58 Utah 196

Stephens v. Doxey

Decided May 7, 1921

Utah Supreme Court · decided 1921-05-07

1. PLEADING-UNNECESSARY ALLEGATION OF PERFORMANCE OF CONDITION Precedent May be Stricken out on Motion. In a suit to foreclose two mortgages, it was not error to strike out allegations of the complaint that plaintiff performed all things required of him; same being surplusage, no such duty resting on plaintiff under the terms and conditions of the mortgages. 2. Mortgages — General Allegation or Performance of Conditions Precedent Sufficient, Where Such Conditions Alleged in Complaint. In a suit to foreclose two mortgages, if the complaint alleges that they were given by defendant to plaintiff’s assignor as a consideration for the latter’s contract to build an apartment house on the mortgaged lots, a general allegation of due performance of the contract would be sufficient, under Comp. Laws 1917, § 6601. 3. Pleading — Averment of Failure of Mortgagor to Apply Rentals to Mortgage May be Stricken as Surplusage, Where Mortgage does not Impose Such Duty. Where plaintiff sued to foreclose two mortgages, and defendant answered that plaintiff’s assignor, in consideration of said mortgages, agreed to erect on the mortgaged lots an apartment house, according to certain plans and specifications, payments on the notes secured by the mortgage not to begin until after completion of the building, it was not error to strike from the complaint averments made as grounds for a receivership, that defendant had not applied to the payment of the notes and mortgages, the rentals received by her for the apartments; no such duty devolving on defendant under the terms and conditions of the notes and mortgages sued on, and plaintiff having the right to meet the issue by way of reply. 4. PLEADING — Answer Alleging Non-performance of Condition PRECEDENT TO SUIT TO FORECLOSE HELD NOT VULNERABLE TO GENERAL Demurrer. Where plaintiff sued to foreclose twcT mortgages, defendant’s answer, that plaintiff’s assignor, in consideration of the mortgages, agreed to erect an apartment house on the mortgaged lots, payments on the notes secured not to begin until after the completion of the building according to certain plans and specifications, and that the building had not been so completed, stated a defense, and, even if assailable by special demurrer, was not vulnerable to a general demurrer. 5. Mortgages — Answer to Foreclosure Suit Alleging Nonperformance of Conditions Precedent Held Bad on Special Demurrer for Ambiguity and Uncertainty. In a suit to foreclose two mortgages given to plaintiff’s assignor in consideration for the erection of an apartment house on the mortgaged lots, payments not to begin until after the completion of the building according to certain plans and specifications, defendant’s answer that the building was incomplete, and not according to plans and specifications with respect to workmanship and materials, was ambiguous and uncertain, in that it did not allege in what particulars the building failed to meet the plans and specifications, or wherein it was incomplete, alleged no facts constituting fraud, and contained no statement of the kind or character of workmanship or materials to be used, so that a special demurrer to it was properly sustained.. 6. Judgment — 'Dismissal not Res Judicata, if not on Merits. A judgment dismissing plaintiff’s suit for foreclosure of certain mortgages on the ground it had been prematurely brought, the court making no finding as to the amount due on the mortgages and notes secured thereby, not being on the merits, is not res judicata at common law or under the statute. Comp. Laws 1917, § 6859. 7. Contracts — 'Building Contractor Must Substantially Comply -with Contract. Under a contract for the erection of a building according to agreed plans and specifications, the law contemplates a substantial, but not punctilious, compliance therewith; the contractor not being permitted to profit by noncompliance with the contract, nor the owner to reap the benefits of the added value to his property by reason of labor performed and materials furnished by the contractor. 8. Contracts — (Use and Enjoyment of Building not Acceptance of Faulty Workmanship or Inferior Material. Under a contract for the erection of a building according to certain plans and specifications, the fact that the owner had been in the use and enjoyment of the building did not amount to an acceptance of faulty workmanship or inferior material, and she was entitled to all the damages arising from nonperformance of the contract.1 9. Bills and Notes — Notice to Assignee of Assignor’s Contract, Made in Consideration of Note and Mortgage Assigned, Does not Charge Assignee with Liability for Breach. The fact that the assignee of certain notes and mortgages took the same with notice of his assignor’s contract to build an apartment house on the mortgaged lots, in consideration of the notes and mortgages, did not charge him with the assignor’s willful neglect to complete the building- according to agreed plans and specifications. 10. Mortgages — Mortgagor, Who Refuses to Permit Performance of Mortgagee’s Contract to Build on Mortgaged Premises, Es-topped to Set up Nonperformance as Bar to Foreclosure. Where plaintiff’s suit to foreclose two mortgages was dismissed, the defense being that plaintiff’s assignor failed to complete the building of an apartment house for defendant on the mortgaged lots, as he agreed to do in consideration of the mortgages, and thereafter defendant refused to permit the building to be completed and the defects remedied, or to discharge her liabilities under the mortgages, and made no claim for credit for the damages, sustained by nonfulfillment of the contract, she cannot be heard to say in a court of equity, in a second suit to foreclose, that the mortgages are not now due, and that no foreclosure can be had at this time. 11. Mortgages — Suit to Foreclose Only Form of Action Permitted to Recover Debt Secured by Mortgage on Real Estate. Under Comp. Laws 1917, § 7230, permitting but one action for the recovery of any debt or the enforcement of any right secured by mortgage on real estate, an assignee of notes and mortgages on lots on which the mortgagee agreed to build for the mortgagor adopted the proper form of action in bringing suit to foreclose the mortgages.2 12. Mortgages — Mortgagor, on Suit for Foreclosure, May Offset Damages by Failure oe Mortgagee to Fulfill Contract Make IN Considebation or Mobtgage. Where an assignee took two mortgages and the notes secured thereby with notice of his assignor’s contract to build for the mortgagor on the mortgaged lots, in consideration of the notes and mortgages, the mortgagor, in suit for foreclosure, should be permitted to offset all damages sustained by her by reason of the assignor’s failure to complete the building substantially in accordance with the contract.

