Hayward Lumber & Investment Co. v. Corbett

JOHNSTON (THOMAS D.), J., pro tem. The principal question presented by this appeal is one of priority of a mechanic’s lien over a recorded deed of trust. The defendant Corbett, on January 11,1929, applied to respondent for a construction loan of $2,500, with which to build a dwelling. He signed a note for that amount and a deed of trust. The deed of trust was recorded on January 18,1929, in the official records of the county of Los Angeles, the county in which the premises were located. These instruments had been left with the escrow department of the respondent, and contemporaneously with the escrow, one Puller, the owner of the lot on which the deed of trust was executed, deposited a grant deed to the premises with authority to record it with the deed of trust from Corbett to Puller to secure payment of a note for the purchase price.

[647]Respondent on the fifteenth day of January, 1929, delivered to the title insurance company the grant deed from Fuller to Corbett, the trust deed from Corbett to respondent, and the trust deed from Corbett to Fuller, with instructions to record when guarantee of title could be issued by the title insurance company. Subsequently, by telephone, respondent countermanded this order, and instructed the title insurance company to record the papers at once, regardless of the condition of the title. The note in question required monthly payments of $29.75, payable on the first day of February, 1929, and the first day of each month succeeding, for a period of months. On January 11, 1929, respondent set over on its books to the credit of Corbett for his building account $2,500, to be paid out as the building proceeded. On or about February 8, 1929, Corbett started the construction upon the lot in question and on that day appellant started to deliver material upon the lot for that purpose. The first money that was paid on the building of the house in question was paid on February 13, 1929. However, it appears that prior to February 8, 1929, the date on which the mechanic’s lien annexed, certain expenses of the title insurance company and investigations therefor had been incurred and charged to the account in question.

The question first presented is whether the mechanic’s lien has priority over the recorded deed of trust by virtue of the contention of appellant that the lien of the ■deed of trust must annex as of the date that the first money was actually expended from the account for the construction of the building. It seems that the law is well settled in this state that Avhcn a loan company opens an account for a building loan, and a deed of trust is executed to secure a note covering the amount of money advanced, the lien annexes as of the time that the deed of trust is recorded, irrespective of when the money in the account actually passes. (Smith v. Anglo-California Trust Co., 205 Cal. 496 [271 Pac. 898]; Valley Lumber Co. v. Wright, 2 Cal. App. 288 [84 Pac. 58] ; Savings Bank of Southern California v. Asbury, 117 Cal. 96 [48 Pac. 1081].)