Opinion
6 Div. 599.
October 17, 1935. Rehearing Denied November 29, 1935.
Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.
Richard D. Gilliam, Jr., of Birmingham, for appellant.
Failure of the bill to show affirmatively whether the land involved was located in a city, town, or village rendered it subject to the demurrer. Code 1923, §§ 8832, 8839. The bill, seeking to enforce a lien on several parcels of land, in separate ownership and the amount and priority of other liens on which are different, should show facts on which the court could base an equitable marshaling of assets. Grayson v. Goolsby, 224 Ala. 75, 139 So. 106. The holder of a mortgage lien acquired subsequent to the time a materialman's lien became effective is entitled, as against the materialman, to be subrogated to the liens which its money went to discharge and which were prior liens on the land at the time of the inception of the materialman's lien. Municipal improvement assessments and purchase-money mortgages are such prior liens. Byrum Hardware Co. v. Jenkins Bldg. Supply Co., 226 Ala. 448, 147 So. 411; Code 1923, §§ 2185, 2199. Where the evidence shows that buildings, if removed from the land, would have their value practically destroyed, the court should order the sale of the land and buildings together. Byrum Hardware Co. v. Jenkins Bldg. Supply Co., supra. In enforcing a materialman's lien on lands and buildings, the court has no power to sever the buildings, which in absence of the statute became a part of the land, from the land otherwise than by ordering a sale of the buildings separately. Code 1923, §§ 8833, 8850.
Harsh, Harsh Hare and Oliver Henderson, all of Birmingham, for appellee.
Where the record and proof show beyond question and without objection that the property on which a lien is sought is in a city, town, or village, failure to aver in the bill that it was so situated is not a fatal defect. Britling Cafeteria Co. v. Irwin, 229 Ala. 687, 159 So. 228; Best Park v. Rollins, 192 Ala. 534, 68 So. 417, Ann.Cas. 1917D, 929; Federal Auto Ins. Ass'n v. Meyers, 218 Ala. 520, 119 So. 230; Buttrey v. Wilhite, 208 Ala. 573, 94 So. 585; State Realty Co. v. Ligon, 218 Ala. 541, 119 So. 672; Life Ins. Co. v. Peacock, 220 Ala. 104, 124 So. 229. A municipal assessment, made final after the accrual of a mechanic's or materialman's lien and paid off by a mortgagee subsequent to the mechanic's or materialman's lien without an express agreement for subrogation, is not subject to subrogation in favor of the mortgagee. Boley v. Daniel, 72 Fla. 121, 72 So. 644, L.R.A. 1917A, 734; In re Wallace's Estate, 59 Pa. 401; Mercantile Trust Co. v. Hart (C.C.A.) 76 F. 673, 676, 35 L.R.A. 352; Hinchman v. Morris, 29 W. Va. 673, 2 S.E. 863; McInerny v. Reed, 23 Iowa, 410; 25 R.C.L. 1338; 99 Am.St.Rep. 498, note; Bunn v. Lindsay, 95 Mo. 250, 7 S.W. 473, 6 Am.St.Rep. 48; Kleimann v. Gieselmann, 114 Mo. 437, 21 S.W. 796, 797, 35 Am.St.Rep. 761; Capen v. Garrison, 193 Mo. 335, 92 S.W. 368, 5 L.R.A. (N.S.) 838. Encumbrances created subsequent to appellee's lien could not be paid off by a subsequent mortgagee and such mortgagee acquire a lien prior to appellee thereby. Richards v. Griffith, 92 Cal. 493, 28 P. 484, 27 Am.St.Rep. 156; Ahern v. Freeman, 46 Minn. 156, 48 N.W. 677, 24 Am.St.Rep. 206; Hargis v. Robinson, 63 Kan. 686, 66 P. 988; Wimberly v. Mayberry, 94 Ala. 240, 10 So. 157, 14 L.R.A. 305; First Ave. Coal Lumber Co. v. King, 193 Ala. 438, 69 So. 549. Where the rights of a materialman holding liens would be materially prejudiced by the acquisition of rights under subrogation by a subsequent mortgagee, equity will not enforce same. 25 R.C.L. 1365; Alison v. Patrick, 217 Ala. 520, 116 So. 918. Payment of street improvement assessment not due at the time, it not appearing that the assessment would prejudice the rights of the holder of the mortgage, does not entitle such mortgagee to subrogation. 