Miles v. Bunn

Not enough of the findings of the trial court and of the lease in controversy is set out in the prevailing opinion to intelligently discuss the case.

Among other things, the trial court found that the Sesom Corporation, owned entirely by the Bars and Dickison, Dickison having received qualifying shares of the corporate stock without paying any consideration therefor, has never owned any other property or transacted any business, other than the ownership, management and control of the real estate conveyed by the Bars to the corporation. The trial court also found that the corporation leased the real estate to R.H. Bunn for a period of ninety-nine years, and that no rent has ever been paid by Bunn. He took possession of the premises under the lease, and began constructing the building authorized by the lease.

Within eight months after filing their lien, appellants served and filed their cross-complaint therein for the foreclosure of the lien, which cross-complaint and summons thereon were regularly served on defendants Bar and the corporation, who entered their appearance within the eight months period. Bunn also was served with summons and cross-complaint, and defaulted.

The lease authorized, but did not require, the lessee to erect any building upon the lot, but provided that the building, if erected, should be of certain specified construction and used only for certain purposes. The lessee also agreed to keep the building insured during the entire term of the lease, loss payable to lessor in case of a fire, who couldeither keep the insurance money or use it to rebuild thebuilding. The lessee was not permitted to make any structural or other material change or alterations in the building without the written consent of the lessor. The lease provided that title toany building erected upon the premises should forthwith vest inthe lessor, subject only to the right of the lessee under the lease, etc.

These findings and the lease disclose that the building, if erected, was to be built as much for the benefit of the lessor as of the lessee, and that the lessee was to have no greater rights or interest in the building than he would have had in a building that might have been on the demised premises when the lease was executed.

In Dahlman v. Thomas, 88 Wn. 653, 153 P. 1065, we held that our decisions

". . . have relieved the landlord when he had profits but had not authorized improvements, and have relieved a vendor when he had authorized the improvements but had no interest in the profits. In the present case the owner has both features against him."

In Finos v. Netherlands American Mortgage Bank, 147 Wn. 86,265 P. 167, where the lessees were given the right to mine and prospect, but were not required to do so, and did proceed to mine upon the leased premises and derive profits therefrom, we held that the property was subject to the general lien law under Rem. Comp. Stat., § 1129.

In Seattle Lighting Fixture Co. v. Broadway Central Market,156 Wn. 189, 286 P. 43, 1119, we reaffirmed the Dahlman case, supra, and held that, under the terms of the lease there involved, the lessee was the agent of the owner in procuring the material and labor upon the premises.

It must be apparent from the findings of the trial court that respondents in this case are the real owners both of the real estate and of the lease, and that the lessee is a mere dummy. They allowed the lessee to enter upon the premises and hold possession thereof while erecting the building, and thereafter, but have never required him to pay a dollar of the rent reserved in the lease.

We should look through the form to the substance.

"A lease may be such only in name, a contract of purchase only a mere form. There must not be left an easy opportunity for subterfuge or fraud against laborers and supply men." Dahlman v.Thomas, supra.

See, also, Kremer v. Walton, 11 Wn. 120, 39 P. 374, 48 Am. St. 870, and Pioneer Sand Gravel Co. v. Northern PacificRy. Co., 170 Wn. 618, 17 P.2d 9.

It is apparent, also, from the situation and relations between the parties respondent, that the Sesom Corporation is owned in community by respondents Bar, and that, when a mortgage was given by it to Mrs. Bar, it was, in effect, simply a mortgage from themselves to one of them. Even though recorded before the material and labor of appellants commenced to be furnished, it should not take priority over their lien because it does not represent an actual indebtedness from an owner of property to a bona fide mortgagee. See Andersonian Investment Co. v. Jones,104 Wn. 142, 176 P. 17; Schoemer v. Zeran, 126 Wn. 219,217 P. 1009; Keane v. Watson Co., 149 Wn. 424, 271 P. 73.

For the foregoing reasons, I am obliged to dissent from the prevailing opinion. The judgment should be reversed and appellants' lien ordered foreclosed.

BEALS, C.J., concurs with HOLCOMB, J.