International Mortgage Bank v. Whitaker
| Decision Date | 11 April 1927 |
| Docket Number | 4511 |
| Parties | INTERNATIONAL MORTGAGE BANK, a Corporation, Respondent, v. JOHN T. WHITAKER and FLORENCE B. WHITAKER, His Wife, E. G. FRANK and HELEN FRANK, His Wife, SANDY WALSH, and E. R. PAUL, Defendants, and BOISE-PAYETTE LUMBER COMPANY, a Corporation, Defendant and Appellant |
| Court | Idaho Supreme Court |
MORTGAGES-MATERIALMAN'S LIENS-PRIORITY-RENEWAL MORTGAGES-MORTGAGE FORECLOSURE - EVIDENCE - RECORDATION OF PROSPECTIVE MORTGAGES - CUSTOM - MORTGAGEE'S LACK OF KNOWLEDGE OF IMPROVEMENTS-ACQUIESCENCE.
1. Lien of mortgage, which was of record at time material for buildings constructed on property was furinshed, is prior to materialman's liens therefor, unless extinguished or released by acts of parties.
2. Under C. S., secs. 6366, 6367, relative to methods of discharging mortgage lien on real estate, execution of new mortgages, with understanding that original mortgage would be discharged if abstract of title showed new mortgages to be first and prior liens on property, held not to amount to renewal and discharge of original mortgage as bearing on priority of lien for materials furnished before execution of new mortgages.
3. In action to foreclose mortgage wherein defendant claimed that mortgage had been discharged by new mortgages executed thereafter, evidence of plaintiff's custom to record prospective mortgages in order that they would show on abstract of title before closing loan held admissible solely as bearing on plaintiff's intention in causing them to be recorded.
4. Where materialman at all times had knowledge of mortgage on premises for which material was furnished, and mortgagee did not know of improvements being constructed on premises until nearly completed, mortgagee could not be held to have acquiesced in making of improvements and accepted the benefits thereof, as bearing on priority of materialman's liens.
APPEAL from the District Court of the Eleventh Judicial District for Cassia County. Hon. T. Bailey Lee, Judge.
Action to foreclose mortgage. Judgment for plaintiff. Affirmed.
Judgment affirmed. Costs to respondent.
James R. Bothwell, W. Orr Chapman and T. M. Morris, for Appellant.
The custom of respondent as to recording is repugnant to statute and cannot be recognized. (C. S., secs. 5423, 5425; Mechanics & Metals Nat. Bank v. Pingree, 40 Idaho 118, 232 P. 5.)
Respondent having acquiesced in the making of the improvements, and accepted the benefits thereof, cannot now take an inconsistent position. (Blackwell v. Kercheval, 27 Idaho 537, 149 P. 1060; 10 R. C. L. 694; Seeley v Security Nat. Bank, 40 Idaho 574, 235 P. 976; Leaf v. Reynolds, 34 Idaho 643, 203 P. 458; Exchange State Bank v. Taber, 26 Idaho 723, 145 P. 1090; Farber v. Page & Mott Lumber Co., 20 Idaho 354, 118 P. 664; Swain v. Seamons, 9 Wall. (U. S.) 254, 19 L.Ed. 554; Shafer v. Killpack, 53 Utah 468, 173 P 948; Lilliard v. Board of Commrs., 102 Kan. 822, 172 P. 518.)
C. W. Thomas, for Respondent.
The lien of a mortgage is not discharged or released by a new note or notes, or new mortgage, in absence of an express agreement to such effect. The note is only evidence of an indebtedness and the lien of the mortgage in such cases can be discharged only in the manner provided by law. ( Walker v. Farmers Bank of Kendrick, 41 Idaho 279, 238 P. 968; 19 R. C. L. 452; Jones on Mortgages, 6th ed., secs. 924, 925; United States v. Grover, 227 F. 181; Clark v. Sheldon, 223 Mich. 323, 193 N.W. 876; Bachmann v. Hurtt, 26 Wyo. 332, 184 P. 709; Interstate Trust Co. v. Headlund, 51 Utah 543, 171 P. 515; Bank of Benson v. Jones, 147 N.C. 419, 61 S.E. 193, 16 L. R. A., N. S., 343; Sather Banking Co. v. Briggs, 138 Cal. 724, 72 P. 352; Tolman v. Smith, 85 Cal. 280, 24 P. 743; Pugh v. Fairmont Gold etc. Min. Co., 112 U.S. 238, 5 S.Ct. 131, 28 L.Ed. 684.)
A mechanic's lien is subordinate to a mortgage recorded prior to the date materials are commenced to be furnished. ( Pacific States, etc., v. Dubois, 11 Idaho 319, 83 P. 513; C. S., sec. 7345; 18 Cal. Jur. 125, and authorities cited; notes, Ann. Cas. 1916B, 635-664.)
