Atkins v. Little

By tne Court. Ripley, Ch. J. The judge, before whom this case was tried without a jury, finds as matters of fact, that on April 19th, 1862, by contract of that date under their hands and seals, one James Lawther agreed to sell to one T. J. Little lot No. one in block No. fifyt-one in Red Wing, and to execute and deliver to him a warranty deed thereof, upon condition that said Little should pay therefor $300, as follows: his three promissory notes, payable in lumber at as low a price as the same quality of lumber could be bought in Red Wing, as follows: $100 on demand after June 20th, 1862, $100 in one year, and $100 in two years thereafter, with ten per cent, per — 348 — annum interest till paid, payable annually; said Little agreeing to pay said sums, and also to deliver said lumber at such times and in such quantities and of such quality, as said Lawther elected, the amounts so delivered to be endorsed on said notes ; and to pay all future taxes; and, in case of default on his part in any respect, said Lawther might consider the contract as forfeited, and dispose of the lot as if no such contract had been.made. That thereupon Lawther gave said Little and defendant Frederick Little possession, who, from their joint means and for their joint benefit, immediately erected a steam saw-mill thereon, ever since and now used as such. That said Littles having bought of one Akers a steam engine for such mill, giving therefor their eight joint notes for $100 each, said T. J. Little assigned said written contract to said Akers as security therefor, and, on May 27, 1862, to secure two other like notes given for other machinery for said mill, made a further assignment in writing of said contract to said Akers. That the Littles jointly occupied and ran said mill on joint account until the spring of 1865, when said T. J. Little verbally .. old to said Frederick all his right title and interest in and to said lot one, and said mill and -said contract, and, under and in pursuance of said sale, surrendered to him sole and exclusive possession of said lot and said mill. And the court further finds, that from that time said Frederick was the equitable owner of said lot and mill, subject to Lawther’s rights under said contract, and said Akers’ under said assignment; and that, upon the payment by him to Lawther of the amount due on said contract, and to Akers of the amount due on said notes to him, said Frederick was entitled to a deed in fee from said Lawther of said lot. The respondent has argued this branch of the case, as if — 349 — this last finding were a conclusion of law from that which precedes it; but it is expressly found as a fact, and we do not perceive upon what principle we are to assume, against such an express statement, that it is a conclusion of law, and to proceed to consider whether the facts previously set out do or do not support it. It would not only be mere assumption, but an assumption in the face of circumstances appearing in the case, tending strongly to show that it was an erroneous assumption. For instance, the circumstance that Lawther gave possession to both the Littles, coupled with the other facts respecting their use and occupation of the property, tends to show that the lot was bought for the firm as partnership property, and that Lawther knew it; and the further fact appears, that, when Frederick Little, subsequently to Thomas J.’s sale to him, made the arrangement hereinafter stated, Lawther accepted his and defendant McGlashen’s bond as security for the amount due him upon said contract, [nothing having been paid on it,] and executed a warranty deed to defendants Sanderson and McGlashen; whereby it appears, said debt having-then been long overdue, not only that said Lawther had waived any right of forfeiture by reason thereof, but that, in as much as the assignments to Akers are stated to have been made as security for the debt of T. J. Little and F. Little, on payment of which Akers would have been bound to re-assign to T. J. Little or his order, Lawther could not, without some such order or authority from T. J. Little so to do, have conveyed to McGlashen and Sanderson. It is, therefore, more than likely that Lawther had agreed, at the Littles’ request, when T. J. sold to Frederick, to convey to the latter as sole owner in equity of the property; an agreement, the validity of which, though verbal, (if it were so,) no one but Lawther could dispute on that account. If he recognized it, and, in pursuance thereof, conveyed the property on F. Little’s order, — 350 — the appointee of F. Little, (the defendant here,) cannot dispute it. The probabilities, therefore, seem to be against any mistake of the court below in placing the finding in question among the findings of fact. But further, looking only at the facts above mentioned and stated by the court, previously to the finding in question, while it is true that this case lacks one element of Gill vs. Newell, 13 Minn. 462, in that there Newell delivered the written contract to Gill when he gave him possession, which it was not in T. J. Little’s power to do, there is, nevertheless, as good a part-performance of the verbal contract in