quired, but a homestead is created by a mere present intention to occupy land as a home, if accompanied with present action to effectuate that intention, the owner of a vacant lot who contracts for the erection of a house thereon to be occupied as his home has a homestead estate in the property superior to the lien for building the house, although the lien attached before the property was actually occupied as a homestead. Many states limit the value up to which property may be exempt as a homestead. In determining the relative priorities of homesteads and mechanics' liens under such statutes, it is proper to estimate the value of the property at the date when the lien attached.78 Homestead exemption laws do not affect liens created before they went into force.79

DIVISION IV. EQUITIES OF REDEMPTION.

Before and After Foreclosure.

§ 143. After a decree of foreclosure of a mortgage, and a sale of the mortgaged premises, the mortgagor has no such ownership in the premises as will support a lien for labor done or material furnished on the premises.80 But a mortgagor in possession before condition broken is still the owner of the premises, and, as such, may contract for improvements for which a lien will lie.

to live in the new one; it not being shown that the husband and wife are not possessed of other property. Parsons v. Pearson, 36 Pac. 974, 9 Wash. 48.

77 Mills v. Hobbs, 42 N. W. 1084. 76 Mich. 122.

78 Mills v. Hobbs, 42 N. W. 1084, 76 Mich. 122.

79 Townsend Sav. Bank v. Epping, Fed. Cas. No. 14,120, 3 Woods, 390; Gum v. Barry, 15 Wall. 610. The latter case was that of a judgment lien.

80 Davis v. Insurance Co., 84 III. 508; Shepardson v. Johnson, 14 N. W. 302, GO Iowa, 239. When the mortgagor, after foreclosure, remains in possession, under agreement with the purchaser, and contracts for the construction of a building thereon, one furnishing material for the contractor cannot acquire a mechanic's lien therefor, against the purchaser, after the mortgagor has in good faith paid the contractor, as provided by the building contract, for the work done. Robbins v. Arendt, 43 N. E. 165, 148 N. Y. 673, affirming 23 N. Y. Supp. 1019.

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Priority Gives Superior Lien.

§ 144. As between mortgages and mechanics' liens, the earlier in time is, as a general rule, preferred, in the absence of any statutory provision to the contrary.81 In other words, a mechanic's lien. for improvements made by the mortgagor is usually held superior to a mortgage executed after the lien attached, 82 and inferior to a mortgage executed before that time.s The rules for determining

83

81 Preston v. Sonora Lodge, 39 Cal. 116; Jones v. Hancock, 1 Md. Ch. 187. 82 Spence v. Etter, 8 Ark. 69; Apperson v. Farrell, 20 S. W. 514, 56 Ark. 640; Soule v. Hurlbut, 20 Atl. 610, 58 Conn. 511; Paddock v. Stout, 13 N. E. 182, 121 Ill. 571; St. Louis & P. R. Co. v. Kerr, 38 N. E. 638, 153 Ill. 182; Elgin Lumber Co. v. Langman, 23 Ill. App. 250; State v. Eads, 15 Iowa, 114; Lamb v. Hanneman, 40 Iowa, 41; Neilson v. Railway Co., 44 Iowa, 71; Bissell v. Lewis, 9 N. W. 177, 56 Iowa, 231; Iowa Mortgage Co. v. Shanquest, 29 N. W. 820, 70 Iowa, 124; Trustees Caldwell Inst. v. Young, 2 Duv. (Ky.) 582; Jean v. Wilson, 38 Md. 288; Dunklee v. Crane, 103 Mass. 470; Batchelder v. Rand, 117 Mass. 176; Carew v. Stubbs, 30 N. E. 219, 155 Mass. 549; Milner v. Norris, 13 Minn. 455 (Gil. 424); Glass v. Freeburg, 52 N. W. 900, 50 Minn. 386; Gardner v. Leck, 54 N. W. 746, 52 Minn. 522; Viti v. Dixon, 12 Mo. 479; Dubois' Adm'r v. Wilson's Trustee, 21 Mo. 213; Reilly v. Hudson, 62 Mo. 383; Merrigan v. English, 22 Pac. 454, 9 Mont. 113; Henry & Coatsworth Co. v. Fisherdick, 55 N. W. 643, 37 Neb. 207; Chapman v. Brewer, 62 N. W. 320, 43 Neb. 890; Cheshire Prov. Inst. v. Stone, 52 N. H. 365; Erdman v. Moore (N. J. Sup.) 33 Atl. 958; Lookout Lumber Co. v. Mansion Hotel & B. Ry. Co., 14 S. E. 35, 109 N. C. 658; Haxtun Steam-Heater Co. v. Gordon, 50 N. W. 708, 2 N. D. 246; Hahn's Appeal, 39 Pa. St. 409; Schultze v. Brewing Co., 21 S. W. 160, 2 Tex. Civ. App. 236; Vilas v. Manufacturing Co., 65 N. W. 488, 91 Wis. 607; Davis v. Bilsland, 18 Wall. 659; Construction Co. v. Meyer, 100 U. S. 476; In re Dey, Fed. Cas. No. 3,871, 9 Blatchf. 285; Taylor v. Railway Co., Fed. Cas. No. 13,783, 4 Dill. 570.

