Exchange Savings and Loan Association v. Monocrete Pty. Ltd. D/B/A Monier Company ( 1982 )

IN THE SUPREME COURT OF TEXAS
EXCHANGE SAVINGS & LOAN S
ASSOCIATION, §
5
Petitioner s
S
V- S From Dallas County
§
MONOCRETE PTY. LTD., d/b/a S Fifth District
MONIBR COMPANY. §
5
Respondent 5
This case concerns the priority of a deed of trust lien
and a later perfected statutory mechanic's and materialman's lien.
Monocrete Pty. Ltd., d/b/a Monier Company (Monier), a roofing
company, furnished and installed concrete roofing tiles on
condominium homes. The roofing company perfected a mechanic's and
materialman's lien under the Hardeman Act, art. 5452 et seq.1
Exchange Savings 5 Loan Association (Exchange Sav1ngs), the first
lien deed of trust holder, foreclosed its lien upon the lots and
bought the condominiums at the trustee's sale. The roofing company,
unpaid for the materials and labor, sued Exchange Savings to foreclose
its materialman‘s lien and to remove the concrete roofing tile.
The trial court held the concrete roofing tile could not be
removed without material injury to the land, the remaining structure,
existing improvements and the tiles themselves; and denied foreclosure
of the materialman's lien. That court also held the deed of trust
lien of Exchange Savings was superior and its foreclosure extinguished
the materialman's lien. The court of ciVil appeals held the trial
court‘s finding of material injury is against the great weight and
preponderance of the evidence. The court of civil appeals reversed
the trial court's judgment and remanded the part of the judgment deny-
ing foreclosure of the materialman's lien on lots H—28, L-98 and H—lB.
601 s.w.2d 448. We reverse the judgment of the court of civil appeals.
lAll statutory references are to Vernon's Texas Civil Statutes
Annotated.
"1
While this Court does not have jurisdiction to review the
question of factual sufficiency of the eVidence, we do possess
jurisdiction to determine whether the court of civil appeals applied
the proper rules of law in reaching its concluSion. Harmon v. Sohio
Pipeline Co., 623 S.W.2d 314 (Tex. 1981).
Monier seeks to remove pre-cast concrete roofing tiles
from a completed dwelling. The roof is constructed by laying
one-half inch plywood decking over the rafters. The decking is
covered by a layer of 30 pound felt paper. A support system of
one inch by four inch wooden lathe strips is laid lengthwise over
the decking and paper. The tile is then placed over the lathing.
The rows of tile are secured by nailing every other tile in every
other row to the plywood decking. A nail-Size hole is molded into
each tile. Trim tiles are nailed to the fascia board around the
edge of the roof. Rake tiles and ridge tiles are set with mortar
at the valleys and ridges. Overlapping lead flashing is used
around vents and walls. The interlocking effect and the density
of the tiles prevent water from leaking through to the non—waterproof
layers below.
Under article 5459, a perfected materialman's lien upon
improvements is superior to a prior recorded deed of trust lien
if the materials furnished can be removed without material injury
to (l) the land, (2) the pre—existing improvements, or (3) the
materials themselves. First Nat'l Bank v. Whirlpool Corp.. 517
S.W.2d 262. 269 (Tex. 1974). This Court, within the context of the
Whirlpool case, properly used the term 'pre—existing" in the second
element of the test. However, the considerations made by this Court
in Whirlpool and the cases cited therein clearly suggest the use of the
more accurate term "existing." This second element, then, questions
whether removal would cause material injury to the other improvements
existing at the time removal is sought. The question is whether,
under the whirlpool test, removal of the roofing tiles constitutes
material injury to the existing structure or the roofing tiles.
Monier contends the existing structure would not be materially
injured in the process of removing the tiles. The evidence is
that nail holes may be left in the plywood decking; paint on the
lead flashing may crack; and the felt paper may be torn in places.
Exchange Savings suggests the evidence also shows possible damage
to the fascia board around the perimeter of the roof.
