Wright v. Bircher

• Decision Date: 19 February 1878
• Citation: 5 Mo.App. 322
• Parties: NANNIE M. WRIGHT ET AL., Appellants, v. RUDOLPH BIRCHER, Respondent.
• Court: Missouri Court of Appeals

5 Mo.App. 322

NANNIE M. WRIGHT ET AL., Appellants,

v.RUDOLPH BIRCHER, Respondent.

St. Louis Court of Appeals, Missouri.

Feb. 19, 1878.

1. While a mortgage of property not in existence, or not owned by the mortgageor at the date of the execution of the mortgage, is void in law, yet where the contract relates to particular property, reasonably certain to come into existence, and which is to be connected with or is necessary to the use of something in existence, in which the mortgageor has an actual interest, so as to constitute a tangible, existing basis for the contract, such a contract may be upheld in equity.

2. B. leased a hotel building to M., reserving in the lease a lien on the furniture to be put in the building; after the furniture had been put in, W., who had notice of the terms of the lease, lent money to M. and took a mortgage on the furniture. Held, that the lien reserved in the lease will be upheld in equity, and has priority over the subsequent mortgage. The lessees, as to the furniture in question, became trustees for the lessor, and the lessor's claim was a charge in rem, by virtue of the contract, against the lessees and all who claimed under them with notice.

APPEAL from St. Louis Circuit Court.

Affirmed.

FRANK J. BOWMAN, for appellants: Property not owned and not in existence at the time of the making of the mortgage cannot be conveyed thereby, except in cases where it is but an incidental and necessary addition to property in existence at the time of the execution of the mortgage.-- Dunn v. Thornton, 1 C. B. 379; Barnard v. Eaton, 2 Cush. 294; Pettis v. Kellogg, 7 Cush. 471; Winslow v. Insurance Co., 4 Metc. 306; Otis v. Sill, 8 Barb. 102; Goodenow v. Dunn, 21 Metc. 96.

M. L. GRAY and J. M. HOLMES, for appellants: A mortgage of property to be acquired in futuro is void at law.-- McCaffrey v. Woden, 62 Barb. 316; Butterfield v. Baker, 5 Pick. 522; Munsell v. Carew, 2 Cush. 50; Head v. Goodwin, 37 Me. 181; Barnard v. Eaton, 2 Cush. 294; Codman v. Freeman, 3 Cush. 306; Otis v. Sill, 8 Barb. 102; Gardner v. McEwen, 19 N. Y. 123; Tapfield v. Hillman, 46 Eng. Com. Law, 243; Dunn v. Thornton, 50 Eng. Com. Law, 379; Gale v. Burnell, 53 Eng. Com. Law, 850. It is equally void in equity as a conveyance.-- Moody v. Wright, 13 Metc. 17; Ross v. Wilson, Peter & Co., 7 Bush, 29; Mogg v. Baker, 3 Mee. & W. 195; Gale v. Burnell, 7 Ad. & E. 850; Morrill v. Noyes, 3 Am. Law Reg. (N. S.) 18; Pennock v. Coe, 23 How. 117; 2 Hill. on Mort., chap. 43, and cases cited. The lien reserved in the lease is only for rent in arrear; and, as no rent was in arrear, the tenant had the jus disponendi when the mortgage was given, and the lien of the lessor is post poned to that of the mortgagee.-- Dalton v. Laudahn, 27 Mich. 529.

CHARLES B. HOWRY and W. L. SCOTT, for respondent: The true character of the lien clause in the lease is that of an equitable mortgage.--Hill. on Mort. 648 et seq.; Lincoln v. Purcell, 2 Head, 143; Blackburn v. Tweedle, 60 Mo. 505; Flagg v. Mann, 2 Sumn. 533; Foster v. Reynolds, 38 Mo. 553; Bank v. French, 3 Barb. Ch. 293; Collins v. Carle, 13 Ill. 254; Johnson v. Huston, 17 Mo. 58; Shirras v. Craig, 7 Cranch, 34; Burgess v. Kattleman, 41 Mo. 483. A mortgage of property not in esse at the date of the mortgage, but which, within the contemplation of the parties, is to be thereafter acquired, is valid in equity, and is operative against the mortgageor, and all persons purchasing from or claiming under him with notice.-- Mitchell v. Winslow, 2 Story, 630; Fletcher v. Morey, 2 Story, 550; Willink v. Morris Canal Co., 3 Green Ch. 377; In re How, 1 Paige, 129; McComber v. Parker, 14 Pick. 497; Benjamin v. Railroad Co., 49 Barb. 441; Sillers v. Lester, 48 Miss. 613; Smithhurst v. Edmonds, 17 N. J. Eq. 408; Pierce v. Railroad Co., 25 Wis. 551; Pierce v. Emory, 33 N. H. 484; Seymour v. Railroad Co., 26 Barb. 286; Arnoult v. Annis, 16 La. An. 225; Trust Co. v. Hendrickson, 25 Barb. 484; Pennock v. Coe, 23 How. 17; Phillips v. Winslow, 18 B. Mon. 531; Galveston R. Co. v. Howdry, 11 Wall. 489; United States v. Railroad Co., 12 Wall. 362; Brett v. Carter, 3 Cent. L. J. 286; Morrill v. Noyes, 3 Am. L. Reg. (N. S.) 18; Langton v. Horten, 1 Hare, 549; Holroyd v. Marshall, 9 Jur. (N. S.) 213; Abbott v. Stratton, 3 Jo. & Lat. 603; Whitworth v. Gaugain, 3 Hare, 416; Douglass v. Russell, 3 Jur. 512; 1 Myl. & K. 488.

