Hancock Bank v. Travis
| Decision Date | 13 March 1991 |
| Docket Number | No. 89-CA-0938,89-CA-0938 |
| Citation | 580 So.2d 727 |
| Parties | HANCOCK BANK v. Milton Eugene TRAVIS and Willie Mae Travis. |
| Court | Mississippi Supreme Court |
William V. Westbrook, III, White & Morse, Gulfport, for appellant.
Malcolm F. Jones, Pass Christian, for appellee.
Before HAWKINS, P.J., and PITTMAN and BANKS, JJ.
BANKS, Justice, for the Court:
I
Hancock Bank appeals from an adverse ruling in its quest for a declaratory judgment. At issue is the effect of a borrower's election for disability insurance on a bank provided Truth-in-Lending 1 disclosure form where the bank failed to follow through and acquire the insurance. The bank concedes liability but seeks to restrict its exposure to a two year period of disability, the kind of policy it wrote at the time. Because the borrower was not informed of such a restriction by the form or in any other manner the chancery court denied the bank relief. Finding that the chancellor's ruling is not manifestly in error except with regard to the failure to allow credit for premiums which would have been paid and for mortgage payments not made when there was no disability, we affirm in part and reverse in part.
II
Hancock Bank initiated this action with a complaint for declaratory judgment pursuant to Miss.R.Civ.Pro. 57. Named as defendants in the suit were Milton Eugene and Willie Mae Travis. (Travises) The court below was asked to resolve an actual dispute by declaring the rights and obligations of the parties pursuant to a fifteen year, $40,000.00 promissory note and deed of trust executed by the Travises in favor of Hancock Bank and the truth-in-lending form executed in process of closing that loan. The bank sought to have the court declare that it was liable only for those mortgage payments which would have been made pursuant to the disability policy that it was offering at the time of the transaction which limited disability payments to a period of two years. The bank also sought a declaration of its rights with respect to premiums which would have been paid and two loan payments not made by the borrower prior to the onset of disability.
Facts
On May 27, 1983, the Travises jointly executed a promissory note in favor of Hancock Bank, in the principal amount of $40,000.00, secured by a deed of trust, also dated May 27. The loan closing took place at the Travises' attorney's office. No representatives from the bank were present at the closing. Consequently Mr. and Mrs. Travis were not informed at closing or anytime thereafter that it would be necessary for them, in accordance with bank procedure, to complete a separate application for credit disability insurance.
Concurrent with the execution of the deed and note, Mr. Travis completed a form entitled "Notice to Customers Required by Federal Law Reserve Regulation Z Mortgage Loan Disclosure," ("Regulation Z"). This document was prepared by the bank in connection with the real estate loan. It was intended to inform the Travises of the costs incurred in obtaining their loan and to ascertain the Travises' wishes concerning the voluntary purchase of credit life insurance and credit disability insurance. On this form, three types of insurance were offered--credit life, credit disability, and credit life and disability.
Mr. Travis affixed his signature in the space provided adjacent to the credit life and disability offering, thereby requesting that Hancock Bank procure credit life and disability insurance on his behalf. Testimony established that it was the usual practice of the bank after such forms were completed, to have all the loan closing documents taken to the bank's direct mortgage loan department. The completed forms would then be reviewed by a bank employee in the mortgage loan department. In the case at bar, an employee did not notice that Mr. Travis had indicated he wished to obtain credit life and disability insurance. As a result of this oversight, the bank neglected to mail Mr. Travis an application presenting and explaining the policy. Consequently, Hancock Bank failed to request or procure insurance on behalf of Mr. Travis.
