Parkdale State Bank v. McCord

• Decision Date: 25 April 1968
• Docket Number: No. 371,371
• Citation: 428 S.W.2d 121
• Parties: PARKDALE STATE BANK et al., Appellants, v. J. E. McCORD, d/b/a McCord Wholesale, Appellees. . Corpus Christi
• Court: Texas Court of Appeals

Page 121

428 S.W.2d 121

PARKDALE STATE BANK et al., Appellants, v.J. E. McCORD, d/b/a McCord Wholesale, Appellees.

No. 371.

Court of Civil Appeals of Texas Corpus Christi.

April 25, 1968.

Rehearing Denied May 16, 1968.

Fischer, Wood, Burney & Nesbitt, James P. Ryan, Corpus Christi, for appellants.

McDonald, Spann & Smith, David L. Smith, Corpus Christi, for appellees.

OPINION

SHARPE, Justice.

This case involves the question of priority of liens as between the holder of a mechanic's and materialman's lien on account of improvements placed on real estate, on the one hand, and the holder, and successors in title through foreclosure, of a prior recorded deed of trust which provided for a first lien on the land and improvements thereon or thereafter to be placed thereon, on the other.Appellee, the holder of the mechanic's and materialman's lien, prevailed in the lower court.

J. E. McCord, appellee, brought this suit against Driftwood Corporation, hereafter 'Driftwood', American Coffee Company, Parkdale State Bank of Corpus Christi, hereafter 'Parkdale', Pels Quality Homes, Inc., and P. B. Portman and wife.Appellee sought recovery of an indebtedness on account of material and labor furnished by him in connection with the partial construction of three residences on lots situated in Corpus Christi, then owned by Driftwood, and for foreclosure of his mechanic's and materialman's lien.Driftwood did not defend and has not appealed from the judgment against it for $7,605.40 and attorney's fees of $1,500.00.Neither is there an appeal from the take-nothing judgment rendered in favor of the Portmans, which concerned one of the three lots originally involved.Thus we are here concerned with only the remaining parties and two lots upon which residences were partially constructed.

The evidence reflects that on November 4, 1965 Driftwood executed separate deeds of trust, recorded the following day, to Parkdale on two lots to secure a recited indebtedness of $11,450.00 in each instance.These instruments were in connection with an interim financing arrangement under which Parkdale agreed to advance funds to Driftwood to pay for the lots and costs of constructing improvements thereon.Such funds, excepting approximately $30.00, were advanced to Driftwood in five installments between November 12th and December 16th, 1965.Little, if any, of such funds were used for construction in 1965.From about March 15, 1965 to the end of June, 1965, appellee McCord furnished materials and labor on both lots.At the time McCord began work, there had been constructed or installed on each lot a concrete foundation slab, driveway and sidewalk.McCord's business is basically the fabrication of component parts of buildings and the setting of them on the job site.The usual arrangement is for an owner or builder to submit plans and specifications to McCord who then bids on the job.Such components consist generally of wall sections, window units, outside door units, roof trusses, roofs, outside wall sheeting and related materials, which are fabricated at McCord's plant and trucked to the building site where they are installed or set on an existing foundation.Remaining construction is done by other contractors or workmen.This general pattern was followed in connection with the improvements furnished by McCord on the two lots in question.Before all of the materials called for in the contract with Driftwood had been furnished, Driftwood repudiated the agreement.McCord then filed appropriate lien affidavits.On May 26, 1966, Driftwood conveyed the said lots to American Coffee Company.Thereafter, on August 5, 1966, McCord brought this suit and filed Lis Pendens notice in connection therewith.Driftwood having defaulted on its notes to Parkdale, the latter caused trustee's sales to be held on September 6, 1966, at which time Parkdale bid in the properties and secured trustee's deeds conveying title to the lots together with all improvements thereon.On December 21, 1966, Parkdale conveyed the two lots to Pels Quality Homes, Inc.

In answer to four special issues the jury found that the structures above the concrete foundation on each of the two lots 'can be removed without material injury to the land or the remaining improvements', and 'can be removed without material injury to such structures.'The judgment recites that the trial court made certain 'findings of fact as a matter of law' which in substance were that McCord had a valid constitutional Mechanic's and Materialman's lien as well as a valid statutory Mechanic's and Materialman's lien on each of the two lots and all improvements, structures and materials thereon.

