Court Opinion

ID: 6747522
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:59:27.906232+00
Date Added: 2024-06-11T16:02:08.264368
License: Public Domain

OPINION
By HAMILTON, J.
Heard on appeal on questions of law and fact.
The controversy here for decision concerns .the priority of liens on real estate.
The case is submitted on a stipulation of facts and additional testimony taken at the hearing in this Court.
The First Federal Savings & Loan Association of Cincinnati, plaintiff, appellee, filed an action for foreclosure of a mortgage on the real estate of the defendant, Nellie E. Robbins, making The A. M. Lewin Lumber Company, a party defendant.
The plaintiff’s action was based on a claimed construction mortgage, executed by the defendant, Nellie E. Robbins and her husband, for the erection of a certain building on certain- real estate described in said mortgage. It claimed its construction mortgage to be a first and best lien- prior to all other liens.. ■
The A. M. Lewin Lumber Company claims a mechanic’s lien for materials furnished and delivered on the premises described in the mortgage, and claims' that its lien has priority- over-the mortgage of The First Federal Savings & Loan Associotion.
■ The property was sold at foreclosure sale for the sum of $4666.67, and was purchased by the appellee.
• The rights of the parties -are ■ transferred to this' fund, the proceeds of the sale.
Two questions are presented for decision: The first is, whether the mechanic’s lien of The A. M. Lewin Lumber Company is a valid- lien, ond question is, if the mechanic’s lien is valid, does it have priority over the mortgage of the First Federal Savings & Loan Association of Cincinnati?
We are content to consider the mechanic’s lien of the A. M. Lewin Lumber. Company is a valid lien.
Counsel for the appellant, The A. M. Lewin Lumber Company, challenge the validity and priority of the construction mortgage of the First Federal Savings & Loan Association, first, on the ground that it fails to comply with, the form in the mortgage notice required by the statute for construction mortgages.
Sec. 8321-1 GC, provides that:
“* * * the lien of a mortgage given in whole or in part to improve real estate, or to pay off prior encumbrances thereon, or both, the proceeds of which .are actually used in such improvement in the manner contemplated in §§8310 and 8311 GC, or to pay off prior encumbrances or both, and which mortgage contains therein the • correct name and address of said mortgagee, together with a covenant between the mortgagor and the mortgagee authorizing and empowering the. mortgagee to do all things in this act provided by said mortgagee to be done, shall be prior to all mechanic’s, material men’s and-similar liens.” * * *
The language of the mortgage is:
. “This, mortgage is . given tp .acquire the prerpise.s- herein described, and.-.or t,p pay prior encumbrances thereon,..and *251the grantor hereby consents and agrees with the grantee, whose correct address is 3301 Warsaw Avenue, Cincinnati, Ohio, that the funds secured by this mortgage may tie paid out by the grantee as provided by §8321-1 GC.”
One of the objects of this section is to provide notice to the world that the mortgage is a construction mortgage, and give notice to those- who might furnish material and labor as to the manner in which funds might to paid by the mortgagee. This is sufficient to put all persons on .notice who might furnish labor and materials for the construction of the improvement. Moreover, it appears that The A. M. Lewin Lumber Company had knowledge of the construction mortgage, in that it filed its .certificate and obtained a $300 payment from the appellee, the mortgagee.
-We are, therefore, of the opinion that there was sufficient compliance with the statute as to the form of the notice contained in the mortgage.
The suggestion by counsel for appellant,. The A. M. Lewin Lumber Company, that the language of the statute be incorporated in the notice is not tenable. It is not so provided in the section, and. certainly, with the actual knowledge of the existence of the construction mortgage, the appellant was not injured by the omission of this language in the notice.
The remaining- question is the priority between the mechanic’s lien and the mortgage, §8321-1 GC, providing for construction mortgages, states in part:
“* v * the lien of a mortgage given in whole or in part to improve real estate, * ‘ * the proceeds of which are actually used in such improvement * * * shall be prior to all' mechanics’, material men’s and similar liens.”
It follows that if the proceeds of the mortgage were distributed as provided in §8321-1 GC, the mortgagee has priority over the Lewin Lumber Company’s mechanic’s lien in question.
. In the case of Knollman Lumber Co. v Fred G. Hillenbrand, 64 Oh Ap 549, in the opinion of the Court it is said:
“When payments are made by the mortgagee to contractors and subcontractors without any certificate- by the owner, that payment is required to meet labor pay-rolls, the mortgagee is entitled to priority for all sums actually used in the improvement.”
The stipulation and the evidence offered m this case shows conclusively that all of the proceeds of the mortgage in question, to-wit: $7,000.00, were paid out by the attorney for the mortgagee directly to laborers and materialmen, and partly through the mortgagor, the owner of the property.
Our conclusion is that the appellee First Federal Savings & Loan Association of Cincinnati.has priority in the proceeds of the sale over the appellant, The A. M. Lewin Lumber Company.
A decree to that effect may be presented here.
MATTHEWS, PJ., concurs in conclusion.
ROSS, J., dissents.