Opinion
No. 27016.
May 11, 2006.
Appeal from the Circuit Court of Dallas County, Honorable John W. Sims, Circuit Judge.
Brett D. Anders of Kansas City, MO, and James Fossard of Springfield, MO, for Appellant.
Kerry D. Douglas of Bolivar, MO, for Respondent.
Tierone Bank (Tierone) appeals from a summary judgment in which the trial court declared invalid a deed of trust securing a loan which had been assigned to Tierone. We reverse the judgment and remand the case for further proceedings consistent with this opinion.
I. Factual and Procedural Background
In 1976, David Ethridge and Mary Ethridge (hereinafter referred to individually as "David" or "Mary" and collectively as "the Ethridges") got married. In 1995, they moved to Dallas County, Missouri. When they first arrived, they lived with David's parents. In 1997, the Ethridges began residing on property in Dallas County that they leased from Geraldine Lewis. The property contained a house where the Ethridges lived and an adjacent building formerly used by Lewis as an art studio. In June 1999, the Ethridges purchased the property from Lewis. They took title to the real estate as tenants by the entirety. The Ethridges financed the purchase by borrowing money from Countrywide Home Loans (Countrywide). This loan was secured by a deed of trust on the premises.
David was the head of the household and made all of the decisions involving the couple's finances. At some point prior to August 2001, David decided that he wanted to refinance their home loan so he could remodel the old art studio and convert it into an income-producing rental house. At that time, the Ethridges owed approximately $74,000 on their loan to Countrywide. David wanted to borrow $100,000, pay off the existing loan and use the remaining proceeds to remodel the art studio. First Fidelity Residential Lending, Inc. (First Fidelity) agreed to make the loan.
On August 6, 2001, David and Mary came to Springfield, Missouri, to close the loan. Mary knew their house was going to be refinanced, and she figured she would have to sign something in order to get that done. The closing took place at the office of Springfield Closing Company. Officer Manager Lynn Huff (Huff) handled the closing. The documents to be signed included the Promissory Note (the Note) and Deed of Trust, which had been prepared by First Fidelity. Each of those documents contained only one signature line with David's name typed beneath it. The Deed of Trust defined the term, "Borrower," as "DAVID ETHRIDGE, A MARRIED MAN, AS HIS SOLE AND SEPARATE PROPERTY." This document contained a section entitled "TRANSFER OF RIGHTS IN THE PROPERTY" which stated:
This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower irrevocably grants, bargains, sells, conveys and confirms to Trustee, in trust, with power of sale, the following described property. . . ."
The Deed of Trust specifically identified that property as the Ethridges' Dallas County real estate. The document also provided that "BORROWER COVENANTS that Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property and. . . . Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record." The last paragraph above the signature line on the Deed of Trust stated: "BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it."
Huff's file contained a copy of the July 2001 title insurance commitment showing that title to the property was vested in David and Mary as husband and wife. Because Huff knew that David and Mary were married and co-owned the property, Huff explained to Mary that she would have to sign the Deed of Trust as David's spouse to show she was aware of the loan and understood their real estate was being held as collateral for the loan. David told Mary to sign the Deed of Trust. Mary understood that David wanted her to sign the Deed of Trust so he could refinance the house, pay off the existing deed of trust and use the remaining money for remodeling. She followed David's instruction because: (1) as head of the household, such decisions were made by him; and (2) Mary felt it was her obligation to do whatever David told her, including signing documents. David had the final say on all decisions, financial or otherwise. Both David and Mary signed and acknowledged the Deed of Trust, and Huff notarized their signatures.
The Ethridges received $15,754.17 of the $100,000 loan proceeds. The remainder of the money was used to pay off the existing loan to Countrywide in the amount of $74,204.44 and to pay other fees associated with the refinancing. The Ethridges used the money they received from First Fidelity to remodel the old art studio. In October 2001, First Fidelity assigned the Note and Deed of Trust to Tierone. The Ethridges made payments on the loan until December 11, 2002, when David was killed in an automobile accident. Thereafter, Mary made no further payments.
