Court Opinion

ID: 6737668
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:47.863664+00
Date Added: 2024-06-11T16:01:51.230556
License: Public Domain

Goss, J.
(dissenting, but concurring in result). Do not draw the same deductions from the testimony of the witness Peck as have the majority. This witness has denied explicitly all knowledge that material was being furnished for improvements upon the northwest of 15. And there is no proof of knowledge on his part that this land in 15, upon which he supposed he had taken his mortgage, was used in connection with and as a part of the mining property on 16, as both the entrance to and the dump of the mine and all buildings adjacent to it were entirely upon section 16. The finding of fact upon which is predicated the decision (to quote from the majority opinion) — “his (Peck’s) testimony as a whole convinces a majority of the court that he was in possession of such facts regarding this building material as constituted notice in law that a lien might be claimed” upon the northwest quarter of section 15' — ■ seems to me to be utterly without foundation in the proof, unless the testimony be distorted and warped into something never intended by the witness. The simple fact that a loan of $2,500 was made by plaintiff upon this bare quarter section ought to be sufficient proof that plaintiff never suspected any possible facts existing that would warrant a claim by anybody of a mechanic’s lien upon improvements on this land, notwithstanding that he may have understood that the elevator company had furnished material for the improvement of a mining property upon a different section altogether and upon which a miner’s lien (as distinguished from a mechanic’s lien) perhaps might have been filed. As for knowledge that the loan was to pay outstanding bills, any business man would have a right to assume that the reason a loan is made is that the mortgagee may pay up his indebtedness. Nor can I see anything in Peck’s testimony to warrant any finding of evasiveness on his part, as would appear to be the conclusion of the majority from the emphasis that has been placed upon his statement that he did not know that a lien would be claimed on section 15, the property upon which he took his *113mortgage. Of course he did not think a lien could be claimed upon that property; otherwise, he never would have loaned the owner $2,500.upon it as security. The size of the loan would seem a prima facie sufficient refutation to any business mind of any such inferences. Peck in Kemmare, over a hundred miles distant by rail, may have been negligent in not examining the property to ascertain, before loaning upon it, that 15 was used with 16 as one mining property, if such was the fact, but he was no more negligent in this respect than was the elevator company and its agents in the village of White Earth, almost within sight of the mine, in selling this material as claimed for use upon 15, and yet remaining ignorant that all of it was being used in the erection of buildings upon 16, a different property entirely. And a month elapsed during which they were thus negligently delivering the materials and during which time all materials delivered were being diverted to other property. No reason existed in fact upon which to predicate notice to plaintiff company that the materials were being furnished for use upon 15 when concededly not a stick of this lumber was ever upon that section, and no notice is shown of the contract or of the fact that the northeast quarter of 16 was used with the northwest quarter of 15 as one mining property. Every inference of notice, actual ox constructive, to plaintiff is wholly unwarranted and to that extent an injustice to it. It is also flatly contrary to the findings of the trial judge who heard the testimony and understood the facts.
Nor can I wholly agree to the construction of our mechanics’ lien laws as based upon the assumed hypothesis of notice had by plaintiff that materials were being furnished. These statutes are broad enough without indulging in any presumption of fact upon which to further extend them. And the construction announced seems to me to be an enlargement upon the statute already sufficiently broad. “The laborer is worthy of his hire,” and the materialman is likewise entitled to security for all improvements for which he has furnished materials, not only as against the purchaser of such materials, but as against those with actual notice of the source of such improvements, and also those who are by the improvements in course of erection constructively warned of the sale and use made of such materials; but further than this equity should not go toward awarding a preferential or privileged lien to the material-man. And as well illustrative of this, the only distinguishing feature *114between actual confiscation of plaintiff’s property and the administration of equity in this case under the construction given of the mechanics7 lien laws is the wholly unwarranted assumption that Peck either had notice or should have known that materials were being furnished for improvements upon 15, although concededly no improvement was ever erected with said materials thereon, and tide value of the property mortgaged was not increased by use of these materials used upon another property. While authorities are cited in the majority opinion, I believe an examination of them will disclose that none are applicable here. It is very significant that able counsel presenting this case have not cited in their briefs the four North Dakota cases to which considerable attention is given in the majority opinion. My conclusion is that they are applicable only because declared so by forced reasoning. And none of the authorities died go bo the extent of holding that constructive notice of a contract to furnish materials is operative without either actual notice thereof or the use of the materials upon the premises for which they were sold for use. The only underlying reason for priority of such liens over mortgages taken during'the furnishing of materials is the enhancement by their use of the value of the premises mortgaged.
