Stiles & McClay v. Galbreath

• Decision Date: 15 March 1905
• Citation: 60 A. 224,69 N.J.E. 222
• Parties: STILES & McCLAY v. GALBREATH et al.
• Court: New Jersey Court of Chancery

60 A. 224

69 N.J.E. 222

STILES & McCLAY

v. GALBREATH et al.

Court of Chancery of New Jersey.

March 15, 1905.

(Syllabus by the Court.)

Bill by Stiles & McClay against M. S. Galbreath and others. Decree advised.

The original bill of complaint in this cause is filed by Arthur Stiles and John McClay, partners trading as Stiles & McClay. It seeks a decree that certain surplus money under the control of this court in a foreclosure suit wherein Stiles & McClay were complainants, and Mary S. Galbreath and others were defendants, may be decreed to be paid to the complainants, Stiles & McClay. The original bill filed in this cause made defendants Mary S. Galbreath, the owner of the equity of redemption, and others, her creditors, who claimed interests or rights in the surplus money. The bill alleges that in the preceding foreclosure suit in this court there was a sale made, and the surplus moneys, amounting to $6,749.49, proceeding therefrom, were deposited with the clerk of this court; that after the filing of the said bill to foreclose, and before the sale of the mortgaged premises, the complainants acquired a lien against the lands secondly described in the foreclosure bill of complaint, and the buildings thereon erected, under the mechanic's lien law of this state, which lien was carried to judgment in the Atlantic county circuit court. The complainants claim and insist that the said surplus money, while apparently belonging to Mary S. Galbreath, holder of the equity of redemption, is properly and lawfully applicable to the satisfaction of their aforementioned mechanic's lien judgment obtained by them. The complainants further show that the defendant Albertson & Young Company, a corporation of this state, also filed a lien claim on January 27, 1902, against said land secondly described in said mortgage, for the sum of $931.14; that the defendant Charles A. Devlan also filed a lien claim on February 3, 1902, against said secondly described lands and buildings for the sum of $3,040; that the defendant David H. Watts, trading as Sharpless & Watts, also filed a lien claim on February 28, 1902, against said secondly described lands, for the sum of $2,252.15; that the defendant Morse-Williams Company, a corporation of this state, on or about March 11, 1902, also filed a lien claim against said secondly described lot of land, and buildings thereon erected, for the sum of $3,620; that the Thackeray Manufacturing Company, a corporation of this state, on the 19th of April, 1902, filed a mechanic's lien claim against said secondly described lot and buildings for the sum of $1,328; that Frederick D. Pettit filed a lien claim against said secondly described lot and buildings on May 10, 1902, for the sum of $572.65; that David H. Watts, trading as Sharpless & Watts, on May 12, 1902, filed another mechanic's lien claim on said land upon said secondly described lot and buildings for the sum of $864. The complainants allege that the lien claims of the said several defendants set forth in the bill of complaint have been reduced to judgment or are now in process of suit. The complainants insist that the complainants and such of said lien claimants as have established their claims to the satisfaction of this court are entitled to be fully paid out of the surplus, if there should be sufficient therefor, and, if not sufficient to satisfy them in full, then to be paid pro rata amounts in satisfaction of said claims. The complainants pray that the surplus money be declared subject to and applicable to the said claim of the complainants, and that the complainants' and such other claims as may be adjudged to be valid liens against said mortgaged premises may be decreed to be paid out of said surplus money, and for further relief.

