terms of a statute, the conclusive legal presumption is that it intended to make none, and the courts may not lawfully do so. Railway Co. v. B’Shears, 59 Ark. 244, 27 S. W. 2; Shreve v. Cheeseman, 69 Fed. 785, 786, 16 C. C. A. 413, 414; Madden v. Lancaster Co., 12 C. C. A. *16566, 573, 65 Fed. 188; Morgan v. City of Des Moines, 8 C. C. A. 569, 60 Fed. 208; McIver v. Ragan, 2 Wheat. 25, 29, 4 L. Ed. 175; Bank v. Dalton, 9 How. 522, 528, 13 L. Ed. 242; Vance v. Vance, 108 U. S. 514, 521, 27 L. Ed. 808. In Railway Co. v. B’Shears, 59 Ark. 237, 244, 27 S. W. 2, the supreme court of Arkansas said:
“Where the statute makes no exceptions, the courts can make none. It might be very just and reasonable and right that the statute should make an exception, such as is contended it does make, or ought to be construed to make; but this was within the power of the legislature, ‘and its exercise of the power cannot be restrained or varied by the courts to subserve’ convenience, to relieve from hardships, or from requirements that seem unreasonable, or even absurd, where the language is plain and unambiguous. Sims v. Cumby, 53 Ark. 421, 14 S. W. 623; McGaughey v. Brown, 46 Ark. 37; Railway Co. v. Hagan, 42 Ark. 122; Railroad Co. v. Carlley, 39 Ark. 246.”
By the proviso of section 3 the legislature enacted that the liens of all prior mortgages which were given for the purpose of raising money to make improvements on the mortgaged property should be superior to the subsequent liens of laborers and materialmen. It made' no exception of mortgages the proceeds of which were not actually used for the purpose for which they were raised. It therefore intended to make none, and it is not the province of the courts to do so. The legislature declared that the liens of all mortgages given for the purpose of raising money to make improvements should be SU; perior to the subsequent liens of mechanics. That declaration seems to me to conclusively negative the assumption and decision of the majority that the legislature intended to and did provide that the liens of some of these mortgages should be superior, while the liens of others of them should be inferior to the subsequent liens of mechanics.
3. Construction and interpretation have no place or office where the terms of a statute are clear and certain and its meaning is plain. When its language is unambiguous, and its meaning evident, it must be held to mean what it plainly expresses, and no room is left for construction. In such a case argument from the reason, spirit, or purpose of the legislation, from the mischief it was intended to remedy, from history or analogy, for the purpose of searching out and justifying the interpolation into the statute of new terms, and for the accomplishment of purposes which the lawmaking power did not express, are worse than futile. They serve only to raise doubt and uncertainty where none ought to exist, to confuse and mislead the judgment, and to pervert the statute. Lake Co. v. Rollins, 130 U. S. 662, 670, 9 Sup. Ct. 651, 32 L. Ed. 1060; U. S. v. Hartwell, 6 Wall. 396, 18 L. Ed. 830; Sturges v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529; Knox Co. v. Morton, 15 C. C. A. 671, 673, 68 Fed. 787, 789; Railroad Co. v. Sage, 17 C. C. A. 553, 565, 71 Fed. 40, 47; Webber v. Railway Co., 38 C. C. A. 79, 83, 97 Fed. 140, 144; Swarts v. Siegel (C. C. A.) 117 Fed. 13; Johnson v. Southern Pac. Co. (C. C. A.) 117 Fed. 462; U. S. v. Fisher, 2 Cranch, 358, 399, 2 L. Ed. 304; Bedsworth v. Bowman, 104 Mo. 44, 49, 15 S. W. 990; Warren v. Paving Co., 115 Mo. 572, 576, 22 S. W. 490; Davenport v. City of Hannibal, 120 Mo. 150, 25 S. W. 364; Witte v. Koeppen, 11 S. D. 598, 79 N. W. 831, 74 Am. St. Rep. 826; Johnson v. Railroad Co., 49 N. Y. 455, 462.
