Opinion
02-17-1927
REPUBLIC FIREPROOFING CO., Inc. v. MORAY REALTY CO. et al.
Charles L. Hedden, of Newark, for complainant. Issennan & Isserman, Jacob L. Newman, and Saul & Joseph E. Cohn, all of Newark, for defendants.
Bill by the Republic Fireproofing Company, Inc., against the Mo-Kay Realty Company and others. On motion to dismiss the bill. Motion reserved until final hearing, and temporary restraining order continued.
Charles L. Hedden, of Newark, for complainant.
Issennan & Isserman, Jacob L. Newman, and Saul & Joseph E. Cohn, all of Newark, for defendants.
BACKES, Vice Chancellor. Motion is made to dismiss the bill. The bill discloses that the complainant furnished material to Mo-Ray Realty Company for the construction of an apartment house, and on August 20, 1925, filed a mechanic's lien for $6,082.90 and commenced suit, which was still undecided at the time of the filing of the bill (judgment against the builder has since been entered; judgment special on the lien is held in abeyance). On October 14, 1925, the Decker Building Material Company filed its mechanic's lien for $6,701.29, and later other claims were filed; the liens in all amount to $23,000. The Decker Company suit to enforce its lien went to judgment, general and special, on April 15, 1926, was assigned to Spruce Realty Company, and by the latter executed by sheriff's sale to the Lukens Holding Company, which was then the owner of the fee. for $1,500. At the time the complainant's lien was filed the property was subject to advance money mortgages amounting to $192,500. Afterwards, and before the Decker lien was filed, additional advance money mortgages amounting to $130,000 were recorded against the property. The sale to enforce the Decker special judgment was subject to the aggregate amount of mortgage liens of $332,500. A sale of the property under the lien judgment of the complainant would have been subject only to the mortgages of $192,500, or less; it being alleged that the money on some of the mortgages was not in fact advanced, some $25,000 and upwards.
Mechanic's liens are concurrent, and the sale to enforce a judgment under any one of them conveys the owner's estate at the time of the commencement of the building, subject to mortgages then of record, and to advance money mortgages recorded thereafter, but before the filing of the liens, respectively. It is charged, in effect, that the holders of the $130,000 mortgage incumbrances recorded after the filing of the Decker lien, conspired to defraud the complainant of its priority lien, and procured the entry of the Decker judgment, the issuing of the execution, and the sale of the property to the Lukens Holding Company, which they organized for that purpose, and that as part of the conspiracy they organized the Spruce Realty Company to take over the assignment of the Decker judgment for the purpose of the sale. The scheme to defraud the complainant is admitted on this motion; and if the view ofthe complainant is correct, that the sale under the Decker lien and judgment bars a second sale under its judgment, then the scheme has been accomplished, and the complainant has been injured, which equity alone can relieve. It suggests itself, however, that, as the complainant's judgment lien operates upon a different estate from that which was sold under the Decker judgment, it would be advisable for the complainant to prosecute its lien to special judgment and sell thereunder.
It is further charged that complainant was unaware of the sheriffs sale. Only the statutory notice was given, and it is questionable whether the sale is valid against the complainant, which had no actual notice of it and opportunity to protect itself. It may be that there is a trust relation between mechanic's lien claimants, the same as between cotenants in possession of land, and, if so, the conduct of the defendants would be held to be the taking of an unfair advantage, which equity would redress. However, the bill presents enough to move the court to require the defendants to answer, and to reserve the motion to strike the bill until final hearing, when the prayer to vacate the sale and set aside the deed can receive more serious consideration. The temporary stay against the Spruce Realty Company, restraining it from applying for distribution of the proceeds of sale under the Decker judgment, will be continued. That company is implicated in the conspiracy, and ought not to be permitted to further complicate the situation.