this case as in that, for when the court finds, as it does here, that T. J. Little sold his interest, it is to be understood that he received value therefor, and though payment alone is not a good part-performance to take a verbal contract out of the statute, payment and taking possession, under and in pursuance of a verbal contract, has always quite uniformly been. Browne Stat. Frauds, sec. 465. And as the object of this verbal contract was the same as in Gill vs. Newell, viz., that Frederick might become the owner of the land; as the intention of the parties on a sale of all T. J.’s interest in the land, the mill and the written contract, is certainly as clearly shown to have been to assign the written contract to Frederick, as such an intention is, in Gill vs. Newell, held to appear from the verbal agreement there proved, that case seems to be a direct authority for holding in this case, that the effect of the verbal contract, if valid, between the Littles, was to transfer the equitable ownership of the land, and T. J.’s rights under the written contract, to Frederick, so as to enable him, through T. J. or in some other way, to obtain the legal title; and in which way, as between them, was immaterial. Gill vs. Newell, 13 Minn. p. 470. But there being a good part-performance, the contract was valid in equity, (Ib. p. 470,) and so all parties have regarded it, — 351 — and have treated P. Little as the owner of the property, as appears from the further facts found. These facts are, in substance, that McGlashen made large advances to P. Little, under an agreement between them in the logging business, and in and about the running expenses of said mill, to be repaid from the proceeds of lumber sawed by said Littles at said mill; and between Aug. 31st and Sept. 6th, 1865, (the old engine having failed,) these two men made a verbal agreement that McGlashen should advance $1,400 for a new one, to be purchased by Little in Chicago, and that Little should secure him on his interests in said mill and lot; but which verbal contract was afterwards superseded by the arrangement hereinafter stated. Little, meantime, however, under this bargain, contracted with plains tiffs for a new steam engine and appurtenances, paying on the execution of the contract $550, furnished him by McGlashen therefor, who, on the arrival of the engine at Bed Wing, advanced about $115, freight and charges, and afterwards, Nov, 9th, McGlashen personally, at Little’s request and for him, paid plaintiffs on said contract the further sum of $750. The engine was received and put into the saw-mill by said Little, Oct. 22d, 1865; and thereafter, and before the' filing of the claim for lien hereinafter mentioned, the following agreement was made: Little sold defendant Sanderson one undivided half of the lot and mill for the sum of $2,000, to be paid by Sanderson to McGlashen upon his advances to Little, and Sanderson to have a deed in fee in his own right of said half, and said McGlashen a deed in fee of the other half, to be by him held as security for the balance of Little’s indebtedness. To carry this out, McGlashen, under an agreement to that effect with Little, on October 26th, compromised said Little’s indebtedness to Akers for $500, which he paid, and took an assignment in writing from Akers to himself and Sanderson of said written contract; and, about the same time'and for the — 352 — like purpose, that is, to carry into effect the above mentioned agreement, Little and McGlashen, as before stated; procured Lawther to take their security for the purchase price of said lot, and to execute to said McGlashen and Sanderson a deed of said lot in fee “ under the sale and arrangement aforesaid prior to which time, but subsequent to the placing of said engine in said mill, and “ under the sale to them as aforesaid,” said Little had surrendered possession of said premises to said McGlashen and Sanderson. On these facts it is apparent that, whatever McGlashen’s interests, as between Little and himself, in this property, may be under this deed, he obtained it and them under, by virtue, and in pursuance of an agreement with Little as the owner of the property. Whatever his title may be, it comes to him through Little as truly, though not so directly, as if Little, nqt Lawther, had held the legal title and executed the deed. He is, therefore, as against Little and those claiming under him, estopped to say that Little was not really the owner. To allow him to say so to their injury would be a fraud on them. Suppose, which is by no means to be assumed, that this arrangement was wholly verbal, and that McGlashen has got a deed and possession through Little’s agency, as aforesaid, upon a verbal promise to Little, that he would hold the deed, when he got it, as security, it would be one of the plainest cases of fraud imaginable in him to repudiate his promise; a fraud that no court of equity would ever allow to be successfully perpetrated. Browne on Stat. Frauds, ch. 19, sec. 441. To allow him to defeat the lien of the plaintiffs, (if any they otherwise have,) by denying that Little was the equitable owner of the property when he contracted with them for said engine, would