The trial court rendered judgment in substance as follows: That McCord recover of Driftwood $7,605.40, plus $1,500.00 as attorney's fees, interest and costs; that McCord take nothing as to P. B. Portman and wife; that as to the remaining defendants McCord take nothing except as they are affected by the foreclosure of his liens and the order of sale granted in connection therewith; that McCord have foreclosure of his mechanic's and materialman's lien on all building materials above the concrete foundation on the two lots; that if under the order of sale the properties should bring more than $3,697.19 as to Lot 32 and $3,352.59 as to Lot 34, both in Candlewood Addition, Unit 3, an addition to the City of Corpus Christi, Texas, that the excess should be paid to Pels Quality Homes, and if the proceeds of sale were insufficient for the stated amounts, the balance was to be made as under execution against Driftwood; that the officer executing the order of sale would place the purchaser in possession within 30 days after the sale and the purchaser should have a reasonable time to remove the property so purchased from the premises.

Appellants assert three points of error in substance as follows: 1) That under uncontradicted evidence and as a matter of law Parkdale's deed of trust liens were first and superior against the land and improvements to the liens of McCord; 2) that under uncontradicted evidence and as a matter of law the materials constructed and installed on the two lots cannot be removed without material injury to the land or improvements thereon; and 3) that assuming removability as an issue, the proper test is whether the whole improvement on which the lien is claimed by the mechanic or materialman, and not selected portions of same, can be removed without material injury to the land or the improvement.Appellee's two counterpoints assert that the trial court judgment is correct because: 1) As to removable improvements the mechanic's and materialman's of trust McCord are superior to the deed of trust liens of Parkdale State Bank; and 2) that under the law and the evidence McCord is entitled to an order of sale of all building materials above the concrete foundations on the lots in question.

We argee with appellee and affirm the judgment.

Under their point one appellant argues that Parkdale had first and superior liens on the lots and the unfinished houses, including the improvements placed thereon by McCord.They particularly point to the provisions of the deeds of trust which give Parkdale first liens on the two lots 'together with all improvements thereon or hereafter to be placed thereon'.But appellants' argument under their first point does not take into account the rule of law which is applicable where removability of improvements is involved, and appellants reserve argument in such respect for their points two and three.We believe that appellee's first counterpoint, in reply to appellants' point one, is well taken for the reasons now to be stated.

As to the lots and concrete foundations thereon, the trial court and appellee recognize that the deed of trust liens held by Parkdale were and are superior.But as to the materials above the concrete foundations the trial court agreed with appellee that his duly perfected mechanic's and materialman's liens were superior.Our agreement with the trial court and appellee in the fact situation here presented is based upon the well settled rule that a mechanic's and materialman's lien is superior (as to the improvements made) to a deed of trust lien where the improvements have not become so permanently attached to the land and existing improvements that they may be removed therefrom without material injury to the land and existing improvements or to the improvements removed, even though the deed of trust was recorded prior to the furnishing of materials and labor by the materialman or mechanic.SeeArticles 5452, 5459, 5471, Vernon's Ann.Civ.St., Article 16, Sec. 37, Constitution of Texas, Vernon's Ann.St.;Summerville v. King, 98 Tex. 332, 83 S.W. 680(1904);Wallace Gin Co. v. Burton-Lingo Co., 104 S.W.2d 891(Tex .Civ.App., Austin, 1937, n.w.h.);Freed v. Bozman, 304 S.W.2d 235(Tex.Civ.App., Texarkana, 1957, wr. ref. n.r.e.);40 Tex.Law Review 872, 876.

In Freed v. Bozman, supra, the Texarkana Court of Civil Appeals, speaking through Justice Fanning, discusses the above-cited cases, constitutional and statutory provisions, and other authorities.In that case, Bozman asserted rights as the holder of a mechanic's and materialman's lien against a motion picture screen, frame, ticket booth, neon sign and speaker poles situated on an eight acre tract of land.A deed of trust in favor of other persons had been recorded prior to the furnishing of the materials and labor by Bozman.As in the instant case, the holder of the mechanic's and materialman's lien tried the case on the theory that as to the land the deed of trust was superior, but as to removable improvements his lien was superior.There the jury found in substance that the improvements placed on the land by Bozman, as hereinabove mentioned, had not become so permanently attached to the land as to prevent their removal therefrom without material damage.In affirming the judgment the Court of Civil...