Gardner v. Leck
| Decision Date | 29 March 1893 |
| Citation | 54 N.W. 746,52 Minn. 522 |
| Parties | Herbert B. Gardner et al. v. Arthur Leck et al |
| Court | Minnesota Supreme Court |
Argued December 22, 1892
Appeal by Twiford E. Hughes and Albert C. Robinson, Intervenors from a judgment of the District Court of Hennepin County Canty, J., entered June 30, 1892, decreeing all the mechanics' liens of the parties to the action to be co-ordinate, and prior and paramount to the mortgages given after the construction commenced.
These intervenors gave a bond to the mortgagee, with condition to protect her mortgage from prior liens on the property, and they intervened in the action on account of this liability.
Judgment affirmed.
Gilfillan Belden & Willard, for appellants.
Woods & Kingman, Roberts & Baxter, Geo. H. White, Alvord C. Egelston, J. K. Doolittle, Kellogg & Stratton, Molyneaux & Peterson, F. C. Harvey, Frederick B. Lathrop, Freeman P. Lane, William H. Briggs, Edward H. Crooker, and Edward Savage, for respondents.
OPINION
Each of these actions, consolidated upon trial, was brought to foreclose liens claimed to exist under the provisions of the noted statute of 1889, (Laws 1889, ch. 200,) mortgagees and other lien claimants being made defendants. In brief, the facts were that in March, 1889, defendant Leck verbally agreed to purchase a certain city lot. The owner then executed a deed to Leck of the east sixty feet. In September following the owner executed another deed to Leck of the balance of the lot, both deeds being delivered and recorded September 18th. Leck commenced the erection of an apartment house on the east sixty feet when he agreed to purchase. This house was completed in December. Late in September he commenced to build another house on the rear of his lot, which was completed late in the following spring. January 1, 1890, he executed and delivered a mortgage to defendant Fitch upon the rear or west seventy-four feet of this lot, which was placed on record six days later. There was no general contract for the erection of either house, so that each lien claimant was an independent contractor. Some performed labor or furnished materials for the westerly house only, and a part of these subsequent to the delivery of the mortgage. Other claimants had worked upon both buildings, or had provided materials for each. There were other mortgages upon the land having precedence over any of the lien claims.
Because all of the mechanics' liens did not cover both houses, and because the mortgages were upon separate tracts of land, the trial court held it impracticable and inequitable to sell the lot as one tract, and, for the purposes of sale, divided it into two parcels, exactly as it had been conveyed to Leck. The court further held, and judgment was so entered, subordinating the Fitch mortgage, upon the westerly parcel, to all the liens thereon. Other facts having special reference to certain of the lien claims will be mentioned as we proceed. The chief question now before us is the correctness of the ruling of the trial court whereby it was determined that lien claims for labor performed and materials furnished after the Fitch mortgage was executed and placed upon record, by persons who up to that time had made no contract with Leck, were superior to the mortgage. This was the condition of four claims, that of the respondents Farnham Company, the Herzog Company, W. K. Morison & Co., and Mr. Tanner.