be quite as bad, if no worse; for it was to enable Little to resume work and repay McGlashen his advances, that v agreed to furnish Little the supposed cost of a new engine. — 353 — It was directly in McGlashen’s interest tbat it was agreed that Little should go to Chicago, and purchase it of plaintiffs, (whose names they had,) or of other parties, upon the best terms practicable; and before said engine arrived, McGlashen was informed by Little of the terms of the contract with plaintiffs, and therefore, by means of Little’s dealings as owner at McGlashen’s request, McGlashen, if he could be allowed to deny Little’s ownership, would knowingly pocket the plaintiffs’ property to the extent of one half the unpaid price of the engine. On the plainest principles of equity and good conscience, therefore, as well as on the express finding of fact above mentioned, we are to consider Little as the equitable owner of this property at the time of the contract with plaintiffs; and there is no manner of doubt whatever that under our lien law of Aug. 12, 1858, which governs the rights of the parties, and which is identical with the general statutes in this respect, one who furnishes “ materials or machinery for erecting, constructing, altering or repairing * * * any * * mill, * * * by virtue of a contract or agreement, with the [equitable] owner thereof, shall have a lien to secure the payment of the same upon such * * mill,” together with his “right title and interest in and to the land on which it is situated,” (Comp. Stat. ch. 86, sec. 1,) — that is to say, that the word, “ owner,” in such statute includes as well the owner in' equity as at law. The point was not raised, it being taken for granted that such was the case, in Tuttle vs. Howe, 14 Minn. 145; Hodgins vs. Heaney, 15 Minn. 185; Hodgins vs. Heaney, Jan. T. 1871. We think it is apparent, on the face of the statute, that such is the intention of the law, and in principle there is no reason why it should be otherwise. The equitable owner, Little for instance, under the contract with Lawther had the fee simple in equity to all intents, subieet to Lawther’s lien for — 354 — unpaid purchase money, and Akers’ for his claim. Lawther was the trustee for him of the legal estate, which he could call for at any time by paying said claim. Chemedlin vs. Prince, 15 Minn. 331. It is true that in Massachusetts, under a statute giving a lien by virtue of an agreement with the owner, it is held that a legal estate only can be subjected to the lien. (Peabody vs. Eastern Methodist Soc., 5 Allen 540.) However proper a construction this may be of the law of a state, which had never granted its courts full equity powers, we think it is not to be followed by courts whose jurisdiction extends to all cases in equity as well as at law. Thus, in Iowa, one in possession of land under a bond for a deed, is so far the “ owner ” as to enable a mechanic, contracting with him, to acquire a lien on the premises to the extent of his estate or interest. Monroe vs. West, 12 Iowa 119. See also Smith vs. Moore, 26 Iowa 392. It is true that the lien, being upon an interest subject to the rights of the vendor, cannot be paramount to those rights. It is no more paramount to a vendor’s lien, than to the lien of a prior mortgage. (Chouteau vs. Thompson, 2 Ohio State Rep. 114; Harsh vs. Morgan, 1 Kansas 293; 11 Ohio State Rep. p. 58.) But if plaintiffs furnished this engine and appurtenances for the construction or repair of this mill by virtue of a contract with Little, they had a lien to secure payment therefor on the lot and mill. The lien law of Ohio is substantially identical in phraseology on this point with our own. It has been held in that state, that if a material man sells his wares with no understanding, express or implied, as to their application, he can assert no lien upon the building in which they may be placed. Chouteau vs. Thompson, 2 Ohio St. Rep. 114. So in Iowa, under a similar statute, it is held, that the law — 355 — contemplates that the parties shall mutually understand that the material is to be used, and is furnished to be used about the erection or reparation of a building. If it was sold, however, to defendant, and he got it for the purpose of erecting or repairing a building, if this was the mutual understanding or agreement of the parties, the material man would have a lien, though the particular building was not, at the time, understood, referred to or mentioned; that when the law of Iowa speaks of material furnished especially for any building, it means for building or repairing purposes, as contradistinguished from general or unknown purposes, rather than that it shall be furnished especially for any particular house or building. Cotes vs. Davies, 8 Clark 416. A narrower construction than this could not, in our opinion, fairly interpret our own statute. As, however, it is broad enough to secure to the present plaintiffs the right to a lien, we shall not now stop to consider whether or not the statute will bear a less restricted interpretation. It is obvious, that, though there be a written contract for such materials, it would by no means follow that a lien should be therein