R. L. Sweet Lumber Co. v. E. L. Lane, Inc.

• Decision Date: 09 September 1974
• Docket Number: No. 58576,I--70,58576
• Citation: 513 S.W.2d 365,76 A.L.R.3d 596
• Parties: R. L. SWEET LUMBER COMPANY et al., Plaintiffs, v. E. L. LANE, INC., et al., Defendants, Grandview Products Company, Inc., et al., Defendants-Appellants,Investment Limited et al., Defendants-Respondents.
• Court: Missouri Supreme Court

Page 365

513 S.W.2d 365

76 A.L.R.3d 596

R. L. SWEET LUMBER COMPANY et al., Plaintiffs, v. E. L. LANE, INC., et al., Defendants Grandview Products Company, Inc., et al., Defendants-Appellants I--70 Investment Limited et al., Defendants-Respondents.

No. 58576.

Supreme Court of Missouri, En Banc.

Sept. 9, 1974.

William E. Simmons, George T. O'Laughlin, P.C., Kansas City, for appellants.

Thomas M. Sullivan, Edward L. Fitzgerald, Downey, Sullivan & Fitzgerald, Galen P. Knowlton, Knowlton & Drape, Kansas City, for respondents.

HOLMAN, Judge.

In this equitable mechanics lien suit the trial court held that the sub-contractor lien claimants were not entitled to a lien for the sole reason that they had failed to give ten days notice to the mortgagees and the title company (which claimed a security interest) before the filing of their lien statement. The lien claimants duly appealed and the Kansas City District of the Court of Appeals adopted an opinion written by Pritchard, P.J., which reversed the judgment and remanded the case with directions. The appeals court, however, transferred the case here because it considered that its opinion conflicted to some extent with cases decided by this court and by the St. Louis District of the Court of Appeals. The case will be determined here 'the same as on original appeal,' M. Const. Art. V, Section 10, V.A.M.S. We reverse and remand.

We are in general agreement with the opinion of the court of appeals and adopt the following portion thereof:

'The single issue presented is whether appellants, who were subcontractors in the construction of an apartment building complex owned by I--70 Investment Limited, must, to enforce their claims for mechanics' liens, give to respondents, First National Bank of Wellston, Johnson County National Bank and Trust Company (mortgagees), and Chicago Title Insurance Company (the disburser of construction funds), the 10 day notice of intention to file mechancis' liens under § 429.100. ¹ It is claimed by respondents that they are 'owners' within the meaning of § 429.100 by reason of the definitions in § 429.150: 'Every person, including all cestui que trust, for whose immediate use, enjoyment or benefit any building, erection or improvement shall be made, shall be included by the words 'owner or proprietor' therefor under sections 429.010 to 429.340, * * *.' In short, respondents claim that by reason of being named as beneficiaries or mortgagees in certain security agreement instruments executed by the owner, I--70, they are 'cestui que trust' parties under § 429.150. Appellants basic contention is that respondents are not owners or cestui que trust parties because they, as security holders only, do not have the 'immediate use, enjoyment or benefit' of the property involved as would an ordinary beneficiary or 'cestui que trust' whose interest is vested in a usual living trust instrument, and thus appellants were not required to give the 10 day notice to respondents.

'E. L. Lane, Inc., was the general contractor for the apartment building construction on real estate owned by I--70. Appellants agreed, as subcontractors, with the general contractor to provide labor and materials and other things necessary for certain portions of the construction. Grandview Products was to construct kitchen cabinets, counter-tops, vanity tops window sills and similar items for a contract amount of $41,641.21, of which there remains unpaid $28,803.55, and the last date that it furnished labor and materials was December 1, 1969. Teague was to install lumber and carpentry materials, set structural steel, install windows, finish hardware, medicine cabinets and building trim for $94,041.00, of which $9,344.14 remains unpaid, and the last date he performed labor was December 15, 1969. Grandview Linoleum was to install linoleum, floor stone, tile, ceramic and vinyl asbestos and similar materials for $19,802.97, of which $10,846.87 remains unpaid, and the last date it furnished labor and materials was December 11, 1969. Kilbourn was to install carpeting, carpet backing, padding and cement rubber-back carpeting for $16,771.92, of which $11,321.79 remains unpaid, and the last date he performed work was November 28, 1969. Tip Top was to install plumbing, heating, and gas fixtures and materials for $105,288.54, of which $23,348.73 remains unpaid, last performing on December 11, 1969. Ben Cole was to do painting, decorating and wallpapering for $18,893.50, of which $7,509.10 remains unpaid, and the last date he performed labor was November 20, 1969. Ten days before filing their mechanics' lien statements, each appellant personally served the registered agent of I--70 with notice of intention to file liens. The mechanics' liens were filed on these dates: Grandview Products, March 12, 1970; Teague, April 13, 1970; Grandview Linoleum, March 17, 1970; Kilbourn, March 25, 1970; Tip Top, April 10, 1970; and Ben Cole, March 20, 1970.

