Morrison v. State Trust Co.

• Decision Date: 10 June 1925
• Docket Number: (No. 2511.)
• Citation: 274 S.W. 341
• Parties: MORRISON et al. v. STATE TRUST CO.
• Court: Texas Court of Appeals

274 S.W. 341

MORRISON et al. v. STATE TRUST CO.

(No. 2511.)

Court of Civil Appeals of Texas. Amarillo.

June 10, 1925.

Rehearing Denied July 1, 1925.

Appeal from District Court, Wichita County; H. R. Wilson, Judge.

Action by the State Trust Company against William G. Morrison and others, tried on an agreed statement of facts. From the judgment, defendants appeal. Reversed and rendered.

E. M. Mann, of Wichita Falls, for appellants.

Dabney, Goggans & Ritchie, of Dallas, amicus curiæ.

Davenport, Thornton & Crain, of Wichita Falls, for appellee.

HALL, C. J.

This case is before us upon purely a question of law. The briefs present the question of the priority of liens; the contest being between the holder of a vendor's lien and those holding a subsequently acquired mechanic's lien. The appellee, trust company, as the transferee before their maturity of two vendor's lien notes dated February 26, 1920, executed by Walter Salm alone, in the sum of $2,750 each, instituted this suit to recover the amount due upon the notes and to foreclose the vendor's lien. Walter Salm and wife, Wm. G. Morrison, and J. P. Coleman were made parties defendant. On the 10th day of March, 1923, Salm and wife executed to Morrison and Coleman a mechanic's lien contract upon the lot in question to secure the payment of $416.34; the same being the cost of certain street improvements to be constructed and laid by Morrison and Coleman in front of and adjacent to the property in suit. It is agreed that both liens are regular and formal, and that the mechanic's lien was properly executed, acknowledged, and filed for record under an ordinance of the city of Wichita Falls, duly enacted; that the work was done in accordance with the contract; that the value of the house and lot in question just prior to the construction of the street improvement was $4,600; that its value, after the paving had been completed, including the improvement, was $5,016.34, and that the work of paving had enhanced the value of the property to the extent of $416.34. It was further agreed that the paving could not be removed from said property without destroying it; that said improvement was of a permanent character, complete within itself, and was inseparable from the property and incapable of division and separation from it without greatly impairing and damaging the improvement of the street and the balance of the property.

The case was tried by the court without a jury upon an agreed statement of facts. The court rendered judgment in favor of the appellee, trust company, for the full amount of its notes, principal, interest, and attorney's fees, and foreclosing the vendor's lien upon the property, holding that said lien was prior to the mechanic's lien. It was also decreed that Morrison and Coleman have judgment for the amount sued for with a foreclosure of their mechanic's lien upon the property, but expressly decreeing that said foreclosure should be in all things subject to and inferior to the foreclosure of the vendor's lien in favor of plaintiff. No personal judgment was rendered against Salm in favor of Morrison and Coleman. It was ordered that the property be sold, that the judgment in favor of appellee company should be first satisfied in full from the proceeds of the sale, and that any excess should be applied to the satisfaction of the claim of Morrison and Coleman. No question is made upon the sufficiency of the pleadings; the sole issue being as to the superiority and priority of the liens.

According to the agreed statement of facts, the property is worth about $1,400 less than the total indebtedness secured by the two liens.

V. S. C. S. (1918 Supp.) art. 5631, prescribes the formal requisites to the fixing of a valid lien upon a homestead. V. S. C. S. (1914) arts. 5621-5627, relate to the fixing of the lien upon property which is not exempt. Article 5628 of the same chapter provides:

"The lien herein provided for shall attach to the house, building, improvements or railroad for which they were furnished, or the work was done, in preference to any prior lien or encumbrance or mortgage upon the land upon which the houses, buildings or improvements, or railroad, have been put, or labor performed, and the person enforcing the same may have such house, building or improvement, or any piece of the railroad property, sold separately; provided, any lien, encumbrance or mortgage on the land or improvement at the time of the inception of the lien herein provided for shall not be affected thereby, and holders of such liens need not be made parties in suits to foreclose liens herein provided for."