25 R.C.L. 29; Wilkins v. Gibson, 113 Ga. 31, 38 S.E. 374, 84 Am.St.Rep. 204; Tillman v. Stewart, 104 Ga. 687, 30 S.E. 949, 69 Am.St.Rep. 192; Alison v. Patrick, supra. Where money is loaned to pay off encumbrances when the lender has no prior interest, there must be an assignment or agreement of substitution. 99 Am.St.Rep. 513, note; Kline v. Ragland, 47 Ark. 111, 14 S.W. 474; Price v. Courtney, 87 Mo. 387, 56 Am.Rep. 453; Seeley v. Bacon (N.J.Ch.) 34 A. 139; Carolina I. B. L. Ass'n v. Black, 119 N.C. 323, 25 S.E. 975. It is proper to decree the removal of houses in a mechanic's or materialman's lien suit without a sale. Vesuvius L. Co. v. Alabama Fid. Co., 203 Ala. 93, 82 So. 107; Pilcher v. Porter Co., 208 Ala. 202, 205, 94 So. 72. Allegations of the bill showed one contract to furnish material to three contiguous lots, entitling complainant to a lien on all three lots. Tallapoosa Lumber Co. v. Copeland, 223 Ala. 41, 134 So. 658, 75 A.L.R. 1325. The decree does not authorize removal of houses unless and until the court had been unable to realize a sufficient amount from a sale of all the property together to pay all liens and costs. Grayson v. Goolsby, 224 Ala. 75, 139 So. 106.
The bill was filed by Tallapoosa Lumber Company, appellee, to enforce a materialman's lien in solido on three lots, Nos. 3, 4, and 6, and the buildings erected thereon.
On former appeal (Tallapoosa Lumber Co. v. Copeland, 223 Ala. 41, 134 So. 658, 75 A.L.R. 1325) we held the record sufficiently disclosed the materials were furnished the owner, Roy Copeland, under one contract for use in the several buildings under construction at the same time, and that same were so used; that the lots were "contiguous or adjacent," notwithstanding a 50-foot lot, No. 5, under separate ownership, lays between lots 4 and 6, and that under Code, § 8839, the complainant had an election to claim and enforce one lien against the entire property. The present record on these issues is the same. as then before us. We adopt our former decision on this phase of the case.
The present appellant, City Realty Mortgage Company, claims under three mortgages, one on each of the lots, executed contemporaneously by the owner, Copeland, to secure a loan or loans.
By demurrer to the bill a question was raised touching the sufficiency of the description of the property. It was described as "situated in Jefferson County, Alabama, to-wit: Lots Numbered Three (3), Four (4) and Six (6), in Block No. Two (2), according to the survey of South Park as recorded in the Office of the Judge of Probate of Jefferson County, Alabama, in Map Book 3, Page 44." It further appears from the bill that lot No. 3 is known as 2717 Florida avenue, and lot No. 4 is known as 2715 Florida avenue.
The contention is that this does not show the lots are situated in a "city, town or village" as per Code, § 8832.
Without dispute the evidence discloses that the lots are in the city of Birmingham. While exact pleading should expressly aver the lots are in a "city, town or village," when the lien is claimed on them as such, the description here reasonably imports city or town lots, with street numbers, fully identifies the property, and on the record as a whole no injury resulted from overruling the demurrer.
The questions of moment on this appeal concern the priorities between the materialman's lien and the mortgage liens, as presented by appellant's cross-bill and the evidence.
Appellant's mortgages were executed after the buildings were in course of construction. Standing alone, they are subordinate to the materialman's lien both as to the lots and the buildings. Code, § 8833.
But the proceeds of the mortgage loan were applied by appellant in large measure to the removal of prior incumbrances claimed to be superior to the materialman's lien on the lots, and, in part, on both lots and buildings. Appellant claims a right of subrogation in equity to the liens so removed.
Among these was a local assessment by the city of Birmingham against each of these lots for street improvements.
