Hanchey v. Hurley

• Decision Date: 17 April 1901
• Citation: 129 Ala. 306,30 So. 742
• Parties: HANCHEY v. HURLEY ET AL. [1]
• Court: Alabama Supreme Court

30 So. 742

129 Ala. 306

HANCHEY v. HURLEY ET AL. ^[1]

Supreme Court of Alabama

April 17, 1901

Appeal from chancery court, Pike county; A. H. Alston, Chancellor.

Bill by W. E. Hanchey against J. F. Hurley and others. Decree for defendants. Plaintiff appeals. Reversed.

The bill was filed to enforce a mechanic's lien, and to subject the proceeds of a certain fire insurance policy to the payment of a debt for repairs upon a house, against respondents Hurley. It also made the National Building & Loan Association party defendant, because it held a mortgage against the property which had been foreclosed; the mortgagee purchasing at its own sale. E. R. Brannen was also made a party defendant, by virtue of an alleged agreement to collect the sum due under a policy of insurance to Hurley, and apply the same to complainant's debt. The bill also made W. B Folmar, doing business as the People's Bank, party defendant; he having collected the sum due under the policy under an agreement to hold the same pending the termination of this suit. The bill charged that a contract for repairs of a certain house was made between him and W. F. Hurley. At the time of this contract there was a deed to the land on record from said Hurley to his wife. The second paragraph of the amendment of February 2, 1900, alleged that said Hurley represented that he was the owner of the house; that this representation was known to Mrs. Hurley, and she permitted him to proceed with his work without asserting her title, he being ignorant of its true state. The bill prayed for a lien upon the house, and its sale, and also prayed a lien upon the insurance money in the hands of the People's Bank, and that the same be paid to him. Each of the respondents moved to dismiss the bill for want of equity. The cause being submitted on these motions, the same were granted.

M. N Carlisle, for appellant.

Carmichael & Brannen, for appellees.

TYSON J.

Under the view I take of the case made by the bill, it is unnecessary to determine the question of estoppel raised against the respondent Mrs. Hurley, or the merit or demerit of the amendment to the bill alleging that the deed executed by her husband to her to the lot sought to be condemned to the satisfaction of the complainant's mechanic's lien was fraudulent; for the very obvious reason that, if it be admitted that both contentions are meritorious, the complainant could take nothing under either of them. The lot at the time of the filing of the bill, as shown by its allegations, had become the property of the building and loan association by virtue of a purchase at a foreclosure sale under a mortgage held by the association. After the foreclosure of the mortgage, Mrs. Hurley had nothing left but her statutory right of redemption. The bill is not one for redemption from the association as purchaser; nor is the integrity of the mortgage held by the association, or the foreclosure proceedings thereunder, assailed. Both were confessedly regular, and there is no assertion of a superior lien by the complainant upon the lot to that of the rights of the purchaser. The bill contains no averment of any actual notice by the purchaser of the estoppel sought to be enforced against Mrs. Hurley, to the end of precluding her from asserting her title under the deed. She appears by the chain of title, as shown upon the record, to be the owner of the equity of redemption by conveyance properly executed and recorded before the repairs were made by the complainant on the house. The lien was filed against the husband as owner. This was the state of the title at the time the purchase was made. It is perfectly clear to my mind that on this state of facts the purchaser was not chargeable with constructive notice of complainant's lien. It may be said to all this and in fact it is urged, that, as the mortgagee was the purchaser, it cannot claim the benefit of this doctrine, for the reason that it was chargeable as purchaser with the same knowledge or notice it possessed as mortgagee,-a proposition I do not deny, but which, I insist, has no application to this case. The right of the holder of a mechanic's lien to enforce it upon the building for repairs against a prior mortgage is in no wise dependent upon notice, either actual or constructive, but has its origin in the statute (section 2724 of the Code). The principle doubtless underlying the purpose of its enactment was to prevent a mortgage from taking the benefits of the betterments put upon the property to the end of restoring to him his original security for his debt, without paying to the mechanic the value of the repairs. And this the statute does, without reference to his knowledge of the repairs being made upon the house conveyed by the mortgage. But the rights of a purchaser at a foreclosure sale stand upon a very different footing. It will be well to observe that section 2724 makes no reference to purchasers at foreclosure sales under mortgages, but confers the right of priority upon mechanics' liens on the building or improvement, "over all other liens, mortgages or incumbrances, whether existing at the time of such work or subsequently created." The status of a purchaser being in no wise dealt with by the statute, his rights as owner, as against a mechanic's lien, must, of necessity, be determinable upon the principle of notice. Suppose a third person had become the purchaser at the foreclosure sale; would it be contended that he was not a bona fide purchaser for value, without notice, upon the facts shown by the bill? I apprehend not. The estoppel relied upon, against Mrs. Hurley, is an equity, which is not averred to have been known to the purchaser. Was the association any the less a purchaser because it was the mortgagee, and therefore not entitled to protection as such? By the purchase it extinguished the mortgage debt, to the extent of the sum bid, and destroyed the lien of the mortgage. The property no longer remained mortgagedproperty, subject to the right of Mrs. Hurley to redeem it by paying the debt. In short, the sale cut off the equity of redemption, and the association stood in relation to it as the absolute owner of it. Hambrick v. Security Co., 100 Ala. 551, 13 So. 778. And this is true not only as against Mrs. Hurley and her husband, but as against all incumbrancers not having enforceable prior liens, and, I may add, as against all lienholders of which the association had no notice of their claims. But it may be said that the association sold only the mortgagor's interest, who was the person named in the verified statement filed by the complainant in the office of the probate judge as being the owner of the house against which the lien is...