In August 2003, Mary filed a petition for declaratory judgment in the Circuit Court of Dallas County, Missouri. Mary prayed for cancellation of the Deed of Trust on the ground that it was void ab initio because she was not named as a grantor in the Deed of Trust, did not make any covenants of title and did not otherwise convey, via that instrument, her fee simple title as a tenant by the entirety in the property. In Tierone's amended answer, it denied the Deed of Trust was invalid. It asserted the Deed of Trust was ambiguous and should be construed to grant Tierone a valid, first-priority lien on the property. Tierone also asserted the following affirmative defenses: (1) Tierone was entitled to have the Deed of Trust reformed to create a valid lien on the property; (2) Mary should be estopped from denying the validity of the Deed of Trust; (3) Tierone should be granted an equitable lien on the property because the proceeds of the loan were used for Mary's benefit; and (4) the doctrine of equitable subrogation was applicable because the proceeds of the loan were used to extinguish the prior lien on the Ethridges' property.
After conducting discovery, Mary and Tierone filed opposing motions for summary judgment. The trial court granted Mary's motion and denied Tierone's motion for the following reason:
The Court . . . finds that the real estate described in the deed of trust at issue was owned by Plaintiff and her now deceased husband as tenants by the entirety and that in order to convey a lien to the Defendant's predecessor [First Fidelity], it was necessary that the deed of trust use appropriate words to convey the estate. In so determining, the Court finds that it is bound by the controlling precedent, as set forth by the Supreme Court of the State of Missouri, in Bradley et al. v. The Missouri Pacific Railway Company, 91 Mo. 493, 4 S.W. 427 (Mo. 1886), which held that the party in whom the title is vested must use appropriate words to convey the estate, and that signing, sealing and acknowledging a deed by a wife, in which her husband is the only grantor, will not convey her estate. The Court finds that in this case the party in whom the title is vested did not use appropriate words to convey the estate, even though the Plaintiff signed the Deed of Trust in question before a notary public. Therefore, the case is analogous to Bradley, and the Court is bound by the Bradley decision.
This appeal followed.
II. Standard of Review
In determining whether the trial court properly granted summary judgment, we employ a de novo standard of review. City of Springfield v. Gee , 149 S.W.3d 609, 612 (Mo.App. 2004). Accordingly, we do not defer to the trial court's decision to grant summary judgment. Murphy v. Jackson Nat'l Life Ins. Co. , 83 S.W.3d 663, 665 (Mo.App. 2002). Instead, we use the same criteria the trial court should have employed in initially deciding whether to grant Mary's motion. Stormer v. Richfield Hospitality Services, Inc. , 60 S.W.3d 10, 12 (Mo.App. 2001). We view the record in the light most favorable to the party against whom judgment was entered, and we accord that party the benefit of all inferences which may reasonably be drawn from the record. ITT Commercial Finance Corp. v. Mid-Am. Marine Supply Corp. , 854 S.W.2d 371, 376 (Mo. banc 1993). "The propriety of summary judgment is purely an issue of law." Id.
As the opinion in ITT explains, Rule 74.04 distinguishes between motions for summary judgment filed by a "claimant" and by a "defending party." Id. at 380. A claimant includes a party who seeks to obtain a declaratory judgment. Rule 74.04(a). A defending party includes one "against whom . . . a declaratory judgment is sought[.]" Rule 74.04(b). Thus, Mary was the claimant, and Tierone was the defending party in the case at bar. As the moving party, Mary was not entitled to summary judgment unless she demonstrated that there was no genuine issue as to any material fact and that she was entitled to judgment as a matter of law. Rule 74.04(c)(6); Cornejo v. Crawford County , 153 S.W.3d 898, 902 (Mo.App. 2005). Because Tierone asserted several affirmative defenses in its amended answer, Mary had to successfully overcome two different obstacles in order to demonstrate her entitlement to judgment as a matter of law:
All references to rules are to Missouri Court Rules (2006).
A claimant must establish that there is no genuine dispute as to those material facts upon which the claimant would have had the burden of persuasion at trial. Additionally, where the defendant has raised affirmative defenses, the claimant's right to judgment depends as much on the non-viability of the affirmative defenses as it does on the viability of the claimant's claim. A claimant moving for summary judgment in the face of affirmative defenses must also establish that each affirmative defense fails as a matter of law. However, as to each defense, the claimant need only establish that any one of the facts necessary to support the defense cannot be established.
Stormer , 60 S.W.3d at 12 (citations omitted). Thus, "the non-moving defending party has no obligation to raise or prove its properly-pled affirmative defenses to avoid the claimant's motion for summary judgment." Chouteau Auto Mart, Inc. v. First Bank of Missouri , 91 S.W.3d 655, 659 (Mo.App. 2002).
In Mary's petition, she alleged the Deed of Trust was invalid because she was not explicitly named as a "Borrower" in that document. Tierone denied that allegation on the ground that, due to ambiguity in the Deed of Trust, it should be construed to grant Tierone a valid first lien on the Ethridges' property. Assuming the Deed of Trust was invalid, Tierone also asserted the affirmative defenses of reformation, estoppel, equitable lien and equitable subrogation to avoid Mary's claim for declaratory relief. With the pleadings in this state, Mary was not entitled to summary judgment unless she established that there were no genuine issues of material fact and that she was entitled to judgment as a matter of law. To do so, she had to demonstrate the following: (1) the Deed of Trust was invalid as a matter of law (i.e., there were no genuine issues of material fact affecting the legal determination of its validity); and (2) each one of Tierone's affirmative defenses failed as a matter of law because one or more of the facts necessary to support a particular defense could not be established.
"An affirmative defense seeks to defeat or avoid the plaintiff's cause of action, and avers that even if the allegations of the petition are taken as true, the plaintiff cannot prevail because there are additional facts that permit the defendant to avoid the legal responsibility alleged." Mobley v. Baker , 72 S.W.3d 251, 257 (Mo.App. 2002).
III. Discussion and Decision
On appeal, Tierone argues that grant of summary judgment to Mary was erroneous for the following reasons: (1) the Deed of Trust is valid because it contains an ambiguity with respect to the identity of the Borrower, and thus the grantor, and should be construed to effectively convey Mary's interest in the real estate; (2) the Deed of Trust contained a drafting mistake which is subject to reformation so as to preserve and give effect to the intentions of the parties; (3) Mary should be estopped from asserting that David was the only grantor since such assertion renders false the title covenant in the Deed of Trust, and Mary accepted and agreed to such covenant; and (4) the circumstances justified the imposition of an equitable lien in Tierone's favor or the use of equitable subrogation to place Tierone in the position of the prior mortgage lender. All of these arguments were advanced and rejected below. The court granted Mary's motion for summary judgment because the trial judge concluded he was bound to do so by the "controlling precedent" of Bradley v. Missouri Pac. Ry. Co. , 4 S.W. 427 (Mo. 1887). Before we undertake a detailed analysis of Bradley , it is necessary to contrast the much different rights possessed by a married woman at common law from those granted to her by statute after passage of the Married Woman's Acts in Missouri.
At common law, a woman's money and the right to possess her chattels passed to her husband when she married. Otto F. Stifel's Union Brewing Co. v. Saxy , 201 S.W. 67, 69 (Mo. 1918). So long as the marriage endured, the husband was entitled to the use, rents and profits of all real estate acquired by the wife before and after she got married. Id. This vested life estate in the use and possession of the wife's real estate for their joint lives was alienable by the husband. Id. In addition, a husband was entitled to a vested estate by the curtesy in the real estate of his wife if certain conditions were met:
There are two gradations to an estate by the curtesy, to wit, curtesy initiate and curtesy consummate. The requisites or elements of the estate of curtesy initiate are: (1) Marriage; (2) seisen in the wife during coverture; and (3) issue born alive before the wife's death and capable of inheriting the estate. In addition to the above requisites, curtesy consummate includes the death of the wife. When these requisites respectively attach, both curtesy initiate and curtesy consummate are vested estates.
Duncan v. Duncan , 23 S.W.2d 91, 92 (Mo. 1929).
