223

cel the sale, the lien claimants are necessary parties,222 and a decree canceling the contract of sale rendered in a suit to which the lien claimants are not parties does not affect their rights.2 A voluntary surrender by the vendee, or his conveyance of the land back to the vendor, does not destroy the liens that have accrued at his instance. In such case, the liens attach to the fee.224 One induced by fraud to convey title to land to another under a contract contemplating the construction of buildings thereon, cannot, in an action. to set aside the conveyance and discharge the property from liens, defeat the claims of those who, in good faith, relying on the apparent title of the purchaser, furnished materials and performed labor in the construction of the buildings contemplated, and complied with the statutory requirements in establishing their liens.225

§ 310.

Vendors' Liens.

On

Mechanics' liens are subordinate to vendors' liens.226 this point the authorities are as nearly harmonious as they are on erection of a building thereon by the vendee, if the vendee shall forfeit or surrender such contract, then, for the purpose of establishing and enforcing a lien for labor, material, etc., performed or furnished by other persons for or to such vendee, under contract for such erection, the vendor shall be deemed the owner of the building, and the vendee his contractor. Under this statute it has been held that it is necessary for one seeking to enforce against the vendor's interest a mechanic's lien for labor or material performed or furnished in the erection of a building under a contract with the vendee to allege in his complaint, and prove, if the allegation be controverted, that the contract between the vendor and vendee has terminated unconditionally. Nolander v. Burns, 50 N. W. 1016, 48 Minn. 13.

222 Radcliff v. Noyes, 43 Ill. 318.

223 King v. Smith, 44 N. W. 65, 42 Minn. 286.

224 Adams v. Russell, 85 Ill. 284; Boyd v. Blake, 43 N. W. 485, 42 Minn. 1; King v. Smith, 44 N. W. 65, 42 Minn. 286; Cochran v. Wimberly, 44 Miss. 503; Wingert v. Stone, 21 Atl. 812, 142 Pa. St. 258; Kerrick v. Ruggles, 47 N. W. 437, 78 Wis. 274.

225 West V. Lumber Co., 43 Pac, 239, 56 Kan. 287.

226 Bremen v. Foreman, 25 Pac. 539, 1 Ariz. 413; Wood v. Rawlings, 76 Ill. 206; Wing v. Carr, 86 Ill. 347; Millard v. West, 50 Iowa, 616; Orr v. Batterton, 14 B. Mon. (Ky.) 100; World's Industrial & Cotton Centennial Exposition v. North, Central & South American Exposition, 1 South. 358, 39 La. Ann. 1; Atkins v. Little, 17 Minn. 354 (Gil. 320); Bohn Manuf'g Co. v. Kountze, 46 N. W. 1123, 30 Neb. 719; Millsap v. Ball, 46 N. W. 1125, 30

any point of mechanic's lien law.227 A partial exception to this rule, however, exists in states that make mechanics' liens superior to prior incumbrances so far as the improvements for which the liens are claimed are concerned. In such states mechanics' liens have a priority on the buildings, and vendors' liens have priority on the land.22 It is held in Pennsylvania that a vendor who has obtained judgment for the unpaid part of the purchase price before or at the time of conveying the land has a lien superior to those of mechanics employed by the vendee,229 but that mechanics' liens have priority over a purchase-money judgment entered on judgment notes more than four months after the liens attached.23 Where the vendee

Neb. 728; Irish v. O'Hanlon, 52 N. W. 695, 34 Neb. 786; Neil v. Kinney, 11 Ohio St. 58; Kline v. Lewis, 1 Ashm. (Pa.) 31; Zeigler's Appeal, 69 Pa. St. 471; Gillespie v. Bradford, 7 Yerg. (Tenn.) 168; St. Paul & Tacoma Lumber Co. v. Bolton, 32 Pac. 787, 5 Wash. 763; Charleston Lumber & Manuf'g Co. v. Brockmyer, 18 W. Va. 586.

227 There are decisions that seem to put the lien of the mechanic in some cases ahead of that of the vendor. Thus in Pennsylvania, under a statute which gave a lien regardless of the title of the contracting party, and provided a proceeding in rem to enforce such lien, it was held that on sale of land to enforce a lien for work done for a vendee in possession, the entire fee would be sold, and the proceeds applied first to satisfy the lien and then to compensate the vendor for the land. Bickel v. James, 7 Watts (Pa.) 9. In New York, in a case where the vendor had in the contract of sale bound the vendee to improve the property, it was held that a stipulation in the contract of sale that any mechanic's lien should be subject to the vendor's interest in the property did not destroy the vendor's consent to the erection of the houses, and was not sufficient to subordinate to the vendor's rights the lien of a person furnishing materials for the work, who was not in privity with either of the parties to the contract, and who had no notice of the stipulation. Miller v. Mead, 28 N. E. 387, 127 N. Y. 544, affirming 6 N. Y. Supp. 273, 53 Hun, 636. And it has been recently held in New Jersey that where a purchaser in possession before the deed is delivered makes improvements on the buildings, and the vendors, with full knowledge thereof, allow the laborers and material men to proceed without warning them of their claim of title, the lien of the party furnishing such labor and materials is superior to any claims by the vendors for unpaid purchase money, or otherwise. Leonard v. Cook (N. J. Ch.) 20 Atl. 855.

228 Smith v. Moore, 26 Ill. 392; Stockwell v. Carpenter, 27 Iowa, 119; Louisville Building Ass'n v. Korb, 79 Ky. 190; City of Baltimore v. Parlange, 23 La. Ann. 365.

