United States Bank Nat'l Ass'n v. Burns - 406 S.W.3d 495 (Mo. Ct. App. 2013)

Rule:

In Missouri, a deed of trust securing a negotiable note passes with it. A party entitled to enforce a note is also entitled to enforce the deed of trust securing that note.

Facts:

Jeana Burns obtained title through a Missouri Warranty Deed to property located at 1536 Honey Locust Court in Chesterfield, Missouri (Property). Burns recorded the warranty deed in the St. Louis County Records. The deed contained the Property's address as well as a correct legal description of the Property. Title to the Property is solely in Jeana Burns’ name. Also, Daryl Burns executed an Assent to Execution of Deeds and Waiver of Marital Rights, waiving any right to the Property. This document was also recorded in the St. Louis County Records. Jeana Burns executed a promissory note (Note) in favor of Aegis Funding Corporation (Aegis). Attached to the Note was a deed of trust (Deed of Trust) for the Property that Burns executed in favor of Aegis, to secure repayment of the loan. The Deed of Trust listed Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary, and it stated that MERS acted as a nominee for Aegis. The Deed of Trust listed the Property's correct address but contained an incorrect legal description of the Property. Again, Daryl Burns executed an Assent to Execution of Deeds and Waiver of Marital Rights (Second Waiver), which was recorded in the St. Louis County Records. This document contains the same incorrect legal description of the Property. MERS, as nominee for Aegis, executed an Assignment of Deed of Trust (Assignment) assigning all of its rights, title, and interest in the Deed of Trust "together with any and all notes and obligations therein described or referred to" to US Bank, as Indenture Trustee for the Securities Trust. This Assignment was recorded in the St. Louis County Records, and it contained the same incorrect legal description of the Property. US Bank filed suit against Jeana Burns, Daryl Burns, and Subdivision, seeking in Counts I through III to reform the Deed of Trust, the Second Waiver, and the Assignment, respectively, to reflect the correct legal description of the Property. In Count IV, US Bank requested that the trial court declare the Deed of Trust the first-priority lien against the Property and quiet title to the Property in Appellant's name, subject to the Deed of Trust. Subdivision filed a cross-claim against Jeana Burns and Daryl Burns requesting payment of outstanding subdivision assessments, late fees, and collection costs. US Bank moved for summary judgment on all counts of its petition, and Subdivision moved for judgment on the pleadings regarding its cross-claim. The trial court granted both motions. In its summary judgment, the trial court ordered that the incorrect legal descriptions described above be reformed and declared the Deed of Trust a valid and enforceable lien against the Property. The trial court quieted title to the Property in the name of Jeana Burns, subject to the Deed of Trust. In its judgment on the pleadings, the trial court ordered Jeana Burns and Daryl Burns jointly and severally liable for subdivision fees and attorney's fees in the amount of $14,929.00. This appeal follows.

Issue:

Was the Bank entitled to enforce the deed of trust?

Answer:

Yes.

Conclusion:

The court found that the documents submitted by both parties confirmed that the Bank was in possession of the note, and both copies of the note contained endorsements, and the debtor failed to establish the existence of a genuine factual dispute regarding either the endorsement of the note to the Bank or the Bank's possession of the note. The Bank was the holder of the note under Mo. Rev. Stat. § 400.1-201(20) and as such, it was also the holder of the deed of trust, and therefore entitled to enforce the deed of trust.