Prichard Bros. v. Causey

12 S.W.2d 711, 158 Tenn. 53, 5 Smith & H. 53, 1928 Tenn. LEXIS 123
Tennessee Supreme Court·Decided January 12, 1929·Published·Cited by 5 cases

Opinion

Mr. Justice McKinney

delivered the opinion of the Court.

These four causes were consolidated and heard together, and involve contests between furnishers of material used in the construction of an apartment house in Memphis, and the holder of a deed of trust on the property improved.

*56 The Chancellor dismissed, the bills, and, upon appeal, his decree was affirmed by the Court of1 Appeals.

(l) On April 29,1926, Riverside Realty Company entered into a written contract with Causey for the purchase of the lots upon which the apartment house was later constructed. Causey was to have two weeks within which to examine the title to the lots. The contract price was $10,000, $1,000 to be paid in cash, and deferred payment notes were to be executed for the balance, to be secured by a deed of trust on the lots.

After the contract of sale was executed Causey contracted with complainants for material to be used in said house, and the delivery of material on the lots was begun on May 6 and 7, 1926, and before Causey acquired title to the property.

On May 22, .1926, Riverside Realty Company delivered a deed to Causey, the recited consideration being $10 and other valuable considerations. This deed was recorded on May 26, 1926. Contemporaneous with the delivery of said deed Causey delivered t'o the Realty Company a deed of trust to secure the deferred purchase .money. This deed of trust was recorded on May 24, 3926.

The other courts have found that the deed and deed of trust were delivered at the same time and constituted one transaction. This finding is not questioned.

Complainants take the untenable position that when the deed conveying absolute title was delivered on May 22, 1926, their liens became effective and' constituted a superior lien to that of the Realty Company, evidenced by the deed of trust.

Complainants acquired a lien only as to the interest vested in Causey, which was an equity subject to the lien of the Realty Company for the unpaid purchase money.

*57 (2) It is conceded that had a lien been retained in the deed for the purchase money the claim of the Realty Company would have been superior to that of complainants.

(3) It is well settled that where a contract of sale is entered into and a bond for title executed, the vendors’ lien is superior to the mechanics’ lien. Crittenden Lbr. Co. v. Ward, 153 Tenn., 383; Gillispie v. Bradford, 15 Tenn., 170.

In the first-named case it was said: “Bond for title is generally recognized in equity as substantially equivalent to a sale of land by means of a conveyance with the purchase money secured by mortgage or trust deed.”

In the latter case of Gillispie v. Bradford, it was expressly held that a vendor, executing’ bond for title, had a lien superior to that of a mechanic.

(4) It is generally held that a vendor’s lien is superior to that of a mechanic, and, upon principle, we think this is true whether the vendor executes a bond for title, or a deed retaining a lien on its face, or executes a joint instrument with his vendee, by which he conveys title to the vendee and ithe latter, in turn, conveys the property by mortgage or deed of1 trust to secure the purchase money, or where, as in these causes, contemporaneous with the delivery of the deed, the vendee delivers a deed of trust or mortgage to secure the unpaid purchase money. They all have the same object, constitute but one transaction, and vest in the vendee the same interest. In neither case has the vendee ever been vested with an absolute title, but, whatever method is adopted, he takes the land subject to the vendors’ lien, and his creditors can obtain no greater interest than he possesses. This view is well supported by the authorities. In 40 C. J., 296, it is said:

*58 “It is well settled that, where a person not the owner of the property, but in possession thereof under a contract of sale or otherwise, makes improvements thereon and subsequently receives a deed of the property, and at the same time executes and delivers to the vendor a purchase-money mortgage, such mortgage is prior to mechanics’ liens arising out of the improvements.”

In the note will be found many cases supporting the text.

It is not contended that the Realty Company induced or procured complainants to furnish this material, or agreed that they should have a prior lien for same, so as to bring the causes within the exceptions pointed out in 40 0. J., 111.

The Realty Company did agree, as it had a light to do, that its mortgage should be subordinate to one given by the purchaser to obtain money with which to erect a building upon the lots.

(5) In 40 C. J., 296, it is said: “The fact that a vendor agrees that his purchase-money mortgage shall be subordinate to one given by the purchaser to obtain money with which to erect a building on the premises, does not render it subordinate to mechanics’ liens.”

In Ragan v. Howard, 97 Tenn., 334, it appears that title to the lot was vested in the ¡purchaser for six days before a mortgage securing the purchase money was executed. In the meantime the mechanics’lien had attached.

In Bridges v. Cooper, 98 Tenn., 390, it is said: “To be operative as parts of a single transaction, the different instruments must take effect at the same time. Simultaneity is absolutely essential in every instance.”

The record indicates that complainants made no investigation as to the title to this property, hut rather *59 trusted to the financial responsibility of Causey, to whom they had previously furnished materials that were used in other buildings which he had erected.

(d) By sections 3536-3537 of Shannon’s Code methods are provided by which mechanics may obtain priorities over mortgages and vendors’ liens, but complainants did not undertake to comply with these statutes.

The vendor acquired the first lien, was not interested in the building to be erected, and in nowise misled the complainants to their prejudice. We hold,' therefore, as the other courts did, that the vendor had the prior lien.

(7) As to the Ideal Heating Company, it is conceded that it waived its lien in writing, but the contention is made that this would not prevent it from recovering parts of the material which it furnished that have not become attached to the freehold. It certainly violates the spirit of the waiver, if not the letter. What would the beneficiaries of the waiver profit if this Company were permitted to remove the materials! It appears that this Company furnished and installed the heating plant for the building, and counsel in his brief has not pointed out the parts which his client proposes to remove; neither has he cited us to the record where evidence as to this may be found, as required by the rules of this court.

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Prichard Bros. v. Causey, 12 S.W.2d 711, 158 Tenn. 53, 5 Smith & H. 53, 1928 Tenn. LEXIS 123 (Tenn. 1929).

12 S.W.2d 711 (Prichard Bros. v. Causey) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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