Gilcrist v. Wright, 34462

• Citation: 94 N.W.2d 476,167 Neb. 767
• Decision Date: 06 February 1959
• Docket Number: No. 34462,34462
• Parties: Frank GILCRIST, Appellee, v. Andy WRIGHT and Iola Wright, et al., Appellees, William A. Ehlers and Margaret C. Ehlers, Appellants, William A. Evans and Allen D. Evans, copartners D/B/A United Service Company, Intervenors-Appellees.
• Court: Supreme Court of Nebraska

Page 476

94 N.W.2d 476

167 Neb. 767

Frank GILCRIST, Appellee, v. Andy WRIGHT and Iola Wright, et al., Appellees William A. Ehlers and Margaret C. Ehlers, Appellants William A. Evans and Allen D. Evans, copartners D/B/A United Service Company, Intervenors-Appellees.

No. 34462.

Supreme Court of Nebraska.

Feb. 6, 1959.

Syllabus by the Court.

1. Where a person performs labor or furnishes materials for the improvement of a house, pursuant to a contract with the owner thereof, such person has 4 months from the completion of the work or the furnishing of the materials in which to file a mechanic's lien.

2. The lien of a mechanic or laborer attaches at the commencement of the furnishing of material or at the commencement of the performance of labor by him on the property on which a lien is claimed.

3. Under the Nebraska statute there are no priorities among liens for material furnished or labor performed where the liens are of the same class and attach to the same estate.

4. A mechanic's lien has priority over a mortgage if work was commenced or materials furnished before the mortgage was filed for record.

5. On foreclosure of a mechanic's lien the plaintiff may take a personal judgment against the person liable for the debt.

6. The defense of usury is personal to the borrower and his sureties and privies. One who takes title to mortgaged property may not, in the absence of fraud, assert usury as a defense to the mortgage which the usurious note was given to secure.

7. In order for a mortgage on real estate to merge in the title, there must be an identity of ownership in the mortgage and the fee title.

W. A. Ehlers, Omaha, for appellants.

Kelley & Grant, Omaha, for Gilcrist.

Davis & Pittman, Omaha, for Wright et al.

Peter E. Marchetti, McCulloch, Leigh & Koukol, L. W. Hopkins, Omaha, for appellees.

Marks & Clare, Omaha, for Evans, intervenors-appellees.

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

CARTER, Justice.

The plaintiff brought this action to foreclose a mechanic's lien on Lot 4, Block 3, Hulst Addition to the city of Omaha, in the amount of $860. William A. Evans and Allen D. Evans, a partnership, intervened and prayed for the foreclosure of a mechanic's lien for $635 on the same property. Robert W. Fitzpatrick filed his answer and cross-petition, and prayed for the foreclosure of a mechanic's lien for $249 on the same property. The defendants, Andy Wright and Iola B. Wright, James Fruits and Mary Fruits, and William A. Ehlers and Margaret C. Ehlers, were owners of the property at various times involved in the litigation. Fred Minor and Thelma Minor are alleged to have some interest in the litigation by virtue of a mortgage for $5,000 given to them by James and Mary Fruits. Earnest Wiggins is alleged to have an interest in the litigation by virtue of a partial assignment in the amount of $1,770 of a mortgage for $4,750 executed by Andy and Iola Wright to James Fruits. The defendant William A. Ehlers filed an answer and cross-petition. In the cross-petition Ehlers alleged that the Pound Abstract Company failed to include in the abstract of title to the property here involved the recorded mortgage for $4,750 given by the Wrights to Fruits and the partial assignment of $1,770 of such mortgage to Wiggins. He asks a judgment for damages sustained by him if loss is shown to have resulted from such failure. The Pound Abstract Company made no appearance, summons is not shown to have been made upon it, and no issues raised by Ehlers against the Pound Abstract Company were determined by the court. Ehlers alleged the invalidity of the mechanics' liens, that the $5,000 mortgage assigned to him by Fred and Thelma Minor did not merge in the title subsequently acquired by Margaret C. Ehlers and William A. Ehlers as joint tenants, and that the note in the amount of $1,770 secured by an assignment in that amount of the $4,750 note and mortgage given by the Wrights to James Fruits was usurious and wholly unenforcible. Fred and Thelma Minor made no appearance, and the court found that they had no interest in the litigation. From a decree of the trial court determining the ownership of the property and the validity and priority of liens thereon, and the personal liability therefor, the defendants Ehlers have appealed.

