City Lumber Co. v. Park

BARNARD, P. J. In this action the plaintiffs sought to have their mechanic’s liens declared prior and superior to the lien of a trust deed held by the defendant bank.

The defendant bank sold a lot to the defendant William F. Park, taking back a deed of trust securing a note for $1250, the balance of the purchase price. Shortly after that deed of trust was recorded Park and his wife gave to the defendant McKay a second deed of trust, securing a note for $8,000, which was recorded on January 13, 1931. Some time thereafter the plaintiffs furnished labor and materials in connection with a building being erected on the property, for which they later filed mechanic’s liens.

The complaint, filed on October 30, 1931, alleged that materials had theretofore been furnished by the plaintiffs and verified claims of lien filed; that the $1250 trust deed above referred to had been recorded but that the same was wholly released and discharged on March 13, 1931; that the $8,000 trust deed above referred to was recorded on January 13, 1931, but that no consideration of any kind had been given therefor; that this $8,000 deed of trust had been recorded for the purpose of cheating and defrauding persons who furnished material and labor in the construction of a building upon the property; and that the claims of the plaintiffs were prior and superior to the purported claims of the defendants. The answer of the defendant bank denied the allegations of the complaint and as a separate defense alleged the execution and delivery to it by Park of a note for $1250; that for the purpose of securing this note the said McKay had endorsed and transferred to the bank the note for $8,000, together with the trust deed securing the same; and that the note for $1250 had not been paid in whole or in part.

The court found that the plaintiffs had furnished materials and labor of a certain value and had filed liens therefor; that the trust deed securing the $1250 note had been recorded but had been released and discharged on March 13, 1931; that a trust deed for $8,000 had been recorded on January 13, 1931, naming McKay as beneficiary; that this trust deed was given without consideration; that it was not true that this trust deed had been recorded for the purpose of cheating and defrauding persons who had furnished material in the [433]construction of a building on the property; that in March, 1931, the defendant Park executed and delivered to the defendant bank another note for $1250; that at the time of the execution of said note and for the purpose of securing the payment thereof the defendant McKay endorsed to and deposited with the defendant bank, as collateral security, the $8,000 note and trust deed referred to in the complaint; that the defendant bank took the last-mentioned note and trust deed as an innocent purchaser for value before maturity to the extent of $1250; that no part of the original debt of $1250 had been paid; and that the lien of the defendant bank is prior and superior to any interest of the plaintiffs or either of them. Judgment was entered in favor of the defendant bank decreeing that it had a lien upon the premises in question in the sum of $1250 together with interest and certain amounts expended in the preservation of its security, and that this lien is prior to any right or lien held by the plaintiffs. From this judgment the plaintiffs have appealed upon the judgment roll and a bill of exceptions.