This priority may of course be lost by neglect to comply with the requirements of the statutes in regard to filing claim and bringing suit. See post, §§ 467, 728.

83 Fuquay v. Stickney, 41 Cal. 583; Tritch v. Norton, 15 Pac. 680, 10 Colo. 337; Folsom v. Cragen, 17 Pac. 515, 11 Colo. 205; National Bank of Athens v. Danforth, 7 S. E. 546, 80 Ga. 55; Troth v. Hunt, 8 Blackf. (Ind.) 580; Close v. Hunt, Id. 254; Fletcher v. Kelly, 55 N. W. 474, 88 Iowa, 475; Kiene v. Hodge, 57 N. W. 717, 90 Iowa, 212; Bartlett v. Bilger (Iowa) 61 N. W. 233; Martsolf v. Barnwell, 15 Kan. 612; Marmillon v. Archinard, 24 La. Ann. 610; Citizens' Bank of Louisiana v. St. Louis Hotel Ass'n, 27 La. Ann. 460; Morse v. Dole, 73 Me. 351; Smith v. Shaffer, 46 Md. 573; Mulrey v. Barrow, 11 Allen (Mass.) 152;

when the lien attaches are given elsewhere.84 Whether a mortgage which would otherwise be inferior to a mechanic's lien acquires any superiority over such lien by the fact that it secures a loan of money which was used to pay off a prior mortgage is a disputed point.85 Hoover v. Wheeler, 23 Miss. 314; Otley v. Haviland, 36 Miss. 19; Dugan v. Scott, 37 Mo. App. 663; Morris County Bank v. Rockaway Manuf'g Co., 14 N. J. Eq. 189; Coe v. Railway Co., 31 N. J. Eq. 105; Broman v. Young, 35 Hun (N. Y.) 173; Munger v. Curtis, 42 Hun (N. Y.) 465; Stuyvesant v. Browning, 33 N. Y. Super. Ct. 203; Choteau v. Thompson, 2 Ohio St. 114; Inverarity v. Stowell, 10 Or. 261; Lyle v. Ducomb, 5 Bin. (Pa.) 585; Lieb v. Bean, 1 Ashm. (Pa.) 207; Bassett v. Swarts, 21 Atl. 352, 17 R. I. 215; Reid v. Bank, 1 Sneed (Tenn.) 262; Pride v. Viles, 3 Sneed (Tenn.) 125; Kenny v. Gage, 33 Vt. 302; Hinckley & Egery Iron Co. v. James, 51 Vt. 240; Wroten v. Armat, 31 Grat. (Va.) 228; Jessup v. Stone, 13 Wis. 466; Challoner v. Bouck, 14 N. W. 810, 56 Wis. 652; Toledo, D. & B. R. Co. v. Hamilton, 10 Sup. Ct. 546, 134 U. S. 296; Moran v. Schnugg; Fed. Cas. No. 9,786, 7 Ben. 399; Tommey v. Railroad Co., 7 Fed. 429, 4 Hughes, 640; Fidelity Ins. & Safe-Deposit Co. v. Shenandoah Iron Co., 42 Fed. 372..

84 See ante, chapter 4.

In Carew v. Stubbs, 30 N. E. 219, 155 Mass. 549, and Batchelder v. Hutchinson, 37 N. E. 452, 161 Mass. 462, the lien was held superior to a mortgage executed after the contract for the work was made. In Lookout Lumber Co. v. Mansion Hotel & B. Ry. Co., 14 S. E. 35, 109 N. C. 658, it was held superior to a mortgage executed after the materials were furnished; and in Lamb v. Hanneman, 40 Iowa, 41, it was held superior to a mortgage executed and recorded within 90 days from the date of the last item in the account. In the following cases the lien was held superior to a mortgage executed after the building was begun: Bissell v. Lewis, 9 N. W. 177, 56 Iowa, 231; Gardner v. Leck, 54 N. W. 746, 52 Minn. 522; Cheshire Prov. Inst. v. Stone, 52 N. H. 365; Haxtun SteamHeater Co. v. Gordon, 50 N. W. 708, 2 N. D. 246; Hahn's Appeal, 39 Pa. St. 409; Construction Co. v. Meyer, 100 U. S. 476.

In Mulrey v. Barrow, 11 Allen (Mass.) 152, the lien was held inferior to a mortgage executed before petition filed to enforce the lien; and in Jessup v. Stone, 13 Wis. 466, it was held inferior to a mortgage recorded before the building was begun. In the following cases the lien was held inferior to a mortgage recorded before the contract for the work was made: Folsom v. Cragen, 85 It is held in New Jersey that, as against the mechanic's lien, the mortgagee in such case will be subrogated to the rights of the prior mortgagee, even though the prior mortgage was released. Barnett v. Griffith, 27 N. J. Eq. 201; Platt v. Griffith, Id. 207. But in Massachusetts it is held that the fact that the money which the mortgage was given to secure was used in the payment of a previous mortgage is immaterial on the question of priority. Batchelder v. Hutchinson, 37 N. E. 452, 161 Mass. 462; Simpson v. Same, Id.

