Lincoln Material Co., Inc. v. Goodwin Const. Co.

• Decision Date: 19 May 1930
• Docket Number: No. 51.,51.
• Citation: 150 A. 829
• Parties: LINCOLN MATERIAL CO., Inc. v. GOODWIN CONST. CO.
• Court: New Jersey Supreme Court

150 A. 829

LINCOLN MATERIAL CO., Inc

v. GOODWIN CONST. CO.

No. 51.

Court of Errors and Appeals of New Jersey.

May 19, 1930.

1. Sufficiency of proof.

Syllabus by the Court.

The proofs in this case do not show the recordation of a mortgage before actual commencement of building operations.

2. Sufficiency of evidence.

Syllabus by the Court.

The proofs in this case do not show that the mortgage in question was a purchase-money mortgage.

Syllabus by the Court.

Upon sufficient proofs being shown, a mortgage recorded before lien claims are filed will, under section 15 of the Mechanics' Lien Act, be preferred to the extent of actual advances paid and applied to the erection of a building.

Suit by the Lincoln Material Company, Incorporated, against the Goodwin Construction Company, wherein a receiver was appointed for defendant. From a decree affirming a report of the receiver allowing a mortgage to extent of actual advances as a prior incumbrance, the Newark Holding Company appeals.

Affirmed in part, and in part remanded for further proof.

Jacob W. Silverman and Merritt Lane, both of Newark, for appellant.

Joseph Steiner, of Newark, for receiver.

BODINE, J.

A statutory receiver was appointed in the Court of Chancery for the Goodwin Construction Company. At the time of the receivership the company was engaged in building an apartment house on a tract of land on Walnut street, East Orange, owned by it. The property was incumbered by mortgages and there were several mechanics' lien claims. The receiver made a report by which a mortgage to Samuel Werbel, to the extent of actual advances, was allowed as a prior incumbrance. A mortgage to the Newark Holding Company in the sum of $15,000 was subordinated to certain lien claims but given priority over general creditors. This report was affirmed.

The appellant, the Newark Holding Company, maintains that its mortgage was either recorded before building operations actually commenced, and is hence entitled to priority over lien claims; or that it was a purchase-money mortgage to the extent of $5,000; or, at least, that it must be preferred to the extent of $5,000, because it was recorded before any lien claims were filed, and that to the extent of $5,000 the money secured by it was actually used in the construction of the building in question.

The receiver finds that the mortgage was dated January 2, 1925, recorded April 1, 1925, and re-recorded April 29, 1925. He further finds that actual building operations had commenced when the mortgage was re-recorded. The report further states that the proofs do not establish that the mortgage secured moneys used in the purchase of the property, and that there is no evidence that any of the money secured by it went into the actual construction of the building.

The court below sustained the mortgage and allowed it as a lien in advance of general creditors. By so doing it disposed of any question affecting the execution of the mortgage and the bona fides of the parties. It is therefore not necessary for us to consider suggestions in the receiver's report which may incidentally affect these questions. We think on the proofs that the court properly held that the mortgage was properly executed and that the charges of lack of bona...