*17In Lake Co. v. Rollins, 130 U. S., at page 670, 9 Sup. Ct. 652, 32 L. Ed. 1060, the supreme court in discussing this question said:
“We are unable to adopt the constructive interpolations ingeniously offered by counsel for defendant in error. Why not assume that the framers of the constitution and the people who voted it into existence meant exactly what it says? At the first glance, its reading produces no impression of doubt as to the meaning. It seems all sufficiently jplain, and- in such a case there is a well-settled rule which we must observe. The object of construction, applied to a constitution, is to give effect to the intent of its framers and of the people in adopting it This intent is to be found in the instrument itself; and when the text of a constitutional provision is not ambiguous the courts, in giving construction thereto, are not at liberty to search for its meaning beyond the instrument. To get at the thought or meaning expressed in a statute, a contract, or a constitution, the first resort, in all eases, is to the natural signification of the words, in the order of grammatical arrangement in which the framers of the instrument have placed them. If the words convey a definite meaning, which involves no absurdity, nor any contradiction of other parts of the instrument, then that meaning, apparent on the face of the instrument, must be accepted, and neither the courts nor the legislature have the right to add to it or take from it. Newell v. People, 7 N. Y. 9, 97; Hills v. City of Chicago, 60 Ill. 86; Scott v. Reid, 10 Pet. 524, 9 L. Ed. 519; Leonard v. Wiseman, 31 Md. 201, 204; People v. Potter, 47 N. Y. 375; Cooley, Const. Lim. 57; Story, Abr. Const. § 400; City of Beardstown v. City of Virginia, 76 Ill. 34. So, also, where a law is expressed in plain and unambiguous terms, whether those terms are general or limited, the legislature should be intended to mean what they have plainly expressed, and consequently no room is left for construction. U. S. v. Fisher, 2 Cranch, 358, 399, 2 L. Ed. 304; Doggett v. Railroad Co., 99 U. S. 72, 25 L. Ed. 301.”
If the English language contains any words or terms which would express more clearly than those used in the act of 1895 the thought that the purpose for which a prior mortgage or incumbrance was given shall be the sole test of its superiority over subsequent mechanics’ liens, they do not occur to me. This seems to me to be the evident and the only meaning of the words of the statute when they are taken in their natural and ordinary signification. They say “that in all cases where said prior lien or incumbrance or mortgage was given or executed for the purpose of raising money or funds with which to make such erections, improvements, or buildings, then said lien shall be prior to the lien given, by this act.” In my opinion, the courts ought not to repeal this law and enact another to the effect that the purpose of the giving of the prior mortgages shall not be the test of their superiority, and that the use of their proceeds or some other fact or circumstance shall be. No such duty is imposed upon them, nor is any such legislative power conferred upon the judiciary.
4. The common or the general law is not further abrogated by a modifying statute than the clear import of its language necessarily requires. Such a statute should be strictly interpreted, and should not be extended by construction to subjects or classes which it does not clearly include. Shaw v. Bank, 101 U. S. 557, 565, 25 L. Ed. 892; Fitzgerald v. Quann, 109 N. Y. 441, 445, 17 N. E. 354; Brown v. Barry, 3 Dall. 365, 367, 1 L. Ed. 638; Johnson v. Southern Pac. Co. (C. C. A.) 117 Fed. 462. Under the common law and under the statutes of Arkansas as they read before this act of 1895 was passed, the liens of all mortgages and incumbrances upon real estate before im*18provements were commenced thereon took precedence in right as in time to the subsequent liens of mechanics. The act of 1895 subordinated the liens of that class of these prior mortgages and incumbrances which were not given for the purpose of raising money to make improvements upon the incumbered property to subsequent mechanics’ liens. To that extent it abrogated the common law and the general law. It ought not to be construed to abrogate or modify that law further than its language necessarily requires. That language does not require the abrogation of the former law to* such an extent that the liens of that class of mortgages which were given for the purpose of raising money to make improvements, but the proceeds of which were not used for that purpose, shall be subordinated to subsequent liens of mechanics in addition to the class specified in the statute, and it ought not to be given that effect.
5. An ex post facto construction of a plain statute which destroys prior rights vested under the law as it reads is as abhorrent to justice and reason and as inadmissible as an ex post facto law. Johnson v. Southern Pac. Co. (C. C. A.) 117 Fed. 462. The mortgagees in this case invested their money in this mortgage for the purpose specified in this statute, which plainly declares that the liens of mortgages given for that purpose shall be superior to the subsequent liens of mechanics. A construction which repeals that declaration establishes a new test for the superiority of such liens, and strikes down those honestly secured under the statute, without any notice or premonition that any new test not mentioned in this law would be prescribed by the courts, has all the pernicious attributes of an ex post facto law, and is violative of the basic principles of Anglo-Saxon jurisprudence.
