Federal Land Bank of New Orleans v. Robinson

• Decision Date: 04 May 1931
• Docket Number: 28745
• Court: Mississippi Supreme Court
• Parties: FEDERAL LAND BANK OF NEW ORLEANS v. ROBINSON et al

134 So. 180

160 Miss. 546

FEDERAL LAND BANK OF NEW ORLEANS v. ROBINSON et al

No. 28745

Supreme Court of Mississippi

May 4, 1931

Division A

1 MOETGAGES. Mortgagee's action in foreclosing for entire indebtedness without actual notice to mortgagors, after foreclosing for delinquent installment only, held legal fraud on mortgagors' rights, authorizing recoupment of damages.

Mortgagee land bank, after declaring on its minutes that it would foreclose for entire indebtedness secured by trust deed, at instance of its attorney acquiesced in changing plan and consented to foreclosure sale for single delinquent installment only. Thereafter land bank's local attorney bid in property at foreclosure sale, and sale was approved and ratified by all parties, but, attorney being unable to secure purchaser under such sale, purchaser and land bank agreed to set aside their action, and foreclosed for entire indebtedness without notice to mortgagors other than by publication, and without any further default on mortgagors' part. Though no actual fraud was committed by mortgagee, proceeding constituted legal fraud on mortgagors' rights, since they were advised that debt had been adjusted, and were denied privilege of attending second sale and protecting their interest.

2 MORTGAGES.

Generally in absence of prohibition in mortgage, mortgagee may foreclose for past-due note or installment only.

3. BANKS AND BANKING.

That executive committee of mortgagee land bank did not place on minutes resolution authorizing attorney to sell under foreclosure for past-due installment only did not render sale for installment void as against mortgagors.

4. BANKS AND BANKING.

Executive committee of federal land bank held to have apparent authority to sell mortgaged land for delinquent installments, and mortgagor could rely thereon.

5. EVIDENCE. In mortgagee's action for balance due on mortgage note after foreclosure sale, evidence of mortgagee's offer of compromise held properly excluded.

Such evidence was properly excluded, because, among other things, offer of compromise imposed attorneys' fees, large in amount, on mortgagors, and did not have effect of restoring situation as it existed on date of second foreclosure sale for entire indebtedness, which sale constituted fraud on mortgagors' legal rights because made without notice to mortgagors.

6. MORTGAGES. Instruction respecting mortgagee's right to recover balance due on mortgage note after foreclosure held properly refused.

Requested instruction was properly refused because it made market value at time of sale by mortgagee after it had purchased property at foreclosure sale the test of recovery, whereas issue of fair market value of land was fixed as of foreclosure sale for entire indebtedness, when mortgagors' cause of action for damages for sale without notice accrued, and because sale by mortgagee which had bid in property at foreclosure sale occurred about 15 months after foreclosure sale during which period evidence showed that land had become lower in market value, and that houses and land had deteriorated.

7. MORTGAGES.

Injured mortgagor, damaged by fraudulent sale for inadequate price, without notice, may sue in equity to set aside sale or at law for damages.

8. MORTGAGES.

Mortgagor, damaged by fraudulent foreclosure sale for inadequate price, if sued, may diminish debt by way of recoupment, or, if damages sustained equal or exceed debt, he may extinguish debt.

HON. W. A. ALCORN, JR., Judge.

APPEAL from circuit court of Bolivar county, Second district, HON. W. A. ALCORN, JR., Judge.

Action by the Federal Land Bank of New Orleans against Rosalie Robinson and husband. Judgment for defendants, and plaintiff appeals. Affirmed.

Affirmed.

Wells, Jones, Wells & Lipscomb, of Jackson, for appellant.

In Instruction No. 12 plaintiff sought to submit to the jury the very question as to whether or not the sale by the Federal Land Bank to Brooks for twenty-six thousand dollars was for the full, fair, market value of the land. Under that instruction if the jury found that said sale at twenty-six thousand dollars was for the full, fair, market value, then the defendants had sustained no damages by the sale of the property at that price, and the defendants were still due the six thousand five hundred dollars to the Federal Land Bank after crediting the twenty-six thousand dollars on the indebtedness. This error is so palpable as to require a reversal of this case in this court.

Where the executive committee of the board of directors had ordered the foreclosure for the entire indebtedness of twenty-five thousand dollars and interest and expenses, having declared the entire indebtedness due without said action ever having been rescinded. This action could not be reversed or altered by any subordinate official or by any other body save either the board of directors or the executive committee of the board of directors.

14a C. J., pages 81, 95, 96, 354, 355, 377, 421; 2 Thompson on Corporations (3 Ed.), 768.