contracted for, or that it should appear by the written contract for what building they were destined. (Cotes vs. Davies, 8 Clark 416.) If, therefore, it was mutually understood, either expressly or by implication, between Little and the plaintiffs, that this engine was for a steam saw-mill of Little’s, they would be entitled to a lien to secure the payment therefor. We think there was such an understanding. On this point the finding is painfully' obscure; but, upon careful consideration, we think that the above is the construction of it most free from objection; and, as it is at the same time most consonant with equity, we shall adopt it. The finding referred to is as follows: “ That said engine, fixtures and machinery were purchased by said defendant Lit356 tie of said plaintiffs as aforesaid, for and to be used upon said lot and in said mill; but there is no evidence that said plaintiffs had any knowledge of what particular lot or property the same were designed for or to be located upon.” (The italics are ours.) The first clause of this paragraph, taken alone, imports, it seems to us, that plaintiffs as well as Little knew that the engine was to go into this very mill. The last clause excludes such implication; but there is an implication, arising out of its peculiar phraseology and in connection with the first clause, that, though plaintiffs did not know for what particular steam and saw-mill in Red Wing the engine was intended, they did know that it was for a saw-mill in Red Wing belonging to Little. And this construction is supported by the terms of the written contract; for the character of the materials notified plaintiffs that this was an engine for such a mill. It was, moreover, for Little of Red Wing, and was to go to RedWing- It is not to be denied, that our construction of this finding is open to criticism; but any other is far more so, in our judgment; for instance, that this was a sale by plaintiffs, without inquiry or information as to whether Little was buying for himself or another, to repair an existing mill or to sell again, is something into which this finding could scarcely be twisted. But it is objected that the engine was, by the contract, to have been delivered at LaCrosse, on payment there in full before delivery. True, but that provision was changed by the parties, or waived by the plaintiffs, (how or why does not appear,) so that when the engine was delivered to Little at Red Wing, instead of at LaCrosse, and without such payment, the contract was a contract for manufacture and delivery of the engine on credit, as to the unpaid part of the price, payable on demand. If the plaintiffs saw fit, for instance, to waive their right of present payment at LaCrosse, and delivered it — 357 — to Little at Red Wing on credit, Little was, of course, no less bound to pay than before; and if no time of credit was agreed on, he would be bound to pay on demand: moreover, and aside from the finding aforesaid, it would be against all probability that said engine should have been so delivered by plaintiffs, and received by Little, without any understanding express or implied as to its application. The circumstances above warrant the assumption that the plaintiffs parted with their property, upon an understanding that it was to go into Little’s saw-mill; and, the contract being modified as above stated, the plaintiffs’'rights in respect of this lien are not to be tested by the state of facts at the time of the making the original contract, to which we understand this finding to refer, but the question is, what was the understanding of the parties at the time of the delivery 'at Red Wing. To secure the payment for this engine thus furnished Little for his saw-mill, under a contract with him and used in his saw^aiill, the statute gives plaintiffs a lien. There is nothing in the objection, that the plaintiffs are nonresidents, and that the contract was made and originally to be performed out of this state. The latter provision, we have seen, was changed, and the contract was performed on plaintiff's’ part in Minnesota. That the contract was made out of the state was also immaterial. (Gatz vs. Casey, 15 Illinois 189.) And if this cause of action had arisen wholly out of the state, it is not perceived how the case in 3 Minn. 202, arising on ch. 86, Rev. Stat., giving certain proceedings in rem against boats, has any application. That case decides that causes of action, arising wholly out of our state, are not entitled to our special remedies, and that if parties seek our courts as the forum to enforce their rights in such cases, they must adopt the common law remedies. A mechanic’s lien is a statutory security to which — 358 — the term remedy would be as misapplied as it would be in respect to a mortgage. It is further objected, that plaintiffs have filed no “ account ” under Pub. Stat. ch. 86, p. 697, sec. 7. The court finds that the plaintiffs made an “ account in writing, of which, and the contract annexed to it, the following are copiesIt is a detailed statement, among other things, of the engine and appurtenances, and that they were furnished in pursuance of said written contract, to said Little by plaintiffs