A husband's total control of his wife's real and personal property "had for its very foundation the idea that husband and wife were one because she merged in him, and he held the rights of both, and could act for both regardless of her wishes." Otto , 201 S.W. at 69. Stated more bluntly, "[t]he common law union resulting from a marriage is not a union of two persons, but it is the entire annihilation of one." State ex inf. Norman v. Ellis , 28 S.W.2d 363, 367 (Mo. banc 1930). Because a married woman ( femme covert) was considered one with her husband, she was under a legal disability and lacked the power to sue or be sued, make a valid contract or convey her interest in real property except by a deed joined, executed and acknowledged by her husband. See, e.g., Rogers v. Rogers , 177 S.W. 382, 383 (Mo. 1915); O'Reilly v. Kluender , 91 S.W. 1033, 1036 (Mo. 1906). The existence of these common law disabilities had a pronounced effect on the law relating to the validity of a deed conveying the wife's interest in real estate. "[T]he wife labors under certain disabilities, and the courts, with the view of protecting her rights, insist that the instrument shall disclose the performance of every act on her part necessary to convey her estate." Peter v. Byrne , 75 S.W. 433, 438 (Mo. 1903); see also Danciger v. Stone , 210 S.W. 865, 866 (Mo. 1919).
Between 1879 and 1889, the General Assembly passed a series of statutes, collectively referred to as the Married Woman's Acts, which emancipated married women by eliminating the above-described legal disabilities imposed upon them by the common law. See, e.g., § 3296 RSMo (1879); § 6864 RSMo (1889); § 6869 RSMo (1889). The effect of these statutes was to convert a femme covert into a femme sole (unmarried woman) in the eyes of the law. See Blair v. Chicago A.Ry. Co. , 1 S.W. 350, 351-52 (Mo. 1886). As our Supreme Court explained in Ellis :
The essential provisions of these statutes have been carried forward to the present day and are found in § 451.250 RSMo Cum. Supp. (2005) and § 451.290 RSMo (2000).
The married woman is no longer a femme covert in all respects as was her status under the common law. Her property is separate property. She is a femme sole for transacting and carrying on her business on her own account; to contract and to be contracted with; to sue and be sued; to enforce and have enforced against her such judgments as may be rendered for or against her, without her husband being joined as a party. She can convey her land without her husband joining in the deed.
State ex inf. Norman v. Ellis , 28 S.W.2d 363, 367 (Mo. banc 1930).
The foregoing review of Missouri law is helpful in understanding Bradley , which was decided in 1887. That case involved an ejectment action brought by the heirs of Lucy and Argillon Price to recover possession of certain real estate being used by the Missouri Pacific Railroad Company for right-of-way, side track and depot purposes. The land used by the railroad was part of an 80-acre tract that had originally been patented to Lucy as her separate property. In 1853, Argillon conveyed the property to one Edwards. Lucy's name did not appear in the body of the deed, and it did not refer to Argillon as a married man. Both Argillon and Lucy, however, signed and acknowledged the deed. Mesne conveyances led to the railroad ultimately obtaining title of the land deeded to Edwards. Bradley v. Missouri Pac. Ry. Co. , 4 S.W. 427, 427-28 (Mo. 1887). The first issue addressed by the Supreme Court was the validity of the deed to convey Lucy's interest in the property. The Court held that Lucy's acts of signing and acknowledging the deed did not make it effective as to her:
The wife, as will be seen, owned the property in her own right, and the fact that she signed her name to the deed, and acknowledged it before a proper officer, does not make it her grant. The party in whom the title is vested, must use appropriate words to convey the estate. Signing, sealing, and acknowledging a deed by the wife in which her husband is the only grantor, will not convey her estate.
Id. at 428. The second issue addressed by the Court was whether the ejectment claim was barred by the statute of limitations. The Court held that "[Argillon] was a tenant by the curtesy; and, though the deed was ineffectual to convey the estate of his wife, still operated as a conveyance of his life estate." Id. Since the deed was effective to convey his life estate in the property, Lucy would not have been able to maintain an action for possession so long as her husband lived. Therefore, no cause of action for possession accrued to her until Argillon's death, and the ejectment action was initiated within ten years after that occurred. Id. Finally, insofar as relevant here, the Court held that estoppel did not lie against Lucy because she had moved to California and neither encouraged nor had any knowledge of the uses being made of the property by the railroad. Id. at 429-30.
This rule has been reaffirmed in a number of subsequent decisions. See, e.g., East v. Davis , 204 S.W. 402, 403 (Mo. 1918); Driskill v. Ashley , 167 S.W. 1026, 1029 (Mo. 1914); Young v. Hyde , 164 S.W. 228, 230 (Mo. 1914); Golden v. Tyer , 79 S.W. 143, 144 (Mo. 1904); Drzewiecki v. Stock-Daniel Hardware Co. , 293 S.W. 441, 444 (Mo.App. 1927).
With this prologue completed, we now turn to an examination of Tierone's points on appeal. In its first point, it contends the Deed of Trust is valid because it contains an ambiguity with respect to whether Mary is a "Borrower," and thus a grantor, in that instrument. By this argument, Tierone implicitly acknowledges the long-standing rule in Missouri that a deed by only one of two tenants by the entirety conveys nothing. Austin Bass Builders, Inc. v. Lewis , 359 S.W.2d 711, 714 (Mo. banc 1962); Samuel v. Frederick , 262 S.W. 713, 716 (Mo. 1924); Mahen v. Ruhr , 240 S.W. 164, 166 (Mo. 1922); Manissi v. Manissi , 672 S.W.2d 738, 739-40 (Mo.App. 1984). Mary argues that the Deed of Trust is not ambiguous and, under the clear holding in Bradley and its progeny, her act of signing and acknowledging the Deed of Trust was ineffective to convey her interest in the real estate. We are persuaded that Mary has the better argument on this issue.
The issue of whether the Deed of Trust is ambiguous is a question of law. See Clampit v. Cambridge Phase II Corp. , 884 S.W.2d 340, 345 (Mo.App. 1994); Young Dental Mfg. v. Engineered Products, Inc. , 838 S.W.2d 154, 155 (Mo.App. 1992). That document is ambiguous "only if its terms are susceptible of more than one meaning so that reasonable persons may fairly and honestly differ in the construction of the terms." Clampit , 884 S.W.2d at 345. "Where no ambiguity exists, the intention of the parties must be gathered from the documents alone and not from the acts and deeds of the parties involved." Id.
Here, Tierone argues that Mary's act of signing and acknowledging the Deed of Trust creates an ambiguity. We disagree. David was the only obligor on the Note. The Deed of Trust identified the borrower as "DAVID ETHRIDGE, A MARRIED MAN, AS HIS SOLE AND SEPARATE PROPERTY." Since the Deed of Trust described David as the sole owner of the real estate, he would have to be named as a grantor in the body of the Deed of Trust for it to be valid. See Bradley v. Missouri Pac. Ry. Co. , 4 S.W. 427, 428 (Mo. 1887), and the additional cases cited in n. 3, supra. In addition, Mary would have been required to "join" in the Deed of Trust, even though the real estate was David's separate property. Chamberlain v. Spalding , 170 S.W.2d 454, 458 (Mo.App. 1943) (husband owning land under general conveyance to him alone cannot convey title in fee without his wife joining in the deed); see also Wright v. Martin , 674 S.W.2d 238, 243 (Mo.App. 1984); § 474.150.2 RSMo (2000) (providing that any real estate conveyance made at any time by a married person without the joinder or other express, written and duly-acknowledged assent of his or her spouse is deemed to be in fraud of the surviving spouse's marital rights unless the contrary is shown). Mary's act of signing and acknowledging the Deed of Trust would have been sufficient to show that she joined in a deed conveying real estate solely owned by her husband. See Peter v. Byrne , 75 S.W. 433, 438 (Mo. 1903). To demonstrate her joinder in the Deed of Trust, it was not necessary that she also be named as a grantor. Id. at 436. Furthermore, Mary's execution of the Deed of Trust to convey whatever marital rights she possessed in her husband's separate property would not have caused her to be bound by the covenant of title contained therein. § 442.030 RSMo (2000); Eul v. Beard , 47 S.W.3d 424, 426 (Mo.App. 2001). As drafted and executed, the Deed of Trust appears on its face to show that David, acting as the grantor, conveyed real estate solely and separately owned by him and that his wife, Mary, signed the instrument to show her joinder in the Deed of Trust. Accordingly, we do not find the terms of this instrument are susceptible of more than one meaning so as to create an ambiguity.
