Jersey Bond & Mortgage Co. v. Wesp Bldg. Co.

• Decision Date: 06 March 1930
• Citation: 149 A. 340
• Parties: JERSEY BOND & MORTGAGE Co. v. WESP BLDG. CO. et al.
• Court: New Jersey Court of Chancery

149 A. 340

JERSEY BOND & MORTGAGE CO

v. WESP BLDG. CO. et al.

Court of Chancery of New Jersey.

March 6, 1930.

Syllabus by the Court.

Suit by the Jersey Bond & Mortgage Company against the Wesp Building Company and others.

Decree in accordance with opinion.

Harvey Rothberg, of Plainfield, for complainant.

Paul Q. Oliver, of Westfield, for defendant Di Fabio.

Sauer & Sauer, of Elizabeth, for defendant Loveland Co.

Sidney W. Eldridge, of Elizabeth, for defendant Brodhead & Co.

BUCHANAN, Vice Chancellor.

Complainant sues to foreclose mortgage. The issues are as to the priorities of the several incumbrances. Defendant Mrs. Di Fabio holds two purchase-money mortgages on the premises aggregating $5,000, dated May 17, 1928. Complainant mortgage company holds a $7,000 mortgage, made May 26, 1928, recorded June 4, 1928, being a construction loan or advance money mortgage.

May 29, 1928, Mrs. Di Fabio executed agreements with complainant, subordinating her mortgages aforesaid to the lien of complainant's said mortgage; these were recorded June 5, 1928. Brodhead Murphy Company has a judgment on mechanics' lien claim for $162.28, on lien claim filed October 6, 1928. L. Loveland & Sons, Inc., has a judgment on mechanics' lien claim for $1,109.34, on lien claim filed December 12, 1928.

The building was never completed; the mortgaged premises were sold pendente lite for $5,500.

Mrs. Di Fabio made her subordination agreements in consideration of complainant's agreement to pay the Di Fabio mortgages out of the moneys to grow due to the mortgagor on the complainant's construction loan. This latter agreement was not recorded, and is not referred to in the subordination agreements. Complainant paid Mrs. Di Fabio $800 on account of her mortgages, but no more. There is now due on the Di Fabio mortgages $4,200 and interest, aggregating upwards of $4,600.

Disregarding the Di Fabio mortgages for the moment, the mechanics' lien claimants admit that complainant's mortgage is superior to theirs to the extent of $3,413. Complainant claims to be entitled to priority to the extent of an additional $1,800, of which $800 is the amount it paid Mrs. Di Fabio on her mortgage, and $1,000 is a sum paid to Otis Wright who furnished materials to the owner.

That complainant's mortgage is entitled to priority to the extent of $3,413 is admitted by all; it was proven that, of the moneys advanced by complainant on its mortgage, at least this amount actually went to the payment of labor and materials in the construction of the building, under section 15 of the Mechanics' Lien Act (3 Comp. St. 1910, p. 3303).

Complainant paid to Otis Wright, who furnished lumber for the building, a total sum of $1,800; $800 of this included in the $3,413 already mentioned, as being payment for lumber which went into the building in question. Testimony was offered by the lien claimants to show that the additional $1,000 was paid by complainant to Wright for materials used in other houses being built by the owner at the same time that the house involved in this suit was being built. On the entire evidence, however, I am entirely satisfied that this $1,000 was paid for materials in the building in question, and that complainant is therefore entitled to priority to this additional amount.

It seems clear also that complainant is entitled to priority to the further extent of the $800 paid to Di Fabio. This $800 was paid on June 6th, almost an entire month prior to the inception of the lien of the lien claimants, who first furnished materials on July 4th or 5th. The debt of a lien claimant becomes a lien at the same instant it becomes a debt, Stiles v. Galbreath, 69 N. J. Eq. 222, at bottom of page 235, 60 A. 224, affirmed 71 N. J. Eq. 299, 67 A. 181, but obviously he has no lien or other interest in the land before that time.

Under section 14 of the Mechanics' Lien Act (3 Comp. St. 1910, p. 3302), the lien claimant is given priority over the lien of an advance money mortgage, but "to the extent only of the moneys remaining to be advanced."

"Remaining to be advanced" at what time? The statute does not expressly say, but the only logical conclusion, from a consideration of all the pertinent statutory provisions and of the factors entering into the situation, seems to be that the date of the inception of the lien claimant's debt is the date which is meant.

The estate or interest in the lands and building which is acquired by the mechanics' lien claimant as security for his debt was specified by section 23 of the Mechanics' Lien Act, Rev. of 1874, as "the estate which the owner had * * * at the commencement of the building * * * subject only to all mortgages * * * created and recorded * * * prior to the said commencement of the building." In the revision of the statute in 1898, that section was re-enacted as section 28 (P. L. 1898, p. 550 [3 Comp. St. 1910, p. 3310, § 28]), but with the important modification that the estate available to the mechanics' lien claimant shall be subject not only to mortgages created and recorded prior to the commencement of the building, but also subject to mortgages given and recorded "under the circumstances contemplated by and in conformity with the provisions of sections 14 or 15 of this act"; inferentially, "irrespective of whether or not they were given and recorded prior to the...