Bob DeGeorge Associates, Inc. v. Hawthorn Bank
377 S.W.3d 592
| Mo. | 2012Background
- Hawthorn Bank secured Blue Springs Xtreme Powersports property with a purchase-money deed of trust that was not recorded initially.
- After property acquisition, general contractor DeGeorge and subcontractor KD Christian began remodeling work in June 2008 and were not paid.
- DeGeorge filed a mechanic’s lien on November 18, 2008; KD Christian filed a mechanic’s lien on January 20, 2009.
- Hawthorn Bank’s purchase-money deed of trust was recorded on November 19, 2008.
- The trial court held DeGeorge’s mechanic’s lien superior to Hawthorn Bank’s purchase-money deed of trust, and Hawthorn Bank appealed seeking priority for its deed.
- The issue centered on whether mechanics’ liens take priority over a later-recorded purchase-money deed of trust under Missouri law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do mechanics’ liens have priority over a later-recorded purchase-money deed of trust? | Hawthorn Bank asserts purchase-money deed is superior regardless of timing. | DeGeorge/KD Christian contend liens have priority under recording statutes and first spade rule. | Mechanics’ liens prevail over Hawthorn Bank’s purchase-money deed. |
| Does Westinghouse create a blanket rule that purchase-money deeds always outrank mechanics’ liens? | Hawthorn Bank relies on Westinghouse to claim universal superiority of purchase-money deeds. | DeGeorge/KD Christian argue Westinghouse is limited to its facts and not controlling here. | Westinghouse is limited; here recording statutes and first spade rule apply. |
| Is the 7.2(b) exception applicable to protect a purchase-money deed of trust when liens arise post-closing? | Hawthorn Bank urges application of 7.2(b) to grant priority to purchase-money deed. | DeGeorge/KD Christian argue 7.2(b) does not apply given post-closing lien arise and recording statutes. | 7.2(b) does not apply to defeat priority of mechanics’ liens in this case. |
Key Cases Cited
- Westinghouse Electric Co. v. Vann Realty Co., 568 S.W.2d 777 (Mo. banc 1978) (broadly stated purchase-money deed may outrank liens when properly recorded; limited by facts)
- Joplin Cement Co. v. Greene County Bldg. & Loan Ass’n, 74 S.W.2d 250 (Mo. 1934) (early precedent cited in 7.2(b) context for priority under purchase-money financing)
- Becker & Hockensmith, uncited reporter (unspecified) (discussed in the context of purchase-money priority; not a standalone official citation here)
- Drilling Serv. Co. v. Baebler, 484 S.W.2d 1 (Mo. 1972) (mechanic’s lien priority over later encumbrances on land under first spade rule)
- H. B. Deal Const. Co. v. Labor Disc. Center, Inc., 418 S.W.2d 940 (Mo. 1967) (mortgage vs lien priority depending on timing; later overruled in part by Sweet Lumber)
- Woodard v. Householder, 289 S.W. 571 (Mo. 1926) (purchase-money mortgage inferior to later-recorded encumbrance; early record doctrine)
- Riverside Lumber Co. v. Schafer, 158 S.W. 340 (Mo. 1913) (earlier lien priority principles for encumbrances on land)
- Schroeter Bros. Hardware Co. v. Croatian “Sokol” Gymnastic Ass’n, 58 S.W.2d 995 (Mo. 1932) (mechanic’s lien commencement date doctrine for priority on improvements)