Haxtun Steam Heater Co. v. Gordon
| Decision Date | 18 November 1891 |
| Citation | 50 N.W. 708,2 N.D. 246 |
| Court | North Dakota Supreme Court |
APPEAL from district court, Grand Forks county; Hon. CHARLES F TEMPLETON, Judge.
Action by the Haxtun Steam Heater Company against the Dakota Investment Company and others to determine the priority of liens on real estate. Judgment for plaintiff. Defendant appeals. Affirmed.
Affirmed.
Burke Corbet, for appellant.
Fred B Lathrop and Cochrane & Feetham, for respondents.
Burke Corbett, for appellant:
Error is claimed by the trial court, striking out certain testimony of defendant's witnesses, citing to sustain the point Soule v. Dawes, 7 Cal. 575; Crowelly v. Gilmore, 13 Cal. 54; Mutual Life Co. v. Rowland, 26 N.J.Eq. 389; Wells v. Canton county, 3 Md. 234; Knox v. Stark, 4 Minn. 20; Taylor v. LaBar, 25 N.J.Eq. 222; Tompkins v. Horton, 25 N.J.Eq. 284; Parrish Appeal, 83 Pa.St. 111; Aiken v. Kennison. 5 At. Rep. 757. A mechanic's lien for materials for improving or enlarging a building does not take priority over an existing mortgage. Jessup v. Stone, 13 Wis. 466; Getchell v. Allen, 34 Iowa 559; Insurance Co. v. Slye. 45 Iowa 615. Provisions of a mechanic's lien law giving such lien priority over incumbrances on the land created before the making of the contract and decreeing that the deed, etc., takes precedence of any other title, is void. Myers v. Berlandi, 39 Minn. 438.
Fred B. Lathrop, for respondent:
The material which enters into the construction of a building prior to its completion, pursuant to a contract with the owner, is a part of the building, and the material-man has a lien dating from the commencement of the building. This is the sole test to determine priority. Nelson v. Iowa, etc., 44 Iowa 75; Davis v. Alvord, 94 U.S. 545; Insurance Co. v. Sly, 45 Iowa 615; Davis v. Belsland, 85 U.S. 659; Brooks v. Burlington, 101 U.S. 443; Hydraulic Co. v. Bormen, 19 Mo.App. 665; Douglas v. St. Louis, etc., 56 Mo. 400; Page v. Betts, 17 Mo.App. 381; Insurance Co. v. Pringle, 2 S. & R. 138; Reading v. Hopson, 90 Pa.St. 497; Dubois v. Wilson, 21 Mo. 214. The mortgagee takes his mortgage with notice of this. The fact of the improvement gives notice to the world. Loan Association v. Rowland, 26 N.J.Eq. 392, and cases cited. The commencement of the building is the first labor done on the ground--the excavation for the foundation. Conrad v. Star, 50 Iowa 481. Boilers imbedded in brick and stone and a steam heating apparatus are a part of the building when furnished during its construction. Dimmick v. Cook, 8 At. Rep. 627; Watts v. Geuning, 3 N.Y.S. 869; Boynton v. Reid, 3 N.Y.S. 224; Schwar v. Allen, 7 N.Y.S. 5; Schaper v. Bibb, 17 At. Rep. 935; Goss v. Hilbrig, 19 Pa. 277; Short v. Miller, 14 At. Rep. 374; Donahue v. Cromartie, 21 Cal. 86.
