Western Loan & Building Co. v. Scheib

THE COURT.

Plaintiff appeals from a judgment of the trial court decreeing that the mechanics’ liens of respondents have priority over the mortgage lien of plaintiff. It is admitted that each of the mechanics’ liens held by the several respondents became a lien on the real property on April 13, 1927, and that respondents have duly and properly taken all steps required by law for the enforcement of their respective liens. The sole question presented for determination on this appeal is the priority between the mortgage lien held by appellant and the mechanics’ liens held by respondents.

The facts giving rise to this appeal, as found by the trial court and concerning which, except as hereinafter indicated, there is no dispute, are as follows:

In November of 1926 defendant Charles A. Scheib, the owner of certain real property in the city of Los Angeles, made a written application to the appellant for a building loan of $55,000, to be secured by a mortgage. This application for a loan was not made by Scheib personally, but was made through one S. E. Beach, the latter acting as agent of Scheib for this purpose. Scheib agreed to pay Beach a commission for his services if the loan was secured. It should here be stated that all of the negotiations between Beach, as agent of Scheib, and the appellant, were carried on ■ by mail, the main office of appellant being located in Salt Lake City, Utah.

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On December 6, 1926, the appellant wrote to Beach, as the agent of Scheib, informing him that the executive finance committee had approved the application for the loan, and setting forth the terms and conditions on which the money would be advanced. On December 7, 1926, the appellant forwarded to Beach, as agent of Scheib, a form mortgage and promissory note which, it was stated, were to be signed by Scheib, the mortgage recorded and the documents, together with a title report and other information, returned to appellant' at Salt Lake City. On December 27, 1926, Scheib signed the note, and signed and acknowledged the mortgage, and left them with S. E. Beach, his agent, to be recorded and forwarded to appellant. S. E. Beach, as agent of Scheib, through his son, W. E. Beach, and pursuant to appellant’s request, delivered the mortgage (but not the note) to an escrow agent with instructions to record when a title insurance policy was furnished showing the mortgage to be a first lien. On April 8, 1927, the escrow agent had the mortgage duly and properly recorded. The county recorder mailed the recorded mort- . gage to appellant at Salt Lake City, he having received no instructions to the contrary, and the name of appellant appearing thereon, but the evidence sustains the view that this was probably not the intent of the parties, the intent being that the recorded mortgage should have been mailed back to the escrow agent or to Beach. All during this ■ period Beach had the promissory note in his possession as the agent of Scheib. The note was not delivered with the mortgage on April 8, 1927. On April 13, 1927, it is admitted, the mechanics’ liens of respondents attached. On May 27, 1927, appellant wrote to Beach, as the agent of Scheib, as follows: