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

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COURT OF CIVIL APPEALS
FIFTH SUPREME JUDICIAL DISTRICT OF TEXAS
AT DALLAS
(.7
NO.
MONOCRETE PTY. LTD., d/b/a
MONIER COMPANY,
APPELLANT
VS.
EXCHANGE SAVINGS & LOAN
ASSOCIATION, RUSSELL
BUILDERS, INC., d/b/a
RUSSELL CUSTOM HOMES, POWELL,
ARDIS AND POWELL, INC., and
KENNETH L. STEWARD d/b/a
S & H ROOFING CO.,
APPELLEES
20155
FROM A DISTRICT COURT
FILED
m sunnemr? sound
"F"
was 5) i98®
GARSQN R JACRUQN PLERK
OF DALLAS COUNTY, TEXAS
BEFORE CHIEF JUSTICE GUITTARD AND
JUSTICES ROBERTSON AND STOREY
OPINION BY JUSTICE STOREY
MAY 20,
1980
This appeal concerns the application of the "material
injury" rule to a materialman's removal of a concrete tile
roof.
The trial court, in this non—jury case, found that "the
concrete roof tiles cannot be removed without substantial
damage to the tiles themselves,
existing improvements, and the land."
the remaining structure,
It accordingly ordered
that the deed of trust liens of defendant Exchange Savings &
Loan were superior and that their foreclosures extinguished
the materialman's liens of plaintiff Monocrete Pty. Ltd.
Plaintiff attacks the trial court's finding on the ground
that it is against the great weight and preponderance of the
-1-
evidence. We agree with this contention and therefore reverse
and remand the judgment insofar as it favors defendant Exchange,
but we affirm the judgment in favor of plaintiff against the
remaining defendants, Russell Builders, Inc. and S & H Roofing
CO.1
1. Plaintiff sued Exchange Savings & Loan, which
was the owner and holder of notes and prior
recorded deeds of trust upon lots H-28, L—98,
H—l8, N-36 and H—lO. Exchange was the purchaser
at foreclosure of all five lots. Plaintiff sued
Russell Builders, contractor—owner of lots H—28,
L—98 and H-l8, and recovered a money judgment
against it. Plaintiff also sued S & H Roofing
Co. as subcontractor and Powell as contractor—owner
of lots N—36 and H-lO and recovered a money judgment
against S & H Roofing Co. On appeal, plaintiff
complains of error in the trial court's finding that
it failed to perfect liens on lots N—36 and H-lO.
Plaintiff now concedes that its lien on N—36 was
not perfected; and we conclude the trial court's
finding that plaintiff failed to perfect a lien
on H—lO is supported by eVidence because it
failed to prove delivery or timely notice. We
are therefore concerned only with the Russell
lots, H—28, L—98 and H—18, upon which all parties
agree materialman's liens were perfected. The
only parties to this appeal are plaintiff Monocrete
and defendant Exchange Savings & Loan.
The parties agree that the case is governed by TEX. REV.
CIV. STAT. ANN. art. 5459 (Vernon Supp. 1980), which creates a
statutory lien in favor of thelnaterialmanupon any structure
for which it furnished materials that were incorporated into
the structure. They also agree that the case is controlled by
-2-
0/
a concrete subcontractor having poured walks, driveways and
patios might elect to remove them all on the notion that, because
he had lost his labor and materials, an owner or lien holder
should not be allowed to profit from his loss. He could
break up and remove all his materials without injuring the
land, but would realize no benefit from his action. As
further example, the witness Kilgore testified he could
remove a wood shingle roof without injuring the existing
structure but doubted it would be economically feasible
because the shingles would be destroyed.
Material injury to the improvements themselves may
therefore be translated into the economic benefit to the
materialman. In determining the economic benefit which plaintiff
may be expected to derive from removal of the tile, we should
accept the testimony least favorable to its removal because the
burden of proof is upon plaintiff. Although it generally
could be assumed that less care in removal would be taken by
one who had estimated a loss in his quote to an owner than
would be taken by one whose purpose in removing was for resale,
we nevertheless, for our purpose, will accept the testimony
of Beddall, who estimated a breakage of twenty percent in field
tile, ten percent in rake tile and one hundred percent in
ridge tile. The total tile on each house amounts to about
3,700 pieces of which field tile is about ninety percent or
Assuming a twenty percent loss from breakage of
.1
At forty—five cents
3,300 pieces.
field tile, 2,670 tiles would remain useable.
-11-
per tile, less ten dollars per square or about $370 per roof
for labor in removal, the plaintiff could expect to recover
about $830 per house or $2,490 from the three houses in
question. This amount represents a substantial degree of
recovery to the plaintiff and, we conclude, demonstrates
a lack of material injury to the improvements themselves. We
reach this conclusion because we are bound to indulge the
facts in favor of recovery by the materialman. Whirlpool,
517 S.Wfi2d at 269; Hayek v. Western Steel Co., 478 S.W.2d
786, 795 (Tex. 1972); University Savings & Loan Assn. v.
Security Lumber Co., 423 S.W.2d 287, 296 (Tex. 1967). We
hold therefore that the court's finding to the contrary is
against the great weight and preponderance of the evidence.
We are not to be understood as departing from the
Whirlpool test. We conclude only that one standard for
determining whether material injury would occur to the
improvements removed is the economic benefit to be realized
by the materialman. Nor do we believe that, once the test
of Whirlpool is met, the courts should necessarily be required
to make a precise determination as to what may constitute a
reasonable economic benefit. Rather, this may be determined
by the economic imperatives in each particular case.
In this respect, we point out that in such cases, the
courts seem to consistently assume that the materials will of
necessity be removed and placed in inventory for resale.
This is not necessarily the case. Title to the materials having
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9’
passed to the purchaser, the trial court must first order
foreclosure of the materialman'slien and then order a sheriff's
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sale of the materials in place. Conceivably third parties may
desire to bid for their purchase. Certainly the materialman and
the lien holder or owner may desire to bid. The materialman, if
he bids, must do so on the basis of value to him as inventory.
He must consider his cost of resale as well as his cost of
removal. Most importantly, he must consider that in removing
he may risk more damage to existing improvements than he
previously represented would occur. We perceive no reason
that he should not be held to the same degree of care and
the same extent of injury to existing improvements that he
represented to the court would occur. Thus he must be
prepared to respond in damages for any excess.
We therefore reverse the trial court's judgment insofar
as it decreed the deed of trust liens superior to the
materialman's liens upon lots H—28, L—98 and H—l8; and remand
for further proceedings consistent with this opinion. We
are bound to remand the case rather than to render, because
our holding sustains appellant's weight and preponderance points
rather than its no evidence points. Leavell & Co. v. Vilbig
Brothers, Inc., 160 Tex. 600, 335 S.W.2d 211, 213 (1960); In
re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). In
all other respects, the judgment of the trial court is affirmed
and costs of this appeal are taxed to the defen nt Exchange.
(gage. Am/
CHARLES H. STOREY
ASSOCIATE JUSTICE
_l3_
THE STATE OF TEXAS
I, Jeannette Johnson, Clerk of the Court
of Civil Appeals for the Fifth Supreme Judicial
District of Texas, do hereby certify that the fore-
going is a true and correct copy of the opinion of
this Court in Cause No 20155
Monocrete Pty. Ltd., dgb/a , Appellant
VS Exchange Savings & Loan Assoc. , Appellee
as the same appears of record and on file in this
Court
Given under my hand and seal of said Court,
at office in Dallas, this the 28th day of
NO. 20155
Monocrete Pty. Ltd., d/b/a
Monier Company
APPELLANT
VS.
Exchange Savings & Loan
Association, et al
APPELLEE
CERTIFIED COPY OF OPINION
OF COURT OF CIVIL APPEALS,
FIFTH DISTRICT, AT DALLAS.
20155
Monocrete Pty. Ltd., d/b/a
Monier Company
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£23
From a District Court
vs. Of Dallas County, Texas
Exchange Savings & Loan
Association, Russell Builders,
Inc., d/b/a Russell Custom Homes,
Powell, Ardis and Powell, Inc.,
and Kenneth L. Steward d/b/a
S & H Roofing Co.
Tuesday, May 20, 1980
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BEFORE CHIEF JUSTICE GUITTARD AND JUSTICES ROBERTSON AND STOREY
OPINION BY JUSTICE STOREY
This cause came on to be heard on the transcript of the record, and
the same being inspected, because it is the opinion of the Court that there
was error in the judgment, it is therefore considered, adjudged and
ordered that the judgment of the court below insofar as it decreed the
deed of trust liens superior to the materialman's liens upon lots H-28,
L-98 and H—l8; and remand for further proceedings consistent with this
opinion. In all other respects, the judgment of the trial court is
affirmed.
It is further ordered and adjudged that the appellee, Exchange
Savings & Loan Association, pay all costs of this appeal for which
execution may issue, and that this decision be certified below for
observance.