Knowledge by the mortgagee that the owner intends to improve the land or is improving the same will not subordinate the lien of the mortgage to the lien of the materialman. The mortgagee is not considered an "owner." (Basham v. Goodholm & Sparrow Inv. Co., 52 Okla. 536, 152 P. 416; Allis-Chalmers Co. v. Central Trust Co., 190 F. 700, 111 C. C. A. 428, 39 L. R. A., N. S., 84, and note; Middleton v. Arastraville Min. Co., 146 Cal. 219, 79 P. 889; C. S., secs. 7339, 7345.)
The recording act is intended to protect only subsequent purchasers or mortgagees in good faith and for a valuable consideration without notice, actual or constructive. The purpose being to charge persons subsequently dealing with the property, with notice of contents of instruments of record. (C. S., secs. 5423, 5427; 17 Cal. Jur. 946, 947; 22 Cal. Jur. 623, 624.)
The evidence to support an estoppel must be clear, precise and unequivocal, and the burden of proof is upon the party relying upon an estoppel. Nor will silence work an estoppel, unless there be a specific opportunity and a real or apparent duty to speak. (10 R. C. L. 692, 844; Seat v. Quarles, 31 Idaho 212, 169 P. 1167; Neitzel v. Lawrence, 40 Idaho 26, 231 P. 423.)
Party claiming an estoppel must be without knowledge or means of knowledge of facts on which he bases claim of estoppel, and the representations or conduct relied on must have been concurrent with or anterior to the action which they are alleged to have influenced. (21 C. J. 1129, 1130, 1132, 1207, 1208, 1249.)
VARIAN, Commissioner. Brinck, Johnson, CC., Wm. E. Lee, C. J., Givens and Taylor, JJ., concurring. Budge, J., dissents. T. Bailey Lee, J., disqualified.
VARIAN, Commissioner.--
On June 23, 1919, defendants Whitaker and wife executed their real estate mortgage to respondent bank, covering 160 acres of land, to secure their note for $ 15,000. The mortgage was recorded June 26, 1919. Thereafter, in the same year, Whitaker and wife conveyed 80 acres of the mortgaged tract to one E. G. Frank, who assumed and agreed to pay $ 7,000, with interest, of the mortgage indebtedness first mentioned.
On June 7, 1920, appellant began furnishing Frank with materials for the construction of a certain dwelling-house and a chicken-house on the tract conveyed to him. The last material was delivered to Frank on September 16, 1920. On September 17th of the same year, appellant began the delivery of material to Frank for the erection of a barn upon the same property, the last delivery of which was made on November 8, 1920. On December 6, 1920, appellant filed two claims of lien upon the 80 acres owned by Frank; the first covered the material furnished for the house and chicken-house, and the other covered material furnished for the barn.
Under date of October 1, 1920, Frank and wife executed a mortgage to respondent bank upon his 80 acres (E. 1/ 2 NW. 1/4 sec. 22, twp. 11 S., R. 23 E., B. M.) to secure their note for $ 6,500, which mortgage was recorded on October 25, 1920. On the same date, October 1, 1920, Whitaker and wife executed a mortgage upon his remaining 80 acres to respondent bank to secure their note for $ 7,500. This mortgage was duly recorded on November 13, 1920.
This action was commenced on February 27, 1922, by respondent to foreclose its $ 15,000 mortgage. Appellant answered, admitting the execution of the note and mortgage and the transfer of the said east half of the northwest quarter to Frank, the failure of defendants to make instalment payment due October 1, 1921, or the interest due on that date, and denying the reasonableness of attorney's fees asked for in the complaint. Appellant then set up its lien claims, asking judgment for their foreclosure, and alleged that the $ 15,000 mortgage had been discharged by the mortgage of Frank and wife on October 25, 1920.
The court found that prior to or during the time of the furnishing of materials to Frank by appellant for the construction of the dwelling, chicken-house and barn appellant never notified respondent that it was so furnishing said materials, or that it intended to claim a lien upon said premises for the purchase price thereof; that respondent in no manner led or induced appellant to believe that respondent would pay for the materials used in the construction of said structures, nor that respondent would waive its lien by virtue of its $ 15,000 mortgage in favor of appellant, and that no understanding or agreement was ever had between appellant and respondent respecting the selling and delivery of any of said materials to Frank by appellant, nor claiming by appellant of a lien therefor; that the mortgages dated October 1, 1920, executed by Frank and wife, for $ 6,500, and Whitaker and wife for $ 7,500, were made upon the request of the respective makers thereof; that said mortgages were not to take effect, become liens, valid obligations, renewals or a splitting up of the $ 15,000 mortgage until such mortgages were shown by abstract of title to be first and prior liens, subject to the lien of the United States Reclamation Service, upon each parcel of land described in said mortgages, nor until $ 100 and, in addition thereto, the costs of continuation of the abstracts recording said mortgages, and all other costs in connection therewith, had been paid; that it was agreed that the $ 15,000 mortgage would not be released, or discharged, of record, or otherwise, until such terms and conditions were fully performed and complied with; that through no fault or neglect of respondent said terms and conditions were never performed, paid or complied with; that the abstracts of title, when continued, did not show said mortgages to be...
To continue reading
Request your trial