Hill v. Aldrich

The facts, as found by the court, and supported by the uncontradicted evidence, are that defendant Huntington sold “on time” the lot in question to the defendant Anna Aldrich for $2,000, upon an understanding and agreement that she should proceed and erect a house upon the premises, he to lend her $1,000 for that purpose, and she to execute a mortgage on the lot for the $3,000. In accordance with this arrangement he executed a conveyance to her, and she executed back to him a mortgage for $3,000, both of which were recorded July 14, 1890, before any work had been commenced or any materials furnished for the contemplated building. Subsequently Mrs. Aldrich proceeded and built the house, for which purpose plaintiffs furnished her the material for which they now claim a lien on the premises. The first material was furnished July 29th. Huntington advanced the $1,000, as he was obligated to do, all of which was applied in paying for labor and material, and was paid out by him on Mrs. Aldrich’s orders during the progress of the work. *77Plaintiffs’ claim is that their lien takes precedence of Huntington’s mortgage. At first this claim was made, in part at least, under the provisions of section four (4) of the lien law of 1889, (Laws 1889, ch. 200,) under the rule of Hill v. Gill, 40 Minn. 441, (42 N. W. Rep. 294,) but it is very evident, especially in view of the recent decision in Nolander v. Burns, ante, p. 13, (50 N. W. Rep. 1016,) that the provisions of that section have no application; and we understand that this is now virtually conceded. Counsel now rest their right to priority upon the provisions of section five (5) of the act, on the ground that Huntington is not a “bona fide prior mortgagee.” His language is: “Wé stand upon the ground that this mortgage is not prior, and in good faith.” That the mortgage is “prior” cannot foe questioned. We are unable to fully understand the logic of counsel’s argument that it is not bona fide. It is not pleaded nor found that the transaction between Huntington and Mrs. Aldrich was intended to mislead or defraud anybody, or that the plaintiffs have been in any way misled by it, or that there was any understanding oetween Huntington and Mrs. Aldrich that the premises should be reconveyed after the house was erected, or that there was any secret or corrupt purpose in their minds. There is no ground for imputing to the phrase “bona fide,” as used in this statute, any other than its usual and established meaning. Huntington certainly paid a full and valuable consideration for the mortgage. The arrangement between him and Mrs. Aldrich was one they had a right to make, and which violated no rule of law or good morals. Mrs. Aldrich had a right to buy a lot on time, and borrow money with which to improve it, and Huntington had an equal right to sell the lot on time, and also lend the purchaser the money with which to improve it. That the building would enhance the value of the mortgage security, and that this fact was the inducement for Huntington’s selling on time and lending part of the money with which to construct the building, certainly cannot affect the good faith of the transaction, as no one could have been misled or deceived by it. The deed and mortgage were both on record, and, had plaintiffs examined the records before furnishing the material, they would hav6 disclosed the exact amount of incumbrance on the property. If they trusted Mrs. Aldrich with*78out examining the records, it was their own negligence, for the consequences of which the law furnishes no relief. If they did examine, then they found Huntington’s lien for $3,000 on the property; and, if they then made no inquiry of Huntington, they trusted Mrs. Aldrich with an apparent lien of $3,000 ahead of them; and, if they did inquire of him, then they learned that Mrs. Aldrich had $1,000,. and no more, in his hands, to use in building the house. In any view of the case, they could not have been misled, and have no show of equity to demand that their lien shall be preferred.

Order affirmed.

(Opinion published 50 N. W. Rep. 1020.)