for, and used in repairing and building said mill; of the amounts paid on the contract price, with the dates of payment, and of the amount unpaid and claimed to be due; and is sworn to, as a true and correct account of the machinery and materials furnished by plaintiffs to and for said Little, who is also stated to have been, at the time the materials were so furnished and used, the owner of the mill and of an equitable interest in said lot. This contains everything that the form, (which, by said statutes p. 699, sec. 18, may be used,) would include; and that it is not in the form of a bill of parcels, annexed to an affidavit, is of no consequence. The other objections, made by the respondents to the account in matters of form, do not require consideration. But it is said, that, in as much as no lien could, under any circumstances, attach, that would not be subject to the contingencies happening to Little’s interest, appellants should have seen to it, that Little’s interests were perfected, that theirs might be preserved. The lien attached on the furnishing of the engine, subject to be defeated, if no account were filed within the year, (Cogel et al. vs. Mickow, 11 Minn. 475,) and it would certainly have been lost if plaintiffs had lain by and allowed Akers, for instance, to foreclose on Little’s interest. But nothing of the — 359 — kind has happened; Little’s interest under said written contract has really been perfected, not destroyed. The case stands in equity precisely as it would if Little, at the time plaintiffs’ lien attached, had held the property under a deed from Lawther, subject to a mortgage to Lawther for the purchase money, and a second mortgage to Akers for the cost of the old engine; and the lien would be a third, though statutory, mortgage. The first mortgage Little pays by his and McGlashen’s bond ; the second with money advanced by Mc-Glashen upon Little’s agreement to give him security therefor, — and for that and other advances, Little does give him security by deed. Whether the deed comes from Little or Lawther is immaterial. It is given to carry out the arrangement between Little and McGlashen to give him such security, and McGlashen holds it as such, and it is in equity but a mortgage, — the agreement for which was made and the mortgage executed subsequent to plaintiffs’ mortgage. If the owner of land on which a building has been erected, for which a lien has arisen under the statute, can defeat that lien by selling and conveying the property within the year allowed for filing the account, so as to give his vendee the title free and clear of such lien, then McGlashen would hold the undivided half of the property, in security for Little’s debt to him, free of plaintiffs’ lien, though Little’s interest as mortgagor would be bound thereby; and Sanderson, also, would hold his half free therefrom, provided they took said deed without notice of plaintiffs’ lien. It is settled in this state, however, that a material-man’s lieu attaches as against a person, who in good faith and without notice purchases the premises subsequently to.the erection of the building, in which the materials are used, and prior to the filing the account. (Cogel vs. Mickow, 11 Minn. 475.) The property, in the hands, therefore, as well of Sanderson the — 360 — owner of. the one, as of McGlashen, who, on these findings, must be deemed in equity the mortgagee in possession of the other undivided half, is subject to the plaintiffs’ lien, and the conclusion of law of the district court, that the plaintiffs have no lien thereon, is erroneous. It is not necessary, however, to send the case back for a new trial because of such erroneous deduction from the finding's of fact. So much of the judgment as declares, in accordance therewith, that plaintiffs have no lien, and are entitled to no judgment establishing or enforcing it, is reversed; and, in lieu thereof, let judgment be entered, adjudging and declaring a lien in plaintiffs’ favor to the amount of their claim, as determined in the judgment against Little, on said property from Oct. 22d, 1865, and that the estate of Sanderson in said property and McGlashen’s interest therein are subject thereto. As to the enforcement of the lien, sec. 11 of ch. 90 of Gen. Statutes does not apply here. A sale of the property on execution, would seem tobe an efficient and sufficient mode of enforcement. The certificate, if no redemption were made from the sale, would operate as a conveyance to the purchaser of all Little’s right, title, interest and estate on Oct. 22d, 1865. (Gen. Stat., ch. 66, sec. 29.) Little was then the owner in equity, but could not get the legal estate without paying off Lawther and Akers; but these claims have been wiped out, and the purchaser at such sale would take the equitable fee as unincumbered by them, as he would do, if, the day after the lien attached, Lawther and Akers had gratuitously released them to Little. In that event the purchaser’s right to call on Lawther for a deed would be absolute, and he occupies the same position here with respect to these grantees of Lawther. The judgment appealed from will be modified in accordance with the views above expressed.