Gray v. McClellan

• Court: United States State Supreme Judicial Court of Massachusetts
• Writing for the Court: BRALEY
• Citation: 214 Mass. 92,100 N.E. 1093
• Decision Date: 27 February 1913
• Parties: GRAY et al. v. McCLELLAN et al.

214 Mass. 92
100 N.E. 1093

GRAY et al.
v.
McCLELLAN et al.

Supreme Judicial Court of Massachusetts, Middlesex.

Feb. 27, 1913.

Appeal from Superior Court, Middlesex County; Franklin G. Fessenden, Judge.

Action by William L. Gray and others against Ellen L. McClellan and others. From the decree, defendants appeal. Affirmed.

Albert [214 Mass. 94]S. Howard, of Lowell, for appellants.

Daniel J. Donahue and George F. Toye, both of Lowell, for appellees.

[214 Mass. 95]BRALEY, J.

[1] The question for decision is, whether the petitioners' liens for labor have priority over the mortgages held by the Central Savings Bank, one of the respondents. By the R. L. c. 197, § 5, ‘the lien shall not avail against a mortgage actually existing and duly recorded prior to the date of the contract under which the lien is claimed.’

The mortgages given by the owner of the premises consisting of three parcels were almost simultaneously assigned to the bank by the mortgagees, to whom, according to the purport of each mortgage, the mortgagor was indebted in the amount of his promissory note of even date. The mortgages having been recorded previously to the date of the petitioners' contract, it would be of no consequence, if the actual transaction corresponded with the face of the papers, that the value of the property must have been enhanced by the petitioners' labor. They had constructive notice of the mortgages to which under the statute their liens would be subordinate. McDowell v. Rockwood, 182 Mass. 150, 154, 65 N. E. 65;Rochford v. Rochford, 188 Mass. 108, 111, 74 N. E. 299,108 Am. St. Rep. 465. It is for the Legislature to make an exception if of opinion that a mechanic may be unjustly deprived of his wages, because under the present law it is possible; that what he should have received enures to those who have given no equivalent. See Mutual Life Insurance Co. v. Walling, 51 N. J. Eq. 99, 26 Atl. 453. But these instruments do not disclose the real arrangement and understanding of the parties. It appears from the separate, unrecorded agreement under seal, executed by the mortgagor and the mortgagees cotemporaneously with the giving of the assignment, and forming part of the contract of transference, and of the loan, that the mortgages were intended as collateral security, for advancements required in the construction of the buildings to be erected on the lots. The securities might have run directly to the bank which was to furnish the money, rather than by the circuitous route devised for the same end. This, however, is immaterial. The purpose undoubtedly was to procure a loan in some form, even if the amount to be obtained did not quite equal the face of the mortgages, and the money was to be furnished not to the mortgagor, but to the mortgagees as the borrowers. The bank, if it had bound itself absolutely to advance the stipulated[214 Mass. 96]sum by installments would have been secured to the amount fixed by the mortgages which would have outranked the liens, even if its officers knew at the time of making advancements that...