The proposition of appellants Morrison and Coleman, who constructed the pavement under a formal written contract with Salm and wife, is that the trial court erred in holding that the vendor's lien held by the appellee, trust company, was a prior and superior lien upon the house and lot, and in decreeing that the house and lot be sold and the proceeds applied first to the satisfaction of the vendor's lien debt, and the excess, if any, to the payment of appellants' claim for paving. The agreed statement of facts shows that Salm and wife bought the house and lot in question, and that the purchase extended "to the center of Tenth street," upon which street the pavement was laid. We then have a case where the owners of a homestead have duly contracted for the construction of a separate and entire improvement thereon; said improvement being of a permanent character and incapable of being separated therefrom without destroying the improvement itself and damaging the freehold. It is agreed that the value of the house and lot, aside from the pavement, is $4,600; that the value of the pavement is $416.34, and that the aggregate value of the whole property is $5,016.34. The effect of this agreement is that the value of the homestead has been enhanced by the pavement to the extent of $416.34.

Appellants insist that the court should have decreed that the property be sold, and, if the proceeds were not sufficient to pay both claims in full, then that it be prorated, as was done in the case of Land Mortgage Bank of Tex. v. Quanah Hotel Co., 89 Tex. 332, 34 S. W. 730.

Creosoted Wood Block Paving Co. v. McKay (Tex. Civ. App.) 211 S. W. 822, 234 S. W. 587 and 241 S. W. 549, was a contest between the holder of a vendor's lien and the owners of a subsequently acquired paving lien. The Dallas Court of Civil Appeals held that the vendor's lien was superior. Writ of error was denied. It does not appear that by pleading and evidence there was any attempt made in that case to show the value of the lot and improvements separately, or to invoke the principle announced in the Quanah Hotel Case, and that case is not cited in either of the three opinions. In Quinn v. Dickinson (Tex. Civ. App.) 146 S. W. 993, this court gave priority to a vendor's lien over a mechanic's lien, acquired for papering, painting, and repairing the homestead, because such improvements could not be removed without damaging the freehold. The trial court had placed the mechanic's lien in the same class with the vendor's lien and prior mechanic's liens which had been contracted by the vendor of the owners while it was their homestead. A writ of error was denied in that case. Judge Graham based his decision upon Sullivan v. Texas Briquette & Coal Co., 94 Tex. 541, 63 S. W. 307. Citizens' National Bank of Waco v. Strauss, 29 Tex. Civ. App. 407, 69 S. W. 86 (by the Court of Civil Appeals in which a writ of error was denied), and Watson v. Markham & Reese, 33 Tex. Civ. App. 476, 77 S. W. 660.

The case of Owens v. Heidbreder (Tex. Civ. App.) 44 S. W. 1079, follows the holding in the Quanah Hotel Case. Lyon-Gray Lumber Co. v. Nocona Cotton Oil Co. (Tex. Civ. App.) 194 S. W. 633, was a contest between mechanic's lienors and a prior mortgagee, and it was held that the mortgage was the superior lien. A writ of error was refused. In Wm. Cameron & Co. v. Trueheart (Tex Civ. App.) 165 S. W. 58, the court said that the equities were all with the mechanic's lienor as to the improvements, although there was a prior vendor's lien upon the land. In Phelps v. Edwards, 52 Tex. 371, Judge Bonner said:

"To hold, in such a case as this [that] the lien of one who furnishes machinery to another necessary to make available his property, should be subordinate to the lien for the unpaid purchase money for this property, would, we think, be in restraint of trade and against sound principles of equity."

But that case was decided under Paschal's D. art. 7112, which expressly extended the lien so as to cover the land upon which the improvement was placed. It is a significant fact that the Phelps Case has never been cited by any subsequent decision, and also the Quanah Hotel Case, wherein it applies equitable principles, has been cited only once, and that in the case of Kahler v. Carruthers, 18 Tex. Civ. App. 216, 45 S. W. 161, in which a writ of error was refused. The contest in the Kahler Case was between the holder of vendor's lien notes upon a homestead and mechanic's lien claimants who had erected a brick building upon the property. The court said that, whatever may be the law in other states, it is now well settled in Texas that in cases involving foreclosure of mechanic's lien upon the building where a prior lien for the purchase money existed upon the lot at the time the mechanic's lien was fixed, it was proper for the trial court to decree the sale of the lot and building together as a whole and prorate the proceeds. A mechanic's lien did not exist either at common law or in equity. It has its origin and operation in virtue of the Constitution and statutes relating to it. As a basis for the lien in Texas, there must be a contract, either express or implied, to pay for the labor or material. A trespasser who places improvements upon the property of another, in the absence of an express or implied agreement with the owner to pay for...