Redlon v. Badger Lumber Co.

• Decision Date: 03 July 1916
• Parties: LIZZIE D. REDLON, et al., Respondents, v. BADGER LUMBER CO., Appellant
• Court: Kansas Court of Appeals

189 S.W. 589

194 Mo.App. 650

LIZZIE D. REDLON, et al., Respondents, v. BADGER LUMBER CO., Appellant

Court of Appeals of Missouri, Kansas City

July 3, 1916

Appeal from Jackson Circuit Court.--Hon. Kimbrough Stone, Judge.

REVERSED.

Judgment reversed.

B. F Deatherage and Goodwin Creason for appellant.

B. F Pursel for respondents.

OPINION

TRIMBLE, J.

The controversy herein is between the widow and heirs of Benjamin C. Redlon, deceased, on one side and the Badger Lumber Company on the other. Redlon, in his lifetime, was the purchaser of a lot at foreclosure sale under a deed of trust. The Badger Lumber Company obtained a judgment enforcing its lien on the lot for materials furnished and used in erecting a house thereon. This lien is superior to the deed of trust. The Lumber Company being about to enforce its judgment, the plaintiffs, the widow and heirs of said Redlon, brought this suit in equity to enjoin the company from so doing and to cancel and annul the lien.

Lelia D. and J. W. Boswell were the owners of the lot and began the erection of a dwelling house thereon, the materials for which were purchased from the Badger Lumber Company. Afterwards, the Boswells gave a deed of trust on the property to C. L. Flaugh, trustee for F. A. Hornaman beneficiary, to secure a note of even date therewith for $ 1500 due in three years. This deed of trust was duly recorded on the same day it was given.

The Badger Lumber Company, within the proper time and manner, filed its lien claim for $ 546.98, and thereafter, within the time allowed by law, brought suit to enforce said lien against the property. In this suit, the Boswells, owners of the lot, C. L. Flaugh, as trustee, and F. A. Hornaman, beneficiary, were made parties defendant, by reason of the aforesaid note and deed of trust, both of which were appropriately referred to. The Redlon Land Company was also made a party defendant, the plaintiff alleging that it was informed and believes that the note secured by said deed of trust was now held by the Redlon Land Company whereby it claimed an interest in and lien upon said property, but alleging further that the lien of the deed of trust was subject and subordinate to the lien of the Lumber Company. All of the defendants in said suit were duly served and the defendant owners, the Boswells, filed answer and contested the suit. A judgment for $ 620 was duly obtained in the Lumber Company's favor and its lien for that amount was established on the lot and this lien was decreed to be prior and superior to the lien of the deed of trust hereinabove referred to.

The judgment enforcing the Lumber Company's lien was obtained November 2, 1914. On the 14th day of January, 1915, Flaugh, as trustee in said deed of trust, sold the same in foreclosure to Benjamin C. Redlon. He died intestate on February 4, 1915, and his widow and heirs brought this suit April 29, 1915.

It seems that Redlon furnished the money for which the note, secured by deed of trust, was given by the Boswells. But for some reason, Redlon had the note made payable to Hornaman, an employee in a real estate office, and who, as soon as it was given, endorsed it in blank and delivered it over to Redlon. About a month later, Redlon, after waiving protest and guaranteeing payment, endorsed the note in blank and delivered it to George Tuggle. He kept it for some ten months or more and then, without endorsement, turned it back to Redlon doubtless under the latter's guarantee of payment. The transfer of the note from Tuggle back to Redlon was made after the Badger Lumber Company had begun suit to enforce its lien and shortly before the rendition of the judgment establishing same.

No assignment of the note or deed of trust was ever placed on record. So that, during the time covered by the foregoing recital, and, even down to the introduction of plaintiffs' evidence in the present suit, there was nothing on record to disclose to the Badger Lumber Company that Hornaman was not the owner of the note or that, if he was not the owner thereof, who was such owner. The Redlon Land Company, of which Benjamin C. Redlon was a stockholder, had, a short time before the deed of trust was given, sold the lot to the Boswells and doubtless for this reason the Badger Lumber Company made said Land Company a party to the suit as being a possible owner of the note. There is no evidence that the Badger Lumber Company knew, or had any means of knowing who did own or hold it other than the notice afforded by the recorded deed of trust which showed Hornaman to be the owner thereof.

