Nohrnberg v. Boley , 42 Idaho 48 ( 1925 )

I concur in modifying the judgment to absolve the bank.

I cannot concur in holding that a lien does not exist during the sixty-day period allowed for filing a claim, or that Moorman could not, under the circumstances, to protect his mortgage, pay during that period the amount of valid liens claimed though not filed, and deduct such payments from the proceeds of the sale.

California has, up to the rendering of the opinion inPeople v. Moxley, 17 Cal. App. 466, 120 P. 43, often referred to the right of a lien as an inchoate right, subject to perfection by filing a claim. That case reverses the position of California, and is in accord with the law that the lien exists, although the remedy may be inchoate, during all the time of the performance of labor and up to the time of the expiration of the right to file the lien. This position is again expressed in Provident M. B. L. Assn. v. Shaffer, 2 Cal. App. 216,83 P. 274. To the same effect are: Hahn v. SleepyEye Milling Co., 21 S.D. 324, 112 N.W. 843; Mitchell v. MonarchElevator Co., 15 N.D. 495, 11 Ann. Cas. 1001, 107 N.W. 1085;Holden v. Cox, 60 Iowa, 449, 15 N.W. 269. "It is the labor performed" which creates the lien, not the filing of the claim. (McCoy v. Cook, 13 Wash. 158, 42 P. 546; Warren v. Olson,46 N.D. 203, 180 N.W. 529; Wisconsin Trust Co. v. Robinson Cary Co., 68 Fed. 778, 15 C.C.A. 668. Mazzera v. Ramsey,72 Cal. App. 601, 238 P. 101, at 103, is in accord with and cites People v. Moxley, supra. See, also, Siegel v. Heckler,181 Cal. 187, 183 P. 664, at 666.)

The citation of an array of authorities on the necessities of filing a lien and what the claim of lien shall contain, or that a lien cannot be enforced by action without such compliance, is beside the issue. This is not such a case, and cases treating of such points are not persuasive herein, where the only question is: Does a lien exist prior to such filing?

To set out at length some of the quotations given is to lose sight of their pungent statements on the point involved. When the facts in each case are considered, there is nothing in the decisions to detract from my point that a lien exists during all the time of the performance of labor, and up to the time of the expiration of the right to file the lien claim. Even excerpts from the opinions quoted from in the opinion on rehearing support this, thus:

". . . . It was clearly the intent of the legislature to grant an absolute lien direct upon the property, to the person who performs labor . . . ." (Hill v. Twin Falls S. R. L. W.Co., 22 Idaho 274, 125 P. 204.)

"And it is the labor performed upon the property designated . . . . that creates this lien, not the filing of the claim, or notice." (McCoy v. Cook, supra.)

". . . . We are satisfied that under the mechanics' lien law of this state, subcontractors and materialmen have a lien upon the premises for the value of their labor and materials, regardless of any payments made to the original contractor prior to the time within which the law requires the notice of their lien to be filed." (Weeter Lumber Co. v. Fales, 20 Idaho 255, Ann. Cas. 1913A, 403, 118 P. 289.)

". . . . The legislature intended to give sub-contractors and material-men direct liens upon the premises for the value of their labor and materials, regardless of payments on the principal contract made prior to the time within which the law requires notice of their claims to be recorded." (James Hunter Co. v. Truckee Lodge, 14 Nev. 24 (45).)

"The lien, however, exists from the commencement of the threshing . . . ." (Warren v. Olson, supra.)

". . . . The right of a lien is . . . . a vested, constitutionally guaranteed and existing right . . . ." (People v. Moxley, supra.)

"The filing . . . . does not bring the lien into existence, for the lien exists inchoately from the time . . . . the work . . . . was commenced . . . . The lien exists by virtue of statutory provisions . . . ." (2 Jones on Liens, 3d ed., sec. 1389, p. 617.)

Moorman pleaded that he had a prior mortgage, and set forth with particularity as to the lien claimants that Boley was indebted to each, naming them, in amounts stated, for work performed in cultivating, harvesting, threshing and housing the seed, within a period for which a lien could have been filed; that each "then and there made demand for the payment of said sums and amounts and claimed a lien" on the seed; "that each and all of the aforesaid lien claimants demanded their money on the 1st day of November, 1920, claimed a lien on the aforesaid alfalfa seed and threatened to and would have filed a lien on the aforesaid described seed unless their claims were immediately paid in full"; and that they "served notice upon this defendant that they claimed a lien thereon, together with an affidavit, stating the amounts and sums due." It must be borne in mind that these claims were paid by Moorman within sixty days of the close of the work, to protect his mortgage.

To say that counsel concede Moorman did not have a mortgage because it had been assigned is to miss the issue in the case, and is losing sight of the record. Moorman, to all intents and purposes had a first mortgage. The court found him entitled to retain "$454, represented by prior chattel crop mortgage covering said crop of alfalfa seed held by the defendant D.B. Moorman." This finding is not questioned, and is the established law and fact of this case. The original opinion herein recites that Moorman received and "distributed the money, paying off his own chattel mortgage to his assignee"; and that "the decision was in favor of respondent . . . . less $454 due on the Moorman note and secured by the prior chattel mortgage." Even as assignor of the mortgage, he had an interest to protect. At all events, he represented the holder of the mortgage. That was the case and the issue presented to the lower court.

