Mortgage and Trust, Inc. v. Bonner & Co., Inc.

• Decision Date: 29 August 1978
• Docket Number: No. 1269,1269
• Citation: 572 S.W.2d 344
• Parties: MORTGAGE AND TRUST, INC., et al., Appellants, v. BONNER & COMPANY, INC., Appellee.
• Court: Texas Court of Appeals

Page 344

572 S.W.2d 344

MORTGAGE AND TRUST, INC., et al., Appellants, v. BONNER & COMPANY, INC., Appellee.

No. 1269.

Court of Civil Appeals of Texas, Corpus Christi.

Aug. 29, 1978.

Rehearing Denied Sept. 21, 1978.

James F. Buchanan, Kleberg & Weil, Corpus Christi, for appellants.

Lola L. Bonner, Bonner & Jackson, Rockport, for appellee.

OPINION

NYE, Chief Justice.

This is a mechanic's and materialman's lien case involving the priority of a mechanic's and materialman's lien asserted by Bonner & Co., a contractor, and the recorded deed of trust lienholder, Mortgage and Trust. Bonner brought suit against a number of defendants to establish and foreclose a constitutional and a statutory mechanic's and materialman's lien. Trial was to the court without the intervention of a jury. The trial court entered a joint and several judgment against Mortgage and Trust and Sundance (the present owner of the land), for $34,307.18, representing the outstanding amount found to be due Bonner under its construction contract. The trial court also entered judgment foreclosing Bonner's mechanic's and materialman's lien on a portion of the land secured under the deed of trust. Mortgage and Trust and Sundance perfected their appeal to this Court.

A somewhat detailed, chronological recitation of the facts is necessary to gain proper perspective of the trial court's action and the contentions of the parties on appeal.

On March 27, 1972, Ranco, the original owner of the property in question, acquired a 66.446 acre tract in Portland, Texas. On the same day, Ranco executed a deed of trust (Deed of Trust One) covering the property in favor of Mortgage and Trust to secure a $398,000.00 "land loan" evidenced by a promissory note executed on the same day. On April 14, 1972, Mortgage and Trust (a private corporation) assigned its entire interest in the original note and Deed of Trust (One) to M & T Mortgage Investors (a public corporation) for a recited consideration of $398,000.00.

Thereafter, Ranco began to develop the 66.446 acre tract by platting it as a subdivision known as Briar Bluff Units 1 and 2. In September of 1972, Bonner was contacted to obtain a bid on the installation of water and sewer systems in the subdivision. A contract between Bonner and Ranco resulted which was executed on December 4, 1972. This agreement was not filed of record.

To finance the development of this subdivision, Ranco obtained a second loan from Mortgage and Trust in the amount of $573,000.00. This transaction was evidenced by a promissory note, secured by a deed of trust (Deed of Trust Two) covering all of Briar Bluff Units 1 and 2. Deed of Trust Two was filed for record with the county clerk on December 6, 1972, and recorded on December 8, 1972.

On December 8, 1972, Mortgage and Trust disbursed $145,000.00 of the "development loan" to M & T Investors to repay a portion of the original "land loan" secured by Deed of Trust One which had been previously assigned to M & T Investors. On December 12, 1972, M & T Investors released from Deed of Trust One Briar Bluff Unit 1 and Lots 35-43 of Briar Bluff Unit 2. The partial release was duly filed and recorded in the Deed of Trust Records of San Patricio County.

Approximately a year later, on January 14, 1974, M & T Investors reassigned the original "land loan" note (to the extent the loan had not been repaid) and Deed of Trust One (to the extent that lien had not been released) to Mortgage and Trust. The reassigned Deed of Trust One was duly filed of record and recorded on February 15, 1974. On the same day as the reassignment, January 14, 1974, Ranco executed Deed of Trust Three in favor of Mortgage and Trust to secure: 1) the renewal and extension of the remaining $233,000.00 indebtedness secured by Deed of Trust One; 2) the renewal and extension of the $573,000.00 indebtedness secured by Deed of Trust Two; 3) the renewal and extension of an additional $120,000.00 of indebtedness not herein involved; and also 4) a new loan not herein involved. On March 14, 1974, plaintiff filed an affidavit claiming a mechanic's lien for work done on Briar Bluff Unit 1 and Unit 2.

On November 5, 1974, Mortgage and Trust foreclosed its Deed of Trust Three. The Substitute Trustee sold and conveyed all property secured by Deed of Trust Three to Mortgage and Trust for a recited consideration of $829,113.00, all as set forth in the Substitute Trustee's Deed. The property was subsequently sold by Mortgage and Trust to Sundance, the other appellant.

