Appellant creditor sought review of a judgment of the Superior Court of Santa Clara County (California), which denied the creditor’s request for enforcement of a mechanics’ lien against appellee contractor and refused the creditor’s motion for a new trial.
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The creditor had taken a mortgage upon real property owned by the contractor, which by its terms covered the debts of the contractor growing out of the materials furnished to him. When the contractor declared bankruptcy, the trial court decided against the validity of the creditor’s lien claims for materials furnished and decreed that the creditor could not participate in the funds admittedly due to the holders of valid liens because of the existence of the mortgage security. The creditor appealed and the court reversed and held that the right to enforce the mechanics’ lien was not lost by reason of the fact that the creditor, by levying an attachment upon other property, thereby obtained additional security. Accordingly, the creditor, by taking mortgage security from the contractor upon the contractor’s property for the value of the material that the creditor might sell to him, did not lose his right to the mechanics’ lien. Hence, the creditor was entitled to share in the funds applicable to the payment of the liens by mechanics and materialmen.
The court reversed the judgment against the creditor and remanded the cause for trial.
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