Kurz v. Pappas Et Ux.

Davis, J. This was a suit to foreclose a mortgage against a large number of defendants. All of them either appeared, answered, or allowed decrees pro confesso to be entered against them. The complainant, A. W. Kurz, in the court below, was the assignee under a mortgage made by the defendants, D. Pappas, and Anna Pappas, his wife, to D. J. Diamond, dated Feb. 16, 1926. George W. Patch863 en, one of the appellees, was the record oVner of the fee simple title of the property sought to be foreclosed upon. The sole controversy on this appeal is between the assignee of the mortgage, A. W. Kurz, and one George W. Patch-en, who was successor in title to the property under the title conveyed by the foreclosure of a mechanic’s lien against the property concerned. From the final decree holding that appellant, Kurz’s mortgage lien was inferior to Patchen’s fee simple title, and that therefore Kurz could not foreclose his mortgage as against the interest of Patchen, this appeal was taken. The recohd shows that in the first instance one Edgar L. Nash claimed a mechanic’s lien on the property involved in this suit. Nash’s claim to such lien was by virtue of having furnished materials and labor for the plumbing on the property from February, 1926, to August, 1926. The work was not paid for by the property owner who. had caused it to be done. By reason of non-payment for the work Nash foreclosed his mechanic’s lien on the property after the work was completed, and within the twelve months’ statutory limitation allowed for beginning foreclosures of mechanic’s liens. The suit to foreclo'se the alleged mechanic’s lien of Nash was instituted against Pappas, the then title holder, and his wife. In that suit the bill was filed, and the final decree was rendered, solely against Pappas as the then owner of the property. No other lien holders, although there appeared to be some in existence who had claims of record, were joined or attempted to be joined as parties defendant in the suit brought for foreclosure of the mechanic’s lien. Nash, the complainant in the mechanic’s lien case, secured a decree of foreclosure, and bid the property in at the sale. The title of Patchen to the property here concerned was based upon the transfer of the original owner’s interest through the master’s deed of — 864 — same to Nash, who conveyed to one Dixon, who later conveyed to Patchen. The principal contention of the appellant, Kurz, is that a mechanic’s lien under the statute expires, or becolnes extinguished as against a subsequent mortgagee, whose claim was of record when the lien foreclosure suit was instituted, provided the suit to foreclose the mechanic’s lien was completed without making such subsequent mortgagee, or his assignee, a party defendant, and without the mechanic’s lien claimant having asserted or attempted to assert his lien as against the subsequent mortgagee, within the o'ne year limitation period provided by statute within which suits to foreclose mechanic’s liens must be instituted against the owner. But the law in this state is now settled to the contrary. Anri for us to uphold the contentions of appellant on this proposition we must of necessity overrule ohr previous recently decided case of Sandquist & Snow, Inc. v. Kellogg, 101 Fla. 568, 133 Sou. Rep. 65, 101 Fla. 579, 136 Sou. Rep. 235. This we are not disposed to do, since the decision in that case was deliberately arrived at by this Court in the light of ’all of the arguments now pressed upon us, and was later adhered to and reaffirmed by us on rehearing. The holding in Sandquist & Snow, Inc. v. Kellogg, supra, is to the effect that the holder of a mechanic’s lien may, within the statutory period of twelve months from the date of the accrual of his lien, or o'f the filing and recording of the notice thereof, institute suit to enforce his lien, and that the only necessary party defendant to enable the lien holder to initially enforce it, is the owner of the fee of the property forclosed against. Or to express the idea in other words, it was held there, that in foreclosing a mechanic’s lien against property, that it is not necessary for the mechanic’s lien holder'to join as defendants all parties having claims of record — 865 — against the same property, in order that the priorities between the mechanic’s lien holder and such outstanding claimants of record might be brought in issue within the twelve months’ limitation, and adjudicated in the mechanic’s lien suit. Or to put it still another way, the holding of the case just cited is that where a suit to enforce a mechanic’s lien is brought against the owner of the property within the statutory period, the failure to proceed against a subordinate lien holder of record by making him a party defendant to' such suit within the statutory limitation of time for enforcing the lien, does not preclude the lien claimant from having the priority of the mechanic’s lien over the mortgage determined in a subsequent suit brought to foreclose the mortgage, though the latter suit is filed more than twelve months after notice of lien was filed. Mechanic’s lien laws were enacted by the Legislature in obedience to the constitutional mandate contained' in Section 22 of Article XVI of the State Constitution.