Bell v. Hernandez

• Decision Date: 07 April 1934
• Docket Number: 31267.
• Citation: 139 Kan. 216,30 P.2d 1101
• Parties: BELL v. HERNANDEZ et al.
• Court: Kansas Supreme Court

30 P.2d 1101

139 Kan. 216

BELL v. HERNANDEZ et al.

No. 31267.

Supreme Court of Kansas

April 7, 1934

Syllabus by the Court.

In an action to foreclose a mortgage, in which defendant, who was assignee of a mechanic's lien which was not foreclosed by action in court, claimed rights superior to the mortgagee under certain agreements with the property owner, the record is examined, and it is held: (1) There is no way to foreclose a mechanic's lien other than in an action in the district court to enforce it or to have it adjudicated; (2) such an action must be brought within one year after the lien statement is filed in the office of the clerk of the district court; (3) holders of mortgages of record, whose rights would be affected by such an action, should be made parties defendant; (4) the fact that such a mortgagee is a nonresident of the state does not toll the time of bringing such action. Further held, respecting the agreements relied upon: (1), Under the first of these, and the facts found, the amount of the mechanic's lien has been paid; (2) that in so far as defendant, or his assignor, agreed with the property owner to pay nonlienable items, which, as between the mortgagee and the property owner, the latter should have paid, defendant can acquire no lien superior to the mortgage (3) neither could he acquire such priority by a subsequent agreement which was tantamount to a mortgage.

Appeal from District Court, Cowley County; O. P. Fuller, Judge.

Action by John M. Bell against Elmer Henry Hernandez and others. From the judgment, plaintiff appeals.

Judgment reversed, with directions.

Henry S. Johnston, of Perry, Okl., and S.C. Bloss, Geo. T. McNeish and Stewart S. Bloss, all of Winfield, for appellant.

W. L Cunningham, D. Arthur Walker, Fred G. Leach, and Wm. E Cunningham, all of Arkansas City, for appellees.

HARVEY Justice.

This is an action to foreclose a mortgage. From a judgment allowing claims superior to it, plaintiff has appealed.

The facts briefly stated are as follows: In December, 1924, Hernandez and wife owned real property in Arkansas City which they mortgaged to a building and loan association. This mortgage is conceded to be a first lien on the property. About that time Hernandez purchased from the Clark Lumber Company materials of the value of $152 used to improve the property, for which the Clark Lumber Company filed a mechanic's lien statement with the clerk of the district court on April 1, 1925, which was within the time provided by statute for the filing of such a lien. On April 8, 1925, Hernandez and wife, for value, executed to plaintiff their note for $500 and secured the same by a mortgage upon the property. This mortgage was duly recorded May 13, 1925, and is the mortgage which plaintiff seeks to foreclose in this action. In December, 1925, Hernandez and wife made an oral agreement with the Clark Lumber Company by which, in consideration of the Clark Lumber Company refraining from foreclosing its mechanic's lien, which would be expensive to both parties, Hernandez and wife gave the Clark Lumber Company full possession of the property, and it went into possession thereof under the agreement: "*** That it was to remain possessed of the same and to rent, manage and control said property and such rentals as should be received were to be applied upon said indebtedness of Hernandez and wife and when and if the receipts from the same exceeded the expenditures on said property, to the extent of paying said balance due, the said property and possession thereof was to be restored to Hernandez and wife; if the receipts from said property failed so to do, the property to remain that of the Clark Lumber Company."

In August, 1926, L. W. Servey paid the Clark Lumber Company the amount due on its mechanic's lien, $160.27, and took an oral assignment thereof and of the rights of the Clark Lumber Company to the possession of the property under its oral agreement with Hernandez and wife, and Servey went into possession of the property and has since remained in possession. In May, 1927, Servey, having made other improvements on the property, obtained a warranty deed to the property from Hernandez and wife, giving them in turn a written memorandum: "*** to the effect that he was to make more improvements on said premises and that if the said Hernandez and wife paid him one-half of the value of the same the first year thereafter and the remaining one-half the second year he (Servey) would deed said premises back, otherwise said deed to become absolute. ***"

This deed was recorded June 9, 1927. Thereafter Servey made improvements upon the property at an expenditure of $1,862.97. He paid taxes for the years 1924 to 1930, inclusive, aggregating $453.60; he paid delinquent and current payments to the building and loan association, amounting to $228.80; also, an $18 insurance premium, making his total expenditures on the property $2,705.64. During that time he had received in rentals $260. The mechanic's lien of the Clark Lumber Company has never been foreclosed by an action in court. The building and loan association is not asking to foreclose its mortgage. Since giving the mortgage to plaintiff, Hernandez and wife and the plaintiff have been nonresidents of the state, and none of them has been within the state a total of one year since that time.

