In re Rhymes, Case No. 0553572ERG (Bankr.S.D.Miss. 3/14/2008), Case No. 0553572ERG.
| Decision Date | 14 March 2008 |
| Docket Number | Case No. 0553572ERG.,Adversary No. 055180EE. |
| Parties | IN RE: JERRY O RHYMES, REBA E. RHYMES, Chapter 13. JERRY O. RHYMES AND REBA E. RHYMES v. COUNTRYWIDE HOME LOANS, INC. |
| Court | U.S. Bankruptcy Court — Southern District of Mississippi |
Robert Gambrell, Biloxi, MS, Attorney for Debtors.
C. Phillip Buffington, Jackson, MS, Attorney for Countrywide.
FINDINGS OF FACT AND CONCLUSIONS OF LAW ON THE COMPLAINT TO SET ASIDE DEED OF TRUST AND AVOID LIEN OF COUNTRYWIDE HOME LOANS, INC.
THIS MATTER came before the Court for hearing on the Complaint to Set Aside Deed of Trust and Avoid Lien of Countrywide Home Loans, Inc. filed by Jerry O. Rhymes and Reba E. Rhymes, and the Answer and Defenses filed by Countrywide Home Loans, Inc. After considering the testimony, the pleadings, the oral arguments and the briefs of the parties, the Court finds that the complaint is well taken in part and should be granted in part.
Jerry O. Rhymes and Reba E. Rhymes (Debtors) filed a petition for relief under Chapter 13 of the United States Bankruptcy Code on August 10, 2005. On December 12, 2005, the Debtors filed the above styled adversary proceeding against Countrywide Home Loans, Inc. (Countrywide) in which the Debtors are seeking to have the Deed of Trust given by Jerry O. Rhymes to Countrywide declared void since the property is homestead and his wife, Reba E. Rhymes, did not sign the Deed of Trust. Countrywide acknowledges that Jerry O. Rhymes did execute a Promissory Note and Deed of Trust in favor of Countrywide, but denies that the Deed of Trust should be declared void.
In their Chapter 13 plan, the Debtors do not propose to pay Countrywide anything. On January 19, 2006, an Order was entered on Countrywide's objection to confirmation of the Debtors' Chapter 13 plan. The order states that upon the resolution of the adversary proceeding, the Debtors' Chapter 13 plan would be modified accordingly, if needed. On February 22, 2006, an order was entered confirming the Debtors' Chapter 13 plan.
At the trial on the above styled adversary proceeding, the parties submitted the following Stipulation of Facts:
1. Jerry Rhymes and Reba Rhymes were married on August 10, 2004.
2. On October 26, 2004, Jerry Rhymes and Reba Rhymes entered into a contract with Azalea Homes for the purchase of a 1998 Horton mobile home.
3. The 1998 Horton mobile home was delivered to 130 Ben Rogers Road in Lucedale Mississippi on or about February 17, 2005, and Jerry Rhymes and Reba Rhymes moved into the mobile home soon thereafter.
4. On February 5, 2005, Jerry Rhymes executed a Bill of Sale conveying the 1984 Conner mobile home to Azalea Homes for five thousand five hundred dollars ($5,500.00). Azalea Homes removed the 1984 Conner mobile home from 130 Ben Rogers Road after February 17, 2005.
5. On March 16, 2005, Plaintiff, Jerry Rhymes, signed his loan application with Defendant, Countrywide Home Loans, Inc.
6. Countrywide Home Loans extended a loan to Jerry Rhymes in the amount of Eighty-One Thousand Two Hundred Twenty-Five Dollars ($81,225.00) to purchase the 1998 Horton mobile home and payoff existing deeds of trust. The closing occurred and the loan documents were executed on March 16, 2005, with Heritage Title LLC serving as the closing agent. Jerry Rhymes and Reba Rhymes were occupying the property located at 130 Ben Rogers Road as their home prior to the date of the loan closing.
7. A deed of trust was executed to secure repayment of the note on March 16, 2005. The deed of trust was filed March 28, 2005, and re-filed on May 31, 2005. The deed of trust was signed only by Jerry Rhymes.
8. At the request of the closing attorney, Reba Rhymes signed a quitclaim deed conveying the property located at 130 Ben Rogers Road to Jerry Rhymes on March 16, 2005. Jerry Rhymes conveyed the property to Jerry Rhymes and Reba Rhymes on March 23, 2005.
9. Jerry Rhymes and Reba Rhymes filed for homestead for purposes of tax exemption pursuant to §27-33-3 Miss. Code Ann. 1972 in February of 2006, for the property located at 130 Ben Rogers Road.
10. The purchase price of the mobile home was Sixty-Six Thousand Seven Hundred Sixty-Six Dollars and Thirty-Five Cents ($66,766.35).
