## Facts

- Buyers contracted with a seller of kit-home materials to build a house on land they were purchasing; the purchase price was financed through installment payments secured by a deed of trust.
- The day after the kit-home contract, Buyers financed the land purchase with a loan from a bank and granted the bank a first deed of trust on the property.
- The seller learned of the bank’s existing first lien and required protection before shipping materials because the seller would hold a junior lien.
- The seller contacted the bank and requested that the bank notify the seller if Buyers became delinquent on the first-lien payments and if foreclosure proceedings were initiated.
- The bank promised to provide such notice; the seller then shipped materials and accepted a second deed of trust.
- Buyers became delinquent on the bank loan; the bank sold the note and first deed of trust to a third party.
- The third party foreclosed without the seller receiving notice; the property was sold after foreclosure for $27,500.
- The seller sued the bank for breach of the commitment to notify; after a bench trial, the court awarded $22,375 (sale price less the unpaid balance on the first note, $5,125).

## Issues

1. Whether the bank’s promise to notify the seller of delinquency and foreclosure was enforceable as a contract supported by consideration or under promissory estoppel.
2. Whether the bank breached that commitment by failing to provide notice despite selling the note and deed of trust.
3. Whether the lack of notice proximately caused the seller’s loss and whether damages measured as foreclosure-sale value minus the remaining first-lien balance were supported by the evidence.

## Decision

- The appellate court affirmed the judgment for the seller.
- The bank’s promise to notify was enforceable based on the seller’s reliance and the trial court’s finding of consideration (consistent with promissory estoppel principles).
- The bank breached by failing to notify the seller of delinquency and foreclosure activity.
- The seller proved causation because timely notice would have allowed steps to protect the junior lien interest.
- The damages award of $22,375 was supported by the evidence and was not speculative.

## Legal Principles

- A promise by a senior lienholder to notify a junior lienholder of delinquency and foreclosure can be enforceable where the junior lienholder provides consideration or reasonably relies in a way the promisor should expect.
- Transfer of the senior note and deed of trust does not excuse the promisor’s liability for its own failure to perform an assumed notice obligation.
- Causation may be shown by evidence that notice would have allowed the junior lienholder to protect its security position (including curing default or arranging payoff/refinancing).
- Damages for breach of a notice commitment may be measured by the lost equity value the junior lienholder could have preserved, calculated as sale value less the amount required to satisfy the senior lien.

## Conclusion

The court held the bank liable for failing to provide promised notice of delinquency and foreclosure, concluding the promise was enforceable based on the seller’s reliance in proceeding with a subordinate security interest, and it upheld damages reflecting the seller’s lost equity after satisfaction of the first lien.


Miles Homes Div. of Insilco Corp. v. First State Bank of Joplin, 782 S.W.2d 798 (Mo. Ct. App. 1990)