* It was no doubt intended that the enforcement of the lien provided for in the statutes should be primarily in favor of mechanics “on the subject matter of their labor,” and that such enforcement by foreclosure in equity should be both expeditious and direct in form, to accomplish its purpose. The Legislature in enacting our mechanic’s lien law was undoubtedly aware that to require second lien holders, in addition to the owner of the property or “subject matter” of the lien, to be made necessary parties defendant to the statutory mechanic’s lien foreclosure suit, would not ohly add to the initial cost of the proceeding, but would greatly add to the delay in making the enforcement of the — 866 — lien effective for realization by the very one whom it was. intended specially to benefit. Therefore procedural requirements tending to- delay were omitted from the statute, and none that were omitted can be implied by the courts to supply what the Legislature failed to express. It was probably the opinion of the Legislature, in authorizing foreclosure proceedings in the first instance, to be maintained against the owner alone, that the owner, in many cases would promptly upon the filing of the suit against him, discharge the lien by paying the amount due against his property, and thereby enable the mechanic to immediately obtain the fruits of his labor, without having to await adjudication of possibly unnecessary controversies with other mere lien holders, whose claims would not be affected should the owner pay off the mechanic’s claim in order to avoid forced collection with additional court costs. We therefore conclude that our previous holdings on this subject heretofore deliberately arrived at, and expressed, in the case of Sandquist & Snow, Inc. v. Kellogg, 101 Fla. 568, 133 Sou. Rep. 65, 101 Fla. 579, 136 Sou. Rep. 235, are sound in principle, and that the rule there declared should be followed in this case. The effect of the rule we now reaffirm is to permit at the option of the mechanic’s lien .holder, the priorities to be adjudicated either in the mechanic’s lien foreclosure suit instituted by him, or in a subsequent suit in which such subordinate lien holders are made parties, in cases where they were not made parties in the mechanic’s lien foreclosure suit. Under the foregoing authority the rights of appellant were neither enlarged nor diminished by reason of his having been omitted as a party defendant to the mechanic’s lien foreclosure suit. And while appellant had the right in the instant case to assert and litigate any claim of priority of his assigned mortgage over the mechanic’s lien — 867 — in question, he had no greater rights in that respect in the instant ease than he would have had in the mechanic’s lien foreclosure ease, if he had been made a party defendant therein. The Chancellor found in the present ease that the mechanic’s lien holder, Nash, was a prior encumbrancer by virtue of his mechanic’s lien. He also held that Kurz, as assignee of the Diamond mortgage, was a subsequent encumbrancer, because that mortgage was taken by the mortgagee after the work for which the mechanic’s lien was claimed, had already been begun and was in progress. The statute (Section 5380 C. G. L., 3517 R. G. S.) provides that a lien for labor and materials furnished can be acquired as against a purchaser or creditor with notice, and that notice of such lien is constructively given to any and all creditors and encumbrancers whose title, interest or lien in and to the property is created or arises while the work being done is in progress, by the actual going on or progress of the work. Booker & Co., Inc. vs. Watson, 96 Fla. 671, 119 Sou. Rep. 104, 123 Sou. Rep. 837, 840; Sandquist & Snow, Inc. vs. Kellogg, supra; People’s Bank vs. Virginia Bridge & Iron Co., 94 Fla, 474, 113 Sou. Rep. 680. In the case at bar the Chancellor held that the mechanic’s lien of Nash was superior to the mortgage lien of Kurz in that it accrued by reason of the performance of work and the furnishing of material on the property prior to the recording of the mortgage. D. J. Diamond, the mortgagee, testified that he made the original loan which the mortgage was given to' secure, on February 16, 1926. The mortgage was recorded February 20, 1926. The plumbing permit of Nash to do the work for which he claimed his lien was sought from the City of Hollywood on February 15, 1926. There was substantial testimony to the effect that the construction o'f the Olympia building — 868 — on. the lots in question was begun the latter part of January, 1926, and that Nash, the mechanic, began his work installing the plumbing on February 14, 1926. There is also proof that he continued to supply materials and labor to the building until its completion sometime in August o'f the same year. The record shows that Edgar L. Nash foreclosed his mechanic’s lien in the Circuit Court of Broward County within one year from the date of the filing of the notice of lien and within one year from the date of his furnishing of the last material to the building in question. To sustain his claim to a decree of foreclosure against Patehen, the subsequent grantee of the purchaser at the sale of the property under the mechanic’s lien foreclosure, Kurz, the mortgagee, as complainant in the court below, relied principally upon, the contention that he was in nowise bound by the decree in the ineehanic’s lien foreclosure suit, since more than a year had elapsed subsequent to the recording of the notice of mechanic’s lien by Edgar L. Nash. From the foregoing circumstances appellant urged in the court below, and now insists here, that as against him as a subsequent mortgagee, Nash’s lien became totally lost because