First Nat. Bank of Birmingham v. Culberson
| Decision Date | 21 January 1977 |
| Citation | 342 So.2d 347 |
| Parties | The FIRST NATIONAL BANK OF BIRMINGHAM, a National Banking Corporation v. William Turner CULBERSON, Jr., et ux. SC 1588. |
| Court | Alabama Supreme Court |
W. Gerald Stone of Stone, Patton & Kierce, Bessemer, for appellant.
Norman K. Brown, Bessemer, for appellees.
Appellant, The First National Bank of Birmingham, appeals from a summary judgment granted in favor of appellees, Mr. and Mrs. Culberson. The issue on appeal concerns the priority to real property which each party claims. We reverse and remand.
George Griffin was a real estate developer in the Jefferson County area. He incorporated two companies to aid him, Residential Planners, Inc., designed to be the area developer, and Planned Homes, Inc., the builder of homes. Residential Planners' certificate of incorporation was filed on November 25, 1970 in the Probate Judge's Office of Jefferson County. Planned Homes' certificate of incorporation was filed on December 14, 1970 in the Probate Judge's Office of Jefferson County. The charter and by-laws of these corporations were practically identical, as the record shows. Appellees assert that they were so identical that they were in legal effect one corporation with two names.
The real property to be developed was a tract of land lying entirely within the Bessemer Division of Jefferson County. It was conveyed to George Griffin from Otis D. Coston and wife by warranty deed dated November 22, 1971, and recorded in the Birmingham Division on December 1, 1971 in real volume 772, page 839. On that same November 22, 1971, Residential Planners, Inc. conveyed this same property to Cobbs, Allen & Hall Mortgage Company and this mortgage was recorded in the Birmingham Division simultaneously with the deed from the Costons to Griffin.
Later, a corrective warranty deed of the same property from the Costons to George Griffin, undated but acknowledged on January 31, 1972, was recorded on February 3, 1972 in the Bessemer Division of Jefferson County to 'CORRECT THAT CERTAIN DEED RECORDED IN REAL VOLUME 772, PAGE 839, IN THE OFFICE OF THE JUDGE OF PROBATE OF JEFFERSON COUNTY, ALABAMA' (Emphasis supplied). A second corrective deed of the same property, acknowledged the same day, from George Griffin and wife to Residential Planners, Inc., was recorded in the Bessemer Division on February 3, 1972 simultaneously with the corrective deed from the Costons to Griffin (the mortgage from Residential Planners, Inc. was recorded in the Bessemer Division at this time). The second corrective deed recited that it was 'TO CORRECT THAT CERTAIN DEED RECORDED IN REAL VOLUME 772, PAGE 839, (the original Costons to Griffin deed) IN WHICH THE NAME OF THE GRANTEE WAS MISTAKENLY ENTERED AS GEORGE GRIFFIN IN LIEU OF RESIDENTIAL PLANNERS, INC.'
To recapitulate, the title transactions were in this sequence:
Nov. 25, 1970: Incorporation of Residential Planners, Inc.
Dec. 14, 1970: Incorporation of Planned Homes, Inc.
Nov. 22, 1971: Deed from Costons to Griffin.
Nov. 22, 1971: Mortgage from Residential Planners, Inc. to Cobbs, Allen & Hall.
Dec. 1, 1971: Mortgage from Residential Planners, Inc. recorded in Birmingham Division.
Dec. 1, 1971: Mortgage from Residential Planners, Inc. to Cobbs, Allen & Hall recorded in Birmingham Division.
Jan. 31, 1972: Deed from Costons to Griffin to correct deed of Nov. 22, 1971.
Jan. 31, 1972: Deed from Griffins to Residential Planners, Inc. to correct deed of Nov. 22, 1971.
Feb. 3, 1972: Recordation in Bessemer Division of two correction deeds and mortgage from Residential Planners, Inc. to Cobbs, Allen & Hall.
July 20, 1972: Building Construction Agreement 'between' Culbersons and Planned, signed by Culbersons and Residential (by Griffin as President of Residential, for building to be constructed on Lot 5, Sterling Manor West (unrecorded).
