Court Opinion

ID: 9784229
Source: CourtListenerOpinion
Date Created: 2023-08-30 20:40:24.385787+00
Date Added: 2024-06-11T07:35:51.244397
License: Public Domain

KENNETH M. ROMINES, J.,
concurring.
I concur but write separately. I reach my conclusion to reverse the summary judgment based on equitable subrogation and bona fide purchaser for value by a somewhat different method.
These claims concern judgment liens in condemnation eases. Specifically, when and to what property such liens attach and when a party is presumed to have notice of the lien. We also examine the issue of equitable subrogation.

Background and Procedural History

The following sequence of events is relevant to the disposition of this case.
16 March 1989: Westgrove purchases a parcel of land (the parcel). 14 January 1992: The condemnation commissioners file their report ordering the Missouri Highways and Transportation Commission (MHTC) to pay Westgrove $1,250,000 for the taking of a portion of the parcel.
21 January 1992: MHTC files its exceptions to the commissioners’ award and demands a jury trial on the issue. Westgrove files its exceptions to the commissioners’ award and also demands a jury trial.
26 October 1992: Westgrove grants Bank of South County deed of trust for $180,000.
29 October 1992: Bank of South County records its deed of trust with the St. Louis County Recorder of Deeds Office.
24 May 1994: David Matula agrees to lend Westgrove1 or William Matula $32,200 and to begin making the interest payments on the Bank of South County loan.
26 May 1994: William and Suzanne Matula execute promissory note in favor of David Matula for $61,000.
6 June 1994: David Matula records the mortgage and security agreement securing the 26 May promissory note.
26 October 1994: Westgrove executes promissory note in favor of David Matu-la for $61,000.
31 October 1994: David Matula records the mortgage and security agreement securing the 26 October promissory note.
*7063 January 1995: Westgrove executes promissory note in favor of David Matu-la for $42,000.
9 January 1995: David Matula records the mortgage and security agreement securing the 3 January promissory note. 2 October 1995: David Matula and wife sign a written sales contract agreeing to purchase the parcel from West-grove for $230,000.
18 December 1995: Westgrove enters into Stipulation for Settlement and Judgment with MHTC, stipulating that Westgrove owes MHTC $326,549.04, plus interest at a rate of nine percent per annum for overvaluation by the commissioners of the condemned portion of the parcel.
20 December 1995: St. Louis County Circuit Court enters the 18 December Judgment.
28 December 1995: David Matula releases all interest he had in the parcel pursuant to the three mortgage and security agreements. Westgrove conveys all right, title and interest in the parcel to David Matula and wife by General Warranty Deed.
29 December 1995: St. Louis County Circuit Clerk abstracts the 20 December Judgment.
4 January 1996: Bank of South County releases its deed of trust on the parcel.
16 January 2002: St. Louis County Circuit Court issues Order of Special Execution directing sheriff to levy upon the parcel.
3 April 2002: MHTC purchases the parcel for $385,000 at sheriff’s sale.
Through this litigation, David Matula and wife and MHTC seek to determine their particular rights in respect to the parcel. The trial court granted summary judgment against MHTC on their claims for fraudulent conveyance, fraud and conspiracy to defraud, and pre-judgment attachment, and in favor of the Matulas on their counterclaim for equitable subrogation. After a bench trial on the issue of whether the Matulas were bona fide purchasers without notice, the court entered judgment in favor of the Matulas, finding they held fee simple title to the parcel as bona fide purchasers without notice, and that MHTC had no interest in the parcel.