The trial court decreed that the mortgage to the building and loan association is a first and prior lien upon the premises and should be established as such, that subject thereto the lien of L. W. Servey is prior and superior in the sum of $2,576.24, and that the lien of plaintiff, in the sum of $553, is inferior to that of Servey. A decree was entered foreclosing Servey's lien and the lien of plaintiff, subject to the lien of the building and loan association.

The principal question here is the priority of liens, as between the plaintiff Bell, claiming under his mortgage, and the defendant Servey, claiming (1) under an oral assignment of the mechanic's lien statement of the Clark Lumber Company, made after the time for foreclosing that lien had expired, and (2) under an oral assignment from the Clark Lumber Company of its oral agreement with Hernandez and wife made in December, 1925, and (3) under his agreement with Hernandez and wife made in May, 1927, evidenced by a deed and a written memorandum; and expenditures he had made under these various agreements. This requires an examination of our statutes (R. S. 60--1401 to 60--1414) relating to mechanics' liens, previous decisions of this court, and other authorities, in so far as they are pertinent to the facts of this case.

Mechanics' liens, rights acquired under them, and procedure to obtain such rights, were unknown to the common law. Rice v. Brown, 1 Kan. App. 646, 653, 42 P. 396; 18 R. C. L. 872; 40 C. J. 42. They are conferred by statute alone, and one who obtains the benefit of the statute must be within the purview of the statute and pursue his remedy in the manner and within the time prescribed by statute. Doane v. Bever, 63 Kan. 458, 65 P. 693; Potter v. Conley, 83 Kan. 676, 112 P. 608; 18 R. C. L. 926; 40 C. J. 365.

One who furnishes material under such circumstances that he is entitled to a lien under the statute has a vested right to a lien, which the Legislature cannot arbitrarily take away from him (Weaver v. Sells, 10 Kan. 609), but the lien must be preserved and enforced in accordance with statutes in force at the time the necessary proceedings are had for that purpose. The vesting of the lien is one thing and its enforcement is another. Groesbeck v. Barter, 1 Kan. App. 61, 41 P. 204; Nixon v. Cydon Lodge, 56 Kan. 298, 303, 43 P. 236; Fossett v. Lumber Co., 76 Kan. 428, 92 P. 833, 14 L.R.A. (N. S.) 918. The filing of the lien statement is an important step in establishing the lien (Nixon v. Cydon Lodge, supra); also, the bringing of an action to foreclose it within the time provided by statute. "A mechanic's lien, not foreclosed within the time allowed by statute, is no longer an enforceable lien." Montgomery County Nat. Bank v. Backus, 108 Kan. 779, 196 P. 1074.

Appellee argues that it is not necessary to foreclose a mechanic's lien by an action in court; that it may be foreclosed by the agreement of the lien claimant and the owner of the property. We cannot agree with this view. Certainly the only way provided by statute for foreclosing a mechanic's lien is by an action in court brought within one year after the filing of the lien, unless a note was given, and in this case none was given (R. S. 60--1405), or brought within that time to adjudicate the liens (R. S. 60--1409). In an action to foreclose the lien all persons who had filed liens, and other incumbrancers, "shall be made parties." R. S 60--1406. This is an essential step in enforcing the lien. Montgomery County Nat. Bank v. Backus, supra. We find no decision of this court that a mechanic's lien can be foreclosed by any method other than by a civil action in district court. Naturally, the owner of real property, generally speaking, may sell it or lease it to any one he chooses and for such consideration and on such terms as he chooses to accept. If the property is incumbered by a mechanic's lien (or any other lien, for that matter), he may sell it or lease it to the holder of the lien, under such terms as may be agreed upon, which may be that he is released from further liability because of the lien. But such a transaction is not the foreclosure of the lien. It is a private agreement between a debtor and a creditor, binding as between them, if fairly made, but not binding, of course, upon one, not a party to it, who had a vested interest in or lien upon the property. The statute (R. S. 60--1406) requires that other incumbrancers,...