The facts in the case are not disputed. And the only objection made by plaintiffs to the defendant Lumber Company's judgment establishing its lien, is that neither Benjamin C. Redlon nor George Tuggle were made parties to the suit wherein that judgment was obtained. They were the unknown and undisclosed assignees of the note secured by the deed of trust; and, although the trustee and the beneficiary, the holder of the note as disclosed by the record, were made parties to the suit, yet plaintiffs say that as the real, though undisclosed, holder of the note was not a party, the judgment was void as to such assignee and consequently is void as to plaintiffs whose rights are derived from and through him. The question, therefore, presented is: Does the failure to make the assignee of a note, secured by deed of trust, party to a mechanic's lien suit, render the judgment therein void as to such assignee notwithstanding the fact that the lien claimant's right to claim a lien accrued prior to the giving of the deed of trust, and, the trustee and beneficiary, as disclosed by the record, were made parties, and there is nothing of record to show that any assignment of the note has been made, and the plaintiff in the mechanic's lien suit has no notice and does not know that an assignment has been made or to whom made?

So far as we have been able to ascertain, the precise question here presented has never been passed upon by the appellate courts of this State.

It will be observed that in this case the assignee and holder of the mortgage has foreclosed the equity of redemption, so that there is nothing upon which the Lumber Company's lien can operate if the judgment was void as to such unknown assignee. Without doubt, it is incumbent upon every lien claimant, suing to establish a mechanic's lien, to make the mortgagee a party to the suit if the claimant desires to bind the interest of the mortgagee. Aside from any statute, the ordinary principles of law would seem to require this. In addition thereto, section 8228, Revised Statutes 1909, of the Mechanic's Lien Law requires such suit to be brought in ninety days, and section 8221 provides that, in suits to establish such liens, all persons interested in the property charged with the lien may be parties, and, if they are not, they "shall not be bound thereby." Whatever may have been thought at one time concerning the meaning of this statute, it is now well established that, at least as to anyone having an interest in the property, the suit must be brought against him in ninety days, and, if not so brought, the lien is void as to him. And, of course, if he is not a party to the suit the judgment is a nullity as to him. [Russell v. Grant, 122 Mo. 161, 26 S.W. 958; Landau v. Cottrill, 159 Mo. 308, 60 S.W. 64.] And in this regard a mortgagee is to be regarded as interested in the property the same as the owner. [Riverside Lumber Co. v. Schafer, 251 Mo. 539, 158 S.W. 340. l. c. 552.] There would seem, then, to be no question but that if the lien claimant desires to bind the interest of the mortgagee, the latter must be made a party within the ninety days and before judgment is obtained. And the lien claimant must do this without regard to whether the lien takes precedence over the mortgage or not, because the validity of his lien is not established until the judgment is rendered. And even though the mortgage, as in this case, be not given or recorded until after the materials were sold and furnished and the erection of the house was begun (which gives the lien precedence over the mortgage, Riverside Lumber Co. v. Schafer, 251 Mo. 539, 158 S.W. 340), still the mortgagee would have the right to question the validity of the lien claimed and for this purpose should be given his day in court. And although the mortgage note be assigned to another, still, if the lien claimant have notice thereof, undoubtedly he should make such assignee a party.

But, in this case, the lien claimant Lumber Company made the mortgagee, as shown by the record, a party, and there was nothing to indicate that the note had been assigned or, if assigned, to whom. And, as shown in the statement of facts, the note was so endorsed that it could in an instant be transferred from one to another by delivery.

The question, therefore, in this case, is, was the lien-claimant's judgment a nullity as to the unknown and undisclosed assignee of the mortgage note when all the parties to the mortgage, as shown by the record, and of which the lien claimant had any...