24076
20155
Monocrete Pty. Ltd., d/b/a
Monier Company
vs. Thursday, June 26, 1980
Exchange Savings and Loan
Association
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This day came on to be heard appellee's motion for rehearing in
the above cause, and the same being inspected, it is therefore considered,
adjudged and ordered that the motion be and the same is hereby overruled.
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GAPsoN é? JACKSGN. @LEQK
Bumm DEPUTY
THE STATE OF TEXAS
I, Jeannette Johnson, Clerk of the Court
of Civil Appeals for the Fifth Supreme Judicial
District of Texas, do hereby certify that the fore-
going contains a true and correct copy of the
judgment and all orders rendered and entered by
this Court in Cause No. 20155
Monocrete Pt . Ltd. d b a r Appellant
VS- Exchan e Savin s & Loan Assoc., Appellee,
as the same appear of record in the minutes of this
Court.
Given under my hand and seal of said Court,
at office in Dallas, this the 23th day of
AL—I A-D- l9_80_-
JEANNETTE JOHNSON, CLERK
WW Deputy
CLERK’S OFFICE-Court of Civil Appeals at Dallas
b CERTIFIED COPY
VS,
No. 20155 in the
.SéMlIlgfi Leer; COURT OF CIVIL APPEALS, 5TH DISTRICT
Clerk’s Fees, Court of Civil Appeals (Rule 388-A) Paid. by Winsteardl, McGuire 5 25'00
Transcript Fee
Statement of Facts Fee
Q
I, Jeamiette Jchnson:,{.é\lerk of the Court of Civil Appeals, Fifth Supreme Judicial District, at Dallas,
hereby certify that the affair; ‘copy of Bill of Costs is true and correct.
GIVEN UNDER/MY HAND AND SEAL OF SAID COURT, at Dallas, this _2ilil______ day of
I 5 -\ JEANNETTE JOHNSON I
s / Clerk
\\ “a” :7/ / C, _
By vé J , Deputy
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VS.
CERTIFIED COPY
B I L L 0 F C O S T S
of
COURT OF CIVIL APPEALS
Dallas, Texas
No.
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Supreme Court No. ... ..
ExchangeHSaylngg,QnQHLanHAafigc.
Petitioner ._.
VS.
Monogxegenktyr.Lndr d/h/nggnxer Company
Respondent
From. Da 1 l a S... County
CERTIFIED COPY OF JUDGMENT
IUHDIDRDERS
offhe
Court of Civil Appeals
FIFTH DISTRICT
Afl'DAflLAS
Filed in Supreme Court of Texas, the. .,.. m...
day of .A. D, 19,
the‘long'standing rule that the materialman's lien, if perfected,
is superior to a prior recorded deed of trust lien on the land
and structure when the improvements (materials) can be removed
without material injury to the land and pre—existing improvements,
or to the improvements (materials) themselves. First National
Bank v. Whirlpool Corporation, 517 S.W.2d 262, 269 (Tex. 1974);
Summerville v. King, 98 Tex. 332, 83 S.W. 680 (1904); Parkdale
State Bank v. McCord, 428 S.W.2d 121 (Tex. Civ. App. - Corpus
Christi 1968, writ ref'd n.r.e.); Freed v. Bozman, 304 S.W.2d
235 (Tex. Civ. App. — Texarkana 1957, writ ref'd_n.r.e.). It
also is agreed that defendant Exchange had a prior recorded
deed of trust lien upon the three lots and improvements involved
and that plaintiff had perfected its statutory materialman's
lien upon each of them. The question is which has the superior
lien. Plaintiff concedes that the prior recorded deed of
trust lien is superior to its statutory lien unless it can
be shown that its materials can be removed from the premises
without material injury to the existing improvements or to
the materials themselves. Neither party contends that the
land will be injured by removal of Ehe tile roof.
While the supreme court in Whirlpool laid to rest many
of the long standing problems with respect to superiority of
liens which have troubled the courts and litigants for years,
it did not answer the threshhold question, namely, what
constitutes material injury. Defendant contends that we must
_3_
NO. 20155
Monocrete Pty. Ltd., d/b/a FROM A DISTRICT COURT
Monier Company
VS.
Exchange Savings & Loan
Association, et al OF DALLAS COUNTY, TEXAS
July 29, 1980
Garson R. Jackson, Clerk
Supreme Court of Texas
Supreme Court Building 7 1
Austin, Texas 78711 U 0
Dear Sir:
In connection with application for writ of error filed in my
office in the above cause on July 25, 1980, I am transmitting here—
with the application and entire record, consisting of the following:
M4. Transcript of Record, 1 vol.
