Equity Jurisdiction, Creditor's bill. Mechanic's Lien. Equity Pleading and Practice, Costs, Counsel fees.
In a suit in equity by a judgment creditor under the general equity jurisdiction of the court to have his claim satisfied out of the surplus realized from a foreclosure sale of mortgaged real estate of the debtor after satisfaction of the mortgage, in which the holders of mechanics' liens upon the real estate had intervened as claimants, it appeared that the surplus was created by the diligence of the plaintiff in attending the foreclosure sale and preventing a sale of the property for the amount of the mortgage debt, that the mechanics' liens held by the claimants were founded on contracts made before the plaintiff's attachment in the action in which his judgment was obtained but after the making of the mortgage, that under the petitions of the claimants to enforce their mechanics' liens the amounts respectively due to them had been determined, but that no decrees had been made ordering the sale of the property, because it had been sold under the mortgage. It also appeared that the total amount of the mechanics' liens exceeded the amount of the surplus. Held, that the holders of the mechanics' liens had not lost their rights by failing to obtain a useless order of sale, and that the plaintiff could obtain no benefit from his diligence which had created the surplus for the benefit of the holders of the liens, although the court in its discretion properly could award him costs and counsel fees out of the fund.
MORTON, J.
The question is whether the plaintiff or the lienors are entitled to the surplus in the hands of the mortgagee. It is conceded by the plaintiff that the liens when filed took effect as of a date prior to his attachment. Petitions were brought to enforce the liens, but, although the amounts due were determined, they never were prosecuted to final judgment, — the reason being that the property had been sold under foreclosure proceedings, — and the plaintiff contends that the lienors have no rights in and to the fund, and that, it having been secured by his superior diligence, he is entitled to a preferred payment.
It is plain, as was said in the memorandum filed by the judge before whom the hearing upon the intervening petitions was had in the Superior Court, that, if the petitioners had perfected their liens by a final decree, then under the authority of Knowles v. Sullivan, 182 Mass. 318, they would have established an interest in the surplus. In other words the fact that the property was sold would not have deprived the petitioners of a remedy, but their liens would have attached to the surplus in the hands of the mortgagee. See also Wiggin v. Heywood, 118 Mass. 514; Western Union Telegraph Co. v. Caldwell, 141 Mass. 489. We do not think that the attachment of the liens to the surplus was defeated or lost because the proceedings to enforce the liens were not pursued to a final decree. The amounts due were determined, but it would have been useless to enter final judgments ordering a sale of the property. We assume, as the plaintiff contends, that the bill is brought under the general equity powers of the court and not under R.L.c. 159, § 3, cl. 7, and that generally speaking in order to maintain such a bill it must appear that the claim has gone to judgment and execution (Carver v. Peck, 131 Mass. 291); but the rule is not an absolute one, and does not apply where a judgment and execution would be of no practical utility. Case v. Beauregard, 101 U.S. 688. Manifestly in the present case an order of sale would have accomplished nothing and would have been a useless formality. It would be absurd to hold that the lienors lost the benefit of the rights which equity had transferred to the surplus in the mortgagee's hands because they did not obtain an order of sale. The most that the plaintiff could insist upon was that the amounts due should be determined in the proceedings to enforce the liens and that was done. If the surplus had been unencumbered by any liens in favor of the intervening creditors, there would be strong ground for holding that the plaintiff was entitled to a preference by reason of his superior diligence. Freedman's Savings Trust Co. v. Earle, 110 U.S. 710. Edmeston v. Lyde, 1 Paige, 637, 640. Gordon v. Lowell, 21 Maine, 251, 257. But we know of no principle of law or equity by which the liens can be divested in his favor, or by which it can be held that they did not attach because the surplus was created by his activity. It was within the power of the court to award him costs and counsel fees out of the fund, if it saw fit, and it has done so. But that is as far as it could go. The result is that the decree must be affirmed.
So ordered.