Corscadden v. Komrosky

I N THE SUPREME COURT O F THE STATE O F MONTANA
NELSON E . CORSCADDEN,
S T E E L CONSTRUCTION,
d/b/a CORSCADDEN
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LEROY HARRY KOMROSKY and BEVERLY KOMROSKY, J c- : 1
husband and w i f e ; U N I T E D INSURANCE & REALTY, INC., :J
a c o r p o r a t i o n ; and BURTON 0. BOSCH, T r u s t e e , 2
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D e f e n d a n t s and R e s p o n d e n t s . ,.
APPEAL FROM: D i s t r i c t C o u r t o f t h e Seventeenth J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of V a l l e y ,
T h e H o n o r a b l e L e o n a r d L a n g e n , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For Appellant:
R o b e r t Hurly, Glasgow, Montana
F o r Respondent:
James M. K a z e ; B o s c h , K u h r , D u g d a l e , M a r t i n & Kaze,
H a v r e , Montana
Submitted: January 2 5 , 1990
Decided: March 6 , 1990
Filed:
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Justice Diane G. Barz delivered the Opinion of the Court.
Nelson Corscadden appeals from an order of the District Court
of the Seventeenth Judicial District, Valley County, granting
respondents Capital Savings Bank and Burton Bosch's motion for
summary judgment. We affirm.
Leroy and Beverly Komrosky owned residential real property
located west of Glasgow, Montana. In early 1984, the Komroskys
arranged with Capital Savings Bank to consolidate certain pre-
existing debts. The resulting loan was secured by a trust
indenture on the real property. Capital recorded the trust
indenture on February 9, 1984.
Appellant commenced a remodeling project on the Komrosky
residence in June 1984. None of the proceeds of Capital's loan
went to finance the remodeling. Appellant completed the project
in February 1987. In the interim, the Komroskys defaulted on their
obligation to Capital. Capital filed notice of non-judicial
trustee's foreclosure sale on April 10, 1987. Appellant filed his
mechanic's lien two weeks later on April 24, 1987, and on August
7, 1987, instituted this action to foreclose that lien. Capital
purchased the real property at the trustee's sale and recorded its
deed of trust on August 18, 1987.
Following motions for summary judgment by both parties, the
District Court found in favor of Capital. The court certified its
judgment for appeal pursuant to Rule 54 (b), M. R. Civ.P. , and entered
judgment on September 15, 1989. The sole issue on appeal is
whether the District Court erred in ruling that Capital's trust
indenture took priority over appellant's mechanic's lien.
Our recent holding in American Federal Savings and Loan
Association v. Schenk (Mont. 1990) , P.2d , 47 St.Rep. 177,
is dispositive of this issue. In American Federal, we held that
the party with the least ability to protect its interest takes
priority over previously recorded liens. American Federal, 47
St.Rep. at 180. We distinguished the lender's position in that
case from those of the lenders in Beck v. Hanson (1979), 180 Mont.
82, 589 P.2d 141; Home Interiors, Inc. v. Hendrickson (1984), 214
Mont. 194, 692 P.2d 1229; and Tri-County Plumbing & Heating, Inc.
v. Levee Restorations, Inc. (1986), 221 Mont. 403, 720 P.2d 247,
on the basis of which party had the greater ability to protect its
interest. In each of those three cases, the lender knew or had
reason to believe the borrower would utilize the loan proceeds to
finance new construction or improvements on real property. The
lender in American Federal had no knowledge of the remodeling
project nor any ability to further protect its position even if
armed with such knowledge. American Federal, 47 St.Rep. at 180.
The facts of the instant case are analogous to those of
American Federal. Section 71-3-502, MCA (1985), is also the
statutory law applicable to this case. Appellant knew of the prior
recorded trust indenture before commencing the remodeling work.
Appellant notified Capital that the Komroskys contracted with him
to remodel their home. However, such notice was given three months
after Capital closed its loan with the Komroskys and subsequent to
the recording of Capital's trust indenture as well. The mere
giving of notice in no way permitted Capital to improve its
position. Appellant, on the other hand, knew of the prior recorded
trust indenture and could have secured its position by demanding
advance or installment payments. The District Court properly found
Capital's trust indenture had priority over appellant's mechanic's
1ien.
Affirmed. /"
We concur:
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Chief Justice