Wells v. Canton Co.

Eccleston, J., delivered the opinion of this court. Under the decree in the case of Samuel Jones, Jr., against R. B. Hancock and Thos. W. Mann, et al., the trustee sold the factory of Hancock and Mann, known as their Adamantine Candle Factory, for the sum of $20,500, on the 15th of February 1847. The sale included the lot, buildings, and the machinery in and about the premises, and was finally ratified on the 14th of June 1847. The claims on which the decree was passed consisted of three mortgages, given by Plan-cock and Mann to Dawson and Norwood, which afterwards passed into the hands of Samuel' Jones, Jr. The first was dated and acknowledged the 31st of July 1845, and recorded the 10th of June 1846. The second was dated and acknowledged on the 11th of April 1846, and recorded the 16th June following. The third -was executed the 16th of June 1846, and recorded the next day. In consequence of the second mortgage not having been recorded within the time prescribed for transfers of personal property, the- last was executed for the purpose of conveying all the property included in the second deed, and all other personal property of every description belonging to Hancock and Mann, at or about the mortgaged premises. The two first conveyances included all the real estate connected with the factory, and likewise all the machinery and apparatus erected on the lot, or used or connected with the factory. Part of the machinery in this establishment the appellants put up, on account of which they filed, in Baltimore county court, their claim under the lien laws, on the 21st of August 1846, and on the same day had a scire facias issued thereon. The making and putting up this machinery was completed on or about the 18th June 1846, the work having been commenced on the 7th of April preceding. The claim of the appellants was filed in the chancery suit, [241] on the 26th March 1847, under the agreement of counsel that it should be so filed and be considered as if the proceeding had not been instituted in Baltimore county court. Also that no issue would be required to prove any fact connected with the claim, but the claim to be sustained in the usual way by affidavit. The costs taxed to follow the claim, and the suit in the county court to be off. In his report, the auditor refuses to allow this claim, but out of the proceeds of sale he applied $9070.80 to the payment of a vendor’s lien, due to the Canton Company of Baltimore, and the balance, after deducting costs and expenses, he appropriated to William Winn and James Ross, trustees and assignees of Samuel Jones, Jr., towards the payment of the mortgage debt. To which report the appellants filed exceptions, but the chancellor overruled them, and ratified the report. The acts of Assembly which have been referred to as regulating the matter in controversy are, 1838, ch. 205,1845, ch. 176, and 1845, eh. 287. The first of these laws relates to buildings, and does not include machines. The 9th section of which, and the 1st section of the second act, give preference to liens upon buildings, for work and materials, over all liens or incumbrances, attaching subsequently to the commencement of the buildings. In the 4th section of the second act it is declared, “That every machine hereafter to be erected, constructed or repaired within the city of Baltimore, shall be subject to a lien, in like manner as buildings are made subject under the provisions of this and the original act to which this is a supplement.” If, as we have seen, the mechanic’s lien has preference over any other incumbrance attaching upon a building subsequent to its commencement, it necessarily follows that the lien of the mechanic attaches as soon as the house is begun. And inasmuch as machines are made subject to hens, “in like manner as buildings are,” the claim of a mechanic upon a machine must commence as soon as he begins to pul up the machine. In this instance there i" no doubt of the machinery having [242] been commenced prior to the 16th of June 1846, and therefore the claim of the appellants has preference over the mortgage of that date. The uncontradicted evidence in the cause, and the admissions of counsel on both sides, clearly establishing the fact that this machinery was no fixture but movable, and therefore personal property, constituting no part of the factory building. And being personalty it was not affected by either the first or second mortgage, neither of them having been recorded in time to pass personal property, and the first bearing date long before the machinery was commenced. But admitting the appellants had a lien upon the machinery put up by them, still it is insisted that they cannot claim payment out of the proceeds of sale, notwithstanding the machinery was included in the sale.. In support of the appellants’ claim some reliance was placed, in argument, upon the 4th section of the act of 1845, ch. 287. But the counsel on the other side contended that this section related exclusively to buildings, and not to machines. It cannot be necessary for us to say which is the correct view on this point, because we think, upon general principles of equity, a party having a lien upon property, under circumstances like the present, may claim satisfaction out of the proceeds of the same. Previous to the sale, but at the place and on the day of sale, the trustee, (Mr. Glenn, who was also solicitor of the complainant in the chancery suit,) was notified of the appellants’ lien claim. In the report of the trustee he states the property was sold, “free of all incumbrances.” Between the sale and the ratification thereof, the agreement, already mentioned, was filed, by which the scire facias in the county court on the lien claim went off, the parties consenting that the claim should be filed in the chancery case, and requiring no issue to “prove any fact connected with the claim,” but that the same should be sustained in the usual way, by affidavit. The agreement is not so clear and explicit in its terms as it might be, but we understand it as an arrangement entered into, for the purpose of avoiding any difficulty [243] to which the purchaser might be subjected by the proceeding at law, he having purchased the whole property, free of all incumbrances; and in consideration of the appellants’ consenting to strike off the scire facias, their claim might be exhibited in chancery and paid out of the proceeds of sale, if it should be decided that they had a lien on the machinery, and entitled to a preference over the mortgage claim of the complainant. It would be truly a one-sided agreement, if the appellants were to strike off the suit at law, (which was a proceeding against the property itself,) and go into chancery, claiming payment out of the proceeds of sale, but so soon as they get there, they are to be told their claim, if they have any, is not against the proceeds, but against the machinery. In Brooks vs. Brooke, et al., 12 G. & J., 318, where land had been sold under a mortgage, and there were prior incumbrancers, not parties to the suit, in which the trustee sold the property, “clear of all incumbrances,” it was held proper to pay off the elder liens out of the proceeds. One of the objections urged against the allowance of the appellants’ claim out of the fund in court is, that the price at which the machinery, said to be bound by their lien, was sold, cannot be ascertained with sufficient certainly, as the property including the machinery was sold in mass. We do not see any very serious difficulty presented by this objection. It not unfrequently occurs, in courts of equity, that the relative value of different parts of mixed property is to be ascertained through the agency of proof on the subject, and why should it not he done in the present instance? There is evidence already in the record on this point. But when the case goes back to the chancery court, and is sent to the auditor to state another account, if the parties desire it, there is no reason why they should not be permitted to furnish other proof. The amount allowed in favor of the vendors’ lien, was conceded by counsel on both sides to he correct. It is due to the learned chancellor to state, that when his opinion was filed in this cause, and which is reported in 1 [244] Maryland Ch. Decisions, 187, there was no proof that the machinery in controversy were not fixtures, but movable, and ho evidence had been given in relation to the value of this machinery. After the chancellor’s order, in December 1847, overruling the appellants’ exceptions and ratifying the report of the auditor, by consent of the parties, the case was opened and further evidence introduced. ■ Subsequently the auditor made a further report, still disallowing the claim of the appellants, to which they excepted. The chancellor overruled these exceptions also, and finally ratified a report of the auditor, which excluded the present claim from any part of the proceeds of sale. From the different orders adverse to the claim of the appellants this appeal is taken. We must reverse those orders and remand the cause, with instructions to allow this claim as entitled to a preference over the mortgage claim, so far as from the proof he may find to be the fair value at the time of sale, of the machinery which was subject to the lien of the appellants, according to the principles of this opinion. They are also to be paid their costs out of the fur\d in court. A decree in conformity with these views will be signed. Orders reversed and cause remanded.