Cited by 2 later decisions — most recently April 1974

2 state decisions

Good law ✅— No negative treatment on recordhow we know

REVERSED AND REMANDED, with directions · Decided 1921-05-07

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FRICK, J.

¶1I concur in tbe conclusions of the CHIEF JUSTICE. I feel constrained to add, however, that, while I am thoroughly convinced that the rule adopted by the courts that in actions on building contracts the contractor should not be permitted to recover on the contract, unless he shows that he has, substantially, at least, complied with its terms and conditions is just, sound and wholesome, yet I am also convinced that, where the action is in equity and it appears that the owner of the building is using it, and is benefited by its use, and where the damage for, defective materials and improper workmanship can be ascertained and adjusted between the parties, relief in toto should not be denied. Courts of equity are not created to enforce penalties, but they were called into existence to ascertain and preserve rights and to administer the law in accordance with the dictates of conscience, and so as to reflect equity and justice between the parties. Where, therefore, the owner of a building or structure in question can apply, and does apply, it to the use for which it was intended, and the damage which arises by reason of improper workmanship or defective materials can be ascertained and fixed in accordance with the established rules of evidence, the courts should not deny the contractor a right to recover, but should permit him to recover what, in view of the facts and circumstances, is equitable, just, and right. Such an adjustment cannot injure any one and tends to maintain the respect for the law which is so essential in all governments.

¶2This case affords a striking example of how injustice might result from denying the contractor any relief whatever. In this case the defendant is in fact enjoying the labor and materials furnished by the contractor, and is receiving an income from the building; yet, if this judgment is to prevail, she may do so without making any compensation therefor whatever. Moreover, it appears from the record that the contractor, with his ow|n money, paid off and had discharged a mortgage which was a lien on defendant’s prop*213erty ánd. bas thus relieved her property from a valid and subsisting lien. Notwithstanding that fact, however, he is denied all relief. It may he that he may have some remedy with regard to that matter, but, so far as this record discloses, it is hard to conceive why he should be denied relief in this proceeding, and, further, Why if this judgment stands, he is not entirely precluded from obtaining any relief. Moreover if she can succeed in preventing a recovery upon the ground that the workmanship and materials are defective now, she may do- so at any future time and is thus permitted to use another’s labor and material as a permanent investment without rendering any consideration therefor whatever. This case should therefore proceed in accordance with the principles of justice and equity, and while the defendant should be awarded adequate damages and compensation for all defects she should not be permitted to hold the building discharged from all claims of the contractor or his assignee.