Summary
In Ohio Sav. Ass'n v. Bell et al., 25 Ohio App. 84, 158 N.E. 548, decided by the Ohio Court of Appeals, the mortgage of the plaintiff was a first mortgage and was the first filed for record. Therefore the recording statutes of that State seem to have been without influence.
Summary of this case from Copeland v. Tennessee Valley BankOpinion
Decided December 6, 1926.
Liens — Priorities — Mechanic's lien, mortgage and vendor's lien — Mortgagee charged with notice that building construction commenced — Vendor's lien superior to mechanic's lien, although mortgage taken after material furnished — Vendor's lien not waived by taking mortgage — Mechanic's lien superior to construction mortgage, when — No priority among mechanics' liens — Distribution of amount of vendor's lien, where subordinate to construction mortgage.
1. Where construction of building had begun and tile furnished was being used in construction of walls at time plaintiff's mortgage was left for record, there had been such physical acts done on premises as produced results visible and sufficient to indicate to persons examining premises that construction of building had actually commenced, so as to charge plaintiff with notice of construction of building on which materialmen claimed lien.
2. Vendor's lien held superior to mechanic's lien for material furnished, although vendor took purchase-money mortgage after materialmen began furnishing material.
3. A vendor's lien is not waived by taking of mortgage on same property to secure payment of purchase price.
4. Mechanic's lien, where work of construction had begun on premises before mortgage was left for record, held superior to mortgage and attached to any interest which mortgagors had in property at time first material was furnished and also to interest which they subsequently acquired.
5. Mechanics' liens have no priority among themselves.
6. Where vendor's lien was superior to mechanic's lien, though vendor had taken purchase-money mortgage, but vendor and O had agreed that O's mortgage should have priority over indebtedness covered by vendor's mortgage and O's mortgage was inferior to mechanic's lien, distribution of the amount of vendor's lien should first be paid to O, followed by payment of mechanics' liens, followed by payment to O of balance on its mortgage, followed by payment to vendor of amount due under his mortgage.
APPEAL: Court of Appeals for Lucas county.
Messrs. Boggs Doty, for plaintiff.
Mr. Stanley A. Grzezinski, Mr. W.W. Campbell, Messrs. Duffey Bryce, Mr. George S. Moss, and Mr. John Zabel, for defendants.
This action comes into this court on appeal from the court of common pleas of Lucas county. Additional evidence has been taken since the trial of the case in the court below, and the issues are presented here in an entirely different manner than in the lower court.
The defendants George E. Pomeroy and F.M. Fuller executed to Robert M. Bell and Elizabeth M. Bell a deed for lot No. 63 in Pomeroy's Stickney Avenue Park Addition to the city of Toledo, which deed was delivered by the grantors to the grantees on October 7, 1924, and filed for record with the recorder of the county on the same day at 3:30 p.m. Subsequent to the execution of the deed, the defendants Robert M. Bell and Elizabeth M. Bell executed to the plaintiff, Ohio Savings Association, a mortgage for $3,200, to secure a loan on the property, and also a mortgage to the defendants George E. Pomeroy and F.M. Fuller, for $900, to secure the balance of the unpaid purchase price of the lot conveyed. The latter mortgage contained a provision that it was "subject to a first mortgage with the Ohio Savings Association." The mortgage to plaintiff was recorded October 7, 1924, at 3:32 p.m., and the mortgage to the defendants Pomeroy and Fuller was recorded October 8, 1924, at 8:55 a.m. The mortgage to the plaintiff contained a provision to the effect that it was a construction mortgage, under the provisions of Section 8321-1, General Code, but upon argument it was conceded that that section of the statute had not been fully complied with so as to make the mortgage effective as a construction mortgage. Certain mechanics' liens were filed against the property in question, and the proceeds arising from the sale thereof are insufficient to pay both mortgages and the mechanics' liens. Two of the mechanics' liens were for material furnished wholly after the leaving of the mortgages for record. The lien of William O. Holst, who is doing business as the W.O. Holst Builders' Supply Company, was for hollow tile and building material. There is no dispute that the tile were delivered in September, preceding the execution of the deed and mortgages, but there is a conflict in the evidence as to whether the tile were delivered on the premises in question or on land adjacent thereto, and there is also a conflict in the evidence as to whether the construction of the building in question had begun so as to charge the plaintiff with notice thereof.
We find from the evidence that, at the time the mortgage of the plaintiff was left for record, the construction of the building had begun and the tile in question were being used in the construction of the walls. There had been, therefore, such physical acts done on the premises as produced results visible and sufficient to indicate to a person examining the premises that the construction of the building had actually commenced, so as to charge the plaintiff with notice. Rider v. Crobaugh, 100 Ohio St. 88, 125 N.E. 130.
The lien of the mortgage of the plaintiff was superior to the mortgage of Pomeroy and Fuller by reason of the fact that it was agreed that, as between the mortgages, that of plaintiff should be the first lien. As between the mechanic's lien of W.O. Holst and the vendor's lien of Pomeroy and Fuller, the vendor's lien was superior, for the reason that a vendor's lien is not waived by the taking of a mortgage upon the same property to secure the payment of the amount of purchase price unpaid. Golner v. Bede, 11 Ohio App. 137; Elliott v. Plattor, 43 Ohio St. 198, 209, 1 N.E. 222. As between the lien of the mortgage of the plaintiff and the mechanic's lien of William O. Holst the mechanic's lien was superior, because the work of construction was begun on the premises, as was obvious to a person making an examination, and the lien attached, not only to any interest which Robert M. Bell and Elizabeth M. Bell had in the property at the time the first material was furnished, but also to the interest which they subsequently acquired. Golner v. Bede, supra. It follows that the mechanics' liens would have no priority among themselves. Rider v. Crobaugh, supra.
We think that under such circumstances it is well settled in Ohio that the funds arising from the sale of the premises should be distributed as follows:
(1) To the county treasurer the taxes, penalty, and interest.
(2) To the clerk of courts the costs of this action.
(3) To the Ohio Savings Association a sum equal to the amount due on the vendor's lien of Pomeroy and Fuller.
(4) To William O. Holst and the other holders of mechanics' liens the amount of their liens, without priority among themselves.
(5) To the Ohio Savings Association the balance due on its mortgage.
(6) To the defendants Pomeroy and Fuller the amount due under their mortgage.
The distribution of the amount due on the vendor's lien to the plaintiff is required for the reason that the mechanics' liens are subject to the vendor's lien for the purchase price, and, as Pomeroy and Fuller had agreed that the mortgage of the plaintiff should be ahead of the indebtedness covered by their mortgage, the amount thereof should first be paid to the plaintiff. Walbridge v. Barrett, 21 C.C., 522, 11 C.D., 634, affirmed by the Supreme Court in Spear v. Walbridge, 67 Ohio St. 558, 67 N.E. 1101. An examination of the mandate from the Supreme Court on file in the common pleas court of this county establishes the identity of the latter case. See, also, what is said by way of obiter dictum in Golner v. Bede, supra, at page 141.
Decree and judgment accordingly.
CULBERT and RICHARDS, JJ., concur.