Realty Sav. & Inv. Co. v. Washington Sav. & Bldg. Ass'n, 22419.

• Decision Date: 12 September 1933
• Docket Number: No. 22419.,22419.
• Court: Missouri Court of Appeals
• Parties: REALTY SAV. & INV. CO. v. WASHINGTON SAV. & BLDG. ASS'N.

63 S.W.2d 167

REALTY SAV. & INV. CO. v. WASHINGTON SAV. & BLDG. ASS'N.

No. 22419.

St. Louis Court of Appeals. Missouri.

September 12, 1933.

As Modified on Denial of Rehearing September 28, 1933.

Appeal from St. Louis Circuit Court; Harry A. Rosskopf, Judge.

"Not to be published in State Reports."

Action by the Realty Savings & Investment Company against the Washington Saving & Building Association. From a judgment for defendant, plaintiff appeals.

Reversed and remanded, with directions.

Boaz B. Watkins and H. Chouteau Dyer, both of St. Louis, for appellant.

C. R. Hamilton and Alva C. Trueblood, both of St. Louis, for respondent.

McCULLEN, Judge.

This is an action brought by appellant, hereinafter referred to as plaintiff, to recover the sum of $2,612.26, which it is alleged belongs to plaintiff and is wrongfully withheld by respondent, hereinafter referred to as defendant. A jury being waived, there was a trial before the court, which resulted in a finding and judgment in favor of defendant. After an unavailing motion for a new trial, plaintiff brings the case here by appeal.

Plaintiff's petition, as originally filed, was in two counts; the first count being directed against the Title Guaranty Trust Company. When the case was called for trial, plaintiff dismissed the first count, and the trial proceeded on the second count against the Washington Saving & Building Association.

No questions being raised as to the pleadings, it is sufficient to say that the action was one for money had and received, and defendant's answer was a general denial.

The evidence disclosed that Elvis Floyd Patterson and Frances Lucille Patterson, his wife, on April 27, 1928, purchased from plaintiff a vacant lot located in Bonita Park, a sub-division of Glendale, St. Louis county, Mo. They desired to build a home on the lot and toward that end negotiated a building loan from defendant in the sum of $7,492, executing and delivering to defendant a note and a first deed of trust on the property to secure such loan. They also executed a deed of trust to plaintiff in the sum of $2,525 for the purchase price of the lot, making this second deed of trust, expressly by its terms, subject to the first deed of trust above mentioned. H. W. Garets, secretary of the plaintiff company, delivered to Mr. Kamp, secretary of the defendant association, the warranty deed which conveyed the lot from plaintiff to the Pattersons, and also delivered to him at the same time the second deed of trust above mentioned. Mr. Kamp took the three written instruments, each of which was dated April 27, 1928, and recorded them in the office of the recorder of deeds for St. Louis county, on May 10, 1928. The warranty deed was recorded first, the first deed of trust next, and then the second deed of trust.

A house was built upon the lot, the money loaned by defendant under the first deed of trust being used in payment for the construction thereof. Building operations were begun between the 27th of April and the 5th of May, 1928, and were practically completed about the middle of August, 1928. The Pattersons failed to pay the interest due on the loan secured by the first deed of trust, and the Title Guaranty Trust Company, trustee, at the request of defendant, foreclosed under that deed and sold the property on February 4, 1929, for the sum of $10,200. It was undisputed that the amount due defendant upon such foreclosure was $8,268.36, which sum included the amount due on the principal note, interest to the date of sale, cost of advertising the sale, trustee's commission, and insurance. It was admitted that the net proceeds of the foreclosure sale were paid over by the Title Guaranty Trust Company, trustee, to the defendant.

It was admitted that defendant paid out sums of money aggregating $3,603.19 for work, labor, and materials which actually entered into the construction of the building, and that said sums were paid to persons who were entitled to file mechanics' liens against the property for labor and materials actually entering into the construction of the building and that such payments were made within the time when such liens could have been lawfully filed, but before any had been filed, and that as a result of such payments, none were filed.