One suing for conversion must have had a right to possession at the time of the conversion, not at a later date. One holding a mortgage lien must have a present, absolute right of possession, and must recover upon the strength of his own title, and not the weakness of that of the defendant. (International Trust Co. v. Palisade L., H. P. Co.,60 Colo. 397, 153 P. 1002; Kinsman v. Stanhope, 50 Mont. 41,144 P. 1083, L.R.A. 1916C, 443; Glass v. Basin Bay State Min. Co.,31 Mont. 21, 77 P. 302; Kipp v. Silverman, 25 Mont. 296,64 P. 884; Frink v. Pratt, 130 Ill. 327, 22 N.E. 819; Smithv. E. T. Davenport Co., 12 Ala. App. 456, 68 So. 545; Joseph Dixon Crucible Co. v. Paul, 167 Fed. 784, 93 C.C.A. 204.)

On the day of the sale, Nohrnberg had no immediate right to possession, but that of a mortgagor with a right to possession only after the rights of prior lienholders; nor had he a right to demand possession on which thereafter to base an action for possession or conversion, without tendering payment of Moorman's mortgage and the just amount of the liens. (Smith v.E. T. Davenport Co., supra; Johnson v. Wilson Co., 137 Ala. 468, 97 Am. St. 52, 34 So. 392; Hogue v. Sheriff of LewisCounty, 1 Wn. Ter. 173.) The situation must be looked at in the light of the facts at and before the sale, not afterwards. (United States v. Loughrey, 172 U.S. 206, 19 Sup. Ct. 153,43 L. ed. 420.)

Can it be said that on such sale without consent of the lien claimants or Moorman, the only surviving right is that of Nohrnberg, who, up to that moment, was junior in right to all of them? By seeking to follow the proceeds of the property, Nohrnberg in effect confirms the sale, and in equity has no greater right in the proceeds than he had in the property. In fact, his present action is a purely equitable proceeding to impress his lien upon the proceeds of a conversion. (25 Cyc. 682; Judge v. Curtis, 72 Ark. 132, 78 S.W. 746.)

It has been said that trover may partake of the nature of an equity action, and that plaintiff can recover damages only to the extent of the injury actually sustained, and if goods be sold illegally to discharge a lien, the owner can recover of the purchaser only the value of the goods after deducting the lien. This is a correct statement of the situation here. (Judge v. Curtis, supra; Keith v. Ham, 89 Ala. 590, 7 So. 234;Carpenter v. Going, 20 Ala. 587; Reavis v. Barnes,36 Ark. 575.)

Day, who handled the money, and Moorman, who received it, knew of the liens. The sale having been made without any consent shown by the lienholders or Moorman, he took the proceeds subject to their liability for payment to the lienholders and his mortgage debt.

An equitable defense may be interposed even in a law action. (37 Cyc 385; Penninger Lateral Co. v. Clark, 22 Idaho 397,126 P. 524.) In equity, Moorman should be entitled to add to his mortgage the amount he paid to protect his lien, and deduct it from the proceeds, whether the liens were filed or not (C. S., sec. 6353; Provident M. B. L. Assn. v. Shaffer, supra;Shoemaker v. White-Dulaney Co., 131 Wash. 347, 230 P. 162,232 P. 695; Leavitt v. Bell (Neb.), 75 N.W. 524), and whether the mortgage provided for it or not. (New England L. T. Co. v. Robinson, 56 Neb. 50, 71 Am. St. 65, 76 N.W. 415.)

There is nothing in a suggestion that, by paying the liens, appellants were undertaking to adjudicate the rights of respondent without his consent. A mortgagee paying a tax lien does the same thing as was done here, but in a contest he must establish that the tax was a lien. This is done every day. (Law v. Spence, 5 Idaho 244, 254, 48 P. 282.) C. S., sec. 6344 provides:

"Where the holder of a special lien is compelled to satisfy a prior lien for his own protection, he may enforce payment of the amount so paid by him, as a part of the claim for which his own lien exists."

If Moorman had tendered the amount of these labor liens to the laborers, and it had been refused, he could successfully defend, in any action brought by them for foreclosure, that their lien was lost by their refusal to take the money. It does not seem reasonable that the lien claimants should be put to further expense of foreclosure, and the deduction of all such expense from the proceeds, to the reduction of the fund and the damage of Moorman, or that Moorman be precluded from discharging a lien prior to his own. On the contrary, if, by tendering the amount of a lien and its refusal, it would be discharged, Moorman had a right to pay the liens and add them to the amount due him, and need not proceed to the needless waste and expense of awaiting filing of the liens and foreclosure, and thus perhaps totally destroy even the balance of his own security, as well as that of Nohrnberg.

To hold otherwise will be to hold that no mortgagee can pay or discharge a prior existing, valid lien to protect his security, and recoup the amount thereof even as against the owner of an inferior right, without awaiting filing and foreclosure with all interests, prior and subsequent, made parties to the action, even though he assumes the burden of proof that such lien was valid, and the subsequent lienholders have their day in court on his assertion of such payment, and a right to contest the validity of the lien and payment; but the mortgagee must sit by and see his security exhausted and lost in needless expense without the right to protect it, though he is willing to assume that burden.

Moorman can make no deduction of money that was not necessarily paid to satisfy a valid lien, because it was not necessary to pay such to protect his mortgage, but Nohrnberg only suffered damage in the amount or value that could be applied to his lien after payment of others having prior rights. Seeking equity, he must do equity.

There should be a new trial to determine all of the facts, what labor claims pleaded were lienable, what amounts were due therefor, and what payments Moorman is entitled to take credit for and retain.

I am authorized to state that Mr. Justice Wm. E. Lee concurs in this dissenting opinion.