Wallace v. Dave Hansen Construction Co.

593 P.2d 307, 122 Ariz. 84, 1979 Ariz. App. LEXIS 432
CourtCourt of Appeals of Arizona
DecidedFebruary 22, 1979
DocketNo. 1 CA-CIV 3663
StatusPublished
Cited by2 cases

This text of 593 P.2d 307 (Wallace v. Dave Hansen Construction Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wallace v. Dave Hansen Construction Co., 593 P.2d 307, 122 Ariz. 84, 1979 Ariz. App. LEXIS 432 (Ark. Ct. App. 1979).

Opinion

OPINION

FROEB, Judge.

George and Joan Wallace (buyers) entered into a contract with Dave Hansen Construction Company, Inc. (seller) for the purchase of a house to be built by seller. The house was built and the escrow at USLIFE Title Company of Arizona (escrow agent) closed in due course. Approximately six months later, the buyers were billed by Arizona Public Service (APS) and Mountain States Telephone and Telegraph Company (Mountain Bell) for a pro rata share of work done by the two utilities in converting the home subdivision to an underground utility area. After the seller and escrow agent refused the buyers’ demand that they pay the two bills, the buyers brought this action against them. The seller prevailed in a jury trial and the escrow agent was granted summary judgment. The buyers appeal from both judgments dismissing their complaint.

The buyers raise the following issues against the seller:

(1) Was the interest of APS or Mountain Bell a lien of any kind against the property purchased by the buyers on or before December 8, 1972, when the seller’s deed was recorded?

(2) Is the “lien” of APS or Mountain Bell included within the warranty of title of the seller’s deed?

[86]*86(3) Did the trial court err in permitting the seller to mention insurance during his opening remarks?

(4) Did the trial court err in refusing any of the buyers’ proposed jury instructions?

(5) Did the trial court err by allowing parol evidence with respect to the agreement between the buyers and seller?

The buyers raise the following issues against the escrow agent:

(1) When an escrow agent has actual knowledge of “liens” adversely affecting title to property during an escrow, must the agent disclose them to a buyer?

(2) When an escrow agent encounters an “underground conversion service area” affecting property and the effect of it is not specifically provided for in escrow instructions, must the agent obtain further instructions before closing?

(3) Did the trial court err in granting the escrow agent’s motion for summary judgment on the buyers’ amended complaint?

(4) Is the escrow agent entitled to attorney’s fees caused by its own omission under the agreements of the parties?

Homeowners in Clearwater Hills Subdivision initiated procedures to petition the Arizona Corporation Commission in May 1970 for the creation of an underground conversion service area pursuant to A.R.S. §§ 40-341-356 which were then in effect but have since been amended.

Notice of the proceedings to form the underground conversion service area was recorded in the Maricopa County Recorder’s Office in August 1970. That notice provided, in part:

If, after a hearing, the formation of this Underground Service Conversion Area is approved and ordered by the Arizona Corporation Commission, the lots and parcels described in Exhibit A will be subject-to liens covering their respective shares of the conversion costs.

In October 1970, the Arizona Corporation Commission issued Decision No. 40939, ordering, in part:

1. An underground conversion service area is hereby established within the area outlined in red on the map attached hereto as ‘Exhibit A’ and by this reference made a part hereof, such area to be known as CLEAR-WATER HILLS SUBDIVISION CONVERSION AREA.
2. Arizona Public Service Company and The Mountain States Telephone and Telegraph Company are hereby authorized to charge the underground conversion costs to each lot or parcel of real property within Clearwater Hills Subdivision Conversion Area. Said underground conversion cost shall not exceed the estimated costs indicated in the joint report admitted in evidence as Petitioners’ ‘Exhibit B’.

Mountain Bell and APS began construction of the underground conversion service area in March 1972. The escrow officer handling the Wallace-Hansen escrow knew that APS and Mountain Bell were working on the site, but had no instructions from the parties as to either of these potential obligations and closed the escrow without further consideration of them.

The buyers and seller executed their Agreement to Purchase Real Property in October 1972. The escrow instructions were signed the same month. The Joint Tenancy Deed was executed and acknowledged in November 1972, and escrow closed and the deed was recorded in December 1972.

The utility companies, having completed their work in May 1973, perfected their liens, and demanded payment from the buyers in June of that year.

CLAIMS OP THE BUYERS AGAINST THE SELLER

The first claim raised by the buyers against the seller is whether any lien in favor of the utility companies existed before the deed was recorded in December 1972. We hold that APS and Mountain Bell did not then have liens against the property. A.R.S. § 40-350(B) is dispositive as to when the underground conversion cost be[87]*87comes a lien against the real property affected. The version of that section in effect at the time pertinent to this action read, in part:

The underground conversion cost to be paid by each owner to each public service corporation or public agency concerned shall be a lien separately on each privately owned parcel of real property within the underground conversion service area in favor of such public service corporation or public agency upon recording ih the office of the county recorder of the county in which the underground conversion service area is located, of a notice or notices of lien within ninety days after completion of the removal of the overhead system in public places, whether or not the connections to serve the individual lots have been completed, as provided in § 40-349.

Under this statute, the charge or assessment for costs involved are only a potential lien until the lien is recorded. We reject the argument of the buyers that the lien “relates back” as does an Arizona mechanics’ lien. See Wahl v. Southwest Savings & Loan Assn., 12 Ariz.App. 90, 467 P.2d 930 (1970), vacated on other grounds, 106 Ariz. 381, 476 P.2d 836 (1970). The mechanics’ lien statute, A.R.S. § 33-992, expressly provides for relation back to the time of the filing of the notice. The statute in force at the pertinent time here did not. In fact, the language of § 40-350(B) expressly provided to the contrary.1

The second issue raised against the seller is whether the seller’s warranty of title included the “liens” of the utility companies. Since we have held that the utilities did not have liens at the closing of the sale transaction, this question is no longer before us.

The third issue is whether reversible error occurred when the seller mentioned title insurance in his opening statement.

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Related

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804 P.2d 841 (Court of Appeals of Arizona, 1991)
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641 P.2d 912 (Court of Appeals of Arizona, 1982)

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Bluebook (online)
593 P.2d 307, 122 Ariz. 84, 1979 Ariz. App. LEXIS 432, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wallace-v-dave-hansen-construction-co-arizctapp-1979.