A bona fide occupant's right, in equity, to compensation for his improvements applies to him as defendant only, and does not give him the right to recover the value of his improvements after eviction by a direct affirmative suit against the owner of the property, although he made them innocently or through mistake, unless the owner of the land has been guilty of fraud, or of acquiescence after knowledge of his legal rights, or unless the parties have agreed upon compensation for the improvements. But according to other authorities, where an occupant in good faith has made improvements and has been evicted by the true owner, he may sue in equity for the value of his improvements without reference to any fraud or other misconduct on the part of the true owner.
Plaintiffs constructed house on lot owned by defendants. The lot was subject to outstanding and contract in other defendants. Plaintiffs alleged that they constructed the house by mistake, that other defendants had taken possession of the house and occupied it, and that defendants declined to make adjustment with plaintiffs. The trial court denied defendant's motion to dismiss. On appeal, the court affirmed, on the grounds that it was not equitable that defendants should profit by plaintiffs' mistake.
Can plaintiffs establish an equitable lien on the premises on which a house was erected by mistake?
The court held that plaintiffs should be able to maintain complaint, stating that it was not equitable that defendants should profit by plaintiffs' mistake. The fact that defendants needed no relief and therefore sought none should not bar plaintiffs' right to relief in equity. The court held that if, upon hearing, plaintiffs made a case for equitable relief, it would be proper to offer to defendants by decree the privilege of taking improvements as fair value found by court, or to release to plaintiffs upon paying fair value. If defendants failed to comply, conveyance to plaintiffs upon payment could then be decreed.