Court Opinion

ID: 6898219
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:52:10.113502+00
Date Added: 2024-06-11T16:06:04.767728
License: Public Domain

Decided 19 February, 1900.
On the Merits.
[60 Pac. 1.1
A bona fide mortgagee for value must be regarded as a bona fide purchaser within the letter and spirit of the mechanic’s lien law, and there is no question that when the sale or mortgage is prior to the commencement of any work or delivery of any materials, it will be preferred to its full extent in a contest with mechanics. When a mortgagee has placed his mortgage upon record, his rights are then protected by law. He has given such notice as the law has prescribed and is not bound either to assent to or dissent from any agreement for improvements made by the person in possession : Capital Lum. Co. v. Ryan, 34 Or. 73 (54 Pac. 1093); Brooks v. Lester, 36 Md. 95; Foushee v. Grigsby, 12 Bush (Ky.), 75; Jessup v. Stone, 13 Wis. 466; Greene v. Sprague, 120 Ill. 416; Hoover v. Wheeler, 23 Miss. 314; Kiene v. Hodge, 90 Iowa, 212 (57 N. W. 717); Robinson v. Williams, 22 N. Y. 380.
*406The mortgagor’s right cannot be impaired by a con. tract which did not exist when the mortgage was made and to which he was not a party : Sly v. Pattee, 58 N. H. 102.
The mortgage is a first lien on the whole property and is to be first satisfied out of the proceeds of sale : Miller v. Seal, 71 Iowa, 392 (32 N. W. 391); Kiene v. Hodge, 90 Iowa, 212 (57 N. W. 717); Oppenheimer v. Walker, 3 Hun. 30.
Under a statute providing that a lien created by a mechanic’s lien shall be preferred to all other liens which may attach subsequent to the commencement of the building, as provided by Section 3671 of Hill’s Ann. Laws, a mortgage executed and recorded prior to the commencement of work on a building takes precedence of the mechanic’s lien, although the mortgage may not expressly provide for future advances, and although some of the money secured by the mortgage was not paid until after the work had begun, being used to pay for labor and materials : Martsolf v. Barnwell, 15 Kan. 461, 464; Robinson v. Consolidated Real Estate, 55 Md. 105; Bartlett v. Bilger (61 N. W. 233-235); Wisconsin Planing Mills Co. v. Chuda, 72 Wis. 277 ; Phillips, Mech. Liens (3 ed.), § 237 ; Moroney's Appeal, 24 Pa. St. 372; Bartlett v. Bilger, — Iowa, — (61 N. W. 233).
Any building or improvement erected upon land subsequent to the execution of a mortgage, becomes a part of the land and is subject to the existing incumbrances : Inverarity v. Stowell, 10 Or. 261-264; Monticello Bank v. Sweet, — Ark. — (43 S. W. 500).
For Delahunt there was a brief over the name of Gearin & Brodie, with an oral argument by Mr. Geo. A. Brodie.
Mr. Justice Bean
delivered the opinion of the court.
This is a suit to foreclose a mechanic’s lien. On March 29, 1895, the defendants Delahunt and wife executed and delivered to the defendant the Alliance Trust Company a mortgage on lots 9 and 10, block 64, in Irvington, a suburb of Portland, to secure the payment of a loan of $3,000, and on the next day it was recorded. Some time in the following month the defendant Chandler, as contractor, commenced the erection of a dwelling house upon the mortgaged premises for the Delahunts, for which the plaintiff furnished materials, and, in default of payment, filed a lien upon the building and premises, and in due time commenced this suit to foreclose the same.