§ 145. There are some exceptions to the rule above stated. In Kentucky, under a statute declaring that mechanics' liens "shall not be effectual against a bona fide purchaser for a valuable consideration without notice, actual or constructive," it is held that if the owner mortgages, while the mechanic is progressing with his work, and while materials are being furnished, to an innocent mortgagee, the lien of the mechanic and material man will be lost and unavailable as against the mortgagee. 86

In Georgia, under a law giving laborers a general lien on their employers' property superior to all other liens except taxes and such others as are declared by law to be superior to them (mortgages not being so declared), laborers' liens precede mortgages, though the holders be bona fide and without notice.87

It is held in Utah that one who contracts with an irrigation company to construct its ditch has a lien on the ditch which has priority over a trust deed executed by the irrigation company before the contractor commenced work, where the ditch is constructed over the public domain, and the company acquires its right of way only as fast as the ditch is completed; since in such case there is nothing to which the mortgage can attach before the ditch is constructed.88 In a case in Kansas it appeared that, pending a suit to foreclose a mechanic's lien, a third person bought the lien claim, and also bought the land, giving the grantcr of the land a purchase-money mortgage. It was held that, whether the sale extinguished the lien or not, yet the lien was inferior to the mortgage.s

89

17 Pac. 515, 11 Colo. 205; Martsolf v. Barnwell, 15 Kan. 612; Morse v. Dole, 73 Me. 351; Otley v. Haviland, 36 Miss. 19; Wroten v. Arinat, 31 Grat. (Va.) 228. And in the following cases the lien was held inferior to a mortgage recorded before the lien claim was filed: Moran v. Schnugg, Fed. Cas. No. 9,786, 7 Ben. 399; Munger v. Curtis, 42 Hun (N. Y.) 465; Kenny v. Gage, 33 Vt. 302; Reinhart v. Shutt, 15 Ont. 325; McVean v. Tiffin, 13 Ont. App. 1; Hynes v. Smith, 27 Grant, Ch. 150, affirming 8 Ont. Prac. Rep. 73.

8c Foushee v. Grigsby, 12 Bush (Ky.) 75. It is said in this case that there could not be constructive notice while the work was in progress because the claim could not be filed nor suit begun until the work was completed.

87 Langston v. Anderson, 69 Ga. 65.

85 Garland v. Irrigation Co., 34 Pac. 368, 9 Utah, 350.

89 Madaris v. Edwards, 4 Pac. 313, 32 Kan. 284.

Rights Affected by Recording.

§ 146. In some states a prior mortgage, if given in good faith, takes precedence of a subsequent mechanic's lien, even though the mortgage is not recorded. This has been held where the statute made unrecorded mortgages void only as against subsequent purchasers or mortgagees without notice," where it declared that no unrecorded instrument affecting real estate should be valid as against a "subsequent purchaser for a valuable consideration," "1 and where the statute merely gave the mechanic a lien on "the right, title, and interest of the owner in the land.” *2

§ 147. In other states, however, a mortgage takes effect as against mechanics' liens only from the date when it is recorded.93 A mortgage recorded on the very day the lien accrued, but executed some ten days before, is superior to the lien; * and the fact that the record of a prior mortgage has been destroyed does not affect its superiority to subsequently accruing mechanics' liens." The liens of mechanics who do work for an owner who, in his deed of the property, assumed payment of an unrecorded mortgage, are subject to such mortgage, since they are estopped by the recitals of the deed."" § 148. The fact that a prior mortgagee knew that the mortgagor intended to make the improvements for which the lien is claimed does not affect the superiority of his mortgage, and his failure to

97

** Rose v. Munie, 4 Cal. 173; Root v. Bryant, 57 Cal. 48.

91 Fletcher v. Kelly, 55 N. W. 474, 88 Iowa, 475.

92 Miller v. Stoddard, 52 N. W. 895, 50 Minn. 272; Noerenberg v. Johnson, 52 N. W. 1069, 51 Minn. 75; Miller v. Stoddard, 56 N. W. 131, 54 Minn. 486.

$3 Thielman v. Carr, 75 Ill. 385; Mitchel v. Evans, 2 Browne (Pa.) 329; Gay v. Bovard, 27 La. Ann. 290; State v. Recorder of Mortgages, 28 La. Ann. 534. 94 Elgin Lumber Co. v. Langman, 23 Ill. App. 250.

95 Myers v. Buchanan, 46 Miss. 420. So, too, where the owner's title is derived through a deed of trust which contains limitations on the power to create mechanics' liens, the record of such deed operates as notice to mechanics, although the record is destroyed by fire before their liens accrue. Franklin Sav. Bank v. Taylor, 23 N. E. 397, 131 Ill. 376; Franklin Sav. Bank v. Taylor, 4 C. C. A. 55, 53 Fed. 854.

** Holmes v. Ferguson, 1 Or. 220.

* Holmes v. Hutchins, 57 N. W. 514, 38 Neb. 601. A loan secured on land, made on the contract of the owner to erect certain improvements, but without

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