Basham v. Goodholm & Sparrow Inv. Co.

• Decision Date: 28 September 1915
• Docket Number: Case Number: 4968
• Parties: BASHAM et al. v. GOODHOLM & SPARROW INV. CO.
• Court: Oklahoma Supreme Court

1915 OK 700

152 P. 416

52 Okla. 536

BASHAM et al. v. GOODHOLM & SPARROW INV. CO.

Case Number: 4968

Supreme Court of Oklahoma

Decided: September 28, 1915

Syllabus

¶0 1. MECHANICS' LIENS--Operation and Extent--Statute--Common Law. The law relating to liens of materialmen and mechanics was not known to the common law and is a creature of the statute, and its operation and extent are prescribed and limited by statute.

2. MORTGAGES -- Property Covered -- Subsequent Improvements. At common law, a mortgage or lien upon land carries with it not only the buildings or improvements thereon at the time, but all subsequent buildings and improvements placed thereon merge into the realty and become subject to the mortgage.

3. MECHANICS' LIENS--Priority--Time of Attaching. As a general rule, as against other incumbrances, such as mortgages, etc., a mechanic's and materialman's lien takes precedence according to the time when it attached to the property, being preferred to incumbrances which have attached subsequent to that time, but postponed to incumbrances previously existing.

4. MORTGAGES -- Mechanics' Liens -- Priorities -- Subsequent Improvements. Under the laws of this state a mortgage duly executed and recorded takes precedence over a materialman's lien accruing after the recording of such mortgage, even to the extent of attaching to improvements placed upon the mortgaged premises afterwards by the materialman.

5. SAME. Chapter 114, Sess. Laws 1911, gives laborers, who perform work in the construction of a building or improvements upon premises, a lien upon such building or improvement so constructed by them, which lien takes precedence over a prior recorded mortgage upon said premises.

6. SAME. The mere knowledge of a party who holds a recorded mortgage against certain land that the owner of the land intends to improve same, or the knowledge that the owner is improving said land, will not warrant the subordination of the said mortgage to a materialman's lien filed upon said premises for material furnished in making said improvements.

J. D. Chastain and Wright & Blinn, for plaintiffs in error.

Burwell, Crockett & Johnson, for defendant in error.

MATHEWS, C.

¶1 On the 18th day of August, 1911, the defendant in error, which will be herein styled plaintiff, sold and conveyed to one T. J. Basham a large number of blocks of land in the Morrisville addition to Oklahoma City, and at the same time, in part payment for the same, the said Basham executed to plaintiff a mortgage thereon to secure the payment of notes in the aggregate of $ 250,000, given as part of the purchase price of said blocks, and said mortgage was duly recorded on the same date. Within a very short time thereafter certain materialmen sold and delivered to the said Basham a large amount of lumber and other material for the purpose of erecting certain houses on certain lots and blocks included in the above-mentioned mortgage; also a number of mechanics and laborers were employed in the erection of said buildings. Said materialmen and laborers, who will, for convenience, be herein styled defendants, not having been paid by the said Basham for the said material and labor, in due time filed liens on the said property as the statute provides. Plaintiff filed suit to foreclose its said mortgage, and made all of the defendants parties thereto, and asked that it be declared a lienholder upon said blocks and improvements thereon prior and superior to any claims or rights of defendants. All of the defendants in their answers and cross-petitions claimed liens superior to plaintiff's mortgage. The action was tried before the court, who rendered a personal judgment in favor of plaintiff against T. J. Basham, and a further judgment foreclosing the said mortgage made by the said Basham to plaintiff. Personal judgments were also rendered in favor of defendants against the said T. J. Basham, and their liens foreclosed; but said liens were decreed to be junior and inferior to the mortgage lien of plaintiff, and said defendants have appealed to this court. At the time of the sale and conveyance by plaintiff to the said T. J. Basham of said blocks of land, there were no improvements on the land, and the same were constructed by the said Basham after said sale out of the material purchased from some of the defendants; the other defendants working thereon as mechanics and laborers. The plaintiff was cognizant of the fact that the said Basham, at the time of the purchase of the land, intended to improve it, and also had personal knowledge that he was improving it at the time the same was being done. There is but one question presented in this case for review. The trial court held that the mortgage of plaintiff was a first and prior lien on the land, and also on the improvements erected thereon after the execution of the mortgage, into which improvements the materialmen and laborers had put their material and labor. Defendants contend that, where there is a recorded mortgage on unimproved land, materialmen and mechanics, who furnish materials and labor in and about the construction of buildings on said land under a contract with the owner of the land, are, under the laws of this state, entitled to a first lien on the buildings thus erected thereon by the owner of the land after the recording of the mortgage. So far as our investigation has led us, we have been unable to find any case where our court has passed upon the question here presented, and no case from our own state has been cited by either party. It will be noted that the mechanics' and materialmen's lien law was not known to common law and is a creature of the statute. Christy v. Union Oil & Gas Co., 28 Okla. 324, 114 P. 740. To the same effect is the case of Keel v. Ingersoll, 27 Okla. 117, 111 P. 214. This decision last referred to is based upon an Indian Territory case, but we believe it is in point here, and almost decisive of the case at bar. While the statute upon which the decision is based is worded differently, it is in effect practically the same. We quote from this case as follows:

