Pacific Spruce Corp. v. Ore. Cement Co. , 133 Or. 223 ( 1930 )

Motion to recall mandate denied July 1, 1930 ON MOTION TO RECALL MANDATE (289 P. 489) In a petition for rehearing the appealing lien claimants contend that the court, in holding that their liens should have priority over the mortgage upon the building, erred in not holding that they were likewise entitled to priority as first liens upon the land. They say that the case is one which comes squarely within the provisions of Or. L., § 10193, which provides that:

"A lien created by this act upon any parcel of land shall be preferred to any lien, mortgage, or other incumbrance which may have attached to said land subsequent to the time when the building or other improvement was commenced * * * also to any lien, mortgage, or other incumbrance which was unrecorded at the time when said building, structure, or other improvement was commenced, etc."

These provisions they assert include all mortgages, whether purchase price mortgages or otherwise, that may have attached to the land subsequent to the time when the building on which the lien was claimed was commenced and, since it was stipulated that the building was commenced on March 19 and the mortgage was not executed until March 20 and not recorded until March 22, their liens must by force of the statute be preferred over the lien of the mortgage as prior liens upon the land.

The language of Or. L., § 10193, is: "A lien created by this act upon any parcel of land shall be preferred, etc." This refers to a lien created by the act not upon some building alone but also upon both the building and the land. All liens created by the act are by force of the statute liens upon some building. There are, however, but two instances under our statute when the act itself creates a lien upon the land in addition to creating a lien upon the building. Those are the instances provided for and defined in Or. L., §§ 10192 and 10194. Or. L., § 10191, which gives the right in all instances to a lien, confers the right to a lien upon the building but nothing contained in that section gives the right to a lien upon the land: Chenoweth v. Spencer,64 Or. 540 (131 P. 302, Ann Cas. 1914D, 678). Whether the lien created by that section shall extend to the land depends wholly upon whether the facts of the particular case bring the case within the provisions of section 10192 or section 10194, Or. L. Under section 10194, where the building or improvement is constructed upon land with the knowledge of the owner of the land by a person who is not the owner and the owner fails to give notice that his property will not be responsible therefor, the lien upon the building extends to and binds the land. That section, however, has no application here because it was stipulated that Woodcock, the owner of the land, had no knowledge of the construction of the building until after he had parted with his title thereto. Section 10192 provides:

"The land upon which any building or other improvement as aforesaid shall be constructed, together with a convenient space about the same, or so much as may be required for the convenient use and occupation thereof * * * shall also be subject to the liens created by this act, if, at the time the work was commenced or the materials for the same had been commenced to be furnished, the said land belonged to the person who caused said building or other improvement to be constructed, altered, or repaired; but if such person owned less than a fee-simple estate in such land, then only his interest therein shall be subject to such lien; * * *."

It was stipulated that on March 19, the day on which the Newport Hotel company commenced the construction of the building, the Newport Hotel company was not the owner of the land nor of any interest therein; hence, under the above statute, the lien upon the building could not be a lien upon the land until after the Newport Hotel company had acquired the land or some interest therein, and it is stipulated that the Newport Hotel company did not acquire an interest in the land until it acquired the land subject to the Woodcock mortgage. Hence, under the facts stipulated, while the lien on the building relates back to the time when the work was commenced (Johnson v. Tucker, 85 Or. 646, 167 P. 787), the liens on the land could not relate back until the Newport Hotel company acquired title to the land, or of some estate or interest therein, and this was on March 20, when Woodcock parted with his title and received from his grantee a mortgage upon the land for the purchase money. That was the first instant of time when a lien upon the land could attach under our statute. The delivery of the deed and of the mortgage were concurrent acts performed simultaneously. There was no interval of time between the two. The Newport Hotel company acquired title to the land subject to the lien of the mortgage and the liens could attach only to such title as the Newport Hotel company had acquired in the land.

"Nothing is better settled than if the vendor, at the time of parting with his title, take a mortgage or judgment as a part of the transaction to secure his purchase-money, he retains a lien upon the estate conveyed, not to be displaced by any other encumbrance, provided the mortgage be recorded within the time allowed, or the judgment be entered on the same day. There being no fractions of a day, the judgment lien is contemporaneous with the delivery of the deed." Phillips, Mechanics' Liens (3d Ed.), § 245.

Again, in section 247, the author says:

"Whenever the mechanic has entered upon his building contract with full knowledge of the rights of the vendor, he cannot claim to hold any greater estate in the premises than the person who employed him possessed."

If, under the facts stipulated, this statute must, as contended for, be construed so as to deprive Woodcock of his right to enforce his mortgage as a prior lien upon the land, then the court would be compelled to hold that the statute is unconstitutional because depriving him of a valuable property right without due process of law. It was stipulated that Woodcock never authorized any work to be done upon his property, never knew that any work was being done thereon, never authorized or assented to the incurring of any of the liabilities for which the liens are claimed, and had no knowledge of any work having been done until after he had conveyed the property and accepted a mortgage in payment of the purchase money. Not being in default, a statute which would deprive Woodcock of his right to enforce his mortgage would be unconstitutional because depriving him of his property without due process of law. Such, however, is not the meaning of the statute.

For these reasons, the petition for rehearing and motion to recall mandate will be denied.

COSHOW, C.J., McBRIDE and ROSSMAN, JJ., concur.