'On January 21, 1969 (recorded January 22, 1969), I--70 executed a deed of trust to John R. Bancroft, trustee in favor of First National Bank of Wellston, whereby the payment of a note for $990,000.00 was secured. This instrument contained an assignment of rentals after default. A security agreement (described as Exhibit X), according to a memorandum thereof dated October 18, 1968 and recorded January 28, 1969, ran to Chicago Title Insurance Company securing it against lien claims to the extent funds were advanced by it. On September 5, 1969 (recorded September 7, 1969), I--70 executed a deed of trust to W. A. Larson, Trustee, in favor of The Johnson County National Bank and Trust Company, securing a note for $100,000.00. These instruments were mentioned in appellants' pleadings to establish their liens and for judgments in the amounts claimed in the circuit court. The pretrial order of the court recited that 'the $990,000.00 secured by the deed of trust held by First National Bank of Wellston represents a loan of $150,000.00 for the purchase price of the subject real estate and the balance of $840,000.00 represents a loan to finance the cost of the improvements on the above described real estate. The said deed of trust held by First National Bank of Wellston is therefore a purchase money deed of trust to the extent of $150,000.00 to the liens of all mechanics' lien claimants herein. However, that portion of the deed of trust held by First National Bank of Wellston which represents a loan for the financing of the cost of improvements, to wit, $840,000.00, is inferior and subject to the liens of all mechanics' lien claimants which are hereafter established and found by the judgment to be valid, subsisting, enforceable mechanics' liens.' It was further ordered that the lien of Johnson County's deed of trust was inferior to that of First National and those mechanics' liens found by the court to be valid. Any lien of Chicago Title Insurance Company was ordered inferior to any mechanics' liens found to be valid by the court.

'It is not controverted that appellants fully performed and that all labor and materials were actually furnished by them and incorporated into the improvements on I--70's real estate; that the lien statements filed contained just and true statements of the accounts; or that the lien statements were in conformity with the statutory requirements for their filings.

'At the request of respondent Cole, and concurred in by all parties, the court appointed a referee, who held hearings, heard arguments and made his report to the court finding and concluding that respondents were owners (cestui que trust) and, under the statutes, were entitled to the 10 day notice, and that failure of each respondent to give the notice invalidated all claims for liens on the subject property. The trial court adopted the findings and conclusions of the referee and entered judgment against all appellants.

' The nature of the title conveyed under a deed of trust was well set forth in City of St. Louis v. Koch, 156 S.W.2d 1, 5(3, 4) (Mo.App.1941): 'A deed of trust in the nature of a mortgage given on land to secure the payment of a debt is held to be 'a lien and nothing more. * * * So viewed, it is neither an estate in land, nor a right to any beneficial interest therein. It is neither jus in re nor jus ad rem. It is merely the right to have the debt, if not otherwise paid, satisfied out of the land. The debt is the essence of the mortgage, the lien a mere incident that follows it as a shadow (Lipscomb v. Talbott, 243 Mo. 1, 31, 147 S.W. 798).' Missouri R.E. & Loan Co. v. Gibson, 282 Mo. 75, 220 S.W. 675, 676. We must hold, therefore, that appellant's ownership of the deed of trust on the property did not constitute him the owner of the title to the property. He had 'a lien and nothing more', which gave him only 'the right to have the debt, if not otherwise paid, satisfied out of the land.' Missouri R.E. & Loan Co. v. Mary J. Gibson et al., supra. See also Dickerson v. Bridges, 147 Mo. 235, 244, 48 S.W. 825.' The facts of the Koch case were these: Burder was the holder of a note secured by a deed of trust on property located on Natural Bridge Avenue, which was condemned by the City of St. Louis for the widening of the avenue. Judgment for benefits was rendered against the owners Lang revived against them, and execution was sought. Buder had purchased the property at a tax sale prior to the judgment of revivor. The court ruled that the tax sale did not wipe out the judgment lien, but the real thrust of the opinion is that appellant (as a mortgagee) was not an 'owner' of the property, was not a necessary party to the writ of scire facias to revive the judgment and was not entitled to the 20 day notice of the revivor proceedings. In Missouri R.E. & Loan Co. v. Gibson, quoted in Koch, supra, the mortgagee only was made a party defendant in a suit to enforce a lien of special tax bills. The court held that it was insufficient to give the court jurisdiction over the...