BAKEWELL, J., delivered the opinion of the court.

On Feb. 10, 1873, the respondent, Bircher, was erecting a large building on the south-east corner of Sixth and Chestnut Streets, in the city of St. Louis. The building was intended for a hotel. At the date named, and before the building was entirely completed, Bircher entered into an agreement in writing with John W. and Walter A. Malin in regard to these premises. This contract is under seal, and is executed in duplicate by both parties. By its provisions, Bircher leases the building to the Malins at an annual rent of $32,500, payable monthly. A blank was left for the day on which the term was to commence, with a proviso that it should be filled on the completion of the building. This blank was afterwards filled by inserting the words “first day of August, 1873;” and the lease, which had been acknowledged by both parties on the day of its date, was then recorded. The lease does not, in so many words, say that the building must be used for a hotel, but it is spoken of throughout as a hotel building, and it plainly appears from the lease, and is admitted, that it was to be used as a hotel. The lease contains covenants against the permission of nuisances, and against subletting portions of the hotel building for any purposes, and against subletting other parts for certain purposes named, and has this stipulation: “All the furniture, fixtures, and other improvements of the hotel shall be bound for the rent, and for the fulfilment of the other covenants contained in the contract on the part of the lessees.” At the date of the lease, the building could not be used for any purpose. As it approached completion, the lessees began to make the necessary preparations for their hotel business. In July, they began to furnish the building; and on July 9, they had placed in the building all the furniture and fixtures in controversy in this case. About twelve months after the execution of this lease, the appellant Mrs. Wright, who is a daughter of John W. Malin, lent the sum of $25,000 to the Malins, taking their note for the amount, secured by deed of trust upon all the furniture and fixtures in the Laclede-Bircher Hotel. This deed was duly recorded. John W. Malin died soon after this transaction, leaving his widow and executrix a life-interest in his hotel property; and on May 26, 1875, the widow and son, who were carrying on the business, borrowed of Mrs. Wright $10,000 more, giving her a second deed of trust on the same property, which was duly recorded. At the time these deeds were given, the rent was not in arrear. The Laclede-Bircher Hotel was composed of the Bircher Hotel, the new building spoken of in the lease under consideration, and of another older building of about the same size. The deeds of trust of Mrs. Wright, therefore, covered not only the furniture spoken of in the lease, but also the furniture in the Laclede part of the building. Afterwards the rent fell in arrear, and on Dec. 11, 1876, respondent took possession of the hotel and its equipments. The trustee of Mrs. Wright demanded possession of the furniture, the notes secured by deeds being overdue. Respondent refused to surrender the furniture, and claims that he has a lien upon it for rent, by the terms of his lease. The rent due is about $15,000, and the sum due on the notes about $30,000. The case was submitted to the trial court on an agreed statement of facts, and the finding and judgment was for defendant. Plaintiffs appeal.

The question to be determined is, whether Bircher has a lien upon the furniture for his rent, under the clause in the lease above set out, and, if so, whether it takes precedence of the liens of Wright. It is admitted that Mrs. Wright, when she lent the money to her father, had not only constructive, but actual, notice of the provision in the lease that the furniture was liable for the rent. It is manifest that the intention of the Malins and Bircher was that the furniture of the hotel should be a security for the rent. If, then, the contract was effectual to carry out the design of the parties, and Bircher has a prior lien, Mrs. Wright cannot complain. She acted with her eyes open, with the fullest notice, and took every risk. She knew that her security was doubtful if the contract of her father and brother with Bircher was to be carried out according to the plain intention of the parties; and, if she looked to this security at all, she knew that Bircher claimed a lien, and on what grounds; and, if the lien is valid, she took the risk of nonpayment of the rent.

That a mortgage of property not in existence, or not owned by the mortgageor at the time of the execution of the conveyance, is absolutely void at law, is conceded. There is no question as to that; it has been so ruled in Missouri, and the rule is well established in England and America. But equity has in some cases sustained conveyances of property not owned by the person giving the lien at the date of the transaction, and not even in existence. The tests are thus stated in the well-considered case of Morrill v. Noyes, 3 Am. Law Reg. (N. S.) 18 (1863): The contract must relate to some particular property described therein, which, though not in existence, must be reasonably certain to come into existence, so that the minds of the parties may be in agreement as to what it is. The vendor or mortgageor must have present interest in or concerning the thing sold or mortgaged; and there must be something in præsenti, of which the thing in futuro is to be the product, or with which it is to be connected as necessary for...