Summary
In Else v. Cannon, 265 Wis. 510, 62 N.W.2d 3 (1953), the supreme court reviewed a circuit court decision voiding a mechanic's lien, an interest equal to Republic Bank's interest, where the land contract vendee and vendor agreed that the land contract would be cancelled.
Summary of this case from Bank of Chicago v. LichosytOpinion
December 3, 1953 —
December 30, 1953.
APPEAL from a judgment of the circuit court for Dodge county: W. C. O'CONNELL, Circuit Judge. Reversed and remanded.
For the appellant there was a brief by Brendemuehl Brendemuehl of Oconomowoc, and oral argument by Alvin G. Brendemuehl.
For the respondents there was a brief by George A. Hartman, Robert G. Hartman, and Leo C. Hartman, all of Juneau, and oral argument by Leo C. Hartman.
Action to foreclose a mechanic's lien.
On October 6, 1951, the defendants, E. J. Cannon and his wife, entered into a land contract with the defendants, Harold Kehl and his wife, for the purchase by the latter of their farm for the sum of $11,750. $500 was paid down pursuant to the terms of the contract which provided that the down payment was to be held by a broker who had negotiated the contract, and that it should be retained by the broker in case of default. The purchasers engaged plaintiff to make certain improvements upon the dwelling. Pursuant to such engagement plaintiff contractor rendered services and furnished materials of the value of $4,359.61. $2,000 of this sum was paid to the contractor by the purchaser. On April 7, 1952, the contractor filed claim for a mechanic's lien. On April 19, 1952, the purchasers finding themselves unable to raise the balance of the purchase price entered into an agreement with the vendors by the terms of which it was agreed that the land contract should be canceled and the down payment of $500 forfeited; that the $2,000 paid by purchasers to plaintiff should "be forfeited by the purchasers and that no claim therefore be made against the vendors."
This action was commenced on May 8, 1952, by the contractor against both the vendors and the purchasers for the foreclosure of his mechanic's lien and demanding that the real estate be sold to satisfy the amount of the lien and for judgment for any deficiency remaining after sale against the purchasers. It appears that the vendors never agreed with the purchasers to pay the contractor, and that they did not agree with the contractor to pay for or become responsible for the payment of the improvements so as to give plaintiff a lien against their legal interest as provided in sec. 289.01 (4), Stats.
Plaintiff contends that when the purchasers surrendered their equitable interest in the real estate to the vendors, the holders of the legal title, a merger resulted, and that in this action to foreclose his lien he may reach both interests and require their sale for satisfaction of his claim.
The question presented is dealt with in two prior decisions of this court. Milwaukee Loan Finance Co. v. Grundt, 207 Wis. 506, 242 N.W. 131, and Delap v. Parcell, 230 Wis. 152, 283 N.W. 305. The facts appearing in those cases are quite similar to those considered here. Out of these earlier cases we read the following:
1. Where an equitable title and a legal title reach the same person after some other interest has attached itself to the equitable estate, a merger is not presumed.
2. An intent to merge must be proved (no such intent is established in the instant case).
3. If a purchaser under a land contract has any equity when he surrenders to the vendor, the equity continues to exist after the surrender to the extent that some other intervening attached interest is not cut off by the surrender.
4. If a purchaser still has an equity after surrender, only such equity can be sold in proceedings brought to enforce the interest of another which has attached between the date of the contract and the surrender.
5. The court may determine from the evidence the value of the premises and the amount due under the land contract and whether at the time of trial and after surrender the purchaser has any equity left.
In Peters v. Bossmann 184 Wis. 254, 199 N.W. 65, it was held that the vendor's knowledge that the work of the intervening claimant was being done is immaterial.
Applying the rules cited it follows that the plaintiff may have a sale in his foreclosure action but that only the equity which the purchasers had at the time of the surrender may be sold.
By the Court. — Judgment reversed. The cause is remanded for further proceedings in accordance with this opinion.