We are thus required to again construe, and upon a most important question, a statute which has brought before our courts more litigation in the three and a half years of its existence than was occasioned by the act or acts on the same subject which preceded it for a period of more than twenty-five years, -- litigation which has proven so expensive, and hence disastrous, to all parties, that the object of the law, as expressed in its title, seems to be a pronounced snare and delusion. The variety of questions which can be presented for judicial determination seems to be endless, and these questions have so arisen that our construction of the different sections found in the act has been piecemeal, and has been rendered more difficult from the fact that, although nearly every state in the Union has a lien law, (most of them adequate in every particular,) this appears to be sui generis, and we have been obliged to pass upon it without the aid of helpful precedents. Because the law has been so fruitful of questions, and because of the detached manner in which they have come up, the one now before us, which involves the rights of an intervening mortgagee where no general contract has been made for the work, and where each lien claimant contracted independently of the others with the owner of the land, has not been squarely presented until this time, although the attention of the court has frequently been called to it, its importance and embarrassments. It was referred to in the main opinion in Finlayson v. Crooks, 47 Minn. 74, (49 N.W. 398, 645.) Although the liens involved in that case grew out of separate and independent contracts with the owner, and there was an intervening mortgage, the real question was as to the power of the court in actions to foreclose mechanics' liens to pass upon and adjudicate the rights of mortgagees. The court below had made two classes of lien claimants, -- one class having precedence over the mortgage, the other being postponed to it, -- upon the authority, presumably, of Crowell v. Gilmore, 18 Cal. 370, and Choteau v. Thompson, 2 Ohio St. 114. Referring to this action of the trial court, an opinion was expressed, unnecessarily for a determination of the case, that such method of distribution was based upon unsound reasoning, and in direct conflict with the plain provisions of ch. 200, supra, § 10, requiring the proceeds of a sale to be distributed ratably among the lien claimants, and without priority among themselves. This court went further, and expressed an opinion that, in a case where a mortgage lien had intervened, there should be first set aside out of the proceeds of the sale a sum equal to the amount of the liens prior to that of the mortgagee, that he should then be paid in full, and, if anything be left, it should be added to the amount first set apart, the whole to be distributed pro rata among all the lien claimants, thus putting all mechanics and material men on the same footing. Upon motion for reargument it was announced that, as the proper method of distribution was not really before us in that case, the question was an open one, and for future consideration. Nor did this question arise in Glass v. Freeburg, 50 Minn. 386, (52 N.W. 900,) in which Finlayson v. Crooks, supra, Hill v. Aldrich, 48 Minn. 73, 50 N.W. 1020, and Haupt Lumber Co. v. Westman, 49 Minn. 397, (52 N.W. 33,) were briefly referred to.
In the Glass Case it was held that, where a building is constructed under one entire contract made between the owner and an original contractor, the liens of all subcontractors attach by relation as of the date of the commencement of the work, and have a preference over a mortgage on the premises executed by the owner subsequent to that date. It is the contention of respondents' counsel that this conclusion is decisive of the case at bar in their favor, not because of the line of reasoning therein adopted, (which is said to be somewhat faulty,) but because the conclusion was right, and cannot be adhered to without affirming on the main issue the judgment herein appealed from. We must admit that counsel's position is correct, and, further, that the lien rights of the claimants in that action depended upon the statute, and not by virtue of any substitution to rights which were held and might have been enforced by the chief contractor. He was entitled to a lien, but asserted none; his right had terminated by inaction, and could not be claimed by others. He could have enforced a lien claim, which would have attached as an entirety, at the date he commenced work or furnished the first item of material, and which would have had precedence, as a whole, over the mortgage; but he failed to assert his rights.
The statute (section 1) grants the lien right to whoever performs labor or furnishes material by virtue of a contract with, or at the instance of, the owner, his agent, trustee, contractor, or subcontractor. It contemplates that a lien may be claimed by both contractor and subcontractor, and section 10 expressly provides for such a condition of affairs; but it nowhere gives or recognizes substitutionary rights, so as to authorize one claimant to advance and attach his own rights to those which might have been acquired by another. So that the date when a lien attaches upon the property, if a lien statement be filed, cannot be made to depend upon the relationship which the claimant has or had to the person who has omitted to assert his rights; and a claimant cannot demand priority in right over other persons by showing that he was a subcontractor, and that his contractor could have had priority, if he had so insisted. The date when each lien shall attach is expressly fixed by statute. On principle, the argument made in support of the subcontractors whose claims were considered in Glass v. Freeburg cannot be justified.
A majority of this court are clearly of the opinion that the views expressed in the Finlayson Case are unsound. If such a method of distribution were adopted, it would result in deferring to some extent the lien claims of those who had performed work or furnished materials before the execution of the mortgage to its lien in every case where the premises sold for more than sufficient to pay prior, in point of time, claimants, because those...
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