In view of the unquestioned rules and principles to which reference has now been briefly made; because it is the intention expressed in the statute, and that alone, to which courts may lawfully give effect, and this statute does not express an intention to except from its terms prior mortgages given for the purpose of raising money to make improvements upon the mortgaged property the proceeds of which were not used for that purpose; because the legislature has made no exception from the plain terms of the statute, and when it makes none the conclusive legal presumption is that it intended to make none, and the courts ought not to do so; because the terms of this statute áre plain and unambiguous, and for that reason it is not subject to construction; because it abrogates a part of the common and of the general law, its language does not require the abrogation of that part of the law which gives superiority to the liens of prior mortgages given for the purpose of raising money to make improvements on the mortgaged property the proceeds of which were actually used for other purposes, and a statute which changes the general law may not be construed to modify it further than the clear import of its language necessarily requires; and because the construction which would repeal the test of the purpose of a loan prescribed by a statute and enact the test of its use to destroy mortgages previously given in reliance upon the plain declaration of the law that the purpose, and not the use, is the test, has all the vice of an ex post facto law,—the conclusion is irresistibly forced upon my mind that the exception to the terms of this statute *19which the opinion of the majority inserts' ought not to be construed into the law by the courts, and the statute should stand and be enforced as it was enacted by the legislature, with its plain declaration that the sole test of the superiority of liens upon lands before improvements are made is the purpose for which the debts they secure were incurred, and not the use made of their proceeds.
My conclusion relative to the question which has been discussed is based upon the reasons which have now been given. The statute seems to me too plain for interpretation, and arguments from the mischief to be remedied and the probable intention of the legislature seem to me ineffectual. It may not, however, be out of place to suggest that it is exceedingly doubtful whether the change in the terms of the statute, that the use of the proceeds of loans instead of the purpose for which the proceeds were obtained shall be the test of the superiority of the mortgages which secure them, will not prove very deleterious to the interests of mechanics, laborers, and materialmen who contribute to the construction of improvements upon mortgaged real estate. Under the test which the statute prescribes they have notice of the existence of prior incumbrances from the records, and by a simple inquiry of the holders of these instruments and of the owner of the property they may readily ascertain before they bestow their labor or material upon the improvement whether or not the incumbrances will be superior to their liens. They can easily learn the purpose for which the money was raised. If they discover that it was obtained for the purpose of making the improvement, they may refuse to contribute to the building, and may thus secure themselves against loss in any event. They cannot do so if the use or application of the proceeds is substituted for the purpose of the loan as the test of the superiority of the mortgages. Under that test the liens of prior incumbrances, which are not superior when the improvement is commenced, may, by the use of their proceeds in its construction, become superior as the building rises. A contractor or laborer will be unable to learn before he commences to contribute to the improvement what part of the proceeds of prior liens will be used in the construction of the building, and after he has furnished his material or performed his labor the proceeds of prior mortgages may be used in completing it, and thus superior liens may be fastened upon it which had not attached or become fixed when he contributed to the building, and which will ultimately sweep away all his security.
There is another consideration which ought to have weight to prevent this change in the statute. It is that such a change will render the security of mortgages more precarious and uncertain and will tend to compel borrowers to pay higher rates of interest to compensate for the less security of the mortgage liens. While these considerations are not in my opinion appropriate to the discussion of this question in the courts, they are worthy of serious deliberation by the legislature or by any other body which undertakes to change the terms and effect of this statute.
There is another conclusion of the court to which I am unable to assent. It is that the mortgagees were estopped from claiming that they had a lien even for the $3,000, which was actually invested in the *20improvement, superior to • that of Dyke Bros., notwithstanding the fact that their loan was made and their mortgage was recorded before the lien of the latter attached. The facts disclosed by the record upon which this conclusion is based are these: Harry E. Kelley was a broker and an agent for owners of real estate and for parties borrowing and loaning money in the city of Ft. Smith, in the state of Arkansas, where the mortgagor, Joe P. Matthews, resided. The mortgagees appear to be nonresidents of the state. Matthews made a written application to Kelley to procure for him a loan of $4,000 on his lot. By this application he appointed Kelley his agent, agreed to pay him for his services in procuring the loan, and that it was to be procured for the purpose of building a two-story stone or brick wholesale house upon the lot. Kelley obtained the loan of the mortgagees, and Matthews paid him out of the proceeds $200 for his services. For some ten years prior to this time Kelley had been the agent of the mortgagees to collect and foreclose their mortgages in the state of Arkansas, and had procured loans from them for borrowers who had appointed him their agent for that purpose by submitting to the mortgagees the written applications of the borrowers of the character made by Matthews in this case. This