Federal Deposit Insurance Corp.v. Taylor
2011 UT App 416
| Utah Ct. App. | 2011Background
- Dispute over priority of trust deeds to secure loans for Riverton development.
- Bank sought priority under after-acquired title and sought reformation; Taylor sought priority based on preexisting equitable liens and good faith status.
- June 2006: Bank to MeDonald issued a first-position deed; Taylor to McDonald/Andersen issued a trust deed recorded later.
- G&L Mac owned the Property; by December 2006 G&L Mac conveyed to McDonald, subject to Taylor’s 9/6/06 TD.
- September 2006: Taylor obtained a new trust deed from G&L Mac; December 2006: Bank obtained a warranty deed from G&L Mac to McDonald; Bank recorded 12/22/2006.
- Trial court denied both summary judgments; on appeal court held after-acquired title does not govern priority and remanded for factual determinations; Bank’s reformation theory rejected as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does after-acquired title govern priority over race-notice? | Taylor: statute does not control priority. | Bank: statute gives priority to after-acquired title. | No; race-notice governs priority. |
| Do June 2006 deeds create enforceable equitable liens and establish priority? | June deeds created Taylor’s priority. | Bank: liens accrue and priority depends on accrual order. | Equitable liens exist; priority depends on accrual timing. |
| Was Taylor a good-faith purchaser defeating Bank’s equitable interest? | Taylor had no notice of Bank’s lien. | Taylor had notice via Bank’s recorded interest. | Taylor did not stand as a good-faith purchaser; Bank’s lien not void. |
| Can the Bank obtain reformation to include a warranty deed to McDonald? | N/A | Bank seeks broad reformation to create missing deed. | Reformation not proven; prejudicial effects unresolved. |
Key Cases Cited
- Utah Farm Production Credit Ass'n v. Wasatch Bank of Pleasant Grove, 734 P.2d 904 (Utah 1987) (after-acquired title; liens survive transfers to titleless grantor)
- Ault v. Holden, 44 P.3d 781 (Utah 2002) (race-notice priority; good-faith purchaser rule)
- General Glass Corp. v. Mast Construction Co., 766 P.2d 429 (Utah Ct.App. 1988) (equitable liens; effect of defective conveyances on priority)
- Dowse v. Kammerman, 246 P.2d 881 (Utah 1952) (deed by estoppel and after-acquired title principle)
- Haik v. Sandy City, 254 P.3d 171 (Utah 2011) (record notice may defeat good-faith purchaser status in some facts)
- Salt Lake County v. Metro West Ready Mix, Inc., 89 P.3d 155 (Utah 2004) (wild deed; purchaser not protected by recording statute)