229 Zeigler's Appeal, 69 Pa. St. 471; Stoner v. Neff, 50 Pa. St. 258.

230 In re Oxnard's Estate (Pa. Sup.) 25 Atl. 568.

fails to pay for the land, which is thereupon conveyed to a third person, who does pay for it, the latter is subrogated to the rights of the vendor, and has a right to the land to the extent of the amount not paid by the vendee, superior to the liens of mechanics employed by the vendee. 231 So where the vendee reconveys to the vendor, the latter's title is superior to the liens created by the vendee to the extent of his former lien as vendor.232 A vendor's lien does not lose its superiority, so far as the land is concerned, although the vendor takes a purchase-money mortgage.233 Where a vendor's lien on land is released in favor of a mortgage to secure money for building on the land, and a mechanic's lien consequently attaches, the claimant knowing that the money loaned is to be used in erecting the building, the mortgage will, to the amount of the unpaid purchase price secured by the vendor's lien, be a first, the full amount of the mechanic's lien a second, the balance due on the mortgage a third, and the vendor's lien a fourth, lien on the land. 23

Improvements by Vendor.

§ 311. A.vendor who directly contracts for improvements after he has sold the land, but before he has delivered a deed, thereby subjects his interest in the land to mechanics' liens.235 Whether he can thereby create liens that will affect his vendee's interest is a more difficult question. In a case in New York, where a vendor, who had agreed in the contract of sale to complete the buildings on the land, employed mechanics for that purpose, and they did the work after the land had been conveyed, though their contract was made before that date, it was held that they had no lien, since they did not do the work under contract with the owner.236 But it is held in other states that the sale of a house and lot while the house was in process of erection and unfinished cannot affect the rights of mechanics under the mechanic's lien laws, who were then engaged in doing, and continued afterwards to do, work, under a previous em

231 Logan v. Taylor, 20 Iowa, 297.

232 Cochran v. Wimberly, 44 Miss. 503.

233 Wing v. Carr, 86 Ill. 347. See post, § 323, and ante, § 153.

234 Leming v. Stephens, 32 S. W. 961, 95 Tenn. 444.

235 Pickens v. Investment Co., 55 N. W. 947, 37 Neb. 272.

236 Smullen v. Hall, 13 Daly (N. Y.) 392.

237

ployment by the vendor when owner, and that they have liens on the property for work done at the instance of the vendor after as well as before the sale.2 When the vendee has paid the purchase price in full, and is in exclusive and open possession of the premises, no lien will attach thereto for materials furnished under a contract with the vendor, though he still retains the mere legal title.238 But if the vendee allows the vendor to remain in possession of the land and to build on it, mechanics, who erect such building for the vendor in ignorance of the vendee's rights, have a lien on the fee.239 a recent case in Illinois it appeared that a man who had made, but not delivered, a deed to his wife had a house built on the land, the builder to receive $300 from the man, and the rest from his wife. The wife did not pay her share, and a lien against her was foreclosed in a suit to which he was not a party. The court held that the man's title was not affected by a sale under such forclosure, and that he was not estopped to deny his wife's title.240

In

237 Miller v. Barroll, 14 Md. 173; Mears v. Dickerson, 2 Phila. (Pa.) 19; Wanganstein v. Jones (Minn.) 63 N. W. 717. But the work or materials furnished after the sale must have been furnished in good faith, or there is no lien. Thus, where a house was sold before its completion, lumber furnished after its completion, without the purchaser's knowledge, and by an arrangement between the vendor and material man for the purpose of preserving the latter's right of lien, is not a proper item for allowance. Heath v. Tyler, 44 Md. 312.

38 Marston v. Stickney, 60 N. H. 112.

239 Buckstaff v. Dunbar, 17 N. W. 345, 15 Neb. 114; Phillips v. Clark, 4 Metc. (Ky.) 348. In a recent case it appeared that an hotel company was incorporated with 1,000 shares of stock, of which B. owned 998. B. contracted with the company to furnish some land, and build an hotel thereon, and turn it over to the company when completed, he to receive $100,000 in bonds and the same amount in capital stock. When the hotel was partly built, B. failed. He had conveyed the lot to one W., and also delivered to him $50,000 of the bonds of the company, to secure a debt. B. afterwards made a deed of the lot to the hotel company. The secretary of the hotel company procured a deed of the lot from W., and bought the bonds from him, giving his note for $2,500 in payment. On these facts the court held that the hotel company acquired no such equitable interest in the land as to defeat liens for labor and material furnished B. for the construction of the hotel. Houston v. Long (Ky.) 23 S. W. 586. In another recent case it was said that the fraud or mistake of a vendee in keeping contractors in ignorance of the transfer until after they furnish material and labor for improvements under a contract with the vendor cannot defeat the lien of such contractors. Jeffersonville Water-Supply Co. v. Riter, 37 N. E. 652, 138 Ind. 170. 240 Price v. Hudson, 17 N. E. 817, 125 Ill. 284.

§ 312-313. Rights of Purchasers.

314. Purchase during Progress of the Work.

315-316. Purchase after Work is Done, but before Claim Filed.

317. Purchase after Claim is Filed.

318. Purchase pending Suit to Foreclose Lien.

319. Objections Open to Purchaser.

320. Conveyance Subject to Lien.

321. Fraudulent Conveyances.

DIVISION II. MORTGAGEES.

§ 322. Rights of Mortgagees.

323. Purchase-Money Mortgages.

324-326. Waiver or Loss of Priority.

327. Reciprocal Rights of Mortgagee and Lien Claimant. 328-329.

Foreclosure.

DIVISION IV.

Execution Sale.

HEIRS, DEVISEES, AND PERSONAL REPRESENTATIVES. 340-341. Heirs and Devisees.

342-343. Executors and Administrators.

DIVISION V. ASSIGNEES AND RECEIVERS

344. Assignee of Owner.

345. Assignee in Bankruptcy. 346 347. Assignee of Contractor. 348-349. Receivers.

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