application was submitted to the mortgagees before they made the loan, and after it was accepted by them Matthews made his notes and mortgage on April 28, 1899. At the time when the mortgage was made Kelley placed the $4,000, which Matthews borrowed, to- the credit of Matthew's on his books, and subsequently paid it out on Matthews’ orders. There was no evidence that the mortgagees had or exercised any control over the disposition of the money after the mortgage was made, on April 28, 1899, and the proof was undisputed that it was paid out upon the orders of Matthews. There was no understanding and agreement between Kelley and the mortgagees that the former should apply the money to the building of the house. But Matthews did not ask for the payment of all the money to him, all the parties to the transaction knew that it was borrowed for the purpose of erecting the house, and Kelley intended to see that it was applied to that purpose, for this was his practice when his customers borrowed money for the purpose of improving the property which they mortgaged. The lien, of Dyke Bros, first attached to the property on June 19, 1899, more than a month after the mortgagees had transferred to Matthews the entire control of the money loaned and had recorded their mortgage. There is no controversy concerning the facts which have now been recited. But there is a direct conflict of testimony between two witnesses, M. T. Dyke and Harry E. Kelley, over the essential fact upon which Dyke Bros, relied to maintain their estoppel, and which is now to be considered. Mr. Dyke testified that after he procured the contract to furnish some of the lumber for this building, and before he delivered any of it, he asked Kelley: “ ‘What about the pay on it ?’ and he says, T have about $1,500 in my hands belonging to Mr. Matthews, and I will see that you get your money out of it;’ ” that he would not have furnished the lumber unless Kelley had made this statement, and that he did furnish it in reliance upon this conversation. Mr. Kelley testified that he never had any such conversation with Dyke, and that he never made *21any such statement to him, and there is no other evidence in the case on the subject. The referee who heard these witnesses, observed their demeanor, and weighed their characters found that no such conversation took place, and that if it had it could not have estopped the mortgagees from insisting that the lien of their mortgage was superior to that of Dyke Bros. The district court reversed the finding of fact and conclusion of law of the referee, and rendered the decree which has been recited. Was this action warranted by the law and the evidence when this case came before the district court ?
Let us consider first the question of fact. The mortgage was of record. The question whether or not this conversation took place had been submitted to and was decided by the referee under an agreement of the parties that he should determine all the questions of law and of fact relative to the superiority of their liens. The burden of proof was on Dyke Bros, to establish the conversation on which they relied by a fair preponderance of testimony, and they had no' preponderance, for Kelley’s testimony stands uncontradicted in the case by any witness except Dyke. More credence is and ought to be given to a disinterested than to an interested witness, and Kelley had no interest while Dyke’s claim was at stake upon his testimony. The finding of a fact dependent upon conflicting testimony by a judge, a master, or a referee, who sees and hears the witnesses testify, has every reasonable presumption in its favor, and may not be set aside and modified unless it clearly appears that there was an error or mistake upon his part. Tilghman v. Procter, 125 U. S. 136, 149, 8 Sup. Ct. 894, 31 L. Ed. 664; Callaghan v. Myers, 128 U. S. 617, 666, 9 Sup. Ct. 177, 32 L. Ed. 547; Clyde v. Railroad Co. (C. C.) 59 Fed. 394, 399; Missouri Pac. Ry. Co. v. Texas & Pac. Ry. Co. (C. C.) 33 Fed. 803, 806; Hennessey v. Budde (C. C.) 82 Fed. 541, 542.
And where by agreement of the parties a referee or special tribunal is selected, or by consent parties submit to him their controversies for determination, his finding of the facts “so far as it depends upon conflicting testimony, or upon the credibility of witnesses, or so far as there is any testimony consistent with the finding, must be treated as unassailable.” Davis v. Schwartz, 155 U. S. 631, 636, 637, 15 Sup. Ct. 237, 39 L. Ed. 289; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764; Crawford v. Neal, 144 U. S. 585, 596, 12 Sup. Ct. 759, 36 L. Ed. 552; Furrer v. Ferris, 145 U. S. 132, 12 Sup. Ct. 821, 36 L. Ed. 649. The holders of these liens selected this referee as a special tribunal, and consented that the questions of fact and of law, which conditioned the rank of their liens, should be determined by him, and the rule announced by the supreme court in Davis v. Schwartz made his finding of fact here, which was supported by at least as much testimony as was deduced in opposition to it, conclusive of this issue. Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764, and Davis v. Schwartz, 155 U. S. 637, 15 Sup. Ct. 237, 39 L. Ed. 289. In the latter case the supreme court after declaring that a finding of fact in such a case was conclusive if there was any testimony to sustain it, and after discussing and reiterating the rule in Kimberly v. Arms, disposed of a like question which had arisen in that case in these words: “As the reference in this case was by consent *22to find the facts, we think the rule in Kimberly v. Arms applies, and, as there is nothing to show that the findings of fact were unsupported by the evidence, we think they must be treated as conclusive.” It seems to me to follow from these rules and decisions that whether the occurrence of the conversation upon which Dyke Bros, claim an estoppel is founded is considered as an original question, dependent upon the preponderance of evidence, and upon the interest, character, and demeanor of the witnesses, or as the finding of the referee whom the parties had selected and agreed to constitute a special tribunal to hear and determine their controversies, the finding of the referee that no such conversation took place was both right and conclusive, and should have been sustained by the court below.
