Warren v. Sohn

Decision Date03 November 1887
Citation13 N.E. 863,112 Ind. 213
PartiesWarren and others v. Sohn and others.
CourtIndiana Supreme Court

OPINION TEXT STARTS HERE

Appeal from superior court, Vanderburgh county; Azro Dyer, Judge.

P. Maier, S. B. Vance, and J. S. & C. Buchanan, for appellants.

The main question in this case arises upon the exceptions to the conclusions of law upon the facts as found by the trial court, and involves the construction of section 5471, Rev. St. Ind. 1881. We submit that the proper natural and equitable construction would be the same as though it read. “These liens shall have priority over and be paramount to all other liens created at the same time, except the lien for state taxes.”

If the construction given to this section by the trial court be adopted, it will result in divesting all kinds of liens which ought to be allowed a priority under all circumstances. Suppose a tract of land is sold for a large sum of money, and most of the purchase money is secured by mortgage upon the premises sold; the purchaser sinks a shaft, and operates a coal mine; he becomes involved; the miners in his employ take liens for all the mine and land is worth; these liens are foreclosed; the vendor is made a party to the foreclosure suit, and sets up his purchase-money mortgage, but he is told his mortgage has suffered the loss of its priority; the property must be sold, and his claim is lost, if the property should not sell for more than the miners' liens. Would this court uphold such a monstrous decision? Yet the section in question divests city and county taxes, although they may have accrued one or two years prior to the miners' liens. Such absurdities would result by adopting appellees' construction.

The mortgage creditors in this case have a lien upon the property of the corporation, older and prior in point of right and equity to any claim for royalty on coal mined subsequently to the execution of the mortgage. It is the duty of the stockholders to preserve and protect the property secured by the mortgage. Mead v. Husted, 52 Conn. 53. The following cases sustain this point: Crandall v. Lincoln, 52 Amer. Rep. 560; Nathan v. Whitlock, 9 Paige, 152;Adler v. Manufacturing Co., 13 Wis. 57;Upton v. Tribilcock, 91, U. S. 45; Sawyer v Upton, Id. 56; Webster v. Upton, Id 65.

This law is unconstitutional, for it grants privileges that no other citizen or class of citizens can enjoy, and that, as far as we can see, without any good cause; for one laborer is entitled to as much consideration as another. This is in violation of section 23, art. 1, Const. Ind. The constitution of the United States, 14th amendment, demands “that all persons shall have the equal protection of the law.” As a consequence, no state can enact a law in violation of this provision. Section 5471 does not equally protect all persons; on the contrary, it denies to some the right to enforce their legally acquired rights, and transfers them to others. Here, the lien of appellants upon the property of the mining company, established and recognized as a valid and meritorious claim for several years, is sought to be set aside in favor of parties whose lien could not attach till several years afterwards, and against which there could be no protection. See, as to similar legislation held unconstitutional in California, County of San Mateo v. Railroad Co., 8 Amer & Eng. R. Cas. 1.

Farmer & Ireland, R. C. Williamson, and W. H Gudgel, for appellees.

Appellees contend that section 5471, supra, means just what it says,-that such liens shall be paramount to and have priority over all other liens, except the lien of the state for taxes; and such liens shall have priority, as against each other, in the order in which they accrue, and for labor, over that for royalty on coal. Appellants concede that the statute is subject to such construction, but say that it ought to be given another one, more in harmony with laws of that character, and with justice to all the parties. The want of harmony or absence of justice is simply assumed by appellants. Appellants say that the proper and natural construction of this section is that these liens shall have priority over and be paramount to all other liens created at the same time, except the lien for state taxes. We submit that to limit the operation and priority to the liens simultaneously created would be exceedingly strained and unreasonable, and in violation of all rules of construction, and would make the legislature say one thing and mean another.

Both of the mortgages held by appellant were made after the enactment of section 5471, supra, and, of course, in the light of and subject to its provisions. They knew the character of the property on which they placed their mortgage; knew it was not productive, indeed was worthless, without the labor of appellees; knew of the very contingency that happened, that is, that the company operating the mines might fail to pay the laborers; and knew, in that event, that these laborers, under the statute, would have a preferred lien for two months' labor done and performed in and about said mines. Appellants knew all these facts when they took their mortgage, and now are in no position to complain that appellees are first to be paid.