V/22. Statement of Facts, 2 vol.
3. Supplemental Statement of Facts, 1 vol.
Vi notebook, (board and tile not included)
xfli Exhibits, 1 vol.,
fl\5. Motion for Extension of Time to File Appellant's Brief, 3 copies
V/E. Brief for Appellant, 4 Copies
“g? Brief for Appellee, 5 copies
g/g: Supplemental Brief for Appellee, 4 copies
:jé;_ Appellant's Reply to Supplemental Brief fOr Appellee, 5 copies
V\ ;;p{/ Appellee's'Motion for Rehearing, 3 copies
fFll. Response to Appellee's Motion for Rehearing, 3 copies
L// 2. Application for Writ of Error, 12 copies
13. Check in the amount of $10.00, the cost of filing fee in the
Supreme Court \
v/l4. Certified copy of Opinion of Court of Civil Appeals
Vfl5. Certified copy of Judgment and Orders of Court of Civil Appeals
Very truly yours,
JEANNETTE JOHNSON, CLERK
By: j I I Deputy
Melanie eton
look to the nature of the improvements which are sought to be
removed and it quotes from Whirlpool for authority. It seems
to argue that removable improvements are limited to "accessories"
or to an improvement which is "connectable" to the structure.
We do not agree. While the supreme court in Whirlpool was
concerned with disposals and dishwashers, it did not limit
its holding to accessories, connectables or appliances. The
court's discussion of the nature of the improvements was limited
to its determination of whether the improvements were, in
the first instance, incorporated into the structure so as to
bring them within the purview of article 5459. 517 S.W.2d at 266.
For the same reason, we do not agree with defendant that a roof
may not be removed because it is a "basic" part of the structure.
No Texas authority, either before or after Whirlpool, has
been found which attempts to define "material injury" nor do
we believe the term is susceptible of precise definition.
As the authorities illustrate, each case must be determined
upon its particular facts. In the following cases, materials
were held to be removable: First Continental Real Estate
Investment Trust v. Continental Steel Co., 569 S.W.2d 42 (Tex.
Civ. App. — Fort Worth 1978, no writ) (windows and doors could
be removed by taking out brick around them without causing
ultimate damage to residence); American Amicable Life Insurance
Co. v. Jay's Air Conditioning & Heating, Inc., 535 S.W.2d 23(Tex. Civ. App. — Waco 1976, writ ref'd n.r.e.) (air conditioning
-4—
units and heating units held removable from apartment complex
without material injury thereto); Wallace Gin & Burton—Lingo
Co.:’104 S.W.2d 891 (Tex. Civ. App. — Austin 1937, no writ)
(materials used in erection of cotton house connected by
roof extension to a cotton gin could be removed without
materially damaging adjoining gin). The following are examples
of non-removable improvements: Cameron County Lumber Co. v.
A1 & Lloyd Parker, Inc., 122 Tex. 487, 62 S.W.2d 63 (1933)
(lumber used to build house held not removable); Chamberlain
V. Dollar Savings Bank of New York, 451 S.W.2d 518 (Tex. Civ.
App. — Amarillo 1970, no writ) (brick could not be removed from
house without detriment or material injury to improvements);
Irving Lumber Co. v. Alltex Mortgage Company, Inc., 446 S.W.2d
64 (Tex. Civ. App. - Dallas 1969), affirmed, 468 S.W.2d 341(Tex. 1971) ("shell houses" became merged with completed houses
and could not be removed and solgpseparately without damaging
realty). In the light of these authorities, we must examine
the record before us to determine if the trial court's
findings are so against the great weight and preponderance
of the evidence as to render them manifestly unjust.
Harrison v. Chesshir, 159 Tex. 359, 320 S.W.2d 814 (1959);
In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).
The materials sought to be removed are precast concrete
roofing tiles which are 16 1/2" by 13" by 1/2" and weigh about
ten pounds each. These are identified in the record as "field
tile." The tiles are corrugated so that when one row is laid
-5...
to overlap another, an interlocking effect results. The
roof system, of which the tiles are a part, is constructed
as follows: A solid deck of 1/2” plywood is installed over
the exposed rafters of the structure, in this case a townhouse;
the decking is then covered with a layer of felt paper; strips
of l" by 4" wood lathing are then nailed end to end across the
length of the roof about 12 inches apart; the tiles are then
laid over the lathing in rows so that each tile overlaps the
next and each row overlaps the preceding row. Around the
perimeter of the roof is nailed a fascia board to cover the
exposed rafter ends. Trim tiles, which slightly overhang
the fascia board, are nailed around the perimeter of the roof.