What the Deed of Trust purported to do, however, is not determinative of what it actually accomplished. The record discloses without dispute that David and Mary owned the real estate as tenants by the entirety. While the Deed of Trust was not ambiguous, it also was not a valid conveyance because, as the trial court correctly observed, Mary was not named as one of the grantors. See Bradley v. Missouri Pac. Ry. Co. , 4 S.W. 427, 428 (Mo. 1887), and the additional cases cited in n. 3, supra. Accordingly, Tierone's first point is denied.
To better facilitate our analysis, we next consider Tierone's fourth point relied on. In this point, Tierone contends Mary should not have been granted summary judgment because the circumstances justified the imposition of an equitable lien in Tierone's favor or the use of equitable subrogation to place Tierone in the position of the prior mortgage lender. It is undisputed that the Ethridges' real estate was subject to an existing mortgage in favor of Countrywide in the amount of $74,204.44. This mortgage was paid off using the proceeds of the loan obtained by David. Relying on Bradley , the trial court granted summary judgment on Tierone's affirmative defenses of equitable lien and equitable subrogation. For the reasons that follow, the court erred in doing so.
"There is no doctrine better settled than that the language of judicial decisions must be construed with reference to the facts and issues of the particular case, and that the authority of the decision as a precedent is limited to those points of law which are raised by the record, considered by the court, and necessary to a decision." State ex rel. Baker v. Goodman , 274 S.W.2d 293, 297 (Mo. banc 1954); Parker v. Bruner , 683 S.W.2d 265, 265 (Mo. banc 1985) (same holding); see also Porter v. Erickson Transport Corp. , 851 S.W.2d 725, 736 (Mo.App. 1993) (no prior decision is a precedent or implicates stare decisis where the facts are inapplicable). Our prior discussion of Bradley demonstrates that it did not involve any issue relating to an equitable lien or the doctrine of equitable subrogation. Accordingly, this case provides no support for the trial court's decision that these affirmative defenses raised by Tierone fail as a matter of law.
The authorities that do address this issue demonstrate why the court's conclusion is erroneous. As long ago as 1886, our Supreme Court noted that "[t]he doctrine seems to be well established that an agreement in writing to give a mortgage, or a mortgage defectively executed, or an imperfect attempt to create a mortgage, or to appropriate specific property to the discharge of a particular debt, will create a mortgage in equity, or a specific lien on the property so intended to be mortgaged." Martin v. Nixon , 4 S.W. 503, 505 (Mo. 1886). In Brown v. Dressler , 29 S.W. 13 (Mo. 1894), our Supreme Court considered whether a mortgage deed executed by a married woman in 1891 should have been annulled. At the point in time when Mrs. Brown executed the mortgage deed, the passage of the Married Woman's Acts had given her the power to enter into a binding contract. Id. at 13. Although the real estate was Mrs. Brown's separate property, the Supreme Court concluded that the mortgage deed was defective because her husband did not join her in making the deed. Id. at 14. Nevertheless, the Court reversed the judgment annulling the deed for the following reason:
This aspect of the court's opinion was later overruled in Farmers' Exch. Bank v. Hageluken , 65 S.W. 728, 729-31 (Mo. 1901).
[A]lthough the instrument in question in this case cannot operate as a deed, conveying the legal title of Mary E. Brown to her real estate to the defendant, it is not for that reason wholly inoperative and void. It may, for aught that appears, in apt words, pledge that real estate as security for the payment of a debt or the discharge of a contractual obligation binding upon her under the provisions of section 6864, supra, which the courts would enforce against her and her interest in the real estate described in the petition; or it may be regarded as an equitable mortgage, and held to create a lien or trust for the benefit of the defendant, which the courts ought to and would enforce. In this view of the question, the [Browns'] bill is entirely without equity, and should have been dismissed.
Id. (internal citations omitted). Thus, the fact that the Deed of Trust securing David's loan is defective does not, in and of itself, preclude Tierone from asserting equitable defenses against Mary's petition for declaratory judgment.