On September 23, 1975, Bonner filed suit against Ranco, the original developer, Mortgage and Trust, Sundance, and numerous other defendants who appeared to have interests in Briar Bluff, seeking: 1) to recover money due under its original contract with Ranco; 2) to establish and to foreclose its mechanic's and materialman's lien on the subject property; and to 3) obtain a declaration of the priorities of various lien claimants. Mortgage and Trust answered, alleging that its deed of trust liens were all superior to the mechanic's and materialman's lien asserted by Bonner and that the foreclosure and sale under Deed of Trust Three extinguished Bonner's inferior lien. On December 12, 1975, Ranco filed a voluntary petition in bankruptcy and it was eventually discharged of its debts.

At the trial, Bonner attempted to establish the earliest possible inception of its mechanic's and materialman's lien by showing that its construction operations and job site materials were visible by an inspection of the premises prior to the inception of Mortgage and Trust's deed of trust liens (one and two). To recapitulate: Deed of Trust One was filed for record on April 11, 1972, Deed of Trust Two was filed for record on December 6, 1972, and the partial release was executed on December 12, 1972. Deed of Trust Three which was executed on January 14, 1974, renewed and extended the outstanding indebtedness secured by Deeds of Trust One and Two. Bonner's mechanic's and materialman's lien affidavit was filed for record on March 14, 1972. The trial court found that the presence of materials and the construction work was visible and apparent from inspection of the premises on and after December 13, 1972. The trial court concluded that Bonner had perfected a valid mechanic's and materialman's lien by the filing of its affidavit on March 14, 1974, relating back to December 13, 1972.

The trial court finally held that Bonner had a superior lien as to that portion of the land M & T Investors had released under Deed of Trust One. The trial court found in part and concluded that: 1) M & T Investors and Mortgage and Trust were alto ego corporations; 2) M & T Investors' partial release pertaining to Deed of Trust One had the effect of releasing the same land (Briar Bluff Unit 1 and Lots 35-43, Block 1, Briar Bluff Unit 2) secured by Deeds of Trust Two and Three; 3) Bonner's lien was superior to other liens on such released land. Consequently, the trial court held Bonner was entitled to have foreclosure of its mechanic's and materialman's lien as to Briar Bluff Unit 1 and Lots 35-43, Block 1, Briar Bluff Unit 2, because Bonner's superior lien was not extinguished by the foreclosure and sale of the property.

The trial court stated in its conclusions of law that defendant Mortgage and Trust held the proceeds of the foreclosure sale ($829,113.00) in trust for the benefit of Bonner to the extent of its lien ($34,307.18). The district court's findings of fact and conclusions of law recitations also suggested that the difference in the sales price to Sundance of $1,170,000.00 and the foreclosure proceeds of $829,113.00 were also held in trust for the benefit of Bonner. Judgment was entered against Mortgage and Trust and Sundance jointly and severally, for $34,307.18 and foreclosure of plaintiff's mechanic's lien on Briar Bluff Unit 1 and Lots 35-43, Block 1, Briar Bluff Unit 2 was so ordered.

Defendants Mortgage and Trust and Sundance bring forward nine points of error which can be grouped into three general categories. The first six points of error attack what we believe to be the crux of the trial court's judgment: the establishment of the priority of Bonner's mechanic's and materialman's lien over Deeds of Trust Two and Three, by finding that Mortgage and Trust and M & T Investors were alter egos. Mortgage and Trust and Sundance's second contention (point of error seven) is that the deed of trust liens of Mortgage and Trust (one, two and three) were superior to the mechanic's lien claim of Bonner and the foreclosure of such superior lien extinguished the inferior mechanic's lien claim as a matter of law. Appellants also contend that there is no evidence (and in the alternative insufficient evidence) to support the trial court's findings that Mortgage and Trust and Sundance held the proceeds of the sale of the property in trust for the benefit of Bonner.

Appellants first contend that the trial court's findings of fact pertinent to the alter ego theory are not supported by pleadings or evidence. A no evidence point of error is a question of law, and in considering the question, it is the duty of this Court to view the evidence in its most favorable light, considering only the evidence and reasonable inferences drawn therefrom in support of the judgment and to disregard all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821 (Tex.Sup.1965); Transport Insurance Company v. Mabra, 487 S.W.2d 704 (Tex.Sup.1972).

As a general rule, two or more corporations are separate and distinct legal entities, and the separate identity of each will not be disregarded in order to impose liability on one corporation for the acts of another corporation merely because of: a) overlapping stock ownership; b) a duplication of some or all of the directors or officers; or c) an exercise of the control that stock ownership gives to stockholders. Gentry v. Credit Plan Corporation of Houston, 528 S.W.2d 571, 573 (Tex...