Central Const. Co. v. Highsmith

• Decision Date: 04 January 1952
• Docket Number: No. 33046,33046
• Citation: 155 Neb. 113,50 N.W.2d 817
• Parties: CENTRAL CONST. CO. v. HIGHSMITH et al.
• Court: Nebraska Supreme Court

Page 817

50 N.W.2d 817

155 Neb. 113

CENTRAL CONST. CO. v. HIGHSMITH et al.

No. 33046.

Supreme Court of Nebraska.

Jan. 4, 1952.

Syllabus by the Court.

1. Where during the trial of a cause both parties treat an affirmative defense as denied, it will be so considered in this court, although the plaintiff filed no reply either before or after judgment.

2. It is a general rule that where two unequal estates vest in the same person at the same time, without an intervening estate, the smaller is thereupon merged in the greater.

3. But merger does not always or necessarily result from such a coinciding of such estates.

4. Whether the two estates will be held to have coalesced will depend upon the facts and circumstances in the particular case, the then intention of the party acquiring the two estates, and the equities of the parties to be affected.

5. Although a mechanic's lien when filed attaches only to an equitable estate, it may be enforced against the fee after the equitable and legal titles have merged.

6. The object of the mechanics' lien law being to secure the claims of those who have contributed to the erection of a building, it should receive the most liberal construction to give full effect to its provisions.

7. Where a claimant, either by gross carelessness or by design, puts upon record a statement which he knows, or which by the exercise of reasonable and proper diligence he might have known, to be erroneous and unjust, either by including items not furnished for the particular building or by failure to give credit for payments made, the law will not aid him in enforcing his lien. On the other hand, if the errors are trifling and immaterial, or if they are readily explainable as the result of mistake, and no element of willfulness appears, regard will be had for the imperfections of human machinery, and the recovery of a just debt will not be denied where nothing but fair dealing was intended.

W. A. Ehlers, Omaha, for appellants.

Fraser, Connolly, Crofoot & Wenstrand, R. G. Fraser, Hird Stryker, Jr., Omaha, for appellee.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

SIMMONS, Chief Justice.

This is an action for the foreclosure of a mechanic's lien. The matter was tried upon an amended petition and answer of the defendants Ehlers. From a decree generally favorable to the plaintiff, the defendants Ehlers and Mitchell appeal. We reverse the judgment of the trial court and remand the cause with directions.

The plaintiff is a construction company engaged in the remodeling of houses. The defendants Margaret C. Ehlers and William A. Ehlers are husband and wife. As will be set out later, certain deeds and instruments were made and delivered wherein Mrs. Ehlers was grantee and assignee. The record shows that Mr. Ehlers handled this entire transaction relating to him and his wife. For convenience these defendants will be referred to as the Ehlers, Mr. Ehlers, or Mrs. Ehlers as the fact appears. It further appears that defendants Mitchell are in possession of the property under a contract with the Ehlers. Where necessary the defendants Mitchell will be referred to herein as the Mitchells.

We are first confronted with a question as to issues. Toward the close of the trial a question arose as to whether or not the Mitchells were parties to the action and, if so, in default. Mr. Ehlers contended that he had answered for the Mitchells. The trial court said: '* * * if the pleadings are not in proper form and their names are not in the heading, he may have leave to ammend (sic) his pleadings to conform to the proof.' That occurred on November 2, 1950. On November 22, 1950, after the evidence had been all taken and the cause submitted to the court, Mr. Ehlers, as attorney for himself, Mrs. Ehlers, and the Mitchells filed an amended answer in which he made the Mitchells answering defendants. In this amended pleading he changed in several respects his answer as to the defenses of the Ehlers and also alleged that the plaintiff had sold and assigned its interest in the claim prior to the perfecting of the alleged mechanic's lien and that it had no lien. Plaintiff does not appear to have challenged this pleading. The transcript does not show the filing of a reply.

Appellants now contend that there being no reply denying or explaining affirmative allegations of defense, such allegations are admitted as true.

We discuss this contention no further than to point out that the rule is: 'Where during the trial of a cause both parties treat an affirmative defense as denied, it will be so considered in this court, although the plaintiff filed no reply either before or after judgment.' Crilly v. Ruyler, 87 Neb. 367, 127 N.W. 251. See, also, Hunter v. Weiner, 103 Neb. 538, 172 N.W. 521; In re Estate of Nilson, 126 Neb. 541, 253 N.W. 675.

