Payne v. Wilson — 18 N.Y. Sup. Ct. 302

Majority

p. 302

FRANCES E. PAYNE, Respondent, v. WILLIAM WILSON, Impleaded, etc., Appellant.

Headnote

Mechanic’s lien — agreement to give mortgage has jyriority over.

One Halstead furnished building materials to defendant Palmer, wbo agreed to pay therefor, half in cash and half by a first mortgage on one of the buildings, in the erection of which they were to be used. May 1,1872, a mortgage was given to him for said sum, together with six per cent interest thereon, not acknowledged

p. 303

or attested by a subscribing witness. On June twenty-fourth he procured the mortgage to be acknowledged, and on August ninth it was recorded. On September twenty-first, fearing there might be some claim of usury, he obtained another mortgage from Palmer, omitting the six per cent. This mortgage was assigned to the plaintiff, who brought this action to foreclose it. Upon the trial it appeared that without any knowledge of Halstead one Wilson had, on June nineteenth, filed a mechanic’s lien against the mortgaged premises and others. Held, that the lien of the mortgage was entitled to priority over that acquired by Wilson.

Appear from a judgment in favor of tbe plaintiff, entered upon tbe report of a referee. Tbis action was brought to foreclose a mortgage given to tbe plaintiff’s assignor by tbe defendant Pabner.

Jackson <Ja Burr, for tbe appebant.

George H. Grawniss, for tbe respondent.

By tbe contract between Palmer and Halstead tbe latter acquired an equitable mortgage and a specific ben on one of tbe said thirteen bouses, and as such has priority over subsequent judgments against tbe mortgagor or owner, and tbis, whether tbe agreement is to give a mortgage on an undivided interest or otherwise. Indeed, all equities against tbe property have preference over subsequent judgments. (Matter of Howe,l Paige, 125, 128, 129, 130, and cases therein cited; Dwight v. Newell, 3 N. Y., 185 ,187; Cook v. Craft, 3 Bans., 516; Bacouiller v. Scmsvcmi, 32 Cal., 375 ; Robinson v. Williams, 22 N.Y., 387 ; De Pierre v. Thorn, 4 Bos. Sup. Ct. B., 266; 2 Story’s Eq., 718, 719, § 1503, b, and authorities cited there.) In Matter of Howe (1 Paige Ob., 125) tbe equity appbed to an undivided interest in common. In Dwight v. Newell ( 3 N. Y., 185 , 187) there was an agreement to give a mortgage on a part of a lot. Whatever ben, legal or equitable, existed before tbe filing of appebant’s ben has priority over tbe latter, and so any transfer of interest by tbe owner previous to tbe fihng of such mechanic’s ben has that priority, even where tbe deed was recorded after tbe fihng of tbe ben. (Cox v. Broderick, 4 E. E>. Smith, 721; Sinclair v. Fitch, 3 id., 677; Noyes v. Button, 29 Barb., 630 ; Qxmriby v. Bloom, 2 E. D. Smith, 594, 616; Gronk v. Whitaker, 1 id., 647 ; Lébretter v. Hoffman, id., 664 ; Ohamberlai/n v. O’Gownor, id., 665 ; Heurpler v. 0’ Gormor, id., 672 ; Mrs. Aubury v. Mild/wn, 1 Daly, 396 ; Bailey v. Johnson, 1 id., 61; Ems v. Reed, 49 Barb., 367 .) Tbe equitable

p. 304

Hen under the agreement to gire a mortgage was not merged in the first or second mortgage, neither was the first mortgage merged in the second mortgage under the circumstances. (.Butler v. Miller, 1 Comst., 496, per Comstock, J.; Gregory v. Thomas, 20 Wend., 17 ; Phelps y. Johnson, 8 Johns., 58 ; James Y.Morey, 2 Cow., 285 , 313, and cases there cited; Yam, West v. Batson, 19 Barb., 604 ; Bussell y. Austin,, 1 Paige; 192; Sohermerhorn v. Merrill, 1 Barb., .511; Spenser v. Blanford, 4 Wend., 381 ; Cooper v. Wlvii/ney, 3 HiH, 95; OUfton y. White, 15 Barb., 90 ; Bonnes v. Cam,ach, 1 id., 392; Hyde y. Tanmen, 1 id., 76; Heiglvway v. Pendleton, 15 Ohio, 735 ; Grimes y. Kimball, 3 AHen, 518; Sherwood v. Elslon, 5 Ind., 218 ; 4 Kent, 114-117; 6 Johns. Ch., 393 ; Forbes v. Moffat, 18 Yes., 384; £?r<?yon/ y. Thomas, 20 Wend., 17 -20.)

In September, 1871, Palmer, the defendant, and one Doran, agreed with Charles Halsted, in consideration that said Halsted would furnish $8,000 in building materials, to pay half cash and half “ in a first mortgage on one of the thirteen houses now being erected by the said Doran.” The materials were furnished, the houses were built, and on or about the first of Hay, 1872, Palmer, who owned the fee of the land, defivered to Halsted a mortgage for $4,240, being for said half payment, with six per cent added to the cash value of said materials, “as caHed for by the agreement.” This mortgage was not acknowledged nor attested by a subscribing witness. On the 19th of June, 1872, William Wilson, one of the defendants, filed a notice estabfishing a Hen on aH the houses and lots, under chapter 478, Laws of 1862. On the 24th of June, 1872, Halsted procured Palmer and wife to acknowledge the mortgage, and recorded it on the 9th of August, 1872, in Kings county. On the 21st of September, 1872, Halsted, fearing that the six per cent added to the cash value of the goods might be held usurious, applied to Palmer to give a new mortgage, omitting the six per cent. This was done on that day. This' mortgage has been assigned to plaintiff and a foreclosure action brought thereon.

The question is as to the priority of Hen between the plaintiff and Wilson. Halsted has an equal right to payment in equity ; he sold goods which not only went into the premises in question, but

p. 305

also those which went into the remaining houses on which Wilson has an undoubted lien. By the agreement, he would have an absolute right to the mortgage if the particular house and lot had been designated. By the mortgage delivered before Wilson’s lien was filed, it was designated. If a mortgage is a “ grant in fee or of a. freehold estate,” under 1 Bevised Statutes, 738, it was good between the parties. (Wood v. Chapin,, 13 N. Y., 509 .) The lien law only establishes such Hen to the extent of the right, title and interest of the owner at the date of fifing the notice of lien. Halsted, then, had a right, as against Palmer, to a mortgage on this property, enforceable in equity as a specific lien thereon. (Matter of Howe, 1 Paige, 125; Dwight v. Newell, 3 N. Y., 185 .) Such a lien would take precedence over all subsequently acquired judgments.

I think Halsted lost no right by the change of the mortgages ; both were set up in the complaint, and no usury was either proven or claimed upon the trial. The giving of the second mortgage did not pay the first, and was not intended to pay it. There was no intention to change its priority. Halsted was ignorant of the intervening lien. Wilson has lost nothing by the cancellation of the first mortgage. Equity has power to give the substituted mortgage priority for the purpose of justice. (Bazmes v. Camaek, 1 Barb., 392 .) I think the judgment ought to be affirmed, with costs.

Gilbert, J., concurred.

Present —• Barnard, P. J., Gilbert and Dykman, JJ.

Judgment affirmed, with costs.