"The right in favor of persons who have performed work in the erection of buildings on land to a lien upon such buildings and land on which the improvements are located to secure payment for the services performed or material furnished was not recognized at common law, and exists only by reason of statutory provisions. Whether such lien may attach to the building separate and apart from the land upon which it is located the rule is not uniform in all the states. In some states the rule prevails that where for any reason the lien cannot attach to the land, it may attach to the building separate and apart therefrom. In other states the lien attaches only to the building, but it appears that in a majority of the states a lien upon the building separate and apart from the land is not recognized. The rule in each state is determined by specific provisions of its statute, or the construction of such statute by the courts of that state. In those states where it is held that the lien may attach to the building separate from the land, although the statute does not specifically so direct, the rule has resulted from construction of provisions in statutes of such states authorizing a sale of the building or improvement separate and apart from the land and a removal of the same from the land by the vendee. The decisions in the following cases are based upon such statutory provisions: Mahon v. Surerus, 9 N.D. 57, 81 N.W. 64; Grand Opera House Co. v. Maguire, 14 Mont. 558, 37 P. 607; Jossman v. Rice, 121 Mich. 270, 80 N.W. 25, 80 Am. St. Rep. 493. But the statute controlling in this case contains no provision creating in specific terms a lien upon the improvements separate and apart from the realty, nor does it contain any provision authorizing a foreclosure of the lien upon such improvements separate and apart from the land when for any reason the lien cannot attach to the land, or that authorizes the vendee to remove such improvements after purchase."

¶2 At common law, a mortgage or lien upon land carried with it not only the building or improvements erected thereon at the time, but all subsequent buildings, improvements, or repairs thereto merged into the realty and became subject to the mortgage, and this is the law now, except in so far as changed by the statute or agreement of parties. The lien of mechanics and materialmen is purely statutory, and its operation and extent are defined and limited by statute. Wimberly v. Mayberry, 94 Ala. 240, 10 So. 157, 14 L. R. A. 305. In the absence of a statute to the contrary, it may be said that improvements become a part of the realty when placed thereon, and the increased value given thereby, if any, inures to the benefit of an existing mortgage. Rockel on Mechanics' Liens, page 162. 27 Cyc. page 236, lays down the rule as to the priority of recorded mortgages and mechanics' liens as follows:

"Where the property is subject to a mortgage at the time of the accrual of a mechanics' lien, such mortgage retains its priority, and the mechanics' lien is postponed thereto, notwithstanding the fact that the value of the mortgage security is increased by the labor or material of the mechanic's lien claimant, or that the building is so changed that very little of the original structure remains. The fact that the improvements for which the lien is claimed were contemplated by the mortgagor prior to the execution of the mortgage does not give the lien priority where the improvements were not contracted for until after the mortgage was executed. Neither does the knowledge of the mortgagee that the mortgagor intends to build upon the mortgaged property or the fact that the money to secure which the mortgage was given was lent for the purpose of improving the property, and under a previous contract that it should be so used, render the mortgage subordinate to a mechanic's lien subsequently arising."

¶3 To the same...