Community Lumber Co. v. Chute

PRESTON, J.

Five actions to foreclose mechanics’ and materialmen’s liens on certain real property in Los Angeles, consolidated for trial and judgment.

The parity, verity and amount of the claims are not in dispute; neither is the efficacy of the liens securing them. The sole question is one of priority as between the lien claimants and the holders of three sets of promissory notes secured by three deeds of trust upon the property, with the collateral question as to the true amount due, if it be found that the first deed of trust is entitled to priority.

The court below gave the lien claimants a third place, that is, a place between the second and third deeds of trust. Before taking up the discussion of the legal issues involved, we forecast that we shall be led to place plaintiffs, as to a large portion of their claims, between the first and second deeds of trust and as to. the remainder thereof, if any, where the court below placed them; and we shall also find that the amount secured by the first deed of trust should be scaled down below the amount found to be due thereon by the trial court.

The facts are: One Keeney, prior to June 1, 1925, owned the real property in question, same being vacant property. On said day one Chute, desiring to build a one-story masonry factory thereon, took a deed from Keeney. Chute and his wife, to secure the full purchase price of $5,000 for said property, executed a promissory note, secured by a deed of trust, which is deed of trust number two involved in this proceeding. This lien was agreed to be second and subsequent to a deed of trust securing a promissory note for $15,000 which was to be used in the construction of a building on said lot.

Simultaneously with this transaction Chute entered into a construction agreement with the defendant Union Engineering Company, under which said company was to become the agent of the owner in the construction of said building and was to handle and spend all sums provided for that

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purpose. Accordingly, Chute executed promissory notes to said corporation and secured them by deeds of trust upon said property. The first note was for $15,000 and the second set of notes aggregated $17,000. The first note was secured by the deed of trust which was to be and would become a first lien upon the property. The second set of notes was secured by a deed of trust which was to become a third lien on the property. Thus we have set forth the three deeds of trust in question.