The opinion of the court was delivered by
This is a contest for priority between plaintiff, the Haxtun Steam Heater Company, a mechanic's lien holder, and the defendant, the Dakota Investment Company, a mortgagee. There was a decree below for the plaintiff, and the investment company appeals. Section 5478 of our Compiled Laws reads as follows: "The liens for labor done or things furnished shall have priority in the order of the filing of the accounts thereof, as aforesaid, and shall be preferred to all other liens and incumbrances which may be attached to or upon said building, erection, or other improvement, and to the land on which the same is situated, or either of them, made subsequent to the commencement of said building, erection, or other improvement." The unquestioned facts are these: One Gordon was the owner of certain lots in the city of Grand Forks, upon which he desired to erect an hotel building. On August 12, 1889, he commenced the erection of said building. August 17, 1889, Gordon executed to the appellant a mortgage upon said lots for the sum of $ 10,550. That said mortgage was properly recorded on August 19, 1889. That in October, 1889, Gordon entered into a contract with the respondent, by which respondent agreed to place a steam heating apparatus in said building, which was furnished and put in place in November and December of that year, and before the completion of the building; and within the required time respondent furnished and filed the necessary documents to perpetuate its lien for the unpaid amount due for such heating apparatus. The appellant introduced certain evidence, which, on motion of respondent, was subsequently stricken out by the court as immaterial. This action of the court is assigned as error. The rejected evidence showed that before the building was commenced Gordon procured an architect to make plans and specifications therefor; that there was no general contractor for the erection of the building, but that Gordon contracted with various parties for different lines of material and work as the same were needed; that said plans and specifications were always used as the basis upon which such contracts were made; that said plans and specifications contemplated heating said building with stoves, and not by steam, but included a smoke stack for future use, as it would be cheaper to put it in then than afterwards; that said plans and specifications, and the submission of bids by different contractors thereunder, formed the basis upon which appellant made the loan to Gordon; that after such loan was perfected, and the mortgage executed and recorded, the plans for said building were so far changed as to substitute a steam heating apparatus for stoves; that said change was made at the solicitation of respondent's agent, and when made, and when the contract for the steam heating apparatus was entered into, respondent had both actual and constructive notice of the mortgage to the appellant. This statement uncovers the contention of the parties. Respondent claims that under the statute its lien has priority over any mortgage on the lots made subsequent to the commencement of the building, although prior to the time when respondent made its contract with Gordon and furnished any part of its labor and materials. The appellant, on the other hand, insists that, as it parted with its money and took its security on the basis of the plans and specifications as they then existed, it is by law entitled to priority over any lien for labor or materials subsequently furnished for purposes not then contemplated in the plans and specifications of the building then being erected; that as to the steam heating apparatus furnished by respondent it was so far a change of and enlargement upon the original building that as to it, and the inception of a lien therefor, the building was not commenced, in the sense of the statute, until the contract for such apparatus was entered into. All of the errors assigned are but different methods of bringing forward this one claim, and the case presents but the single question.
Mechanic's lien statutes, containing provisions similar to or identical with the section quoted from our statute, exist in many of the states, and have been frequently before the courts. The precise point here raised has not been often ruled, nor unfortunately, have the rulings been uniform, yet we are clear that the holding of the lower court has the support of the decided weight of authority as well as sound principle. Appellant cites us to the case of Welch v. Porter, 63 Ala. 225. That case was decided under a statute which declares that the lien conferred thereby "should attach and be preferred to all other incumbrances which may be attached to or upon such buildings, erections, or other improvements, or the ground, or either of them, subsequent to the commencement of such buildings or improvements." It must be admitted that this case fully sustains appellant's position, and goes even further, for the court say: "Nor do we doubt that when, by the terms of the contract, one person is to do the labor, and another is to furnish the material, the lien of each attaches from the time he commences the performance of his contract." And again: "If we were to hold that, because a building had been commenced, a subsequent contractor or material-man could acquire a lien which would take precedence over an intervening incumbrance, we think we would shock the moral sense of the profession, and fail to carry out the intent of the legislature." In that case there was no question of alteration in the original plans, or enlargement upon the building, and the court holds that the lien of each mechanic or material-man attaches only from the time he commences the performance of his contract. The case stands alone, however. No other case can be found going to the same extent. Appellant also cites in support of its position Soule v. Dawes, 7 Cal. 575. But in that case the facts were of an entirely different character. There the lot owner entered into a contract for the erection and completion of a building for a consideration certain, to be paid part in money and part by the conveyance to the contractors of certain other realty. While the building was in progress of erection the owner mortgaged the property where the building stood to a party who was thoroughly conversant with the terms of the contract with the contractors. After the building was completed the contractors waived the conveyance of the realty that was to be taken in part payment, and took the owner's note for the amount, and subsequently filed a lien, and sought to have it declared superior to the mortgage. But the court held that the parties could not change the terms of payment to the detriment of the mortgagee. The language used by the California court was entirely...
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