Ethridge v. Tierone Bank, No. 27016 (MO 5/11/2006)
| Decision Date | 11 May 2006 |
| Docket Number | No. 27016.,27016. |
| Parties | MARY ETHRIDGE, Plaintiff-Respondent, v. TIERONE BANK, F/K/A FIRST FEDERAL LINCOLN BANK, Defendant-Appellant. |
| Court | Missouri Supreme Court |
Appeal from the Circuit Court of Dallas County, Honorable John W. Sims, Circuit Judge.
Brett D. Anders of Kansas City, MO, and James Fossard of Springfield, MO, for Appellant.
Kerry D. Douglas of Bolivar, MO, for Respondent.
Tierone Bank (Tierone) appeals from a summary judgment in which the trial court declared invalid a deed of trust securing a loan which had been assigned to Tierone. We reverse the judgment and remand the case for further proceedings consistent with this opinion.
In 1976, David Ethridge and Mary Ethridge (hereinafter referred to individually as "David" or "Mary" and collectively as "the Ethridges") got married. In 1995, they moved to Dallas County, Missouri. When they first arrived, they lived with David's parents. In 1997, the Ethridges began residing on property in Dallas County that they leased from Geraldine Lewis. The property contained a house where the Ethridges lived and an adjacent building formerly used by Lewis as an art studio. In June 1999, the Ethridges purchased the property from Lewis. They took title to the real estate as tenants by the entirety. The Ethridges financed the purchase by borrowing money from Countrywide Home Loans (Countrywide). This loan was secured by a deed of trust on the premises.
David was the head of the household and made all of the decisions involving the couple's finances. At some point prior to August 2001, David decided that he wanted to refinance their home loan so he could remodel the old art studio and convert it into an income-producing rental house. At that time, the Ethridges owed approximately $74,000 on their loan to Countrywide. David wanted to borrow $100,000, pay off the existing loan and use the remaining proceeds to remodel the art studio. First Fidelity Residential Lending, Inc. (First Fidelity) agreed to make the loan.
On August 6, 2001, David and Mary came to Springfield, Missouri, to close the loan. Mary knew their house was going to be refinanced, and she figured she would have to sign something in order to get that done. The closing took place at the office of Springfield Closing Company. Officer Manager Lynn Huff (Huff) handled the closing. The documents to be signed included the Promissory Note (the Note) and Deed of Trust, which had been prepared by First Fidelity. Each of those documents contained only one signature line with David's name typed beneath it. The Deed of Trust defined the term, "Borrower," as "DAVID ETHRIDGE, A MARRIED MAN, AS HIS SOLE AND SEPARATE PROPERTY." This document contained a section entitled "TRANSFER OF RIGHTS IN THE PROPERTY" which stated:
This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower irrevocably grants, bargains, sells, conveys and confirms to Trustee, in trust, with power of sale, the following described property ...."
The Deed of Trust specifically identified that property as the Ethridges' Dallas County real estate. The document also provided that The last paragraph above the signature line on the Deed of Trust stated: "BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it."
Huff's file contained a copy of the July 2001 title insurance commitment showing that title to the property was vested in David and Mary as husband and wife. Because Huff knew that David and Mary were married and co-owned the property, Huff explained to Mary that she would have to sign the Deed of Trust as David's spouse to show she was aware of the loan and understood their real estate was being held as collateral for the loan. David told Mary to sign the Deed of Trust. Mary understood that David wanted her to sign the Deed of Trust so he could refinance the house, pay off the existing deed of trust and use the remaining money for remodeling. She followed David's instruction because: (1) as head of the household, such decisions were made by him; and (2) Mary felt it was her obligation to do whatever David told her, including signing documents. David had the final say on all decisions, financial or otherwise. Both David and Mary signed and acknowledged the Deed of Trust, and Huff notarized their signatures.
The Ethridges received $15,754.17 of the $100,000 loan proceeds. The remainder of the money was used to pay off the existing loan to Countrywide in the amount of $74,204.44 and to pay other fees associated with the refinancing. The Ethridges used the money they received from First Fidelity to remodel the old art studio. In October 2001, First Fidelity assigned the Note and Deed of Trust to Tierone. The Ethridges made payments on the loan until December 11, 2002, when David was killed in an automobile accident. Thereafter, Mary made no further payments.
