Joplin, MO Business Blog

Case Review - Mechanic's Lien vs. Tort & Breach of Contract

The Missouri Supreme Court held in George Weis Co. v. Stratum Design-Build, Inc. that a plaintiff seeking relief under breach of contract or tort against persons or entities and not real property does not have to join  suit with other claimants seeking to recover on a lien against the property under section 429.300, RSMo.

George Weis Co. (Weis) was a drywall subcontractor on a construction project  where  Stratum Design-Build, Inc. was the general contractor.  Weis was not paid for its work and sued the general contractor and others.  Based upon motions filed by the defendants, the trial court dismissed Weis' petition for lack of subject matter jurisdiction, stating that section 429.300 required that Weis raise its claims by intervening in a prior mechanic's liens brought by other subcontractors.

The Supreme Court held that the mechanic's lien statutes apply to claims against property, not persons.  The purpose of section 429.300 is to enforce multiple mechanic's lien claims filed against the same real property and to adjudicate the rights claimed under the statutes in the property.  Section 429.300 only requires that all mechanic's lien claimants bring their claims in a single action and it does not require Weis to join in the mechanic's lien action because it was not bringing a lien action against the property.  It reversed the trial court's judgment and remanded the case.

Source:  George Weis Co. v. Stratum Design-Build, Inc., SC88194, 07/06/2007

Case Review - Preservation of Property by Estate

In In the Estate of Pauline Shaw v. McKown the devisees of a Will attempted to have the Estate of the decedent reimburse them for the expenses they expended in repairing and improving the real property they were to receive under the Will.  The decedent, Mrs. Shaw, owned 320 acres in Missouri.  She lived on one acre and the  McKowns lived on the remaining 319 acres and ran a cattle operation thereon.  The McKowns did not pay rent on the house they were living in but were required to help maintain Mrs. Shaw's house and acre.  The McKowns did pay rent on the land used for the cattle operation.  After Mrs. Shaw died the McKowns were informed by the Independent Personal Representative (IPR) that they were to receive the 320 acres and that the Estate would continue to pay the insurance, taxes and utilities on the property until the Estate was closed.  During the administration of the Estate, the McKowns wanted the IPR to repair the roof on the main house where Mrs. Shaw had lived.  The IPR refused and the McKowns then repaired the roof themselves and also did other repairs and improvements to the property during the time the Estate was open.  Subsequently the IPR told the McKowns that the Estate would be closing and that it was going to stop paying the insurance, taxes and utilities on the property.  The McKowns filed a claim for reimbursement of all the repairs and improvements they had made on the property and for the insurance proceeds that had been paid for damage to the property during a storm during the administration of the Estate.  The trial court granted the McKown's motion on the insurance proceeds but denied all other claims.  The McKowns appealed stating that the IPR was required to maintain and preserve the property under sections 473.803 and 473.810, RSMo.

Section 473.803 provides that the personal representative has the right to and can take possession or control of the decedent's property or the personal representative may leave the property with or surrender the property to the person to whom the property has been left to in the decedent's Will.  The personal representative must pay the taxes and take all steps reasonably necessary for the management, protection and preservation of the estate in his possession.  Based upon this statute, the McKowns had to show that the IPR had possession of the real property and that the repairs were necessary to preserve the property.  The McKowns failed to prove these two things.

In determining whether the IPR had possession of the property, the appellate court looked at section 473.260 which provides that a decedent's property devolves to the person to whom it is devised at the moment of death; the devisee possesses the real property immediately upon the decedent's death.  The court held that the McKowns held the property subject to the possession by the IPR to defray administration expenses.  Further, section 473.263, RSMo, requires that the IPR has to  affirmatively act to take possession of the property and failure to do so allows the property to remain with the devisee.  The IPR did not affirmatively act to take possession of the real property and the actions of the McKowns by making the repairs and improvements on their own conclusively resulted  in their having the possession of the property and not the IPR.  Further, the McKowns had failed to pay rent on the cattle operation land to the Estate after Mrs. Shaw's death. This also showed that the McKowns had possession of the property and were treating it as if they owned it already.

The appellate court also concluded that even if the IPR had taken possession of the real property, there was not sufficient evidence to show that the repairs and improvements were made to preserve or protect the property.  In fact, the court concluded that the repairs and improvements were made to the McKowns' own benefit and convenience.  The court concluded that the trial court did not err in denying reimbursement to the McKowns for the repairs and improvements they made to the property.

Source:  In the Estate of Pauline Shaw v. McKown, Missouri Court of Appeals, Western District, WD66590, April 10, 2007

Case Review - Sellers' Breach of Contract on Sale of Property

The Sellers in Minor v. Rush contracted to sell their 230 acre farm to the Buyers for a price lower than they had anticipated.  Before entering into the contract the Sellers contacted their bank to see if the sale price would pay off enough of their debt for the bank to release the property.  The bank told them it "looked like" it would.  Time was of the essence in the deal so the Sellers signed the contract with the Buyers but did not put in the contract a contingency provision should the sale proceeds not be enough to release the property.  After the signing of the contract the Sellers learned that the proceeds would not be enough for the bank to release the property and allow them to tender title in fee simple at closing.  The Sellers refused to give the Buyers a deed to the property.  The Buyers sued for specific performance on the contract and the trial court ruled in favor of the Buyers.  The Sellers appealed on the ground that their refusal should be excused on the basis of impossibility of performance.  The appellate court ruled against the Sellers and affirmed the trial court judgment.  It held that a party must comply with the terms of a contract "unless performance is rendered impossible by an Act of God, the law, or the other party," and if a party desires to be excused upon a contingency, the contingency must be included in the contract.  The Sellers failed to have the contingency that the sale would not go forward if  the sale proceeds were not  enough to release the property put into the contract.  This failure results in them having to perform the terms of the contract.

Source:  Minor v. Rush, WD65439, (Mo. App. W.D.  03/06/2007)

Case Review - Mortgage Co. Must Give Homeowner Deed of Release or Face Statutory Damages

When a homeowner pays off the mortgage on his residence the mortgage company or financial institution must release the deed of trust and give to the homeowner the deed of release.  In Huber v. Wells Fargo Home Mtg. the homeowner paid off the loan on his residence and Wells Fargo recorded a deed of release.  However, Wells Fargo failed to provide to the homeowner the deed of release.  The homeowner sent a demand letter to Wells Fargo demanding immediate release of the deed of trust and for the deed of release to be delivered to the homeowner within 15 days.  Wells Fargo failed to respond to the letter and the homeowner filed suit against Wells Fargo and Franklin American Mortgage Co., which initially made the loan but then sold it to Wells Fargo.  The trial court granted summary judgment for both defendants because Wells Fargo had recorded the deed of release and, therefore, the homeowner was not entitled to statutory damages.  The homeowner appealed.  The appellate court determined that the homeowner had failed to provide Franklin American with the required notice and it affirmed the summary judgment as to it.  However, Wells Fargo was not so lucky.  The court determined that even though Wells Fargo had complied with the purpose of section 443.130, which is aimed at financial institutions who fail to release the mortgagee's property, in accordance with the ruling the Missouri Supreme Court handed down in Glass v. First National Bank of St. Louis, 191 S.W.3d 662 (Mo. banc 2006), that did not excuse it from providing the homeowner with the deed of release as required by section 443.130.1.  The homeowner was entitled to statutory damages and the appellate court reversed the trial court's ruling as to Wells Fargo.

Source:  Huber v. Wells Fargo Home Mtg., ED88183, (Mo. App. E.D., 03/06/2007)