Summary
In Gruss v. Miskinis, 130 Conn. 367, 370-71 (1943), the Supreme Court explained that in Palaia it had held that a lien could arise before transfer of the property if the grantee had, at the time of his contract with the lienor, a specific or implied authority to encumber the land before title passed.
Summary of this case from McKechnie v. VendeverOpinion
The defendant M purchased four building lots from defendant B on July 24, 1941, received a deed and executed a mortgage to B for the entire purchase price. The deed was not recorded until October 2 and the mortgage not until November 3. In September, M began the construction of a house on the premises and on September 29 the plaintiff began to furnish materials at the request of M, who represented that he was the owner. The plaintiff made his last delivery October 28. He did not know of the mortgage until informed on November 3 of its recording. He filed a mechanic's lien. Held: 1. That under the provisions of the statute (5105) the date of the recording of the mortgage is the controlling consideration as to priority, and under the facts of the case the mechanic's lien had priority over the mortgage. 2. That B had a purchase money mortgage and not a vendor's lien, and as regards such a mortgage recording is as definitely the test as it is as regards any other mortgage. A vendor who takes a mortgage on land sold to secure the purchase money waives his implied lien, in the absence of an express agreement that it shall be retained.
Argued June 4, 1943
Decided July 22, 1943 — reargued November 2, 1943.
ACTION to foreclose a mechanic's lien, brought to the Court of Common Pleas in Fairfield County and tried to the court, Klau, J.; judgment of strict foreclosure on the cross-complaint of the mortgagee Bajusz and determining the priorities in her favor, from which the plaintiff and the defendants Holmberg and The Norwalk Coal and Supply Company appealed. Error and case remanded with direction.
The appellee filed a motion for reargument which was granted, but after reargument the court declined to amend the rescript in the original opinion.
Margaret Sigsway, with whom was Sidney Vogel, for the appellants (defendants).
John Keogh, Jr., with whom, on the brief, were Gerald R. Steinberg and William O. Keene, for the appellee (defendant Mary Bajusz).
The question is as to priority of lien. The plaintiff claimed under a mechanic's lien and the defendant Mary Bajusz as mortgagee of the premises.
The defendant Miskinis purchased four building lots from the defendant Bajusz on July 24, 1941, received a warranty deed, and executed and delivered a mortgage deed and note for the entire purchase price. Miskinis did not record the warranty deed until October 2, and the mortgage deed was not recorded until November 3. In September Miskinis began the construction of a house upon the premises, and on the 29th day of that month the plaintiff commenced to furnish materials at the request of Miskinis, who represented that he was the owner of the premises and had paid for them. The plaintiff made his last delivery on October 28. He did not consult the land records. He did not know of the mortgage until informed by his attorney on November 3 that it had been recorded on that day. Miskinis left for parts unknown, leaving the house unfinished. The plaintiff filed a mechanic's lien and brought this action to foreclose it, claiming priority over the mortgage. The defendant Bajusz filed a cross-complaint for the foreclosure of the mortgage, claiming that it had priority over the mechanic's lien. Judgment was rendered establishing the priority of the mortgage, and this appeal was taken.
