Sels v. Bunnell

California Supreme Court May 20, 1898 No. Sac. No. 271Published

Before: Henshaw

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Holding. The court held that the plaintiff's lien, created by a recorded deed and agreement, was valid and enforceable against the property, and that the defendant's mortgage did not take priority as a purchase money mortgage because it was not proven that the loan was advanced for the express purpose of purchasing the property.

Issues

Whether the agreement between the vendor and vendee lacked consideration and was a nudum pactum.
Whether the defendant's mortgage qualified as a purchase money mortgage entitled to priority over the plaintiff's lien.
Whether the covenant in the deed ran with the land.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The instrument being in writing not only imports a consideration for its covenants (Civ. Code, sec. 1614), but Bunnell’s agreement to pay under the terms and conditions set forth is expressly declared to be a part of the consideration”

“the claims of third persons to have their mortgages upheld as purchase money mortgages have been recognized only when it has been made to appear that the money was loaned to the purchaser for the express purpose”

Synopsis

Mortgages—Lien Created in Deed—Pumping of Overflowed Land—Consideration.—A lien created in a deed of overflowed land, situated within the boundaries of an irrigation district, to secure the payment by the grantee to the grantor of a stipulated sum annually per acre so long as the grantor should hold the title to pumping machinery used to reduce the water level, the payment to be refunded if pumping was unnecessary in any year, is valid, and imports a consideration, and the fact that there was no obligation to pump the water from the land conveyed is not material, there being an inducement to the vendor to do so if necessary to reduce the level, in order to demand and retain the stipulated price per acre.

Id.—Priority of Vendor’s Lien—Mortgage to Raise Purchase Money.— A lien created in favor of the vendor by the purchaser of real property, at the time it is conveyed, has priority over all other liens created against the purchaser, subject to the operation of the recording laws; and a lien created in the deed given to the purchaser, which is first recorded, will prevail over a mortgage subsequently recorded given by the purchaser to a third party, though the money raised thereon was applied upon the purchase money of the land, and even though it be considered a purchase money mortgage.

Id.—Protection of Mortgagee for Purchase Money—General Mortgage-Liberty to Use Money.—The rule of equity that the execution of a deed to the purchaser and of a mortgage by the purchaser to secure the purchase money are considered simultaneous acts, so that the title does not rest in the purchaser for a single moment for the acquisition of any subsequent lien, extends also to the protection of a third person who has furnished purchase money upon mortgage security, for the express purpose of paying for the property, but does not extend to the protection of such third party against any prior lien, where the money was not advanced for such sole and express purpose, notwithstanding the money was in fact applied upon the purchase of the property, if the purchaser had liberty to use the money for any other purpose, and the mortgage was for money advanced to the general use of the borrower.

Id.—Foreclosure of Lien against Purchaser—Covenant Running with Land—Immaterial Question.—Where the lien created in the deed was foreclosed by the vendor against the purchaser and a subsequent mortgagee, the question whether the covenant sued upon against the purchaser for which the lien was created as security for his performance thereof did or did not run with the land is immaterial, and can be of no consequence to\ the subsequent mortgagee.

HENSHAW, J. Plaintiff brought this action to foreclose a lien upon the real property of defendant C. Bunnell. The Ger-mania Building and Loan Association was made a defendant. It answered, setting up a mortgage upon the property executed to it by Bunnell, and asked that this mortgage be declared a lien prior and superior to that of plaintiff.

The court found defendant Bunnell to be indebted to plaintiff in the sum of seven hundred and fifty-seven' dollars and fifty cents, gave plaintiff judgment for that amount, together with attorney’s fees and costs, decreed to him a lien upon the property superior to that of the loan association, and ordered a sale and a distribution of the proceeds accordingly. From this judgment, and from the order denying it a new trial, defendant, the Ger-mania Building and Loan Association, alone appeals.

By a deed executed on December 5, 1891, plaintiff, the then owner, conveyed to defendant Bunnell the land which is subjected to foreclosure in this suit. The land was overflowed land within the boundaries of a reclamation district. The deed was formally executed and acknowledged by both parties to it, and contained the following clauses, covenants, and conditions:

“In consideration of the premises and of the sum of one hundred dollars to him in hand paid by the party of the second part, and of the conditions, covenants, and stipulations by and on behalf of the party of the second part hereinafter expressed and contained, the party'of the first part has granted and conveyed,” etc. “To have and to hold the same unto the said party of the second part, his heirs and assigns, but upon and subject to the conditions, covenants, and stipulations by and on behalf of the party of the second part hereinafter expressed and contained. And in consideration of the premises the party of the second part hereby covenants, stipulates, and agrees to' and with the party of the first part, his heirs and assigns, that so long as [682]the party of the first part shall continue to hold the record title to said pumping machinery, the party of the second part will pay to the party of the first part the sum of three dollars, United States gold coin of the present standard, per annum, reckoned from November 1st to October 31st next ensuing, for each several acre, and at the same rate for each fraction of an acre, of the land h'creby conveyed, such payment to be made on or before the first day of November in each year; and in case of nonpayment on or before that day, then to bear interest at the rate of one per cent per month from such 1st of November until paid. Provided, however, that if during any season, reckoned from November 1st to May 30th, next ensuing, the water at the pump of said pumping machinery shall, for a period of fourteen consecutive days, stand at a height equal to or higher than five feet of lake gauge as at present established, then any such payment made for that year by the party of the second part shall be refunded to him.”

Sels v. Bunnell

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