Tierone's first argument is that it is entitled to assert an equitable lien against the Ethridges' real estate. "To establish an equitable lien, the following must be present: 1) a duty or an obligation owing by one person to another; 2) a res to which that obligation fastens, which can be identified or described with reasonable certainty; and 3) an intent, express or implied, that the property serve as security for the payment of the debt or obligation." Estate of Ripley v. Mortgage One Corp. , 16 S.W.3d 593, 596 (Mo.App. 1999). The flaw in this argument is that David was the only person who signed the Note. Since Mary is not indebted or otherwise obligated to Tierone, the first element necessary to the establishment of an equitable lien fails as a matter of law. See Thompson v. Chase Manhattan Mortgage Corp. , 90 S.W.3d 194, 209 (Mo.App. 2002).
Tierone's second argument is based on the doctrine of equitable subrogation. We conclude that this argument has merit. In Anison v. Rice , 282 S.W.2d 497 (Mo. 1955), defendant Wilbur Rice and his mother, Eliza Rice, owned certain real estate as joint tenants. The property was encumbered by a deed of trust to Union Central Life Insurance Company, and foreclosure had been threatened. Wilbur orally negotiated with plaintiff Anison for a loan of $6,600 that could be used to avert a planned foreclosure sale scheduled for the next day. Wilbur guaranteed that, if plaintiff Anison loaned the money, Eliza would sign a note and deed of trust to secure the loan. Anison agreed to make the loan, and Wilbur signed a note and deed of trust. Approximately $6,000 was wired to Union Central to satisfy its encumbrance, and the rest of the money was given to Wilbur. After payment, Union Central released its lien against the Rices' property. Id. at 499-500. Thereafter, Eliza refused to sign the note or deed of trust, and Anison instituted an action for specific performance against Wilbur and Eliza. Eliza defended on the ground that Wilbur was not authorized to act on her behalf in negotiating the loan. The trial court entered a decree of specific performance and a money judgment against both defendants. On appeal, the Supreme Court held that there was insufficient evidence to prove that Wilbur was authorized to act as Eliza's agent. Therefore, the money judgment against her for the amount of the loan and attorney's fees was reversed. Id. at 501. Notwithstanding that holding, however, the Court held that the doctrine of equitable subrogation was applicable:
Under some circumstances, the payment of the amount due on a mortgage, when made by certain classes of persons (not mere volunteers), is held in equity to operate as an assignment of the mortgage. By means of the payment, the mortgage is not satisfied and the lien of it destroyed, but equity regards the person making the payment as thereby becoming the owner of the mortgage, at least for some definite purposes, and the mortgage as being kept alive, and the lien thereof as preserved, for his benefit and security. . . . This equitable doctrine, which is a particular application of the broad principle of subrogation, is enforced whenever the person making the payment stands in such relations to the premises or to the other parties that his interests, recognized either by law or by equity, can only be fully protected and maintained by regarding the transaction as an assignment to him, and the lien of the mortgage as being kept alive, either wholly or in part, for his security and benefit.
Id. at 503. The Court noted that the doctrine has been applied when one, having no prior interest and being under no obligation, pays off a mortgage at the instance of a party-debtor and for his benefit. Id. The Court also quoted with approval the following passage from comment a to § 162 of the Restatement of the Law of Restitution:
A court of equity may give restitution to the plaintiff and prevent the unjust enrichment of the defendant, where the plaintiff's property has been used in discharging an obligation owed by the defendant or a lien upon the property of the defendant, by creating in the plaintiff rights similar to those which an obligee or lien-holder had before the obligation or lien was discharged. In such a case the procedure is called subrogation, and the plaintiff is said to be subrogated to the position of the obligee or lien-holder. Although the obligation or lien has been discharged, the plaintiff can maintain a proceeding in equity to revive it for his benefit; in such a proceeding the court will create for the benefit of the plaintiff an equitable obligation or lien similar to that which was discharged.