Sept. 27, 1972: Deed of Lot 4 from Residential Planners, Inc. to Planned Homes, Inc.
Release by Cobbs, Allen & Hall of Lot 4 from mortgage of November 22, 1971.
Future Advance Mortgage on Lot 4 from Planned Homes, Inc. to First National Bank.
Oct. 3, 1972: Instruments of Sept. 27, 1972 recorded in Bessemer Division.
April 26, 1973: Deed of Lot 4 from Planned Homes, Inc. to Culbersons.
May 25, 1973: Recordation of Culberson deed in Bessemer Division.
One of the many couples who chose to invest in Griffin's development are the appellees, who arranged with Griffin to have a house constructed for them. Following their negotiations, the Culbersons delivered to Planned Homes, Inc. a $5,000.00 check drawn on The First National Bank of Birmingham representing the purchase price of a lot in Sterling Manor West, the subdivision being developed by Residential Planners, Inc. The Culbersons signed a building construction agreement on July 20, 1972 with Planned Homes, Inc., which was designated as builder of a house to be constructed on Lot 5, Sterling Manor West. Among the clauses contained in this construction agreement is one stating that 'the property shall be conveyed by a general warranty deed to the purchaser by the builder after the final payment has been made to the builder,' and another stating that:
Physical possession of improvements to said real estate shall be deemed to have been surrendered by the Buyer to the Builder as of the time work is commenced hereunder and to continue in said Builder until said work is completed, and the Buyer shall (not) be entitled to occupancy of said premises or any part thereof unless and until the aforesaid contract sum, adjusted as to additions and deductions, if any, have been determined and paid in full.
The designation of Lot 5 was later changed to Lot 4 by Griffin who endorsed a copy of the plans and specifications of the Culberson home with the following:
Lot 5 on the contract dated 7/20/72 has been changed to read Lot 4 instead of Lot 5. George Griffin.
Griffin explained that this change was made necessary due to an inadvertence in the numbering of the lots in the subdivision, and that on the finally approved plan which was recorded, Lot 5 as referred to in the contract actually was Lot 4 as shown on the plat. This, he stated, was the lot he and the Culbersons agreed upon. He did not remember when he made this change. In fact, when he later applied to the Bank for a construction loan be still thought the Culbersons were on Lot 5, and, in fact, all the money be drew from the bank on that loan went to another lot, not to the Culberson lot.
Plans and specifications for the Culberson house were furnished to the Bank with Griffin's loan application on behalf of Planned Homes, Inc. The outside of these bore the symbols 'SM--5' in red ink which had been written over with 'SM--4' in green. The site plan and specifications furnished the Bank, however, bore 'Lot 5.'
At the time the parties entered into the construction agreement Griffin signed as President of Residential Planners, Inc. Griffin explained this signature as an inadvertence since Planned Homes, Inc. did the construction work, while Residential Planners, Inc. bought the land to be built upon and sold it to Planned Homes, Inc., all for tax purposes. At this juncture we note that the Bank's answer denied the Culbersons' legal title and denied that the contract was with Residential, contending that the contract was between the Culbersons and Planned Homes, Inc. This agreement was not recorded. Within a week after the Culbersons submitted the check to Griffin for the purchase price of the lot, Griffin nailed a visible 'sold' sign on a pine tree in the front of what he thought was Lot 5. Two weeks later another visible sign was placed upon the same tree below the first sign, this one reading 'Custom Built for Mr. & Mrs. Bill Culberson.'
The Culbersons delivered to Griffin three additional checks aggregating over $27,000.00 made payable to Planned Homes, Inc., drawn on The First National Bank to cover installments on the construction of their house, and these checks were paid to Griffin by the Bank. Approximately three weeks after the Culbersons paid their fourth installment, the outside doors to their home were hung. Because the interior was being finished, Mrs. Culberson unlocked the house each morning for the workmen (apparently the building superintendent also had keys to the house), and then locked the house each night, meanwhile placing some of their personal possessions in the house. The record reveals that while the work was going on and until completion Mrs. Culberson was physically present on the premises during the day before September 25, 1972, although Mrs. Culberson stated that:
. . . for some time after ...
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