Under the proof and a proper construction of the mechanics’ lien laws, I affirm that had plaintiff taken its mortgage upon the northwest quarter of 15 and recorded the same in order that the materialman might have had constructive notice thereof before it perfected its mechanics’ lien thereon, the loan company’s mortgage would have had priority over this mechanic’s lien. Smith v. Barnes, 38 Minn. 240, 36 N. W. 346. A careful analysis of the very authorities cited in the majority opinion will refute the conclusions there drawn. L.R.A.1915E, 302, annotating Thompson-McDonald Lumber Co. v. Morawetz, 127 Minn. 277, 149 N. W. 300, is cited in the majority opinion. It illustrates the application made of authority. The case cited shows the extremes to which constructions enlarging mechanic’s lien laws may lead. Are we headed the same way and is this case not the opening wedge ? The following is from the annotator’s note thereto at page 302, viz.: “Under the rule adopted by the court in Thompson-McDonald Lumber Co. v. Morawetz, the owner is not safe unless he is protected by a bond, in settling with his contract- or after ninety days (or other period for filing liens) has expired since the -last delivery of material upon the premises, even if the record is *115free from liens at the time. A lien may be filed later for material that he never saw and never heard of, and the lien may include the price of other material for which no lien could be filed on account of expiration of the lien period, but for the fact that it was furnished by the same materialmen who furnished the unheard of material. So, the owner takes the risk in settling without a bond, and a search of the mechanics’ lien record is no protection to him. But if the interpretation is sound the practical business world, except bonding and surety companies, may have recourse to the legislature for relief.”
But it was as unnecessary to construe the mechanics’ liens laws in this case as it was to indulge in the assumption that the loan was made with notice of a right in the lumber company to an inchoate lien. The mechanic’s lien was fully perfected without notice of the mortgage and before any mortgage as to the holder of it was either created or recorded. As to the mechanic’s lien holder plaintiff’s mortgage was not created until the recording of the decree of reformation in 1912, while the mechanic’s lien had been perfected by filing the claim therefor in 1909. “The reformation (of a mortgage) was the creation of a mortgage as to the land which had been omitted from the mortgage as drawn,” as to intervening bona fide lien holders without notice. Chapman v. Fields, 70 Ala. 403. In Provost v. Bebman, 21 Iowa, 419, it is said: “This right of redemption might arise and exist on the ground that, by reforming tho mortgage so as to make it include property not before described in it there is in effect created a mortgage as to such property at least; and to hold that the prior decree of foreclosure barred the right of redemption would be to create a mortgage and cut off the equity of redemption at a single stroke. This a court of equity would not do.” See also White v. Schaffer, 97 Md. 359, 54 Atl. 974; Wheeler v. Kirtland, 23 N. J. Eq. 13; Blodgett v. Hobart, 18 Vt. 414; Hawkins v. Pearson, 96 Ala. 369, 11 So. 304; Davenport v. Sovil, 6 Ohio St. 459; Van Thorniley v. Peters, 26 Ohio St. 471; Straman v. Rechtine, 58 Ohio St. 443, 51 N. E. 44. With the law established beyond possibility of question, that the mechanic’s lien has priority over the mortgage because of the wrong description in the mortgage necessitating its reformation, making it as to the elevator company the subsequent creation of a mortgage thereby; and under the affirmative proof that the elevator company had no notice whatever that plaintiff had loaned upon the security of northwest quarter *116of 15 and without any constructive notice thereof imputed, it was wholly unnecessary, as has been done, to construe the mechanics’ lien laws in this case. “Sufficient unto the day is the evil thereof.” This unnecessary holding, giving an extended construction to our mechanics’ lien laws that may work virtual confiscation of prior mortgagee’s rights, may prove a future embarrassment if its sting is not sooner removed by legislative action limiting and defining the limits of the land to which such a lien may attach. While for reasons herein stated, I concur in the judgment ordered, yet I insist that there was no need of any extension by construction of an already sufficiently wide open mechanic’s lien statute. Concurrence is entered in the decision on the ground that the reformation of the mortgage was as to the materialman a creation of the mortgage subsequent to its liens. As to all else contained in the majority opinion, am forced to dissent.