A decree pro confesso "was taken against the defendant mortgagor, Mary S. Galbreath, the holder of the equity of redemption. Answers were filed by the other defendants. None of these answers raised any disputed questions, except that of the defendant Morse-Williams Company. The answer of the last-named defendant, Morse-Williams Company, avers that that defendant was not a party to the foreclosure bill above mentioned, which was filed on December 13, 1901, and further alleges that said defendant had filed a mechanic's lien claim against the premises in question on December 6, 1901, for a balance due of $7,644.56, and that judgment was entered thereon in Atlantic County circuit court on April 17, 1902, for $7,681.64. The answer of Morse-Williams Company also contains clauses setting up new matter as a defense, as follows: "And this defendant, further answering said bill, says that it is informed and believes that said mortgage so foreclosed by complainant and said lien claim arose as follows: The said complainants had a contract with the said Mary S. Galbreath to erect a building on the land described in said Hen claim, which was one of the tracts described in said mortgage, for the price of forty-two thousand three hundred and eighty-one dollars; that after the commencement of the building they required the said Mary S. Galbreath to give them a mortgage on said lands as collateral security for the payment of the amount to become due them under said contract; that in pursuance of that agreement the said Mary S. Galbreath executed the mortgage so foreclosed, conditioned for the payment of thirty-five thousand dollars within three months from the date of said mortgage, which was dated July 1, 1901, acknowledged July 12, 1901, and recorded July 19, 1901; that the building so contracted to be erected was commenced about the 5th day of February, 1901; that the said complainants knew that this defendant was under a contract with the said Mary S. Galbreath to erect an electric passenger elevator in said building, and that other defendants to the bill in this case were furnishing labor and materials in the erecting and completion of said building, and that the building and the lands whereon the same was erected were by virtue of an act of the Legislature of the state of New Jersey entitled 'An act to secure to mechanics and others payment for their labor and materials in erecting any building' (revision of 1898), approved June 14, 1898 (P. L. p. 538), liable for the payment of the debt due this defendant and the debts due other persons; and that said debt due this defendant was a lien on said building and the lot or curtilage whereon the same was erected; and that this defendant completed its work on the 14th day of November, 1901. And this defendant further says that, although the said complainant knew of the several liens of this defendant and others upon the said building and lands by virtue of said statute, yet, when the said complainants filed their bill, on December 13, 1901, they did not make parties defendant to said bill any of the persons having liens against the said building and lands; that the complainants were the purchasers of said land upon which said debts were liens at said foreclosure sale; that the said complainants took said mortgage solely as a security collateral to their lien claims given to them on said building by virtue of said act above recited, and not in payment for any labor performed or materials furnished in the construction of said building; that they did not advance any money upon said mortgage; that afterwards, claiming that they had, in addition to the contract price, furnished extra work to the amount of four hundred and eighty-four dollars and fifty-six cents; that there was due them forty-two thousand eight hundred and sixty-four dollars and sixty-four cents from said Mary S. Galbreath—they credited said second mortgage for thirty-five thousand dollars, and refrigerators not put in, two hundred and twenty dollars, and filed a lien claim for the balance, seven thousand six hundred and forty-four dollars and fifty-six cents, which is the lien claim mentioned and described in the said bill of complaint, upon which judgment by default was entered on the 17th of April 1902, as above recited. This defendant, further answering, says that in accordance with the act above recited, and for the purpose of perfecting its lien on said building and lands, on the 11th day of March, 1902, it filed its claim against Mary S. Galbreath, builder and owner, said complainant mortgagee, and others, in the office of the clerk of the county of Atlantic, issued a summons on said lien claim, and proceeded so far therein that a judgment by default was entered on the 2d day of June, 1902, against the said Mary S. Galbreath, builder and owner; pleas having been filed by said complainants and by the Guarantee Trust Company, assignee of their said mortgage. And this defendant avers that the complainants and the said several persons, including this defendant, parties to said bill of complaint, had, by virtue of the act above recited, liens on said buildings and land which would be enforced by a conveyance to the purchaser in proceedings on said lien claims of the estate which the owner had in the buildings and lands at the commencement of the building, subject only to all mortgages and other incumbrances created and recorded or registered prior to the commencement of the building, and subject to the lien of mortgages given and recorded under the circumstances contemplated by, and in conformity with the provisions of, sections 14 and 15 of the act (pages 542, 543); that the said mortgage so made by the said Mary S. Galbreath to the said complainants was not a mortgage given and recorded under the circumstances contemplated by, and in conformity with the provisions of, sections 14 and 15 of said act, in that it was not a mortgage for the purchase price, nor was it a mortgage given to secure advances, but was only a mortgage given as collateral with said lien that said complainants had, by virtue of said act, on the said building and lands, and was, in effect, of no validity as against the claim of this...