Court: Supreme Court of Alabama; January 21, 1993; Alabama; State Supreme Court
A dispute arose regarding the priority of liens between Metro Bank and Henderson's Building Supply Company, Inc. Carol Chandler, president of Lakeside Cove, Inc., initiated construction of a commercial building in St. Clair County in March 1991. Chandler secured a $125,000 mortgage from Metro Bank and contracted with Henderson for building materials. On March 25, 1991, Henderson provided Chandler with a statutory notice of its lien, which Chandler acknowledged. Henderson commenced material deliveries on March 26, and Metro Bank recorded its mortgage on April 2.
Chandler defaulted on payments to both Metro Bank and Henderson. On July 26, 1991, Henderson filed a materialman's lien for $22,742.60, claiming priority over Metro Bank's mortgage. After Metro Bank sued Chandler, Henderson sought to consolidate its claims and intervene, asserting its lien's superiority. The trial court initially ruled in favor of Metro Bank but later allowed Henderson to intervene and enjoined the foreclosure sale pending a resolution of lien priorities.
Ultimately, the trial court determined that Henderson's materialman’s lien had priority over Metro Bank’s mortgage for $17,500. Metro Bank appealed this ruling, but the court affirmed the decision, outlining that a materialman's lien exists immediately upon providing materials but becomes enforceable only when properly filed and acted upon. The lien's priority is established according to Alabama law, favoring such liens over encumbrances that arise after work has commenced.
Liens, mortgages, and encumbrances established before the commencement of work generally retain priority over subsequent liens, with the timing of recording a mortgage and the provision of materials determining priority (citing relevant case law). Henderson established a materialman's lien in compliance with statutory requirements and perfected it, allowing the lien to retroactively relate to March 26, 1991, when materials were supplied. Consequently, Henderson's lien was prioritized over Metro Bank's mortgage, recorded on April 2, 1991. The trial court's ruling in favor of Henderson's materialman's lien priority was upheld. Henderson's claim for a higher judgment amount of $31,239.98 was not considered, as it was not challenged at the trial level or through a cross appeal, leaving the matter outside of the court's review. The decision was affirmed with concurrence from the judges involved.
