O'Neill v. Lyric Amusement Co.

Hart,. J., (after stating the facts). It is conceded by counsel for the plaintiff that,, owing to a defective ac-knówledgment, his mortgage is not entitled to be recorded ; counsel insist, however, that the mortgage having •been executed 'before the materials had been furnished, the plaintiff’s lien is prior to that of the materialmen notwithstanding the fact that his mortgage was not entitled to be recorded. The defendants have asserted a lien under section 4972 of Kirby’s Digest, and counsel for the plaintiff contend that because that section does not specify recorded mortgages, it is not necessary that the mortgage should be recorded in order to give plaintiff a lien prior to that of the materialmen. In support of their contention, counsel have cited Mathwig v. Mann (Wis.), 65 Am. St. Rep. 47, and Miller v. Stoddard, 50 Minn. 272, but we do not think these cases support their contention. Under the Wisconsin statute, the only effect of a failure of a mortgagee to record his mortgage was that it became void as against any subsequent purchaser in good faith ¡and for a valuable consideration, and the court held that the parties claiming liens under the statute for material furnished were not subsequent purchasers in good faith, 'and for a valuable consideration within the meaning of the statute. The Minnesota statute provides that mortgages, unless recorded, are void as against subsequent purchasers in good faith and for a valuable consideration, or against attachments levied, or valid judgments. The court held that under the statute there was no obligation resting upon the mortgagee to record his mortgage as against mechanics ’ liens, for the provisions of the statute did not apply to or extend to such liens, because they did not come within the terms of the statute; that in the absence of any statute on the subject, the court was relegated to the common law by which a registration of mortgages was not required. (1-2) The provisions of onr statute in regard to mortgages *are essentially different. Section 5395 of Kirby’s Digest provides the manner in which mortgages are to be proved and acknowledged, and .where they are to be recorded; and section 5396 provides that every mortgage, whether for real or personal property, shall be a lien on the mortgaged property from the time same is filed in the recorder’s office for record, and not before; and that the filing shall be notice to all persons of the existence of such mortgage. In construing these sections, the court has uniformly held that, though the mortgage is good between the parties thereto, though not acknowledged and recorded, it constitutes no lien upon the mortgaged property as against strangers, even though they may have actual notice of its existence. Smead v. Chandler, 71 Ark. 505. Persons who have filed mechanics’ liens under our statutes, are strangers to the mortgage, .and where their liens have been perfected in accordance with the terms of the statute, we are of the opinion that such liens are prior to those acquired by a mortgagee who has not filed his mortgage for record. We are strengthened in this view by section 4972 of the Digest, which gives materialmen a preference over prior liens with certain exceptions, not now necessary to be named. The language of the statute is that the materialmen shall have a lien in certain cases in preference to any prior lien or encumbrance or mortgage. In the connection in which it is used, it is evident to our minds that the framers of the statute used the word “mortgage” in the sense of a valid mortgage which constituted a lien upon the property. As we have already seen, under our statutes a mortgage is only a lien on the mortgaged property from the time the same is filed for record, and not before. The mortgage dates its priority from the time it is filed for record. Supporting this view, see Morris County Bank v. Rockway Mfg. Co., 14 N. J. Eq., 189; Thielman v. Carr, 75 Ill. 385; Rockel on Mechanics’ Liens, § 161. (3) It is conceded iby counsel for the plaintiff that all the lien claimants have lienable claims except J. C. Rush; as to him, two contentions are made to defeat his lien.. The first is that his claim was not filed within ninety days after the materials were furnished as required by the statute; and the second is that the materials furnished were not lienable claims under our statute. The property leased -by the Lyric Amusement Company was a three-story building formerly used as .a hotel, and it was the intention of the company to change it into a theater for moving pictures and vaudeville. This change was provided for in the lease.. It will be remembered that the lease was for a period of nine years and seven months from the 1st day of June-, 1912. The lower floor of the building was changed and subsequently alterations were made in the second and third floors. To make the building available for use as a moving picture show, it was necessary , to exclude sunlight, and use artificial light. Electricity was chosen for that purpose. The Lyric Amusement Company made a contract with J. C. Rush to furnish all the material needed for that purpose. The agreement was that the material should be furnished along as needed and ordered by the company. The walls were decorated in a special manner and it was the intention of the company to install the electric light fixtures in such a manner as to show the decorations to the best advantage. (Specially designed fixtures were furnished for that purpose, and it was the intention of the lessee that these fixtures should become a permanent part of the building. They were incorporated into the building in such a manner as to be a part of it. Part of the materials furnished were used in making a sign in front of the building. Globes were furnished which were screwed into sockets made for them. Of course, these globes could be unscrewed and fitted into other sockets, and they would also wear out by constant use. It appears from the record, however, that all the materials furnished by Rush were incorporated into the building and made a part of it, and that it was the intention of the lessee to install them in the building and make them a permanent part of it. In short, they were installed in the building as a component part of it, 'and it was intended that they remain there until they wore out. They were essential to the snccessfnl operation of the building as a moving picture and vaudeville theater, .and were designed for that use. They were reasonably necessary for the purpose for which they were placed in the building and under the circumstances, we think the materials were furnished for the improvement of the building within the meaning of the statute. See Rockel on Mechanics’ Liens, section 18; Scannevin & Potter v. Consolidated Mineral Water Co., 25 R. I. 318; J. I. Mulholland v. Thompson-Houston Electric Co., 66 Miss. 339; McFarlane v. Foley, 27 Ind. App. 484, 87 Am. St. Rep. 264; Pacific Sash and Door Co. v. Bumiller (Cal.), 41 L. R. A. (N. S.) 296; Wahle-Phillips Co. v. Fifty-Ninth Street Madison Avenue Co., 138 N. Y. S. 13; Canning v. Owen, 22 R. I. 624, 84 Am. St. Rep. 858. (4) In regard to the claim that the lien was not filed in time, it may be said that though the materials were furnished in installments .and at intervals, they were furnished under one contract and for the same improvement. The parties 'intended that they should be included in one account, and, under the circumstances,'we think the entire account should Ibe treated as a continuous and connected transaction. In such cases the time fixed by the statute within which to file a lien runs from the date of the last item. Rockel on Mechanics’ Liens, par. 94; 27 Cyc. 145; see, also, Joplin Sash & Door Works v. Oklahoma Presbyterian College for Girls (Okla.), 43 L. R. A. (N. S.) 158. It follows that the decree must be ‘affirmed.