Whether the removal of a specific improvement will cause
material injury under the Whirlpool test is generally a question
for the fact finder. The materialman may have his materials sold
separately, provided the prior lien "... shall not be affected
thereby...." art. 5459. The purpose of the statutory proviso is to
protect the security of the prior lien holder. Accordingly, evidence
of the effect of removal of improvements upon the security of the
prior lien holder is pertinent. In weighing the evidence, the
court of civil appeals incorrectly refused to consider evidence of
the nature of the improvements sought to be removed and the probabilities
of post-removal damage to the existing structure. Some factors
that may be considered are: the manner and extent of attachment to
the land or existing improvements; the extent to which removal
would necessitate repairs, modification and/or protection of the
land or existing improvements; the stage of completion of improve—
ments under construction at the time removal is sought; the effect re-
.— ..
moval may have on habitability or use of the existing improvements; and
the function of the improvements sought to be removed.
This is not a departure from the test set up in Whirlpool.
Improvements found removable, even though connected to the realty,
are separable from the basic structure. The courts have held the
following improvements removable without material injury: First
Nat'l Bank v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex. 1974)
(dishwashers and disposals); Richard H. Sikes, Inc. v. L & N
Consultants, Inc., 586 S.W.2d 950, 954 (Tex. Civ. App.--Waco 1979.
writ ref'd n.r.e.) (carpets, appliances, air conditioning and
heating components, smoke detectors, burglar alarms, light fixtures
and doorlocks); Parkdale State Bank v. McCord, 428 S.W.2d 121 (Tex.
Civ. App.-—Corpus Christi 1968, writ ref'd n.r.e.) (entire structure
removable from foundation); Mogul Producing & Ref. Co. v. Southern
Engine 5 Pump Co., 244 S.W. 212 (Tex. Civ. App.-—Beaumont 1922, no
writ) (pumps attached to existing machinery and foundation).
Cement roofing tiles necessary to prevent penetration of
the elements through the roof of a completed structure become an
integral part of its construction and necessary to its completion
as a livable dwelling. The roofing tiles became an integral part
of the basic structure of the townhomes. At the time the roofing
tiles were furnished and affixed to the roof, the townhomes were
of such a nature as to give notice to Monier that the roofing
tiles could not be separated from the basic structure without mat-
rial injury and had necessarily become a part thereof. See, e.g.,
Crabb v. William Cameron & C0., 63 S.W.2d 367 (Tex. Comm'n App.
1933, judgmt adopted) (entire garage building); Chamberlain v.
Dollar Sav. Bank, 451 S.W.2d 518 (Tex. Civ. App.--Amarillo 1971,
no writ) (brick veneer, fireplace and chimney): McCallen v. Mogul
Producing 5 Ref. Co., 257 S.W. 918, 923 (Tex. Civ. App.--Galveston
1923, writ dism'd) (roofing, window frames); Quinn v. Dickinson,
146 S.W. 993, 1000 (Tex. Civ. App.——Amarillo 1912, no writ) (paint,
wallpaper); Citizens' Nat'l Bank v. Strauss, 69 S.W. 86 (Tex.
Civ. App.—-1902, writ ref'd) (new roof on existing building). We
hold, as a matter of law, removal of the roofing tiles would cause
material injury to the existing improvements on the land. Thus,
Monier‘s statutory lien under article 5459 is not superior to
Exchange Savings' prior deed of trust lien.
The materialman is not Without protection if the materials
prOVided are not removable. Article 5463 authorizes the owner, upon
delivery of the materials and proper notice from the subCOntractor,
to hold undisbursed funds due the original contractor in the amount of
of the subcontractor's claim. More importantly, article 5469
requires the owner to maintain a fund equal to ten percent of the
original contract price or, if none, ten percent of the reasonable
value of the completed work. Unpaid subcontractors may have a
ratable lien on the fund. The owner is personally liable for any
funds paid to the original contractor in violation of either provision.
The three-prong test in Whirlpool being in the disjunctive,
we do not reach the question of material injury to the roofing
tiles themselves. Nonetheless, we disapprove the broad language
used by the court of civil appeals in disposing of the question.
