Crescent Lumber Co. v. Borchers

SPENCE, J. Plaintiff filed a complaint entitled “Complaint to Enforce Equitable Lien,” naming as defendants Borchers Bros., a copartnership, the members thereof and the said San Jose Abstract and Title Company, hereinafter called the title company. Plaintiff prayed that Borchers Bros, be compelled to pay into court the sum of $402.40; that an equitable lien be declared thereon in favor of mechanic’s lien claimants; and that a pro rata participation therein by the mechanic’s lien claimants be ordered. The cause was tried upon an agreed statement of facts, which was incorporated into the trial court’s findings of fact and conclusions of law. The trial court entered an ordinary money judgment in favor of plaintiff and against defendants in the sum of $144.20. Defendants appeal from said judgment upon the judgment roll.

Plaintiff’s complaint and the trial court’s judgment were based upon the theory that plaintiff had an “equitable lien” under the authority of Smith v. Anglo-California Trust Co., 205 Cal. 496 [271 P. 898], We are of the view, however, that the agreed statement of facts presents an entirely different situation from that presented in the cited ease. The Smith case involved a controversy between the administratrix of the estate of the deceased owner of real property and certain mechanic’s lien claimants, whose mechanic’s liens had been wiped out by the foreclosure of a second deed of trust, over the unexpended balance of a construction loan, secured by a first deed of trust, which unexpended balance remained in the hands of the lender. The court there stated on page 501 that it had found no authority directly in point governing the rights of [320]the respective parties. On page 502, it held that the terms of the construction loan agreement gave rise to no trust, express or implied, in' favor of the lien claimants, but it pointed to the special circumstances present and said at page 504, ‘ ‘ Smith and the securities company by their conduct may be said to have induced, or contributed to induce, the lien claimants to enhance the value of the real property by their labors and materials, and it would be inequitable and unjust, it seems to us, to permit Smith or his personal representative to withhold, at this time, any part of the fund upon which the lien claimants must surely have relied for reimbursement. ’ ’ It was therefore held, upon the theory of ‘ ‘ equitable estoppel ’ ’ (page 504), that there were “special circumstances warranting the imposition in their (the lien claimants’) favor of a charge or lien upon the fund” (page 502) and that the trial court should have directed the securities company to pay into court the unexpended balance of the construction loan fund to be thereafter disbursed pro rata among the lien claimants. (Page 504.)