Craig v. Herzman

• Court: North Dakota Supreme Court
• Writing for the Court: BARTHOLOMEW
• Citation: Craig v. Herzman, 9 N.D. 140, 81 N.W. 288 (N.D. 1899)
• Decision Date: 01 December 1899
• Parties: CRAIG et al. v. HERZMAN et al.

9 N.D. 140

81 N.W. 288

CRAIG et al.

v.HERZMAN et al.¹

Supreme Court of North Dakota.

Dec. 1, 1899.

Syllabus by the Court.

1. The provision found in section 4795, Rev. Codes, giving a court authority, under conditions stated therein, to order real estate to be sold, and the proceeds to be divided between the mortgagee, who had the first lien upon the land, and a mechanic's lien holder, who had a first lien upon the building, does not impair the obligations of the mortgage existing upon said land before the building was erected, and before the law was passed.

2. Such provision, as it relates to procedure only, may be applied in any case tried after its enactment, although the cause of action arose before the enactment. The rule requiring statutes to be given prospective operation only does not apply to statutes relating to procedure.

3. The repeal of the mechanic's lien law, as it existed in the Compiled Laws, by the enactment of the Revised Codes, did not operate to extinguish liens that had been acquired under the prior law. Where a mechanic's lien has attached under the law in force at that time, the holder's right thereto becomes vested, and cannot be destroyed by the repeal of the law.

Appeal from district court, Cass county; Charles A. Pollock, Judge.

Action by Archibald J. Craig and others against Rosa Herzman and others. Judgment for plaintiffs. Defendants appeal. Affirmed.

Mills, Resser & Mills, for appellants. Newton & Smith and Benton, Lovell & Bradley, for respondents.

BARTHOLOMEW, C. J.

This is a contest between certain mechanic's lien holders and a purchaser under a mortgage foreclosure sale. The property consists of a certain lot in the city of Fargo, upon which a two-story brick building, with party walls on either side, has been erected. The mortgage was given long before the building or any part thereof was placed upon the lot. The mechanics' liens attached before the foreclosure of the mortgage. This action was brought by the lienholders. The Red River National Bank was the only defendant that appeared and answered. It claimed title under the foreclosure proceedings, free and clear from all the mechanics' liens. The trial court established the liens upon the building, and found the value of the lot without the building and the value of the building separately, and each at the same sum, and directed that the premises be sold, and that one half of the proceeds of sale be paid over to the defendant bank; that the mechanics' liens, as established, and in their order, be paid from the other half; and that the surplus, if any, be paid over to the bank. From this decree the bank appeals.

The first position of appellant, as we understand it, is briefly this: When the mortgage under which it derives title was given, and when it was foreclosed, and when appellant received its deed thereunder, the statute in force relative to mechanics' liens declared that, where a building was erected upon land upon which there was an existing mortgage, the mortgage should remain a first lien upon the land, but that the liens for labor and materials used in the construction of the building should be a first lien upon the building, and that the building might be sold under said liens, and removed from the land. Comp. Laws, § 5480. It concedes that it possesses only such rights as came to it through the mortgage, and that it took such rights subject to the mechanics' liens, so far as they existed and could be enforced under the law existing when the mortgage was given, and when appellant acquired its title, but to no other or greater extent. It claims that the provision under which the court ordered a sale of the entire property was passed after it acquired its rights, and, in effect, impaired the obligations of the mortgage contract, and hence, as to appellant, such provision is unconstitutional and void. The provision is found in section 4795, Rev. Codes, which went into effect January 1, 1896, and is as follows: “But if in the opinion of the court it would be for the best interests of all the parties that the land and the improvements thereon should be sold together, it shall so order and the court shall take an account and ascertain the separate values of the land and of the erection, buildings or other improvements, and distribute the proceeds of sale so as to secure to the prior mortgage or other lien, priority upon the land, and to the mechanic's lien priority upon the building, erection or other improvement.” It will be noticed that under the prior law the priority of the mechanic's lien was enforced by a sale and removal of the buliding. It so happens in this case that the building is so situated that it can be removed only by demolition. This a court will not sanction, where it would impair the rights of the former mortgagee. Lumber Co. v. Danner, 3 N. D. 475, 57 N. W. 343. Hence, if appellant's contention that its contract rights are impaired be correct, it will follow that the mechanics' liens can never be enforced against the property, and the appellant will enjoy the rare good fortune of having the value of its property doubled without any expense to itself.

It is admitted that the statute of which complaint is made is primarily remedial in character, but it is insisted that, if it enforce a remedy in a manner that prejudices contract rights, the fact that it is remedial does not take it out of the operation of the constitutional inhibition. It must be conceded that such is the law. Taylor v. Stearns, 18 Grat. 288;Bank v. Schranck, 97 Wis. 250, 73 N. W. 31, 39 L. R. A. 569;Barnitz v. Beverly, 16 Sup. Ct. 1042, 41 L. Ed. 93;Edwards v. Kearzey, 96 U. S. 600, 24 L. Ed. 793;Antoni v. Greenhow, 107 U. S. 769, 2 Sup. Ct. 91, 27 L. Ed. 468. It is necessary, then, to determine whether this statute did prejudicially affect the contract rights existing by virtue of the mortgage. The impairment prohibited by the constitution is not a mere imaginary or impossible injury. The law must render the contract obligation less valuable, either by a contraction of its scope or increasing its duties, or by rendering it invalid or less enforceable. If such be the necessary effect of the law, it matters not how slight the impairment. Green v. Biddle, 8 Wheat. 1, 5 L. Ed. 547. What were the rights of the mortgagee under the mortgage? Primarily, to have the property covered by the mortgage-which was the naked lot-applied to the satisfaction of the debt secured by the mortgage. True, as to the mortgagor, the rights under the mortgage have ripened into title, his right of redemption has been foreclosed. But as to these lienholders whose rights in the building under the former law were superior to the rights of the mortgagee, and which rights could not be affected by the foreclosure, the appellant must still rely solely upon its rights under the mortgage. Under the amended statute, and under the decree of the trial court, the lot is still devoted exclusively to the payment of the mortgage debt. The contract obligation is not impaired in that respect. But appellant says that, if a mechanic's lien may be enforced by compelling a sale of the entire property, it might force a mortgagee to change the term of his investment, and put him to the trouble and expense of seeking another investment, and perhaps with a lower rate of interest. Should we admit this to be a valid objection to the statute,-and we do not,-still...