Opinion ID: 2363755
Heading Depth: 1
Heading Rank: 3

Heading: irving property

Text: Construction: As stated, Dollar Inns and Blaylock began negotiations concerning construction of two motels in the fall of 1972; they entered into a preliminary agreement on December 29, 1972 whereby Blaylock agreed to construct motels on both sites pursuant to a general construction contract to be executed at a later date. At this time, Dollar Inns directed Blaylock to proceed with construction on the land as much as possible until the building permit could be obtained. Thereafter, on January 25, 1973, wooden stakes were delivered to the property and topographical work and job site engineering were conducted, continuing until March 1, 1973. As a result of such work, the layout of the building was visibly staked on the property as of March 1, 1973. During this period, on February 21, 1973, Blaylock and Dollar Inns entered into a written construction agreement. On March 25, 1973 lumber for the batter boards was delivered and erection of such batter boards began and was completed by April 2, 1973. On April 5, 1973 a subcontractor to Blaylock commenced general site clearance and excavation which included the removal of several large trees, the clearing of the land, and the removal of a swimming pool which had previously been located on the property. Also at this time fill dirt was delivered to the site and spreading operations were begun, involving truck haulers and a truck loader at the site. On April 7, 1973 concrete section pipe was delivered to the site. Thereafter, on April 11, 1973, a building permit was obtained and a subcontractor began work on the concrete foundation. Such foundation work required excavation for perimeter beams and the laying of the concrete foundation on the dirt pad formed by the spread operations. After construction of the motel was completed, on January 9, 1974, Blaylock filed his mechanic's lien affidavit in accordance with Article 5453 to secure the unpaid portion of the construction contract relative to the Irving project, amounting to $136,767. Financing: As stated, as early as November 1972 Dollar Inns began negotiations with DMI and later, in January 1973, with Palomar Mortgage Investors concerning the financing for the purchase of land and construction of two motels. On January 18, 1973 Dollar Inns entered into a contract of sale with First Madison Corporation to purchase property in Irving, Texas. The total purchase price was $309,900, of which $200,000 was paid by Dollar Inns on January 18, 1973. On February 16, 1973 Dollar Inns and Palomar entered into a loan agreement wherein Palomar agreed to provide interim financing for the purchase of the Irving land and the construction of a motel thereon. Such loan agreement incorporated a previous commitment issued by Palomar dated January 15, 1973 and a commitment issued by DMI dated November 10, 1972. These commitments, in addition to a tri-party agreement executed by DMI, Palomar, and Dollar Inns, provided that interim financing was to be furnished by Palomar and that DMI agreed to provide permanent financing after completion of construction. Palomar, in exchange for its funds, received Dollar Inns' promissory note in the amount of $1,665,000 and secured same through a deed of trust on the Irving property and improvements thereon. The closing of the sale of the Irving property to Dollar Inns was consummated on April 5, 1973 for a total purchase price of $309,900, of which $109,900 was used to pay off a prior vendor's lien held on the land by First Bank and Trust of Richardson under a deed of trust dated July 26, 1972. [3] As a result of the transaction, First Bank and Trust of Richardson executed a release of lien to the property. On April 12, 1973 the deed of trust on the Irving property was filed and such deed was recorded on April 13, 1973. On February 5, 1974, after completion of construction of the motel, Palomar assigned its interest in the deeds of trust to both the Fort Worth and the Irving properties to DMI for a total consideration of $2,757,150. Thereafter, Dollar Inns defaulted on its deed of trust and DMI conducted a foreclosure sale on the property under its deed of trust on December 3, 1974. DMI purchased the property at such sale for a consideration of $1,200,000. The instant suit was brought by Blaylock to recover the balance due under the construction contract, to foreclose the mechanic's liens on the two properties, and to obtain an order of sale of the two properties. By amended petition, it further sought a declaration by the court that its mechanic's liens were superior to the deed of trust liens on the properties and that DMI's title to the two properties was burdened with the mechanic's liens. In the event the court found that the mechanic's liens were extinguished by the deed of trust foreclosures, Blaylock sought to recover the amount of the mechanic's liens from the proceeds received by DMI at the foreclosure sales in excess of the purchase money loaned by Palomar, DMI's assignor. DMI answered with a general denial and pleaded that the deed of trust liens against the properties were superior to the mechanic's liens. The trial court, in an interlocutory summary judgment on February 21, 1975, ruled against Dollar Inns and K. R. Riley, holding them liable on the construction contract to Blaylock. This interlocutory judgment was later incorporated into the final judgment rendered on January 15, 1976. Neither Dollar Inns nor Riley appealed the judgment to the court of civil appeals or to this court; accordingly the trial court judgment as to these parties is final. After rendering the interlocutory judgment, the trial court proceeded to conduct a nonjury trial on the issues of priority of the mechanic's liens and the deed of trust liens held by DMI. The trial court held that the deed of trust liens were superior to the mechanic's liens; therefore, judgment was rendered that Blaylock take nothing against DMI. On appeal, the court of civil appears reversed the trial court. The court of civil appeals held that the mechanic's liens had their inception prior to the deed of trust liens held by DMI. However, the intermediate court held that a purchase money lien on property is superior to a mechanic's lien, regardless of the inception of the mechanic's lien, because a mechanic's lien cannot antedate ownership of the property. The court of civil appeals further noted that DMI's deeds of trust secured both the purchase money and the construction loan funds and held that the deed of trust liens were senior only to the extent that they secured the purchase money loaned. Therefore, Blaylock could proceed against DMI to have its liens satisfied out of the foreclosure sales proceeds received by DMI, as mortgagee, in excess of the purchase money loaned by Palomar, DMI's assignor. Both DMI and Blaylock have appealed, asserting that the court of civil appeals erred in its determination of the priority of the liens. DMI further urges that the intermediate court erred in its determination of the inception of the mechanic's liens involved herein.