the mechanic’s lien was only enforceable against htm as mortgagee under the same conditions that it was originally enforceable against the owner of the fee, that is to say, by suit or proceeding taken to assert it within the twelve months’ period against the subsequent mortgagee. Both the master and the Chancellor in the codrt below held otherwise. And the authorities we have heretofore cited support their holding on this point. Such rule of law must therefore be held applicable to the facts in evidence. And the evidence is ample to sustain under that rule the Chancellor’s findings to the effect that no priority — 869 — in favor of Kurz as against Patehen had been established in this ease. We are not unmindful of the possibility, if not likelihood, suggested at .the argument, that in particular cases the rule we have established will open the way for a mechanic’s lien holder to conspire with the owner to commit fraud, by suing the owner of the fee alone, and proving up his alleged lien fo'r a much greater amount than is actually due or enforceable against the property. But as we have specifically pointed out in our opinion on rehearing in the Sandquist & Snow case (136 Sou. Rep. text 237), a subsequent mortgagee, not made a party to the mechanic’s lien foreclosure suit, is not so concluded by the effect of the decree in such mechanic’s lien foreclosure suit, that he may not thereafter raise any legitimate defense to the alleged validity of all, or any portion, of the mechanic’s lien which has been ordered foreclosed in a suit against the owner, as to which the subsequent encumbrancer was omitted as a party. But mere failure to proceed against a subseqneut encumbrancer as such within the statutory twelve months’ period that is applicable only to proceedings for foreclosure against the owner of the fee, is not a legitimate defense available to the subsequent encumbrancer, or to any one except the owner, even in a mechanic’s foreclosure suit in which such subsequent encumbrancer is made a party. See Booker & Co., Inc. v. Watson, supra. The final decree rendered in a mechanic’s lien foreclosure suit duly prosecuted against the owner of the fee, without joinder of other lien holders of record, is at least prima facie good as a determination of all facts to be implied as true from the fact- of rendition of a final decree in a suit of that kind. But such a decree is of course not res adjudvcata as to amount or otherwise as against subsequent encumbrancers, — 870 — or as to others having an interest, where they were not made parties to the suit in which such decree was entered. The final conclusion to be drawn is, then, that a subsequent encumbrancer who desires to assert that his own encumbrance should be given priority over an adjudicated mechanic’s lien, which by reason of its adjudication against the owner, appears prima facie of a certain amount and to be of superior dignity, must allege and prove facts tending to support such a contention, otherwise he cannot have his lien prevail over the one previously adjudicated to be at least prima facie superior in dignity for the amount decreed to be due by the owner. If the burden imposed by this rule is so contrary to sound public policy that it should not be continued, the remedy for changing it is with the Legislature. That body can amend the present statutes so as to require all lien holders of record to be made parties defendant in mechanic’s lien foreclosure suits, — a requirement not evident in the statutes as they are found to exist today. The pleadings and evidence in the present case are amply sufficient to support the Chancellor’s refusal to foreclose the Kurz mortgage as against the title held by Patchen. The final decree considered in that aspect, must therefore be affirmed. Other questions of practice have been argued, but the conclusion reached by us on the principal issue renders a particular discussion of the subordinate propositions unnecessary. "We have found no cause to 'hold that the Chanclelor committed reversible error with respect to any of the interlocutory rulings complained of. The bill of complaint was dismissed by the Chancellor “without prejudice to the right of redemption of complainant, or to the right of redemption of any of the defendants herein.” While no request for permission to redeem in the present case or for permission to file a sep — 871 — arate redemption suit, appears to have been made by appellant, the right to redeem was preserved. Such a limited decree of dismissal as against Patchen was assuredly not erroneous. The previous sale under the mechanic’s lien foreclosure vested the estate in the purchaser, subject to redemption' by any person interested in it, who was not made a party to such mechanic’s lien foreclosure proceeding. The only remedy left available to Kurz, as a subordinate mortgagee, was to redeem from the effect of the previous foreclosure of mechanic’s lien had in the suit to which he was not made a party and whose right of redemption was accordingly not barred in that suit. The decree appealed from saves appellant’s right to redeem, and, as we have just pointed out, was in accordance with law, and should be affirmed. Whitfield, P.J., and Terrell, J., concur. Buford, C. J., concurs in the opinion and judgment. Filed under Rule 21 A. Footnotes [*] This constitutional provision reads as follows: “The Legislature shall provide for giving to mechanics and laborers an adequate lien on the subject matter of their labor.”