Approximately two years later, Mr. Travis was injured and later became totally disabled as a result of a slip and fall which occurred at a local K-Mart store. On May 20, 1985, the Travises made a demand on Hancock Bank for credit disability benefits. It was at this time the bank discovered its error. Nevertheless, upon receiving the request from the Travises, Hancock Bank made a demand on Integon Insurance Company 2 ("Integon") for payment of insurance benefits on behalf of the Travises. When Integon refused to make the mortgage payments, the bank brought a declaratory judgment action in the United States District Court for the Southern District of Mississippi, seeking to establish a contract of insurance between Mr. Travis and Integon. Hancock Bank v. Integon Life Ins. Co., 660 F.Supp. 459 (S.D.Miss. 1986). The district court held that Mr. Travis' mere indication that he desired credit life and disability insurance, did not create any "actual or implied contract binding Integon Life Insurance Corporation to provide credit insurance to the Travises."
Shortly after the district court's ruling, Hancock Bank brought the present action against Mr. and Mrs. Travis. In the lower court, the bank admitted its liability to the Travises for its failure to procure insurance, but sought to limit its exposure to the maximum benefits which would have been payable under the Integon Policy the bank would have obtained. The maximum coverage Integon would have provided would have been twenty-four (24) monthly payments at $493.01 (the amount of the monthly note paid by the Travises), for a total of $13,157.28. Testimony revealed at the time of Mr. Travis' injury, the Travises owed $38,218.26 on the loan. The bank offered to credit the Travis account for the thirteen-thousand odd dollars, and asked the court to declare that the note and deed were otherwise enforceable. The court was also asked to grant Hancock Bank the right to collect $986.02, representing the two monthly mortgage payments, which were due and owing Hancock at the onset of Mr. Travis' disability, plus late charges. 3
The Travises denied all liability to the bank. They contended that they relied soley upon Hancock to their detriment, as the bank neglected to obtain the credit disability insurance requested by Mr. Travis. Therefore, they argue Hancock is obligated to make all payments on the note for as long as Mr. Travis remains disabled, or for the remainder of the loan, whichever is less.
On March 4, 1988, the bank moved for summary judgment pursuant to Miss.R.Civ.Pro. 56. The Travises did not respond to the motion prior to the hearing on May 3, 1988. They did, however, present oral argument at the hearing, as well as a "Brief in Opposition to Plaintiff's Motion for Summary Judgment" after the hearing. This motion was denied as was a motion to reconsider denial of summary judgment. The case proceeded to trial on October 26, 1988. At the conclusion of the hearing, the court took the matter under advisement and on May 12, 1989, ruled Hancock Bank was "obligated to make monthly payments on the loan for the benefit of the Travises so long as Mr. Travis' disability continues or until the loan is paid in full."
Aggrieved, Hancock Bank appeals to this Court, presenting three issues for our review:
Did the trial court properly deny Hancock's unopposed motion for summary judgment based solely on a finding that the non-movant, Mr. Travis, in a deposition, asserted his contention that the credit disability policy in question should provide coverage for the term of the loan?
Did the trial court improperly place Hancock Bank in the position of a disability insurer and enjoin the enforcement of a valid 15 year mortgage and deed of trust so long as one of the co-makers of the note and deed is disabled?
Assuming arguendo that the trial court properly entered judgment in favor of the Travises, do the opinion and judgment granted adequately address the issues presented by Hancock's complaint for declaratory judgment?
III
Propriety of Summary Judgment
Hancock Bank contends the chancery court erred in denying its motion for summary disposition (1) as the Travises rested on the pleadings, failed to oppose its motion for summary judgment and chose not to file counter-affidavits, (2) by relying on allegations in the pleadings as opposed to those of an exhibit, and (3) contra this Court's holding that lenders assume contractural obligations to obtain insurance only after financing, collecting, and retaining premiums for such coverage.
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...thereof. Under the circumstances, the bank indeed became their agent for the procurement of such insurance. Hancock Bank v. Travis, 580 So.2d 727, 731-732 (Miss.1991) As such the bank was charged with a duty of good faith and reasonable care. McKinnon, 485 So.2d at 297. This Court stated th......
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White v. White, 2003-CA-00482-COA.
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