Peterman-Donnelly Eng'rs & Contractors Corp. v. First Nat'l Bank of Ariz

In Peterman-Donnelly Eng'rs & Contractors Corp. v. First Nat'l Bank of Ariz., 2 Ariz. App. 321, 408 P.2d 841 (1965), the Apache Junction Chamber of Commerce borrowed $10,000 from Eyre, secured by a mortgage on property where the Chamber intended to construct a baseball facility. 2 Ariz. App. at 322, 408 P.2d at 842. The Chamber conveyed the property to a baseball association and eventually a contractor started construction of the project. Id. The association then borrowed $35,000 from a bank and paid off the original loan from Eyre. Id. The contractor filed a mechanic's lien and successfully foreclosed, but execution was stayed pending the trial court's determination of the lien priorities between the contractor and the bank. Id. On appeal, this court determined that notwithstanding the perfected mechanic's lien, the bank was entitled to step into Eyre's shoes, or in other words, equitably subrogate into Eyre's original loan position. Id. at 325, 408 P.2d at 845. The court quoted the relevant portion of 33-992, and stated that because the bank's lien attached to the property after the mechanic's lien, "the statute is applicable, unless some other factor affords the appellee a priority, in whole or in part." Id. With no additional statutory analysis, the court then determined, "consistent with equity and law," that the bank's lien should be equitably subrogated to the Eyre mortgage. Id.