Craig v. Herzman

81 N.W. 288, 9 N.D. 140, 1899 N.D. LEXIS 122
CourtNorth Dakota Supreme Court
DecidedDecember 1, 1899
StatusPublished
Cited by19 cases

This text of 81 N.W. 288 (Craig v. Herzman) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Craig v. Herzman, 81 N.W. 288, 9 N.D. 140, 1899 N.D. LEXIS 122 (N.D. 1899).

Opinion

Batholomew, C. J.

This is a contest between certain mechanic’s lien holders and a purchaser under a mortgage foreclosure sale. The property consists of a certain lot in the City of Fargo, upon which a two-story brick building, with party walls on either side, has been erected. The mortgage was given long before the building or any part thereof was placed upon tlie lot. The mechanic’s liens attached before the foreclosure of the mortgage. This action was brought by the lienholders. The Red River National Bank was the only defendant that appeared and answered. It claimed title under the foreclosure proceedings, free and clear from all the mechanics’ liens. The trial court established the liens upon the building, and found the value of the lot without the building and the value of the building separately, and each at the same sum, and directed that the premises be sold, and that one-half of the proceeds of sale be paid over to the defendant bank; that the mechanics’ [143]*143liens, as established, and in their order, be paid from the other half; and that the surplus, if any, be paid over to the bank. From this decree the bank appeals.

The first position of appellant, as we understand it, is briefly this: When the mortgage under which it derives title was given, and when it was foreclosed, and when appellant received its deed thereunder, the statute in force relative to mechanics’ liens declared that, where a building was erected upon land upon which there was an existing mortgage, the mortgage should remain a first lien upon the land, hut that the liens for labor and materials used in the construction of the building should be a first lien upon the building, and that the building might be sold under said liens, and removed from the land. Comp. Laws, § 5480. It concedes that it possesses only such rights as came to it through the mortgage, and that it took such rights subject to the mechanics’ liens, so far as they existed and could be enforced under the law existing when the mortgage was given, and when appellant acquired its title, but to no other or greater extent. It claims that the provision under which the court ordered a sale of the entire property was passed after it acquired its rights, and, in effect, impaired the obligations of the mortgage contract, and hence, as to appellant, such provision is unconstitutional and void. The provision is found in section 4795, Rev. Codes, which went into effect January 1, 1896, and is as follows: “But if in the opinion of the court it would be for the best interests of all the parties that the land and the improvements thereon should be sold together, it shall so' order and the court shall take an account and ascertain the separate values of the land and of the erection, buildings or other improvements, and distribute the proceeds of sale so as to secure to the prior mortgage or other lien, priority upon the land, and to the mechanic’s lien priority upon the building, erection or other improvement.” It will be noticed that under the prior law the priority of the mechanic’s lien was enforced by a sale and removal of the building. It so happens in this case that the building is so situated that it can be removed only by demolition. This a court will not sanction, where it would impair the rights of the former mortgagee. Lumber Co. v. Danner, 3 N. D. 475, 57 N. W. 343. Hence, if appellant’s contention that its contract rights are impaired be correct, it will follow that the mechanics’ liens can never be enforced against the property, and the appellant will enjoy the rare good fortune of having the value of its property doubled without any expense to itself.

It is admitted that the statute of which complaint is made is primarily remedial in character, but it is insisted that, if it enforce a remedy in a manner that prejudices contract rights, the facts that it is remedial does not take it out of the operation of the constitutional inhibition. It must be conceded that such is the law. Taylor v. Stearns, 18 Grat. 288; Bank v. Schranck, 97 Wis. 250, 73 N. W. Rep. 31, 39 L. R. A. 569; Barnitz v. Beverly, 16 Sup. Ct. 1042, 41 L. Ed. 93; Edwards v. Kearzey, 96 U. S. 600, 24 L. Ed. [144]*144793; Antoni v. Greenhow, 107 U. S. 769, 2 Sup. Ct. 91, 27 L. Ed. 468. It is necessary, then, to determine whether this statute did prejudicially affect contract rights existing by virtue of the mortgage. The impairment prohibited by the constitution is not a mere imaginary or impossible injury. The law must render the contract obligation less valuable, either by a contraction of its scope or increasing its duties, or by rendering it invalid or less enforceable. If such be the necessary effect of the law, it matters not how slight the impairment. Green v. Biddle, 8 Wheat. 1, 5 L. Ed. 547. What were the rights of the mortgagee under the mortgage? Primarily, to have the property covered by the mortgage— which was the naked lot — applied to the satisfaction of the debt secured by the mortgage. True, as to the mortgagor, the rights under the mortgage have ripened into title, his right of redemption has been foreclosed. But as to these lienholders whose rights in the building under the former law were superior to the rights of the mortgagee, and which rights could not be affected by the foreclosure, the appellant must still rely solely upon its rights under the mortgage. Under the amended statute, and under the decree of the trial court, the lot is still devoted exclusively to the payment of the mortgage debt. The contract obligation is not impaired in that respect. But appellant says that, if a mechanic’s lien may be enforced by compelling a sale of the entire property, it might force a mortgagee to change the term of his investment, and put him to the trouble and expense of seeking another investment, and perhaps with a lower rate of interest. Should we admit this to be a valid objection to the statute, — and we do not, — still the answer would be that this appellant cannot raise that objection. Here, on the record, the mortgage was long since due. Appellant cannot possibly suffer in the manner indicated. “Only those whose rights would be prejudiced by the enforcement of an unconstitutional act can be heard to question its validity.” 6 Am. & Eng. Ene. L. 1090, and cases cited. Again, it is urged that the law forces the mortgagee’s security to a forced sale at the instance of the mechanic’s lien holder, possibly on a bad market, and compels him to take such proportionate share in the proceeds as will give him priority on the land. This is only an imaginary possibility. The statute does not necessitate a sale upon a bad market. The law cannot presume anything of the kind. Moreover, the objection ignores the express wording of the statute.. It says: “But if in the opinion of the court it would be for the best interests of all parties,” etc. The interests of the mortgagee are as carefully fostered as those of the mechanic’s lien holder. In this case we are bound to presume that the court found it to be for the best interest of appellant that the sale should be so ordered, and that is conclusively presumed to be correct, as it is not brought before us for review. We are clear that there is no impairment of contract here involved, of which appellant can complain.

Another position urged by appellant is that the statute, as found [145]*145in the Revised Codes, is prospective only, and cannot be given a retrospective operation, and hence cannot apply to the liens here involved, or to rights accruing under the mortgage.

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Cite This Page — Counsel Stack

Bluebook (online)
81 N.W. 288, 9 N.D. 140, 1899 N.D. LEXIS 122, Counsel Stack Legal Research, https://law.counselstack.com/opinion/craig-v-herzman-nd-1899.