Court Opinion

ID: 9726748
Source: CourtListenerOpinion
Date Created: 2023-08-26 13:06:18.785395+00
Date Added: 2024-06-11T18:25:30.276630
License: Public Domain

BIEGELMEIER, Judge
(dissenting).
If this property was the homestead at the time the first mechanics’ lien claim came into existence the mechanics’ claims are not liens. Our opinions allowing the homestead exemptions were mainly based on an ownership of the property by deed. An exception was Smith v. Allmendinger, 41 *615S.D. 144, 169 N.W. 512, where the claimant had a contract for deed, occupied the property since October 1915 and received -his deed in July 1916; the materials were furnished in May 1916. There intent, actual occupancy and a valid contract for deed were present. In The Home Lumber Co. v. Heckel, 67 S.D. 429, 293 N.W. 549, the intention was communicated to the lien claimant before materials were furnished and in Sidle v. Cheney, 74 S.D. 540, 56 N.W.2d 86, the opinion was based on the theory the property had a homestead character when .materials were first delivered.
However, we have held a homestead claim is subject to and inferior to a vendor’s lien. Hickman v. Long, 34 S.D. 639, 150 N.W. 298. It was stated in the Home Dumber opinion more accurately “the vendor’s lien attaches prior to the acquisition of ithe homestead interest.” [67 S.D. 429, 293 N.W. 550]. The facts here, substantially as set out in respondents’ brief, exhibit and findings are:
1. June 1955-----------Waltons make agreement with Marcoe that they would make furnace bids on Marcoe-built homes and put in all gutter work on accepted jobs for 600 a foot
2. August 31, 1956----Walton bid on job in suit, accepted by Marcoe and l'ater completed work
3. Sept. 12------------Marcoe as “contractor” agrees “to build and deliver a home as represented in plans and specifications” to Maloneys on a Purchase Agreement form that gives a street address as the “Location” and “New House Address” of the property involved; the legal description omits the block and there is no agreement to sell or convey any land, or other usual provisions of a contract for sale of real estate (The trial court found this date as Sept. 16; Exhibit 8 shows it to be Sept. 12)
4. Sept. 19____________Maloneys execute a Veterans’ Administration Application for Home Loan Guaranty for $10,500 to construct a home, proceeds to' be paid out during construction, stating he intends to occupy the property
4a. Sept. 29____________Maloney executes certificate of intention to occupy property described by street address only
5. Oct. 23_____________V. A. issues Certificate of commitment for 60%
5a. Oct. 29_____________Visible improvement of premises appears
6. Nov. 5_____________Maloneys pay Marcoe $300
6a. Nov. (early in)_____Marcoe talks to Lampert about lumber for this job
7. Nov. 10____________Maloneys execute mortgage to First Federal
8. Nov. 12____________Maloneys apply waterproofing to basement wall
9. Nov. 13____________Marcoe executed deed to Maloneys
10. Nov. 14____________Deed and mortgage recorded
11. Nov. 16 — , _________Lampert first material furnished
13. Dec. 15, 1956_______Walton first material furnished
14. Feb. 2, 1957________Maloneys move into house.
Neither Lamipert nor Walton had any knowledge or notice of the First Federal mortgage or the transactions between Marcoe, Maloney, First Federal or the Veterans’ Administration listed above.
*616In my opinion all liens became effective as of October 25, 1956. Botsford Lumber Co. v. Schriver, 49 S.D. 68, 206 N.W. 423. Marcoe then had fee title of record and had incurred or authorized the debts before that date. Maloneys had no contract for deed; it was a building contract on its face, stating “Selling Price of house (as) $12,000.00” the full purchase price. In Exhibit No. 8 Maloneys agreed “to not occupy or otherwise interfere with the completion of the house, until after Federal Housing Administration, or other loan inspectors have approved the house as complete, and full payment is authorized.” It does not appear -this was ever done, nor has the loan been guaranteed by the V.A. To permit their secret intention to occupy the property, without having possession or occupancy or any right to possession or occupancy, is using the homestead exemption as a fraud on innoc’ent persons. Anyone furnishing materials or labor is entitled to some notice of a possible homestead claim. Judge Whiting so indicates in the first Jensen v. Griffin case, 32 S.D. 613 at page 620 and 621, 144 N.W. 119 at page 122, quoted with approval in Sidle v. Cheney, supra: “Certainly no construction should be placed upon our homestead law that will permit it to be used as an instrument through which a palpable fraud may be committed against a party relying upon conditions as they exist when they contract with the homestead claimant” or as here with the apparent owner and builder, Marcoe. This quotation from Judge Whiting is from a case where the homestead claimant actually occupied one house of two on one tract of land which was some notice of his rights. The September 12, 1956 Exhibit 8 was a building contract; even if it was more and gave Maloney any right, it simultaneously authorized liens and these should have priority the same as a vendor’s lien; there is no question Marcoe retained one. Hickman v. Long, supra. Maloney’s title did not arise until his deed November 13— the liens were effective before that date and should be granted priority over the homestead claim and mortgage.
As to the mortgagee, it paid out only $69.85 to material-men; $3,500 went to Marcoe, the rest was disbursed to itself or retained for an old debt. U.S. laws do not apply to the lien *617holders; they affect relations between the U.S. and the mortgagee. The loan is not yet guaranteed and the mortgagee is in the private loan business the same as anyone else. Brettschneider v. Wellman, 230 Minn. 225, 41 N.W.2d 255, involved a V.A. loan and similar facts. It should be persuasive as we adopted our law from that state. Botsford Lumber Co. v. Schriver, supra. Also, there is more 'basis for estoppel to assert the homestead right here than in Crawford v. Carter, 74 S.D. 316, 52 N.W.2d 302. It was suggested in Kingman v. O’Callaghan, 4 S.D. 628 at page 636, 57 N.W. 912 at page 914. Neither Maloney nor the mortgagee should stand idly by and permit a building to be built on a lot without making any inquiry as to possible liens.
The result reached here should be a warning to any person who furnishes labor or material for the erection of a building or any improvement to property. The builder or some person unknown or with an unrecorded instrument may claim it as a homestead based on his undisclosed intent and thus deprive the builder of any lien or claim on the property he has improved. With this I cannot agree and therefore dissent.