2. On behalf of the Delahunts it is claimed that plaintiff’s lien is invalid because it does not contain a true statement of its demand, and is not properly verified. The lien claim, as filed, shows a credit of $350, while the court below found that $400 had actually been paid to the plaintiff on account of material furnished for the building, and for this reason held the lien void. The statute requires a lien claimant to file with the county clerk of the county in which the building or other improvement is situate “a claim containing a true statement of his demand, after deducting all just credits and offsets and if, in filing such claim, he puts on record a statement which he knows to be untrue, or which he could have so known by the exercise of reasonable diligence, he loses his lien : Nicolai Bros. Co. v. Van Fridagh, 23 Or. 149 (31 Pac. 288). But where there is a mistake in the statement as to the amount due, made in the honest belief of its correctness, the courts will not for that reason hold the lien void : Rowland v. Harmon, 24 Or. 529 (34 Pac. 357). And such seems to have been the fact in this case. The evidence shows an honest controversy as to the amount *408paid to plaintiff on account of material furnished for the Delahunt building. The plaintiff claimed that it was only $350, while the defendants Delahunt contended that an additional $50 which the plaintiff received from the contractor should have been credited as a payment upon the material furnished for their building. There was thus a difference of opinion between the parties, requiring evidence to ascertain the true facts ; and there is no evidence that the plaintiff willfully and knowingly filed an untrue statement of his account, or that he made the statement carelessly or negligently. The court was there1 fore in error in holding the lien void.
3. Nor is there any merit in the objection that it is not properly verified. The statute provides that the claim must be verified by the claimant, or some one having knowledge of the facts : Section 3673, Hill’s Ann. Laws. The lien in question was filed by a corporation, and verified by its secretary, which is a sufficient verification, under the statute.
4. The remaining question is one of priority between the mortgage of the trust company and the lien of the plaintiff. It is conceded that the mortgage, being prior in time, takes precedence over the lien of the plaintiff on the land upon which the building was constructed (Capital Lum. Co. v. Ryan, 34 Or. 73, 54 Pac. 1093, arguendo); but the contention for. the plaintiff is that its lien upon the building is prior to the mortgage, and that it is entitled to a decree enforcing such lien against the building, and directing that it be sold separately from the land. Section 3671, Hill’s Ann. Laws, pi’ovides that “A lien created by this act upon any parcel of land shall be preferred to any lien, mortgage, or other incumbrance which may have attached to said land subsequent to the time when the building or other improvement was commenced, or the materials were commenced to be furnished and placed upon *409or adjacent to the land; also to any lien, mortgage, or other incumbrance which was unrecorded at the time when said building, structure, or other improvement was commenced, or other materials for the same were commenced to be furnished and placed upon or adjacent to the land ; and all liens created by this act upon any building or other improvement shall be preferred to all prior liens, mortgages, or other incumbrances upon the land upon which said building or other improvement shall have been constructed or situated when altered or repaired; and in enforcing such lien, such building or other improvement may be sold separately from said land ; and when so sold, the purchaser may remove the same, within a reasonable time thereafter, not to exceed thirty days, upon the payment to the owner of the land of a reasonable rent for its use from the date of its purchase to the time of removal,” etc. The case before us manifestly does not come within either of the first two clauses of the section, because they apply to liens attaching to the land after a building or other improvement is begun, or unrecorded at the time. It is the language of the third clause which calls for interpretation. For the trust company the contention is that it gives priority to a mechanic’s lien on a building, over prior mortgages or other incumbrances upon the land, for an alteration or repair of the building, only, and not on account of its original construction. The statute is not clear, but it seems to us that its evident meaning is that all mechanics’ liens shall attach to the building or other improvement in preference to prior liens, mortgages, or other incumbrances upon the land, whether such mechanic’s lien is for the original construction, or the alteration or repair of the building. It provides, in effect, that the liens created by this act upon any building or other improvement shall be preferred to all prior liens on the land upon which such building or other improvement shall *410have been constructed, or upon which it was situate when altered or repaired. This seems to be the plain interpretation of the language of the statute, and, as the question must be determined from the statute alone, it is useless to refer to authorities elsewhere; but see Grand Opera House Co. v. McGuire, 14 Mont. 558 (37 Pac. 607). It follows that the decree of the court below must be reversed, and a decree entered here in accordance with this opinion.
Reversed.