Discussion

We find that the Missouri Highways and Transportation owns the parcel, subject to no liens in favor of the Matulas, by operation of the sheriffs sale on 3 April 2002.
A valid lien in favor of MHTC attached to the parcel on 20 December 1995 when the circuit court entered the judgment stipulating that Westgrove Corp. owed MHTC $326,549.04 (plus interest). A judgment lien attaches to real property at the time the judgment is rendered. Section 511.350; Rule 74.08; First American Title Ins. Co. v. Birdsong, 31 S.W.3d 531, 536 (Mo.App. S.D.2000).2 The lien attaches to all real property owned by the creditor in the county in which the judgment is rendered. Birdsong, 31 S.W.3d at 536. “A judgment is considered rendered *707when entered and is entered when ‘a writing signed by the judge and denominated ‘judgment’ or ‘decree’ is filed.’ Rule 74.01(a).” Coleman v. Meritt, 324 S.W.3d 456, 459 (Mo.App. S.D.2010). As such, a lien in favor of MHTC attached to all property owned by Westgrove in St. Louis County on 20 December 1995 when the judgment was signed and filed. Such property included the parcel over which the Matulas claim title.
The Matulas argue that pursuant to Section 511.500, the lien did not attach until it was abstracted by the circuit clerk on 29 December 1995, a day after they had purchased the property, and thus they took the parcel free of the lien. This same argument was rejected by this Court in State ex rel. Missouri Highway and Transp. Com’n v. Overall, 53 S.W.3d 222 (Mo.App. E.D.2001). This Court found that while there may be a contradiction between Rule 74.08 and Section 511.500, in this case, Rule 74.08 prevailed. Id. at 228. Supreme Court rules govern over contradictory statutes in procedural matters. Id. The issue as to when a lien pursuant to a judgment attaches is procedural in that “it provides a mean for enforcing a judgment, rather than creating or defining an individual’s rights.” Id. The Matulas’ argument is equally unavailing now as it was in Overall. MHTC’s judgment lien attached to the parcel when the judgment was rendered, not when it was abstracted.
Alternatively, the Matulas argue that even if the hen attached, they took title to the parcel sans the lien because they were bona fide purchasers without notice when they “bought” the parcel on 28 December 1995. “A bona fide purchaser is one who pays a valuable consideration, has no notice of outstanding rights of others, and who acts in good faith.” Johnson v. Stull, 303 S.W.2d 110, 118 (Mo.1957). “A bona fide purchaser takes free of adverse claims to prior, unrecorded interests in the property.” In re Idella M. Fee Revocable Trust, 142 S.W.3d 837, 842 (Mo.App. S.D.2004). The Matulas’ argument rests on the false assumption that they could not be charged with having notice of MHTC’s lien until it was abstracted on 29 December 1995. To the contrary, the Matulas had notice of the lien when the judgment was rendered on 20 December 1995.
The recording of a judgment, properly entered and docketed, is notice of what it contains or recites, as well as such facts as might be fairly inferred from its recital, and such record carries with it constructive notice of the facts therein expressly recited as well as such facts as might be fairly inferred from its recitals. Further, regardless of the nature of the action or the judgment sought, where a statute provides that a judgment shall create and establish a lien on the real property of the judgment debtor, the judgment imparts notice of such lien.
Knutson v. Christeson, 684 S.W.2d 549, 552 (Mo.App. S.D.1984). The Matulas received notice when the stipulation judgment which gave rise to the lien was of record on 20 December, not when that judgment was abstracted on 29 December. Thus, the Matulas could not have been bona fide purchasers without notice on 28 December and they took title subject to MHTC’s lien.
The parties present no evidence that there was anything irregular about MHTC’s revival of the judgment, its execution on the lien, or the sheriffs sale. As the lien that supported the sheriffs sale attached prior to the sale of the parcel from Westgrove to the Matulas’ and as the Matulas’ had notice of that lien prior to purchase, MHTC took fee simple title to the parcel when it placed the winning bid at the sheriffs sale.
Finally, the Matulas’ argue that even if MHTC owns the parcel, they are entitled *708to be subrogated to the rights of the first and second mortgageholders as of 28 December 1995 due to the doctrine of equitable subrogation. MHTC argues that equitable subrogation does not apply to the facts of this case because MHTC did not commit any fraud in relation to the conveyance of the property to the Matulas and that MHTC was not unjustly enriched by the enforcement of its judgment lien.
There are no allegations by any party that MHTC was in any way involved in the conveyance of the property from the West-grove to the Matulas. Such an absence is fatal to the Matulas’ claim to equitable subrogation. Subrogation is a drastic remedy and is usually allowed only in extreme cases bordering on if not reaching the level of fraud. Metmor Financial, Inc. v. Landoll Corp., 976 S.W.2d 454, 461 (Mo.App. W.D.1998). "... [Ejquitable subrogation is not granted in the absence of complicity by the superior lien holder in obtaining the loan.” Id. at 462. Here, MTHC had no complicity in the Matulas’ purchase of the parcel from Westgrove. MTHC in no way attempted to conceal its judgment lien on the property from the Matulas. As such, the Matulas’ interest cannot be advanced ahead of MHTC’s. The circuit court’s conclusion to the contrary is error.3
The Matulas argue that they should be granted equitable subrogation to avoid the unjust enrichment of MHTC. The Southern District rejected a nearly identical argument in Thompson v. Chase Manhattan Mortg. Corp., 90 S.W.3d 194, 204-05 (Mo.App. S.D.2002). The Court recognized that while equitable subrogation can be an appropriate vehicle to prevent unjust enrichment, “equity follows the law,” and as such cannot be invoked to destroy an existing legal right. Id. at 204. The Court held that when a court enters a judgment imposing a lien on real property, this creates a legal right in favor of the judgment creditor. Id. at 205. Such legal right can not be defeated by principles of equity. Id. In this case, MHTC’s legal right commenced upon entry of judgment on 20 December 1995. Id. The Matulas’ rights did not commence until they closed on the property on 28 December 1995. As such, the Matulas cannot invoke equity to destroy MHTC’s legal right.

Conclusion

A valid lien in favor of MHTC attached to all property owned by Westgrove in St. Louis County when the court entered the stipulation judgment on 20 December 1995, including that portion of the parcel which had not been condemned. That same act gave the whole world notice of the lien. As the Matulas had notice of that lien on 20 December 1995, they could not have been bona fide purchasers of the parcel on 28 December 1995. When the Matulas purchased the parcel on 28 December 1995, they took title subject to MHTC’s lien. After MHTC properly executed on that lien, it obtained title to the parcel by operation of the sheriff’s sale. Since the Matulas and the Bank of South County had voluntarily released their respective interests in the parcel prior to the sheriffs sale, MHTC took fee simple title.
Any interest the Matulas might have had after that sale was dependent on their ability to invoke the doctrine of equitable subrogation. As MHTC had no involvement in the conveyance of the property from Westgrove to the Matulas, the Matu-las cannot use equitable subrogation to destroy MHTC’s rights.
I agree that the judgment of the circuit court in favor of the Matulas on their claims for bona fide purchaser and equita*709ble subrogation should be reversed and the case remanded for further proceedings.

. Westgrove is owned by William Matula, brother of David Matula

. Judgments and decrees entered by the supreme court, by any United States district or circuit court held within this state, by any district of the court of appeals, by any circuit court and any probate division of the circuit court, except judgments and decrees rendered by associate, small claims and municipal divisions of the circuit courts, shall be liens on the real estate of the person against whom they are entered, situate in the county for which or in which the court is held.
Section 511.350.1
Except as provided in Chapter 454, RSMo, or Chapter 517, RSMo, the lien of a judgment commences upon entry of the judgment, continues for a period of ten years, and is revived by a revival of the judgment.
Rule 74.08

. We need reach no conclusion in regard to the dealing brother to brother.