Hamilton v. Schwehr

• Decision Date: 17 February 1871
• Citation: 34 Md. 107
• Parties: WILLIAM HAMILTON v. FRED'K SCHWEHR, JOHN A. ALLERS, JOHN W. WILSON, and others.
• Court: Maryland Court of Appeals

34 Md. 107

WILLIAM HAMILTON v. FRED'K SCHWEHR, JOHN A. ALLERS, JOHN W. WILSON, and others.

Court of Appeals of Maryland

February 17, 1871

APPEAL from the Circuit Court of Baltimore City.

In addition to the facts of the case as given in the opinion of the Court, it may be further stated that after the final ratification of the sales, the proceedings were referred to the auditor, who stated four Accounts, viz: A, B, C and D the last upon instructions of the complainant's counsel. To Accounts A, B and C, and in part to Account D, the complainant excepted. All of these Accounts were rejected by the Court's order of the 9th of December, 1869, and the papers were again referred to the auditor, with directions to state an account upon the principles set forth in the opinion of the Court. The auditor thereupon stated and reported Accounts E and F. By Account E, stated in accordance with the opinion of the Court, the proceeds of the McHenry street lot less commissions, costs, expenses, &c., were applied to the payment of the whole of the first mortgage of the complainant, and of a part of the second; and the proceeds of the Sterrett street lot, after deducting commissions, costs expenses, &c., were applied ratably to the claims of the material men. Account F, stated in accordance with the written instructions of the complainant's solicitor applied the fund upon the same principle as in Account E, but by a difference in the apportionment of the costs, expenses, & c., in the two accounts, the amount appropriated to the payment of the second mortgage claim by Account F, was greater than the amount appropriated by Account E, and the balance distributed among the mechanics' lien creditors by Account F, was less than the balance distributed by Account E. The complainant excepted to Account E as to the manner of the allowance of costs, and further to the same Account, as also to Account F, because in each of said Accounts, the auditor did not allow the amount of the complainant's two mortgage claims in full, with interest to the day of sale, but in distributing the proceeds of sale of the two lots, which were both covered by the two mortgages, he allowed the full amount of the first mortgage only, and a proportionate amount of the second mortgage, treating the second mortgage as a deferred lien against the Sterrett street property, and the first mortgage as a lien to be satisfied out of the property on the corner of McHenry and Sterrett streets, to the total exclusion of the lien of the first mortgage on the Sterrett street property, and excluding thereby the exceptant from the benefit of his second mortgage lien on the entire property. The complainant insisted that in stating said Accounts his claims should have been allowed by the auditor, as far as the sums to be distributed would go, out of the proceeds of sale of the Sterrett street property, in satisfaction of the sum of two thousand dollars, with interest to the day of sale, part of the first mortgage claim; and out of the proceeds of sale of the property on the corner of McHenry and Sterrett streets, for distribution, the auditor should have allowed the residue of the first mortgage claim, and the whole of the second mortgage claim, with interest thereon to the day of sale. The complainant, further excepting, insisted that the mechanics' lien creditors had no right to compel him to resort to one or other of said lots for the satisfaction of any part of his claims, much less by such election to compel him to abandon, to his loss, any claim or lien against any of the property covered by the two mortgages.

The Court, (PINKNEY, J.,) by its order of the 8th of March, 1870, finally ratified and confirmed Account E, and ordered a distribution of the fund accordingly, and rejected Account F. From these orders of the Court, passed on the 9th of December, 1869, and the 8th of March, 1870, the complainant appealed.

The cause was argued before BARTOL, C.J., STEWART, BRENT, GRASON and MILLER, J.

T. A. Linthicum and W. H. A. Hamilton, for the appellant.

The lien of a mechanic or material man is an extraordinary remedy, created not by the act of the party but by the law based solely upon the terms of the law giving the lien; and where the law defines the remedy and provides the means of enforcing it, and limits its extent or operation, all questions arising thereunder must be determined by the terms of the law itself. Carson vs. White, 6 Gill, 17; Greenway vs. Turner, 4 Md., 296; Thomas vs. Barber, 10 Md., 380; Hess, &c., vs. Brown, 10 Md., 257; Miller vs. Barroll, 14 Md., 173.