In August 2003, Mary filed a petition for declaratory judgment in the Circuit Court of Dallas County, Missouri. Mary prayed for cancellation of the Deed of Trust on the ground that it was void ab initio because she was not named as a grantor in the Deed of Trust, did not make any covenants of title and did not otherwise convey, via that instrument, her fee simple title as a tenant by the entirety in the property. In Tierone's amended answer, it denied the Deed of Trust was invalid. It asserted the Deed of Trust was ambiguous and should be construed to grant Tierone a valid, first-priority lien on the property. Tierone also asserted the following affirmative defenses: (1) Tierone was entitled to have the Deed of Trust reformed to create a valid lien on the property; (2) Mary should be estopped from denying the validity of the Deed of Trust; (3) Tierone should be granted an equitable lien on the property because the proceeds of the loan were used for Mary's benefit; and (4) the doctrine of equitable subrogation was applicable because the proceeds of the loan were used to extinguish the prior lien on the Ethridges' property.
After conducting discovery, Mary and Tierone filed opposing motions for summary judgment. The trial court granted Mary's motion and denied Tierone's motion for the following reason:
The Court ... finds that the real estate described in the deed of trust at issue was owned by Plaintiff and her now deceased husband as tenants by the entirety and that in order to convey a lien to the Defendant's predecessor [First Fidelity], it was necessary that the deed of trust use appropriate words to convey the estate. In so determining, the Court finds that it is bound by the controlling precedent, as set forth by the Supreme Court of the State of Missouri, in Bradley et al. v. The Missouri Pacific Railway Company, 91 Mo. 493, 4 S.W. 427 (Mo. 1886), which held that the party in whom the title is vested must use appropriate words to convey the estate, and that signing, sealing and acknowledging a deed by a wife, in which her husband is the only grantor, will not convey her estate. The Court finds that in this case the party in whom the title is vested did not use appropriate words to convey the estate, even though the Plaintiff signed the Deed of Trust in question before a notary public. Therefore, the case is analogous to Bradley, and the Court is bound by the Bradley decision.
This appeal followed.
In determining whether the trial court properly granted summary judgment, we employ a de novo standard of review. City of Springfield v. Gee, 149 S.W.3d 609, 612 (Mo. App. 2004). Accordingly, we do not defer to the trial court's decision to grant summary judgment. Murphy v. Jackson Nat'l Life Ins. Co., 83 S.W.3d 663, 665 (Mo. App. 2002). Instead, we use the same criteria the trial court should have employed in initially deciding whether to grant Mary's motion. Stormer v. Richfield Hospitality Services, Inc., 60 S.W.3d 10, 12 (Mo. App. 2001). We view the record in the light most favorable to the party against whom judgment was entered, and we accord that party the benefit of all inferences which may reasonably be drawn from the record. ITT Commercial Finance Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). "The propriety of summary judgment is purely an issue of law." Id.
As the opinion in ITT explains, Rule 74.04 distinguishes between motions for summary judgment filed by a "claimant" and by a "defending party." Id. at 380.1 A claimant includes a party who seeks to obtain a declaratory judgment. Rule 74.04(a). A defending party includes one "against whom ... a declaratory judgment is sought[.]" Rule 74.04(b). Thus, Mary was the claimant, and Tierone was the defending party in the case at bar. As the moving party, Mary was not entitled to summary judgment unless she demonstrated that there was no genuine issue as to any material fact and that she was entitled to judgment as a matter of law. Rule 74.04(c)(6); Cornejo v. Crawford County, 153 S.W.3d 898, 902 (Mo. App. 2005). Because Tierone asserted several affirmative defenses in its amended answer, Mary had to successfully overcome two different obstacles in order to demonstrate her entitlement to judgment as a matter of law:
A claimant must establish that there is no genuine dispute as to those material facts upon which the claimant would have had the burden of persuasion...
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