Nor is the conclusion of láw that if this conversation had taken place the mortgagees would have been estopped thereby from maintaining the superiority of their lien more tenable. An estoppel is a prohibition of one from denying the truth of some statement or representation of fact which he has made and upon which another has rightfully acted. It is nothing more and goes no further. It never prevents one from maintaining the truth concerning any fact relative to which he has made no misstatement or misrepresentation. The truth which Dyke Bros, seek to estop the mortgagees from asserting is that the lien of their mortgage was superior to the mechanic’s lien of Dyke Bros. That mortgage was of record, and Dyke Bros, were charged with knowledge of its priority and superiority. The mortgagees never made any statement or representation, that it was not or would not be prior or superior to the lien of these materialmen.. Kelley had neither power nor authority to discharge the lien of the mortgagees nor to subordinate it to the liens of others, and no statement or representation which he made could have had any such effect or could have been binding upon them.
Again, if Kelley had been the mortgagee and had made the alleged statement to Dyke, still he would not have made any statement or representation that the lien of the mortgagees was not superior to that of Dyke Bros. If he said, “I have about $1,500 belonging to Mr. Matthews, and I will see that you get your money out of it,” that statement contained no averment or representation that the lien of the mortgagees was not superior to any lien which Dyke Bros, had or could acquire upon the lot and building. It was nothing but a statement that he had $1,500 of Matthews’ money, coupled with a promise that he would pay Dyke Bros, out of it. It would not be a denial of this statement to prove the first lien of the mortgagees upon the lot and building. That fact tends in no way to show that Kelley did not have $1,500, or that he would not see that Dyke Bros were paid. Hence the statement cannot estop or prohibit the mortgagees from establishing and maintaining the fact that their lien is superior to that of Dyke Bros., a truth which is neither directly nor indirectly denied by the terms of Kelley’s alleged statement.
Moreover, there is no foundation for an estoppel in the statement. It is not claimed that the averment that Kelley had $1,500 of Matthews’ money in his hands was not true. The only part of the conversation which is asserted to be false or to form the basis of an estop*23pel consists in the words, “I will see that you get your money out of it.” But this is nothing butta promise, nothing but an executory agreement, and no estoppfel can arise upon a promise or upon an executory contract coupled with a failure to perform it. The only remedy for such a failure is an action for specific performance or for damages for breach of the agreement. 2 Pom. Eq. Jur. § 808; Bigelow, Estop, p. 555; White v. Ashton, 51 N. Y. 285; Starry v. Korab, 65 Iowa, 267, 269, 21 N. W. 600; Railroad Co. v. Barnes, 64 Fed. 80, 82, 12 C. C. A. 48, 50.
A false representation or a concealment of an existing or present state of things is a sine qua non of an estoppel. Neither a promise nor a prophecy will sustain it, “for,” as Mr. Bigelow well says, “if a party make a representation concerning something in the future it must generally be either a mere statement of intention or opinion, uncertain to the knowledge of both parties, or it will come to a contract with the peculiar consequences of a contract.” In Maddison v. Alderson, 52 Law J. Q. B. 737, Lord Selborne said: “The doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence, and not to promises de futuro, which, if binding at all, must be binding as contracts.” So are all the authorities. There was no false statement, no misrepresentation of any fact, of any past or existing state of things, in the alleged conversation of Kelley, and hence it could not have worked an estoppel. The conclusion seems to me to be inevitable that under the. evidence and the finding of the referee Dyke Bros, failed to establish the fact that Kelley made the statement upon which they relied, and that, if he had made it, it could not under the law have estopped the mortgagees from asserting the priority and superiority of their lien. No estoppel arose which forbade them from maintaining that the lien of their mortgage was superior in right to the mechanic’s lien of Dyke Bros.
In my opinion the decree below should be reversed, with a direction to the court below to enter a decree in accordance with the finding of the referee that the mortgagees are entitled to a first lien upon the premises and the proceeds thereof for the entire amount of their mortgage debt and interest.