Additionally, the system employs rake tile and ridge tile
whfch cover the ridge rows and are fixed in place by mortar.
When tiles abut a wall or vent pipes which protrude through
the roof line, lead flashing is installed to overlap the
tile in order to prevent water leakage. The interlocking
effect created by the overlapping of tiles and by the lath
is not secure in itself; consequently, depending upon the
pitch of the roof, some of the tiles must be nailed to the
one nail—size hole is left in each
lath. For this purpose,
-
Here, the roof was not
tile during the molding process.
severely pitched; therefore, only every second tile in every
second row was nailed.
As stated before, only the tile is sought to be removed
The record shows that on
from the three houses in question.
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the average each house contains about thirty—seven to thirty—nine
squares of tile which translates into 3,700 to 3,900 pieces of
tilef Of these, about ninety percent are field tile and
ten percent are a combination of rake, trim and ridge tile.
The retail price of each piece of field tile is forty—five
cents and the labor cost for the removal of all the
tile would be about ten dollars per square.
During the installation process, the tile is lifted to
the roof of the house by means of a thirty—two foot conveyor
belt and spaced in stacks about the surface of the roof so
as not to create undue weight stress on any part of the decking.
The testimony is that removal would be accomplished in a
reverse order from the installation. Five witnesses, each
with varying degrees of experience and expertise with concrete
tile roofs, gave testimony regarding installation and removal
of the roofs.
Steward, the owner of S & H Roofing Co., who was a
defendant in the trial court, was called as an adverse witness
by plaintiff. He had been in the roofing business for many
years; however, his experience with concrete tile was limited
to four jobs. He testified: "Well, there would be some
broken tile if you take them off and there would probably
be a little damage to the house, but I don't think it would be
much." The damage to the house, according to Steward, consisted
of "possible" tearing of some felt, a bending of flashing, and
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some nail holes. He could not testify that the nails
penetrated the decking and into the attic. Kilgore was
the head of plaintiff's contract division and charged with
the training of its installers. He had participated in
the removal of one entire roof and, on another occasion, had
removed a part of a roof for the purpose of constructing an
addition to a house. He testified that, "No damage occurred to
the tile except for an occasional broken one, but primarily,
it is all useful material. There should be no damage to the
tile or to the house as long as reasonable care is taken."
He explained that of those tiles which are randomly nailed,
the nails are removed with flat-jawed pliers and are easily
removed because they are necessarily not driven flush with the
top of the tile, otherwise the tile might be shattered in
installation. According to Kilgore, tiles could possibly
be broken by walking upon them, however, because a roof
is removed in a manner reverse from its installation, there is
little occasion for walking on the tile.
Stell was plaintiff's installation adviser with twenty—five
years experience in the roofing business and extensive personal
experience in laying concrete tile. He had never removed an
entire concrete tile roof but had removed clay tile, a softer
material, with only occasional breakage. He had removed sections
of plaintiff's tile and experienced no damage to the structure
and only an occasional broken tile. On an average roof, only
-8-
three or four tile would be broken by walking on it. While
flashing will need be bent to remove tile, no damage results
2'
because it is flexible and can be bent back when the tile is
replaced.
Beddall supervised construction of the houses in question
for Russell Builders and was Exchange's representative at
trial. While he had supervised construction of about twelve
houses using concrete tile, he had only one experience in
removing and reinstalling tile. He had removed all the tile
from a garage in the townhouse development, added a second
story addition, and replaced the tile. In calculating the
cost of the addition, he had estimated a loss of twenty percent
of the field tile, ten percent of the rake tile and all of the
ridge tile. He testified that his estimate "worked out real
well" in the course of construction. With respect to damage
to the existing structure, Beddall testified that there might
possibly be damage to the fascia, the felt paper,and the stucco
walls, but he acknowledged that whether the stucco walls were
scratched at all would depend upon how carefully the tile was
removed.
Summarizing all of the evidence in the record and, as we
0 U
must, assuming a requisite skill and care in removal, we find
the only injury which might occur to the existing structure
would be nail holes left by those tiles which were randomly
nailed; there would possibly be some cracking of paint on the
lead flashing; and possibly some tearing of the felt paper. We
-9-
do not consider this evidence of material injury to the existing
structure and therefore hold the trial court's finding to the
contrary is against the great weight and preponderance of
the evidence.
In further support of its contention that the roof may not
be removed because it is a part of the basic structure, defendant
argues