Seitz v. Union Pacific Railway Co.

The opinion of the court was delivered by Valentine, J.: The petition in error in this case ought probably to be dismissed because of a defect of parties in this court. But as we think the judgment of the court below is correct, we shall pass over the question of dismissal, without deciding it, and proceed to consider such questions as are involved in the merits of the case. The facts of the case are substantially as follows: The Union Pacific Railway Company, Eastern Division, owned three lots in the city of Salina., Mrs. M. A. Bickerdyke desired to build a hotel on them. The parties thereupon agreed that Mrs. Bickerdyke should build and furnish said hotel, that the railway company should advance some money by way of a loan to assist her in building and furnishing the same, and that when she should build and furnish it, and pay back to the railway company the amount of money advanced by the company to her, the company would then execute a deed conveying to her .the full legal title to the property. Under this contract the railway company furnished to Mrs. Bickerdyke the sum of $7,512.85, and she built and furnished said hotel. But she has never yet refunded said sum of money, or any part thereof, and the company has never yet executed to her a deed for said property. Said contract between the railway company and Mrs. Bickerdyke was originally entirely in parol. But subsequently, and on November 4th 1867, Mrs. Bickerdyke gave to the railway company her two promissory notes for said amount of money, and also gave a mortgage on the hotel property and on the furniture therein to secure the payment of said notes. The original parol contract was not however in any other manner disturbed or altered by these transactions. While Mrs. Bickerdyke was building said hotel she obtained labor [140] and materials therefor from the defendants below, plaintiffs in error. The defendants below afterward duly filed statements for mechanics’ liens on said property under the provisions of the statutes of 1862. (Comp. Laws, 680, et seq.) These claims of the defendants have never been paid or satisfied. The court below held that these claims were valid liens upon the property, but also held that they were subsequent to the lien of the plaintiff (the railway company) thereon. When the contracts for furnishing said labor and materials were made, is not shown. Whether any of them were made before the railway company furnished said money, is not shown. Therefore, in support of the decision of the court below we should presume that said contracts for labor and materials were made after the money was furnished, although probably it would make no difference in the decision of this case whether they were made before or afterward. Some of the defendants furnished labor and materials before said mortgage was executed, and some of them afterward. The judgment of the court below was, that the property should be sold and that the claim of the railway company should be first paid from the proceeds thereof. Of this the defendants (plaintiffs in error) complain. They claim that their claims should be first paid. We think however that the judgment of the court below was correct. We think that it is not only supported by reason and justice, but. it comes fairly within the spirit of the mechanic’s-lien law itself. The defendants make their claim exclusively under §17 of that law. (Comp. Laws, 683.) But §17 must be read in connection with § 14; and indeed, in connection with the whole of the law upon the subject of mechanics’ liens. Then, taking the whole of the law together, and it undoubtedly means that a mechanic’s lien shall operate upon the whole of the estate which the person procuring the labor and materials may have in and to the property for which he procures the same, whatever may be the character of that estate, but that such lien cannot operate upon anything more than such estate, and that so far as it does operate, it is the paramount [141] lien upon the enhanced value given to such estate by the labor and materials. That is, it is the paramount lien upon the surplus value of the estate over and above what would have been the value of such estate without such labor and materials. In the present case Mrs. Bickerdyke had a contingent equitable estate in the property in question. The plaintiff had all the rest of the estate. Upon this contingent equitable estate of Mrs. Bickerdyke the defendants’ liens operated, and upon that they were the paramount lien to the extent above mentioned; but they operated upon nothing more. They could not operate upon anything more. They could not reach something that Mrs. Bickerdyke did not have. They could not reach to the plaintiff’s legal estate. A lied upon an estaté cannot be greater than the estate itself. A stream cannot rise higher than its fountain. And therefore, we think that said liens did not in any manner affect the legal estate of the plaintiff, or its rights thereunder. But the plaintiff (as well as the defendants) had liens upon Mrs. Bickerdyke’s equitable estate. It had a vendor’s lien, (Stevens v. Chadwick, 10 Kas. 406,) and a mortgage lien, upon the same. But for the purposes of this case we shall consider that the defendants’ liens were paramount to either of these liens of the plaintiff. Indeed, for the purposes of this case we shall consider the mechanics’ liens of the defendants upon Mrs. Bickerdyke’s equitable estate as paramount and stronger than any other liens could possibly be. But the plaintiff had more than the said vendor’s lien and mortgage lien upon Mrs. Bickerdyke’s equitable estate. It also had a lien upon the legal estate, and held such legal estate in its own hands as a security for its own claim. And these last-mentioned rights of the plaintiff are rights' not derived from Mrs. Bickerdyke, or from the defendants, or from any common grantor; but they are rights originally held by the plaintiff, reserved to it by the transactions with Mrs. Bickerdyke, and with which it has never parted. And these rights are governed more by the law relating to vendor and vendee than by any law relating to liens or incumbrances. Originally [142] the plaintiff held the whole of the estate, both legal and equitable. It parted with the equitable estate upon certain conditions. But it reserved to itself the legal estate, with a lien upon it to secure the payment of said debt of $7,512.85. Now, how can the plaintiff be divested of this legal estate except by the payment of said debt — except by the fulfillment of the terms and conditions upon which it agreed to divest itself of said legal estate? To take the legal title to said property from the railway company without paying said debt, against the consent of the company, and for no crime or fault of the company, would look very much like confiscation. If the judgment of the court below had merely ordered Mrs. Bickerdyke’s equitable estate to be sold to satisfy the defendants’ claims, then possibly there would have been no necessity for making any provision for the payment of the plaintiff’s claim. But the purchaser of the property in such a case would have stood precisely in the place of Mrs. Bickerdyke. He would have obtained precisely her equitable estate; nothing more, and nothing less. And before he could have obtained the legal estate he would have had to fulfill all her obligations to the plaintiff. But the court below did not stop 'with ordering that the equitable estate of Mrs. Bickerdyke should be sold. The court ordered that the entire estate, legal as well as equitable, should be sold. And therefore, as the sale would divest the plaintiff of its legal estate, the court had to provide by its judgment for paying • the plaintiff’s claim. We see no error in this. On the contrary, it was eminently just and legal. We suppose that no .one will claim that the giving of said promissory notes for the debt, and the.giving of said mortgage upon Mrs. Bicker-dyke’s equitable estate and upon the furniture in the hotel to secure the payment of said notes, will in any manner change the plaintiff’s rights with regard to the legal estate, when at the same time the legal estate was reserved as a further security for the payment of said debt. ■The judgment of the court below will be affirmed. All the Justices concurring.