Blumauer v. Clock

• Citation: 64 P. 844,24 Wash. 596
• Court: United States State Supreme Court of Washington
• Decision Date: 15 April 1901
• Parties: BLUMAUER et al. v. CLOCK et al.

64 P. 844

24 Wash. 596

BLUMAUER et al. v. CLOCK et al.

Supreme Court of Washington

April 15, 1901

Appeal from superior court, Thurston county; O. V. Linn, Judge.

Action by Joseph Blumauer and others against Rachel L. Clock and others. From a judgment in favor of defendants, plaintiffs appeal. Affirmed.

Troy &amp Falknor, for appellants.

John R. Mitchell, Phil Skillman, and J. W Robinson, for respondents.

DUNBAR J.

This is an action on the part of the appellants to foreclose a mortgage upon both real and personal property. The appeal herein involves the rights of appellants and respondents to the personal property described in appellants' mortgage. The personal property is described as the building used as a shingle mill, together with the machinery specifically described, the same being situate on leased land in the town of Bucoda, Thurston county, state of Washington. The appellants' mortgage was executed by Rachel L. Clock and others, on the 14th day of November, 1896, for the sum of $2,557.24, and there is now due and owing upon the same $2,269.94, with interest and attorney's fees. The mortgage was recorded in the auditor's office of Thurston county upon the 18th day of November, 1896, but the mortgage did not contain the affidavit of good faith, and was recorded as a real-estate mortgage. The respondents, excepting the mortgagors, were employed in said mill described in the mortgage, which mill was being operated by a firm known as Clock & Sanford, and they performed work and labor and furnished material to said Clock & Sanford in the operation of said mill, for which they filed loggers' liens upon the lumber and shingles at the mill, and also what are known as 'employés' liens' upon said mill, under the law of 1897. These respondents were brought into the action. To the answer of respondent lienors the appellants replied alleging actual knowledge of the appellants' mortgage. The court found that certain of the respondents, to wit, J M. and M. J. Davies, Henry Richards, Ed Enderland (who assigned his claim to Henry Richards), Peter Anderson, Louis Hagoes, Sam Southerland, A. Perry, Tony Cales, and Charles Whalen, and each of them, had, at and prior to the doing of the work for which they claimed their liens, actual knowledge and notice of appellants' mortgage, but also found that all of the respondents' claims were superior to those of the appellants, the mortgagees.

The first assignment of error is that the court erred in holding the employé's act of 1897 constitutional. This question is eliminated from the case by the opinion of this court in Fitch v. Applegate (Wash.) 64 P. 147.

It is also alleged that the court erred in its conclusion of law that the respondents' liens were superior upon the property, after finding that the respondents had actual knowledge of appellants' unrecorded mortgage. The statute which is under construction here is section 4558, 1 Ballinger's Ann. Codes & St., which is as follows: 'A mortgage of personal property is void as against creditors of the mortgagor or subsequent purchasers, and incumbrances of the property for value and in good faith, unless it is accompanied by the affidavit of the mortgagor that it is made in good faith, and without any design to hinder, delay, or defraud creditors, and it is acknowledged and recorded in the same manner as is required by law in conveyance of real property.' There has been a controversy in this and other states in relation to the construction of this statute, but this court, in Hinchman v. Railway Co., 14 Wash. 349, 44 P. 867, placed a construction upon the statute which it has since followed. It was there said: 'We think the true interpretation to be given the section requires the transposition of the comma appearing after the word 'purchasers,' as found in said section, by placing it after the word 'mortgagor,' making the section read as follows: 'A mortgage of personal property is void as against creditors of the mortgagor, or subsequent purchasers and incumbrances of the property for value and in good faith.' Manifestly,' said the court, 'there are three classes of persons whose rights are defined by this section. They are (1) creditors of the mortgagor; (2) subsequent purchasers; and (3) parties in whose favor subsequent incumbrances of the property are made. As to the first class,--creditors,--the unrecorded mortgage is absolutely void. It is void, also, as to the two latter classes, when they deal with the mortgaged property for value and in good faith. Subsequent purchasers and parties taking subsequent incumbrances upon the property are thus placed upon the same footing; and, in all reason, why should they not be?'

It is insisted by the appellants that the lienors are subsequent incumbrancers; that they are not creditors of the mortgagor and that their actual knowledge of the existence of the mortgage exempts them from the benefit of the section; and the above case is quoted in support of that contention. But we are inclined to think that in the third classification, viz. parties in whose favor subsequent incumbrances of the property are made, the court did not have reference to parties in whose favor any incumbrances were made by operation of law, but to parties who took an incumbrance by virtue of a contract with the owner of the property, as a subsequent mortgagee, and incumbrances of that character. This view is sustained by the decision of this court in Willamette Casket Co. v. Cross Undertaking Co., 12 Wash. 190, 40 P. 729, where, after quoting the statute, it was said: 'If the language used be given its ordinary significance, it would seem to fully warrant such contention. It is claimed, however, by the respondent, that only such creditors are protected by the provisions of this section as before the time of the recording of the mortgage have obtained some specific lien upon the property. But such construction would do violence to the language used. The statute makes no distinction as to the creditors who are to be protected, and we see no good reason for holding that one class, rather than another, was intended. One is as much a creditor before his claim has been made a specific lien upon certain property as after, and for that reason an unsecured creditor is as well described by the language of the section as one who had procured a specific lien as security for his claim. The intention of the legislature was to protect those who should give credit upon the faith of property owned by one to whom it was extended, and, to give force to such intention, the term 'creditors,' as used in the act, must be held to cover all classes of creditors.' It is generally held that, where the statute does not restrict the word 'creditor,' the courts will not limit its application. A creditor and an incumbrancer may stand in a dual capacity; for an incumbrancer must, at least, be a creditor, although a creditor need not necessarily be an incumbrancer. It seems to us that the more reasonable and just construction of the law would be to construe the term 'creditor' with reference to the inception of the obligation of the debtor, rather than to conditions which might afterwards arise. For instance, if the lienors in this case had not seen fit to file their liens, but had relied upon their employer for compensation, they would unquestionably have been creditors. Because they afterwards took advantage of the lien laws, the relative position to the employer ought not to be held to have been changed. It has even been held in Dempsey v. Pforzheimer, 86...