By Rev. St. 1881. § 5296, it is provided that mechanics' liens created thereby relate to the time when the work or repairs began, and under this statute the court has held that such lien is prior to any mortgage made after the work began, although taken without notice of any lien, actual or prospective. Fleming v. Bumgarner, 29 Ind. 424, and Kellenberger v. Boyer, 37 Ind. 188. And this in the face of the fact that the statutes declare that such liens shall have priority over all liens suffered or created thereafter, except other mechanics' liens in such cases. According to the construction contended for by appellants, the bondholder or mortgagee ought not to be governed by law, because he paid out his money without reference to any liens thereafter created. The legislation referred to all shows that the legislature has always had in view the very worthy object of protecting the feeble laborer, even in the grasp of the strong, and to prevent him from being deprived of his hard earnings in the event that bonds and mortgages issued and made turn out to be bad investments, for the very good reason that such laborer, as a rule, depends upon the price of his toil for the very necessaries of life.

Appellants further contend that the statute under consideration is in violation of section 13, art. 1, of the constitution of this state. It is only necessary to say, in answer to this objection, that the same privileges and immunities granted to appellees would be granted to appellants upon like terms and conditions. If they go into the mines, and work in and about them, upon failure of their employer to pay them, they might retain the lien by filing and recording same, and thus have priority over all others except taxes.

But it is further said that said section is in violation of the fourteenth amendment to the constitution of the United States, in this: that it grants class privileges. In support of the construction, appellants cite the case of San Mateo v. Railroad Co. That case is not in point. This statute has been in force over seven years, and its constitutionality has never before been questioned.

Howk, J.

The only error whereon the appellants, defendants below, rely for the reversal of the judgment or decree herein, is that the trial court erred in its conclusions of law upon its special finding of facts. The facts specially found by the court were substantially as follows:

(1) At the times hereinafter mentioned, the Evansville Echo Mining Company was a corporation organized pursuant to the laws of Indiana, owning and operating a coal mine in Vanderburgh county, Indiana.

(2) On the first day of December, 1883, said mining company executed a mortgage to William Warren, trustee, on the property described in said Warren's cross-complaint herein, as follows, to-wit: All the right, title, and interest of said company in a certain leasehold, created by virtue of a lease executed by Herman Wessel on the twenty-seventh day of November, 1883, and recorded in Lease Record No. 3, pp. 352, 353, and 354, of Vanderburgh county, Indiana, as follows, to-wit: Lots Nos. 27 and 28 of Maxwell's subdivision of the S. 1/2 of section 17, and the S. E. 1/4 of the S. E. 1/4 of section 18, township 6 S., range 10 W., Vanderburgh county, Indiana; also the surface of two acres of land of said lot No. 27, for the shaft and improvements erected, and to be erected, thereon, said two acres being more particularly described as follows, [description omitted;] also all engines, boilers, machinery, tools, appliances, apparatus, buildings and fixtures on said leasehold, and all coal cars, wagons, horses, mules, rights, credits, franchises, and property, of every kind and nature, held and owned by said company,-to secure the payment of 100 bonds of $100 each, payable 10 years from their date, with 8 per cent. interest, payable semi-annually, and coupons were attached for such interest, all payable at the First National Bank of Evansville. By the terms of said bonds, it was provided that, if the interest was not paid when due, then the principal should become due and payable. Said coupons falling due December 1, 1885, are due and unpaid, although payment thereof has been duly demanded, and the principal thereof remains wholly unpaid. Such bonds are owned and held as follows: Adam Schmidt and Herman Rehrman, each 20 bonds; Herman Wessel and Margaret Mane, each 8 bonds; Koester and Korff, 38 bonds; and John Toranelle, 6 bonds.

(3) On the first day of May, 1885, said mining company executed a second mortgage on the same property hereinbefore described to Koester and Korff, to secure the payment of a promissory note of that date, for the sum of $6,738, executed by said company, and made payable to the order of said Koester...

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