11. As part of the transaction, Countrywide also paid off two previous debts secured by the property located at 130 Ben Rogers Road, Lucedale. Stipulation of Facts, pp. 1-2, September 13, 2007.
This Court has jurisdiction of the subject matter and of the parties to this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2)(A) and (O).
The issue before the Court is whether the Deed of Trust signed by Mr. Rhymes in favor of Countrywide is void due to the failure of Mrs. Rhymes to sign the Deed of Trust.
Mississippi Code Section 89-1-29 pertains to a spouse's role in conveying a homestead. It states in pertinent part:
§ 89-1-29. Spouse's role in conveying homestead; incompetent spouse.
A conveyance, mortgage, deed of trust or other incumbrance upon a homestead exempted from execution shall not be valid or binding unless signed by the spouse of the owner if the owner be married and living with the spouse. . . .
Miss. Code § 89-1-29 (1980).
In Grantham v. Ralle, the Supreme Court of Mississippi explained the reasoning behind this prohibition:
It is to be noted that these homestead provision first were listed in the Code of 1880 primarily as a protection for the wife in lieu of dower which had been abolished by statute. The basic purpose was, of course, to prevent her husband from conveying or encumbering the homestead without the consent of his wife, and the effect was to avoid any attempt to so convey the homestead.
Grantham v. Ralle, 158 So. 2d 719, 724 (Miss. 1963).
"The cases are legion construing (§ 89-1-29) to mean that a conveyance of homestead without a spouse joining in the execution of the deed is absolutely void." Welborn v. Lowe, 504 So. 2d 205, 207 (Miss. 1987). Ward v. Ward, 517 So. 2d 571, 572 (Miss. 1987). Therefore, if the property in question was the homestead of the Debtors, and the Debtors were married and living together, then in order for the Countrywide deed of trust to be valid, both Debtors must have signed the deed of trust.
Davis v. Smith, 922 So. 2d 814, 819 (Miss. App. 2005). See Miss. Code § 85-3-23 (1991). At the trial, the Plaintiffs' Answer to Defendant's First Set of Interrogatories was admitted into evidence. In their response to Interrogatory No. 1(d), the Debtors state that they currently resided at 130 Ben Rogers Road, Lucedale, Mississippi (Lucedale Property). Plaintiffs' Answer to Defendant's First Set of Interrogatories, ¶ 1(d), p. II, Sept. 21, 2006. As stipulated by the parties, the Debtors also stated that the Horton mobile home was delivered on or about February 27, 2005. At that point, the Debtors stated that the wheels were removed and the home affixed to the real property, and from that point in time, the Debtors have resided as husband and wife in the mobile home. Id. at IV. Therefore, the Court finds that the Debtors have shown that they are entitled to a homestead exemption in the Lucedale Property.
The parties stipulated that the Debtors were married on August 10, 2004. In their answers to Countrywide's interrogatories, the Debtors stated that they were married at the time the deed of trust was signed and are married at the present date. At the trial, Countrywide did not produce any evidence to contradict this statement. Therefore, the Court finds that the Debtors have shown that the Lucedale Property was their homestead and that they were married and residing on the Lucedale Property at the time Mr. Rhymes signed the Deed of Trust. Consequently, the Court finds that the Deed of Trust signed by Mr. Rhymes in favor of Countrywide is void because Ward, 517 So. 2d at 572 (citations omitted). See also, Alexander v. Daniel, 904 So. 2d 172 (Miss. 2005); Goodwin v. McMurphy, 435 So. 2d 639 (Miss. 1983); Stockett v. Stockett, 337 So. 2d 1237 (Miss. 1976); Gilmer v. Freeman, 336 So. 2d 717 (Miss. 1976); Hendry v. Hendry, 300 So. 2d 147 (Miss. 1974).
The Court will note that the fact that Mrs. Rhymes conveyed the property to Mr. Rhymes on the same date that Mr. Rhymes signed the Deed of Trust does not affect this Court's finding that Countrywide's Deed of Trust is void. As the Supreme Court of Mississippi stated in Ward v. Ward, "(o)bviously a wife may convey any interest or right she has in the homestead to her husband, however the statutory mandate still applies to any conveyance by the husband to a third party." Ward, 517 So. 2d at 573.
Countrywide asserts that Miss. Code § 89-3-23 does not apply to the situation at bar because the Deed of Trust was issued to secure a purchase money lien on the mobile home and the real property. To support this contention, Countrywide sites Jarvis v. Armstrong, 94 Miss. 145, 48 So. 1 (Miss. 1909) and Stuart v. Kennedy & Co., 145 Miss. 728, 110 So. 847 (Miss 1927).
In Jarvis, the Supreme Court of Mississippi held that when the money advanced ...
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