The difference between the amount received by defendant, and the amount which plaintiff admits defendant could properly retain, is $2,151.39. Plaintiff claims that this sum should be paid to it as the holder of the junior incumbrance. In stating the amount last mentioned, however, plaintiff fails to take into consideration an item of $219.75 which defendant paid out for insurance.

The question to be determined is whether the amounts paid by defendant for labor and materials entering into the construction of the building before any mechanics' liens had actually been filed, but within the time when such liens might have been filed, constituted the payment of "prior liens or incumbrances," as provided by the first deed of trust. The whole controversy, therefore, is to be determined by looking to the language of the first deed of trust. In that instrument the parties of the first part covenant and agree, "To pay off and discharge all prior liens and incumbrances (if any there be) on said premises." The following language also appears therein: "In case any prior lien or incumbrance on said premises shall remain unpaid after the same is due, the said party of the third part its successors or assigns may, at their option * * * pay off and satisfy * * * such prior lien or incumbrance or any part thereof. And all sums of money so expended in paying * * * off any prior lien or incumbrance as aforesaid shall immediately become a debt due and payable from said parties of the first part, their executors and administrators, to said party of the third part its successors and assigns * * *." In another part of the instrument appears this language: "Now if the said parties of the first part, * * * shall well and truly keep and comply with all the covenants and agreements aforesaid in reference to * * * prior liens and incumbrances; and shall duly refund and pay to the said party of the third part, * * * all sums of money * * * which they may have expended * * * in paying off prior liens and incumbrances, then this deed shall be null and void, otherwise this deed shall remain in full force and effect." The following language also appears: "Such trustee shall, out of the proceeds of such sale, pay * * * all sums which said party of the third part, * * * may have expended at any time before such sale * * * in paying off prior liens and incumbrances as aforesaid." It is further provided in the aforesaid first deed of trust that: "In case of a breach of any of the covenants or agreements herein in reference to * * * prior liens or incumbrances, or in case the said parties of the first part * * * shall neglect or fail to pay and refund to the party of the third part * * * any and all sums of money with interest thereon, as aforesaid, which they may have expended * * * in paying off prior liens and incumbrances as aforesaid * * * then and in that case the whole of said note * * * shall become due and payable."

It will be noticed that the words "prior liens and incumbrances" are used in each of the parts of the first deed of trust which we have set forth above.

Counsel for defendant contend that under the language in the deed of trust defendant was authorized to pay the claims for work, and materials which entered into the construction of the building, even though such claims had not been filed as liens. It is argued that by the use of the word "incumbrances" the parties to said deed manifested an intention to protect the title of the property against any cloud which might be cast upon it, and that any such inchoate mechanic's lien was a cloud. To support this contention, defendant relies mainly upon the case of Duffy v. Sharp, 73 Mo. App. 316. In that case the court, quoting from Jones on Real Property, gives the following definition of an "incumbrance": "Any interest in a third person, consistent with a title in fee in the grantee, if such outstanding interest injuriously affects the value of the property." Duffy v. Sharp, supra, loc. cit. 322 of 73 Mo. App. In the case mentioned, the defendant Sharp conveyed to the plaintiff Duffy certain real estate in the city of St. Louis. The deed of transfer contained the words, "Grant, bargain and sell," without any words of limitation. The action brought by the plaintiff therein was to recover damages for three breaches of the statutory covenant in the deed. The petition therein alleged that an architectural company was the former owner of the land in question; that the defendant claimed title through it; that while owning the land the architectural company contracted with a lumber company for lumber to be used in the construction of a building on the land; that prior to the conveyance to plaintiff by defendant therein, the lumber was so used; that the lumber company thereafter brought suit to enforce its mechanic's lien against the property for the lumber so furnished; that the architectural company, defendant Sharp, and one W. S. Lefferty, a former owner of the land, were joined as defendants in the mechanic's lien suit; and that a judgment was rendered for plaintiff therein for $1,619.60, which was declared to be a lien upon the property. Plaintiff Duffy alleged that to protect the property from sale, he was compelled to pay, and did pay, $887.15. Two other breaches of the statutory covenant were alleged, one of which charged that a mechanic's lien suit had been brought by one...