The next contention is that plaintiff's petition does not state a cause of action against these appellants or any of them and that the trial court should have so found. It does not appear that the sufficiency of the petition was tested by demurrer or otherwise. The propositions advanced in support of this position are also advanced as to the sufficiency of the evidence to sustain a decree for the plaintiff. They will be determined in that connection.

The real property involved in this action is a lot with a house thereon in the city of Omaha. It is agreed that as of August 1, 1946, the legal title to this property was in Wholesalers Adjustment Company, a corporation. On that date it entered into a contract to sell this property to one Guy E. Highsmith for $1,300, of which $500 was paid down and the balance of $800 with interest was to be paid in monthly installments of $15, beginning on September 1, 1946. Highsmith went into possession. On October 1, 1946, he paid $30; on November 1, 1946, he paid $15; on December 7, 1946, he paid $15; on March 8, 1947, he paid $20; and on April 15, 1947, he paid $30. On October 3, 1946, Highsmith executed a mortgage on this property to secure a promissory note for $280, payable in monthly installments of $20. The mortgagees were John L. and Juanita L. Bilby. This mortgage was recorded October 4, 1946. It does not appear what, if any, payments were made by Highsmith on the debt.

There is evidence that the Wholesalers Adjustment Company dissolved on or about January 18, 1947, and that one Howard became the holder of this property. The evidence is quite inconclusive on the matter. In the evidence plaintiff and defendants both treat the adjustment company as a going concern after that date. In June 1947, the insurance was paid and charged to the Highsmith account. On September 24, 1947, Howard paid the taxes. The trial court found that the adjustment company was a dissolved corporation. No assignments of error are made here as to that matter.

It also appears that in February 1947, the representative of Howard, using the name of Wholesalers Adjustment Company, began to ask, then to urge, then to demand, that the delinquent payments, the insurance, and the taxes be paid. As late as September 9, 1947, Highsmith was notified by letter that if settlement in full of the contract was not made within five days from the date of receipt of the letter the matter would be placed with an attorney to start action.

Mr. Ehlers testified that in November or December 1946, he was approached by a representative of the adjustment company with a proposition to buy this contract for Mrs. Ehlers and that '* * * I suggested that I would foreclose the contract for him if he so desired.' All the evidence is that Highsmith was not then in default on the contract. He further testified that in December he agreed that 'my wife would buy the contract.' Mr. Ehlers offered in evidence a resolution of the board of directors of the adjustment company showing that on January 18, 1947, the officers had authorized conveyance of the property to Mrs. Ehlers, 'Assignee of Guy E. Highsmith,' for the consideration of $1,300. He further testified that on January 18, 1947, an assignment of the Highsmith contract was made to Mrs. Ehlers. This appears in the bill of exceptions as having been acknowledged before Mr. Ehlers as a notary public. It was recorded as of Octber 11, 1947. He also testified that on January 18, 1947, the Wholesalers Adjustment Company executed a warranty deed conveying this property to Mrs. Ehlers. It is acknowledged and recorded, as was the contract. It further appears by Mr. Ehlers' testimony that the deed was held by the representative of the adjustment company until early October 1947, when Mr. Ehlers paid Howard $769.70, the balance then due on the contract, including insurance and taxes, received the assignment and deed, among other things, and had them recorded. Prior to October 1947, the Ehlers had no interest in the property.

On October 11, 1947, Highsmith executed a quitclaim deed conveying this property to Mrs. Ehlers, the deed reciting that it was given to convey all right, title, and interest which the grantor had by virtue of the land contract. This deed was also recorded October 11, 1947. Mr. Ehlers testified that the consideration for this conveyance was $100, and that he secured this deed in order to avoid the necessity of a foreclosure proceeding.

On October 14, 1947, the Bilbys executed a release of the Highsmith mortgage. The release was recorded January 28, 1948. Mr. Ehlers testified that he paid for the mortgage release, although the amount paid is not shown.

On January 16, 1947, Highsmith entered into a contract with plaintiff for the construction of a porch to the house for the recited consideration of $1,180, payable in monthly installments of $37.29. The contract provided that 'FHA charge per year is to be added to above cost of labor and materials and is included in the monthly payments.' Also on January 16, 1947, Highsmith made application to Universal C. I. T. Credit Corporation for...