Admittedly these were lawful assessments against this abutting property made final when the buildings on the lots were nearing completion. Such assessments are by statute made a lien on the abutting property "superior to all other liens, except those of the state or county for taxes." Code, § 2199.
Moreover, such assessment is a betterment tax, limited by the Constitution (section 223) and statute (Code 1923, § 2174) to "the increased value of such property by reason of the special benefits derived from such improvements."
These assessments are for a public purpose; the basis, in most cases, of issues of bonds.
We are of opinion and so declare that such liens have priority over materialman's liens; otherwise, the materialman would obtain the benefit of enhanced security at public expense.
The lien attaches to the property as a whole, the lot and the buildings as part of the realty, and takes priority over the materialman's lien as to both lot and buildings, whether the assessment is made before or after work is begun on the buildings. Code, § 8833, has no application to such assessments. 44 C. J. 806, § 3416.
We are further of opinion that the mortgagee, appellant, is entitled to be subrogated to such liens, having paid the assessment out of the money loaned. The mortgagee was not a mere intruder or volunteer. It had the same right to make a loan on the property as the materialman had to improve it.
The mortgagee, in clearing its own security, worked no hurt to the materialman. We can see no basis in equity for a contention which would in effect give the materialman the benefit of removing these assessment liens, rather than the mortgagee, whose funds were so applied.
We, therefore, conclude the appellant, mortgagee, should be decreed a prior lien by way of subrogation on all the lots and buildings for the aggregate sum paid by reason of the local assessment liens of the city of Birmingham. Code, § 8936.
The trial court correctly recognized the superiority of the Sanders mortgage, a purchase-money mortgage outstanding at the time of the purchase by Roy Copeland, and properly decreed the appellant a lien by way of subrogation for the sum applied thereto, in priority to the materialman's lien upon the lots, but subordinate to the materialman's lien as to the buildings. Code, § 8833.
The purchase-money mortgage given by Copeland to his immediate vendor, W. T. Mooney, stands on a like footing. The mere fact that this mortgage may have been executed subsequent to the beginning of work on the buildings does not affect its priority. The materialman's lien on the land is limited to the "right, title, and interest" of the owner at the time work on the buildings is begun. Code, §§ 8832, 8833.
Outstanding purchase money on lands, in the absence of evidence of a waiver, implies a vendor's lien, or legal title reserved, and a mortgage therefor, nothing to the contrary appearing, is to be treated as a continuation or substitute for the original security. The court erred in failing to decree the mortgagee appellant priority upon the lands, not the buildings, for the sum applied to the removal of this Mooney mortgage.
The evidence warrants the finding that the mortgages given by Copeland to Annie Keith Russell for contemporaneous loans were executed subsequent to the beginning of work on the buildings, and appellant's equity of subrogation to these mortgages is subordinate to the materialman's lien of appellee, both as to lots and buildings. There was no error in the trial court's ruling on this issue.
Subsequent purchasers of the equity of Copeland in these properties suffered decrees pro confesso and make no claim to a marshaling of securities calling for a sale of the properties in inverse order of alienation. Apparently, they concede that prior liens will wholly consume the proceeds. Appellant cannot assert this equity, if such there be.
The statute, Code, § 8833, does not contemplate a decree directly vesting the lands in one party having the superior lien, and the buildings in another. The right to remove buildings is in the purchaser at a sale under decree.
No evidence was taken on the question of the effect of removal on the value of the buildings. If the security would be greatly destroyed by removal, the better rule is to sell the property as a whole, or in separate units, including lot and building thereon, as may appear to the interest of the lienholders; ascertain and decree the proportionate value of lands and buildings in the proceeds; and apply same to the payment of the liens according to priorities. Baker Sand Gravel Co. et al. v. Rogers Plumbing Heating Co. et al., 228 Ala. 612, 619, 154 So. 591.
The decree is reversed and the cause remanded, with direction to enter decrees fixing priorities as declared in this opinion. Further proof may be taken on the question last mentioned looking to the most advantageous method of selling the property, if the parties so desire.
Reversed and remanded.
ANDERSON, C. J., and GARDNER and FOSTER, JJ., concur.