And the Act, whilst subordinating the lien claim to incumbrances, mortgages, & c., attaching prior thereto, and requiring the amount of such prior incumbrances to be deducted in the first instance, before distribution made among such creditors, makes no provision for marshalling securities in favor of such claimants where such prior incumbrancers have liens on property not affected by the lien, or to which the liens cannot extend as in cases of mortgages upon one entire lot, upon only part of which buildings have been erected, and the lien is against the part thus built upon. Jones vs. Hancock, 1 Md. Ch. Dec., 187; McKim vs. Mason, 3 Md. Ch. Dec., 187; Denmead vs. Bank of Baltimore, 9 Md., 179; Mills vs. Matthews, 7 Md., 315.

Nor does the Act, when it undertakes to provide, as in sections 21 and 30, for liens against several buildings, arising under joint apportioned claims, contain any provision for marshalling securities in relief of the lien claimants against prior incumbrances, but directly postpones such claim.

The Statute giving the lien has provided the mode of establishing such lien, defines the property to which it shall attach, prescribes the time of its commencement, limits its extent as to the interest affected, and subordinates and postpones it to prior incumbrances, and directs the mode and manner of distribution of proceeds, and commands that prior incumbrances shall be deducted befor distribution, as authorized by the law, shall be made. And all the circumstances attending such liens having been provided for by the Act, no other relief than that given by the Act can be extended, either in law or equity. The Statute furnishes the rule which must be complied with, both as to jurisdiction and relief. Glenn vs. Fowler, 8 G. & J., 340; McPherson vs. Snowden, 19 Md., 19; Heard vs. Stamford, Temp. Talbott, 173; 1 Story's Equity, sec. 61.

The foregoing principles would govern the claims of lien creditors were they complainants seeking to enforce their liens; and their situation is not changed by being made defendants, nor are their rights thereby enlarged.

Upon general principles of equity, the Court will, where a party has a lien upon two funds, and another a lien or interest on only one of the funds, require the first to resort to that fund against which the other has no lien, so far as may be necessary to satisfy both claims. But persons who are not common creditors of the same debtor have no right to compel the creditors of both funds to resort to one in order to increase the dividend of those who can only claim against one. 1 Madd. Chy., ch. 3, page 336; Ex parte Kendall, 17 Vesey, 527; 1 Story's Equity, secs. 642, 643, 644, 645; Woollen Ex. vs. Hillen, 9 Gill, 185.

Hamilton is the creditor of Schwehr, and holds a prior lien under his first mortgage upon the two lots of ground, and under his second mortgage a lien upon both lots of ground, i. e. the lot at the corner of McHenry and Sterrett streets, against which the lien claimants have no lien or claim, and the lot on Sterrett street, against which the lien claims attached before the second mortgage. The lien claimants are not the creditors of Schwehr, the debtor of the complainant, and have no lien or claim created by Schwehr, but are the creditors of Schamburg only, the contractor for building the houses, against whom the complainant has no claim, and for this debt due them by Schamburg have, under the Mechanics' Lien Law, a lien upon the Sterrett street lot; and not being, with Hamilton, common creditors of Schwehr, upon the authorities above cited, they cannot compel Hamilton to take satisfaction of his first mortgage out of the McHenry and Sterrett street proceeds to the prejudice of his second mortgage, which is a valid lien on that property, unaffected by any conflicting claim of parties. Aldrich vs. Cooper, 8 Vesey, 191; Averall vs. Wade, (Lloyd & Goold,) 252; Averall vs. Wade, (Flannagan & Kelly,) 325; Boozman vs. Johnston, 3 Simons, 377; Watson vs. Bane, 7 Md., 117; Barnes vs. Rackster, 1 Younge & Coll., New R., 401.

The rights of Hamilton in respect of his first and second mortgages, to the proceeds of sales, are to be considered and treated as entirely independent and distinct as if the second mortgage were made to a third party; and then, in distributing the funds, the second mortgagee could, in like manner, and upon the same principles of equity as asserted by the lien claimants, insist upon having the first mortgage satisfied out of the Sterrett street property in ease of his said second mortgage--or in other words, the first mortgage stands as a lien against the whole; the lien claims affect only the Sterrett street property; the second mortgage affects both the corner and Sterrett street property, though as to the Sterrett street property subject to the lien claims; were there no intervening incumbrances on the Sterrett street property the second mortgagee would clearly have the right to have the proceeds of sale of the corner property applied to his mortgage, were the first mortgage satisfied out of the Sterrett street property, and as the lien claims on the Sterrett street property prevent the application of the entire...