The evidence shows the following facts as to the ownership of the property. In October 1955, Fruits negotiated with W. Irving Wilkie for the purchase of two vacant lots, including the one here involved. About the same time he negotiated with Wilkie for the purchase of two houses which Fruits intended to move onto the lots and, after rehabilitating them, to offer them for sale. On or about October 13, 1955, Fruits sought out the defendant Andy Wright as a prospective purchaser of the lot here involved and one of the houses which was to be moved upon it. On October 20, 1955, Wright entered into an agreement to purchase the property after it was placed in condition for occupancy for the sum of $5,750. In completing the transaction with Wilkie and Wright, Fruits caused the title to the lot to be placed in Wright by a deed from Wilkie to Wright which was recorded on November 17, 1955. As a part of the transaction Wright paid Fruits $1,000 in cash and executed a note and mortgage to Fruits in the amount of $4,750, the mortgage being dated November 11, 1955, and recorded on Nobember 17, 1955. On the same day Fruits gave Wiggins a note for $1,770 and secured it by assigning the $4,750 mortgage to him to the extent of $1,770. On September 19, 1956, the Wrights deeded the property to Mary Fruits, the wife of James Fruits. On October 1, 1956, Mary and James Fruits executed a note and mortgage to Fred and Thelma Minor in the amount of $5,000 which was recorded on October 2, 1956. On October 1, 1956, the Minors assigned the $5,000 mortgage to William A. Ehlers for a stated consideration of $5,000 but which was in fact $3,333.36. On December 27, 1956, the Fruits entered into a land contract with the Wrights whereby the latter purchased the property for the sum of $7,300, subject to the mortgage of $5,000 given by Fruits to the Minors and which they assigned immediately to Ehlers. On January 4, 1957, the Fruits conveyed the property to Margaret C. Ehlers and William A. Ehlers as joint tenants. On the same day the Fruits assigned the land contract they had with the Wrights to Margaret C. Ehlers for an actual consideration of $800. It will be observed therefore that the title to the property was in the Wrights from November 17, 1955, to September 19, 1956; from September 19, 1956, to January 4, 1957, the title was in Mary Fruits; and since January 4, 1957, the title was in Margaret C. Ehlers and William A. Ehlers as joint tenants.

The plaintiff filed a mechanic's lien on the property on which it was shown that he had performed work and furnished materials in the amount of $1,060 upon which $200 had been paid. The lien states that the work was commenced on March 15, 1956, and completed on December 29, 1956. The lien was filed on February 15, 1957.

The evidence shows that the lien was the result of two agreements entered into by plaintiff with the defendant James Fruits. The first agreement was made on or about March 1, 1956. It consisted of an offer to install water service in each of three houses including the property involved herein for the sum of $160 on each house. The evidence shows that this work was completed on or before July 30, 1956. It is clear that the work performed under this agreement was not a basis for a mechanic's lien for the reason that it was not filed within 4 months after performing the work or furnishing materials as required by the mechanic's lien law, the only claim of lien having been filed on February 15, 1957. See section 52-103, R.S.Supp., 1955.

The second agreement between plaintiff and Fruits was entered into on or about August 15, 1956. The work was shown to have been completed on December 29, 1956. It is not disputed that the work was performed and the materials provided in accordance with the agreement. The claimed lien was filed within time to the extent of $700.

At the time the foregoing agreements were entered into, and until September 19, 1956, the title to the property was in the Wrights. Fruits made the agreements pursuant to understandings with the Wrights that the work would be done as part of the consideration they paid for the property. Andy Wright was at the site of the property numerous times during the progress of the work. He in fact prescribed the amount of work to be done. The sale price of the property was based primarily on the extent of the work required by the Wrights in fixing up the property. The work covered by the claimed lien was completed after September 19, 1956, when Mary Fruits took title. She had full knowledge of the existing situation and permitted the work to be completed. Under these circumstances the mechanic's lien was valid to the extent of $700 and the Wrights and James Fruits are personally liable for its payment. We conclude, however, that no basis exists for holding Mary Fruits, Margaret C. Ehlers, and William A. Ehlers personally liable for the amount owing to the plaintiff for the reason that they did not contract for or assume the indebtedness. Plaintiff is entitled to a personal judgment against Andy Wright, Iola B. Wright, and James Fruits in the amount of $860 and to the foreclosure of his mechanic's lien to the extent of $700 of such amount.

The interveners Evans filed a mechanic's lien on the property on which it was shown that they had performed work and furnished materials in the amount of $635. The lien states that the work was commenced on September 25, 1956, and was completed on November 23, 1956. The lien was filed on January 23, 1957.

The evidence shows that Fruits entered into an oral agreement with Evans to perform work and provide a furnace and heating...