Id. Smith v. Sprague , 222 N.W. 207 (Mich. 1928), which was extensively discussed and cited with approval in Anison , demonstrates that the doctrine of equitable subrogation can be applied to property owned by husband and wife as tenants by the entireties. In Smith , real property owned by the defendant and her husband was subject to an encumbrance that was about to be foreclosed. At the husband's request, his former daughter-in-law advanced money to have the mortgage released. The husband promised to give her a mortgage, but he died before providing the promised security. Smith , 222 N.W. at 207-08. The Michigan Supreme Court held that equitable subrogation applied, even though there was no proof husband acted for his wife in obtaining the loan that was used to extinguish the prior encumbrance on their property. Id. at 208. In citing Smith with approval, our Supreme Court noted that the doctrine of equitable subrogation applied equally to the wife:
In the shown circumstances that plaintiff paid the money to satisfy the encumbrance at the instance, promise and request of the husband, plaintiff was not a mere volunteer, and in these circumstances it was not necessary to go further and show the defendant wife made like promise and request. She, as did the husband, received the benefit of the discharge of the obligation.
Anison , 282 S.W.2d at 504.
We find Anison to be controlling here. David requested a loan from First Fidelity for the principal purpose of paying off the existing loan to Countrywide and extinguishing its lien on the Ethridges' property. The loan proceeds were used for that purpose, and Mary benefited from the discharge of Countrywide's lien against their property. Therefore, without regard for whether David was acting as Mary's agent in requesting the loan, the doctrine of equitable subrogation is applicable to revive Countrywide's $74,204.44 lien against the Ethridges' real estate for Tierone's benefit. Since Mary failed to demonstrate that Tierone's affirmative defense of equitable subrogation fails as a matter of law, the trial court erred in granting summary judgment.
As First Fidelity's assignee, Tierone stands in First Fidelity's shoes and succeeds to the rights and obligations that First Fidelity, as the original contracting party, would have under these circumstances. Freeman v. Leader Nat'l Ins. Co. , 58 S.W.3d 590, 597 (Mo.App. 2001); Doss v. EPIC Healthcare Management Co. , 901 S.W.2d 216, 222 (Mo.App. 1995); Stavrides v. Zerjav , 848 S.W.2d 523, 528 (Mo.App. 1993).
In so holding, we have considered Mary's argument that our decision in Thompson v. Chase Manhattan Mortgage Corp. , 90 S.W.3d 194 (Mo.App. 2002), precludes the application of equitable subrogation here. We find that argument unpersuasive because Thompson is factually distinguishable. There, husband and wife owned a ten-acre tract of real estate which was subject to three deeds of trust. When husband and wife got divorced, this marital real estate was awarded to husband. Wife was given an equalizing judgment in the amount of $102,000. Thereafter, husband applied for a loan from First Choice. At husband's request, wife executed a quit-claim deed which conveyed her interest in the property to husband, subject to judgments and liens of record. First Choice loaned husband approximately $89,000 and received a deed of trust from him. Approximately $26,000 of the loan proceeds were used to satisfy the three deeds of trust against the property. Id. at 198-99. Thereafter, First Choice attempted to rely on the doctrine of equitable subrogation to circumvent the priority of wife's judgment lien over First Choice's deed of trust. We held that this doctrine could not be so utilized because First Choice's failure to discover wife's judgment lien resulted from its own negligence and mistakes. Id. at 207. The case at bar presents no such issue of priority of liens. Furthermore, the three earlier deeds of trust in Thompson were satisfied after wife had quit-claimed all interest in the real estate to husband. Use of the First Choice loan proceeds to satisfy the three deeds of trust did not benefit wife by removing an encumbrance against real estate she owned at that time.
Tierone's fourth point on appeal has merit and is granted. Due to our disposition of this point, the judgment must be reversed. Therefore, we do not address Tierone's second and third points on appeal. The case is remanded for further proceedings consistent with this opinion.
We do not determine whether the issues relating to these affirmative defenses were correctly decided below. We would be remiss, however, if we did not point out that Bradley was the only authority upon which the trial court relied in granting summary judgment. It is difficult to discern how Bradley alone would defeat both of these affirmative defenses since reformation was not an issue in Bradley , the estoppel issue addressed therein involved facts radically different from the case at bar, and the trial court's judgment does not identify which essential element of these affirmative defenses is lacking as a matter of law.
SHRUM, P.J. — Concurs in separate opinion.
GARRISON, J. — Concurs.