-The court understood the third requirement of the Whirlpool test
to prohibit "spiteful" removal. The court reasoned material injury
to the improvements themselves could be translated into "economic
benefit“ to the materialman. Determination of "economic benefit'1
is an unnecessary addition to and not a part of the material injury
test. A materialman, for example, under proper circumstances may
very well have the right to remove a unique, specially designed
sign installed on a building. This is so even though the materialman
may, after removal, derive no further economic benefit from use of
the sign. Furthermore, foreclosure of a mechanic‘s and materialman's
lien is a judicial foreclosure resulting in a sheriff's sale.
Value of the materials to the materialman is irrelevant because in
a public sale the value of the materials to each bidder may differ.
The test simply requ1res inquiry into whether the roofing tiles
would be materially injured in the removal process.
The deed of trust liens are superior to the materialman's
liens upon lots H-28, L—98 and H-lB. Exchange Savings, as pur—
chaser at the trustee‘s sale, acquired title to the lots free of
Monier's inferior lien. Nat'l Western Life Ins. Co. v. Acreman.
425 S.W.2d 815 (Tex. 1968). We reverse the judgment of the court
of civil appeals and affirm the Judgment of the trial court.
obert M. Campbell
Justice
OPINION DELIVERED: January 13, 1982
THESUPREME COURI<3FTEXAS
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Mr. N Mike Baggett, Atty
Hinstead. McGuire, Sechrest
& Trimble
l700 Mercantile Dallas Bldg.
Dallas, Texas 7520l
Mr Robert Harms Bliss, Atty
Bliss & Hughes
2535 Stemmons Freeway
Dallas, Texas 75207
RE 8-9671 EXCHANGE SAVINGS & LOAN ASSOCIATION
VS.
MONOCRETE PTY, LTD d/b/a MONIER COMPANY
Gentlemen
Enclosed is the Judgment of the Supreme Court of Texas in the
above referenced cause as said Judgment apperrs in the minutes
of this Court under the date of January 13, 1982.
This is the Judgment that will issue to the lower court if no
motion for rehearing is filedior if a filed motion for rehearing
is overruled.
Very truly yours,
GARSON R JACKSON. Clerk
Encl copy of Jud ment
THESUPREME COURTfDFTEXAS
CHIEFJUSI'ICE PO uth 1.3238 (AHFUL STATION (.ILERl»;
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January 13. 1982
Mr H. Mike Baggett, Atty
Ninstead, McGuire, Sechrest a Trimble
l700 Mercantile Dallas Bldg.
Dallas, Texas 75201
Mr. Robert Harms Bliss, Atty
Bliss & Hughes
2535 Stemmons Freeway
Dallas, Texas 75207
RE 3-9671 EXCHANGE SAVINGS & LOAN ASSOCIATION
vs
MONOCRETE PTY LTD., d/b/a MONIER COMPANY
No 20l55 in the Fifth Court of Civil Appeals
No 78 4046-0 in the 95th District Court, Dallas, Texas
Gentlemen:
Today, the Supreme Court of Texas delivered an opiniOn in the above
referenced cause.
The opinion by Justice Campbell reversed the judgment of the
Court of Civil Appeals and affirmed the Judgment of the trial court
A copy of the enclosed opinion is being mailed to Justice Charles
H. Storey, Fifth Court of Appeals, Judge Kenneth C. Dippel, then
sitting for the 95th District Court and Dallas County District
Clerk, Mr T E. Moore.
Very truly yours,
GARSON R. JACKSON, Clerk
akefield
Chief eputy
Encl opinion
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February 25, l982
Mr T.E. Moore
District Clerk
Dallas County Courthouse
Dallas, Texas 75202
RE EXCHANGE SAVINGS & LOAN ASSOCIATION
vs
MONOCRETE PTY. LTD , d/b/a MONIER COMPANY
No. 8-9671 in the Supreme Court
No 78 4046-0 in the 95th District Court, Dallas County
Dear Mr. Moore
The Judgment of the Supreme Court of Texas is now final in the
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above referenced cause. As Rule 507, Texas Rules of Civil Procedure,
has been satisfied we have issued the mandate as of this date.
Enclosed with the mandate is a certified copy of our cost bill
showing the charges and payments as refected by the record for
your use in settlement between the parties.
Very truly yours,
CARSON R. JACKSON, Clerk
Encl mandate
cost bill
CC letter only to
N. Mike Baggett, Dallas
Robert H. Bliss, Dallas