A trustee in deed of trust could not buy and execute a valid deed to himself personally, where the endorser of the note, and the junior lienees, never consented thereto.

White v. Trotter, 14 S. & M. 31; Lawrence v. Hand, 23 Miss. 103.

Where the highest bidder at a foreclosure sale, made under a deed of trust, is given by the trustee until the following day in which to make good his bid, and then fails to do so, the trustee is without power to declare the person who made the next highest bid at the sale the purchaser of the property and execute to him a deed thereto. In order to then sell the property the trustee must readvertise it for sale as provided in the deed of trust.

Valentine v. Dunagin-Whitaker Company, 102 Miss. 563; McPherson v. Davis, 48 So. 627.

Land can be conveyed only by writing.

Sec. 2422, Hemingway's Code of 1927; Walton v. Lowry, 74 Miss. 484; Weems v. Mayfield, 75 Miss. 286.

The trustee never made any written memorandum of the attempted sale as required by the statute of frauds.

Sec. 3325, Hemingway's Code of 1927; Howie v. Swaggard, 107 So. 556.

Defendants knowing that the land was worth substantially no more than the twenty-five thousand dollars borrowed on same, refused the offer to reduce their damages to nothing, and by so doing they waived the alleged wrongful action of the bank and are now estopped to set up by way of recoupment any alleged damages growing out of same.

Scott & Garrett v. Green River Lumber Co., 77 So. 309, 116 Miss. 524; Upton v. Adcock, 110 So. 774, 145 Miss. 372; Studdard v. Carter, 82 So. 70, 120 Miss. 246; Wynne v. Mason, 18 So. 422, 72 Miss. 424; Station v. Bryant, 55 Miss. 261.

Shands, Elmore & Causey, of Cleveland, for appellee.

The trustee had authority under the terms of the deed of trust to foreclose for one instalment only.

Bridges v. Ballard, 62 Miss. 237; Magruder v. Eggleston, 41 Miss. 284; 41 C. J., p. 856, par. 1044.

The second foreclosure was made without notice to defendants that the plaintiff had disaffirmed or had permitted Scott to disaffirm the May sale. The defendant was entitled to such notice.

Caldwell v. Kimbrough, 91 Miss. 877, 908; Van Vlissinger v. Lenz, 49 N.E. 422.

The mere constructive notice of the publication would not be responsive to the requirements. The publication of a notice of foreclosure in a public newspaper was intended to invite purchasers.

Hoffman v. Anthony, 75 Am. Dec. 701, 702.

Where a mortgagee sells the mortgaged lands under a power of sale, where there has in fact been no breach of condition, the mortgagor, if he so elects, can recover damages of the mortgagee, whether the mortgagor can or cannot redeem the premises from the purchaser at the mortgage sale.

Rogers v. Barnes, 47 N.E. 602; Burnett v. Dunn Commission & Supply Company, 104 S.E. 137, 138; Dwyer v. Rowan, 73 S.W. 384; Missouri Real Estate Company v. Sims, 78 S.W. 1006; 98 S.W. 783; O'Brien v. Logan, 128 N.E. 878.

The grossly inadequate purchase price bid at the sale, under the deed of trust, invalidates the sale as fraudulent in law.

Elmslie v. Mayor, 35 So. 201; Hesdorffer v. Walsh, 127 Miss. 261, 270; Baldwin v. Anderson, 103 Miss. 462, 467; Foster v. Campbell, 145 Miss. 502, 514.

OPINION

McGowen, J.

The appellant, the Federal Land Bank, filed its declaration against the appellees, Rosalie Robinson and her husband, seeking to recover the balance due on their note, the principal of which was twenty-five thousand dollars. The appellees in the court below filed several pleas of recoupment, the nature of which will more fully appear in the statement of facts. The case was submitted to a jury, and a verdict returned for the appellees, and judgment was rendered accordingly; from which judgment an appeal is prosecuted here.

On April 1, 1926, Mrs. Rosalie Robinson and her husband, J. T. Robinson, executed and delivered a note, of that date, for twenty-five thousand dollars, and to secure the note executed a deed of trust on her plantation, consisting of about nine hundred sixty-two acres of land situated in the Delta in Bolivar county. The note was an amortization note, payments to be made in thirty-five annual installments, due on the 1st day of November of each year after the date of its execution. The first installment of eight hundred eleven dollars and forty-six cents fell due on the 1st day of November, 1926. The appellees never paid the first installment or any other.

Being authorized so to do by the terms of the deed of trust, the executive committee of the bank on January 27, 1927, passed a resolution declaring the entire indebtedness due and payable and directed the president of the bank to employ counsel to immediately foreclose the deed of trust; and on...