If the warranty and mortgage deeds had been recorded before the plaintiff commenced to furnish materials, the mortgage would have had priority over the mechanic's lien. General Statutes, 5105. This statute provides for a mechanic's lien under certain prescribed conditions and then states: "Such claim shall be a lien on such land, building and appurtenances and shall take precedence of any other incumbrance originating after . . . the furnishing of any such materials." The statute further provides that: "If any instrument constituting a valid incumbrance upon such land other than a mechanic's lien shall be filed for record while such building is being constructed, raised, removed or repaired, all such mechanic's liens originating prior to the filing of such incumbrance for record shall take precedence over such incumbrance and no such lien shall have priority over any other such lien, but such incumbrance and all such liens shall take precedence over any mechanic's lien which shall originate for materials furnished or services rendered after the filing of such instrument for record, but no one of such liens originating after the filing of such instrument for record shall have precedence over another." The defendant Bajusz contends that these two provisions are conflicting; that only the first applies to this case; that the second provision "which seems to emphasize the time of filing for record is meant to apply only to those incumbrances which can take their legal existence solely from being recorded"; that this mortgage "originated" once it was executed and delivered. The language and intent of the second provision of the statute are clear and unambiguous. They make the criterion of priority over a mechanic's lien the recording of the incumbrance. The house was "being constructed" at the time the mortgage was filed for record, and therefore the statute is applicable. A mechanic's lien is a creature of the statutes and they control it very strictly. Apparently the legislature, in a case within the statute, saw fit to make the recording of the incumbrance the controlling consideration. To say that in such a case actual or imputed knowledge of an unrecorded incumbrance will give it the same precedence as though it were recorded reads an exception into the clear language of the statute which is not there. The legislature has expressed an intent to free the lienor of the duty to inquire as to any unrecorded outstanding incumbrance. Both court and counsel apparently overlooked the fact that the second provision of the statute was not enacted until 1925; Public Acts, 1925, Chap. 130; and that, therefore, certain cited cases decided prior thereto are inapplicable.
In Bridgeport People's Savings Bank v. Palaia, 115 Conn. 357, 161 A. 526, we held that a mere contract by the owner of land to give a deed of it, without granting the vendee specific or implied authority to incumber the land before title passes, cannot be said to create such an equitable estate in the vendee that liens could attach before he acquired the title; but we said (p. 362) that if the contract had been that the proposed buyer should take immediate possession of the property and proceed with the work of construction the liens would then have attached to the extent of the buyer's interest. In the instant case the buyer had a deed of the land; he was in possession and control under the deed; and Mrs. Bajusz knew that he intended to proceed at once with the work of construction. Furthermore, 5105 provides for a claim "by virtue of an agreement with or by consent of the owner of the land." Even though the deed was not recorded, Miskinis owned the land; his title was complete when the deed was executed and delivered; 1 Swift, Digest, p. 124; Haskell v. Bissell, 11 Conn. 174, 176; recording affects rights only as regards others than the grantor or their heirs. General Statutes, 5010. The provision inserted in the statute in 1925, referred to above, gave the plaintiff's lien priority over the unrecorded mortgage.
The defendant Bajusz further claims that she has a vendor's lien, because her mortgage is a purchase money mortgage, and that this lien is prior to the mechanic's lien because the latter lienor is not a purchaser for value. There is a sharp difference between the priority which may be claimed for a purchase money mortgage and a vendor's lien. The lien does not depend upon the mortgage. A vendor who takes a mortgage on the land sold to secure the purchase money waives his implied lien, in the absence of an express agreement that it shall be retained. Avery v. Clark, 87 Cal. 619, 25 P. 919; Escher v. Simmons, 54 Iowa 269, 6 N.W. 274; Robbins v. Masteller, 147 Ind. 122, 46 N.E. 330; 66 C.J. 1269, 1173; 27 R. C. L. 578; see also Soule v. Hurlbut, 58 Conn. 511, 522, 20 A. 610. In view of the decision we have reached as to the meaning of the statute, 5105, recording would be as definitely the test as regards a purchase money mortgage as any other.
In the action which the plaintiffs brought to foreclose his lien he made two other mechanic's lienors and an attaching creditor defendants. The court found that the plaintiff and The Norwalk Coal and Supply Company were in the same class, as mechanic's lienors, and fixed the amounts due them. The three lienors took this appeal; for convenience we have referred to the plaintiff only, but what we have said applies equally to the Norwalk Coal Company. The court found that the defendant Holmberg did not establish the amount of his lien. The attaching creditor D'Avino did not appeal. The court found that his attachment was not recorded until December 2, 1941. As Holmberg and D'Avino would be the only ones affected should the mortgage be found too uncertain to be valid, there is no need to consider that question. The parties have all had their day in court and their claims have been adjudicated. We, therefore, find no good reason for a new trial.