Haupt Lumber Co. v. Westman

Collins, J. Plaintiff corporation brought this action to enforce its lien claim for materials furnished and used in the erection of a dwelling house on a city lot. The facts were not in controversy. On January 6, 189 0, Mrs. Weide, a defendant, was the owner of the lot in question. She was engaged in quite an extensive business; among other things, that of buying and selling real estate and erecting houses thereon. Her husband, J. E. Weide, also a defendant, was her general agent, managing and conducting all her business. [401] About the day last mentioned be entered into a written agreement with one Berg, by the terms of which, in his own behalf, he undertook to sell to Berg the lot for the sum of $1,725, on time. The latter was to build a house on the premises, and when the foundation thereof was completed a deed of the lot was to be delivered to him, and he was to execute and deliver a note for the full amount of the agreed purchase price, payable six months from date, and also a mortgage upon the deeded premises, securing the same. Berg then entered into a contract with defendant Jacobson for the construction of a foundation for the house, and with defendant Westman for the superstructure thereof. The foundation was substantially completed, and examined by J. it. Weide, on or before March 17th. On that day he delivered to Berg a warranty deed for the lot, dated January 6th, duly executed and acknowledged by Mrs. Weide and himself on February 12th, and at the same time received from Berg the note and mortgage agreed upon, each bearing date January 6th. The deed and mortgage were duly recorded on the day of their delivery, March 17th. Defendant Jacobson and defendant Bergstrom, who was a subcontractor under Jacobson, claim liens for labor performed and materials furnished on the foundation, commencing February 15th. Westman, the contractor for the construction of the superstructure, filed no claim for a lien, and the claims of the remaining parties — plaintiff, and defendant respondents, who were subcontractors under Westman — are for labor performed and materials furnished subsequent to the delivery and record of the deed and mortgage. We have, then, two distinct classes of lien claimants, —one being Jacobson and Bergstrom, whose claims relate back to February 15th; the other being plaintiff corporation and other subcontractors, who performed no labor and furnished no material until after the deed and mortgage were placed on record. They then performed labor and furnished materials for a contractor who, although he had previously entered into an agreement to erect the superstructure, had not commenced to perform his contract when the premises were deeded to Berg, and by him mortgaged to Mrs. Weide. Or, to put it in another shape, one class .of lien claimants acquired their rights while Mrs. Weide was the owner of the lot; the other class, [402] subsequently to the recording of her deed and the vendee’s mortgage, —the same transaction. . . i Mr. Weide was not the owner of the lot when he executed and delivered the agreement to convey. Nor did he pretend to act for his wife, who was the real owner; but, if he had, the writing would not have been valid as her contract to sell and convey, for Mr. Weide had no written authority to make it. As there was no valid executory contract entered into for the sale of real property, the provisions of Laws 1889, ch. 200, § 4-, of the lien law have no application here. See Althen v. Tarbox, 48 Minn. 18, (50 N. W. Rep. 1018.) But by the terms of this writing it was shown that Mr. Weide knew that Berg intended to put the foundation for a dwelling house upon the lot, while Mrs. Weide remained the owner of the same in fact and of-record. It was also fully established on the trial that Mr. Weide had knowledge of the improvements being made by Jacobson and Berg-strom as the same progressed, and was fully advised of the exact situation when he delivered the deed and received the mortgage on the 17th of March. There was no finding that Mrs. Weide had personal knowledge of the writing signed by her husband, or that work was being done on real property belonging to her, but the knowledge possessed by her agent must be ascribed and attributed to her. As before stated, she was engaged in buying and selling real estate and in erecting houses thereon, and Mr. Weide transacted all of her business. His complete knowledge of the facts was hers in law. The foundation was substantially completed March 17th, the day she •changed her relationship from that of an owner of the lot in fact and of record to that of a mortgagee; and it must be said, at least, that the case, to this extent, comes within the provisions of Laws .1889, ch. 200, § 5. The labor and materials of Jacobson and Berg-strom were performed and furnished at the instance of Mrs. Weide, the owner of the lot when so performed and furnished, and the amount of their lien claims have precedence over the lien of the mortgage. But there is a clear distinction between lien claims for work done and materials placed on the premises in question prior and those subsequently to March 17th. Before that day Mrs. Weide [403] was the owner of the lot. She had knowledge, through her agent, of what was being done upon the same, and failed to object. Remaining silent, although informed of the situation, the status of certain lien claims in respect to her interest in the land became fixed and established through a statutory rule of evidence found in § 5. At that time, before Westman, contractor for the _ superstructure, had commenced in any manner, Mrs. Weide deeded, and at once became a mortgagee, both deed and mortgage being spread upon the records. That her claim as a mortgagee is prior, in point of time, to the lien claims of the persons who were subcontractors under Westman, is obvious; so that, if she is a bona fide mortgagee, she stands fully and expressly protected by language found in § 5, part of which has been used herein to her disadvantage. On this there is not the slightest question, as is apparent from the findings of fact as well as from the note appended thereto by the learned trial judge. There is nothing before us indicating bad faith on the part of Mrs. Weide or her husband which would justify the conclusion that the mortgage was a mere device, through which to secure the erection of a house at the expense of the mechanics and material men. She became a mortgagee in name, and this fact was disclosed of record before the second class of liens attached; and we are clearly of the opinion that she was a “bona fide prior mortgagee,” whose claim must have precedence, under the statute, over all respondents except Jacobson and Bergstrom. The case is not unlike that of Hill v. Aldrich, 48 Minn. 73, (50 N. W. 1020.) It is altogether different in essential features from that of John Martin Lumber Co. v. Howard, post, p. 404. (Opinion published 52 N. W. Rep. 33.) In conclusion we take occasion to say that possibly a different view might be taken as to the priorities of these several claims had the contractor Westman commenced work on the superstructure before March 17th. Remanded, with instructions to modify the judgment in accordance with the views above expressed.