Loan Corporation v. Wiggins

• Decision Date: 13 May 1940
• Docket Number: 34123
• Citation: 188 Miss. 750,195 So. 339
• Court: Mississippi Supreme Court
• Parties: LOAN CORPORATION v. WIGGINS et al

195 So. 339

188 Miss. 750

LOAN CORPORATION v. WIGGINS et al

No. 34123

Supreme Court of Mississippi, Division A

May 13, 1940

April 15, 1940

Suggestion of Error Sustained May 13, 1940.

APPEAL from the circuit court of Hinds county HON. J. P. ALEXANDER Judge.

Suit by the Home Owners Loan Corporation against B. B. Wiggins, Jr. and others for the balance due on an indebtedness secured by a trust deed after foreclosure thereof in pais. Judgment for defendants, and plaintiff appeals. Reversed and remanded.

On suggestion of error.

Suggestion of error sustained.

Judgment amended and judgment rendered.

Reversed and remanded. Suggestion of error sustained, and judgment here for appellant.

Luther Manship, H. G. Hall and J. Thomas Dunn, all of Jackson, for appellant.

It is the contention of the appellant in this case that nothing contained in the defendant's plea or notice under the general issue or in their amended notice presented any defence to the declaration on the promissory note by plaintiff. It has never been the law in Mississippi or elsewhere that we know of that a defendant can defeat a suit for deficiency judgment, in the absence of allegation of and proof of fraud in foreclosure by submitting to the jury evidence that the property was worth more than the amount it brought at the foreclosure sale.

It is not an available defence that the price for which the property sold on foreclosure was less than its real value unless fraud in making the sale is charged.

42 C. J. 304; 19 R. C. L. 666; Newman v. Meek, Freeman Chancery 441; Weyburn v. Watkins, 44 So. 145, 90 Miss. 728; Fed. Land Bank v. Robinson, 160 Miss. 546, 134 So. 180; Wheeler v. Cleveland State Bank, 174 Miss. 542, 164 So. 400; Federal Credit Co. v. Boleware, 163 Miss. 830, 142 So. 1; American Oil Co. v. Williamson, 154 Miss. 441, 122 So. 488; Chandler v. Bank of Brooksville, 181 Miss. 529, 178 So. 797; Hardin v. Grenada Bank, 182 Miss. 689, 180 So. 805; Anthony v. Bank of Wiggins, 183 Miss. 885, 184 So. 626; Bradbury v. Carter, 291 F. 363; Belmont v. Cornen, 48 Conn. 338; Markel v. Evans, 47 Ind. 326; Richard v. Michinard, 33 La. Ann. 380; Hicks v. Beedle, 98 Mo.App. 223, 71 S.W. 1074; Fischer v. Spierling, 93 N. J. L. 167, 107 A. 420; Randrup v. McBeth, 116 A.D. 195, 101 N.Y.S. 604; Merchants Ins. Co. v. Hinman, 34 Barb. 410; Smith v. Bunting, 86 Pa. 116; Hollister v. Buchanan, 11 S.D. 280, 77 N.W. 103; Bray v. Sewall (Civ. A.), 171 S.W. 795; Sabin v. Stickney, 9 Vt. 155; Howard v. McNaught, 9 Wash. 355, 43 Am. St. 837.

Sale price, so long as sale stands, must be taken as between parties, as conclusive of the value.

Fischer v. Spierling, 93 N. J. L. 167, 107 A. 420.

If originally liable for the mortgage debt, he remains liable for any unsatisfied balance, including unpaid costs and expenses. And this rule is not affected by the fact that the mortgagee bid in the premises at the foreclosure sale, although for much less than their value, if no fraud or inequitable conduct is shown. And the fact that land increased in value after sale, enabling the mortgagee to make a profit, does not affect the liability of the mortgagor.

42 C. J. 286; Young v. Clifford, 61 Mo. A. 450; Mollenauer v. Smith, 51 Pa. Sup. 48; Fischer v. Spierling, 93 N. J. L. 167; Bonds v. Lawless, 33 N.J.Eq. 413; Randrup v. McBeth, 101 N.Y.S. 604; Robinson v. Sumner Brick, etc., 11 Pa. Super. 48; Newman v. Meek, 1 Freeman Chancery 441; Weyburn v. Watkins, 90 Miss. 728, 44 So. 145; Federal Credit Co. v. Boleware, 163 Miss. 830.

Inadequacy of land sold at judicial sale may not after confirmation be urged as defence to a deficiency judgment.

Anderson v. Walsh, 109 Nebr. 759, 192 S.W. 328; Manning v. Liberty Trust Co., 125 N.E. 691, 8 A. L. R. 999.

The fact that the lands sold at the foreclosure sale for a price greatly disproportionate to their real value does not invalidate or affect the sale.

Hunter v. Mellen, 127 Ala. 343, 28 So. 468; Harmon v. Dothan Nat. Bank, 186 Ala. 360, 64 So. 621; Hudgins v. Morrow, 47 Ark. 515, 2 S.W. 104; Roby v. Smith, 261 Mo. 192, 168 S.W. 965; Routt v. Milner, 57 Mo.App. 50; Betzler v. James, 227 Mo. 375, 126 S.W. 1007; Klein v. Glass, 53 Tex. 37; Clark v. Freedman's Sav. & T. Co., 100 U.S. 149, 25 L.Ed. 573; Bailor v. Daly (D. C.), 7 Mackey 175; Hopkins v. Gibens, 119 Va. 578, 89 S.E. 871.

The defendants in the court below alleged in their plea that the trustee was not entitled to charge a fee because it was alleged that the trustee, A. J. McLaurin, was a salaried employee of the mortgagee. We have been unable to find any authorities to uphold their contention in this behalf, and it must be remembered that the mortgagors themselves were the ones who appointed the trustee in their deed of trust.

Neither the 2 1/2% trustee's fee nor the 10% attorney's fee was charged but only the $ 35 paid out to the agent for the trustee and the advertising cost, stamp and recording trustee's deed.

Wheeler v. Cleveland State Bank, 174 Miss. 542.

We contend that the plea and notice as filed by the defendants offered no defence to the suit on the note and that consequently none of the evidence offered in their behalf was competent. And since no defence or denial of the debt was made that the appellant is entitled to have the case reversed and judgment entered for the amount sued for.

William Harold Cox, of Jackson, for appellees.

The appellant instituted this action for a deficiency judgment against the appellees. The appellees are seeking no affirmative relief in this case. They simply seek to recoup defensively the actual value of the property up to the amount of the debt. The appellant had the burden of proof in this case to establish a deficiency in its demand. The appellees' plea of the general issue was sufficient to require such proof from the appellant.

The deed of trust executed by appellees, although a deed of trust in form, was a mortgage in effect. The trustee in the deed of trust, A. J. McLaurin, was a full time employee on a salary basis. A corporation can only act through its representatives and since this instrument contained no provisions authorizing appellant to become the purchaser of the property, it has no such authority.

It is settled law in this state that a mortgagee cannot purchase, directly or indirectly, at a sale under his mortgage, unless the mortgage confers such right or the mortgagee consents to such purchase.

Houston v. National Mutual Bldg. & Loan Assn., 80 Miss. 31, 31 So. 540.

Never having conceded that appellant purchased this property, the appellant was wholly without authority to compel appellees' acceptance of some arbitrary amount as a relative pittance for credit on their indebtedness.

This foreclosure sale was conducted on September 2, 1938. At that time there obtained Chapter 346, Laws 1938. This act was approved March 16, 1938, only a few months prior to this foreclosure. The legislature of this state at that time made the declaration of public policy, which declared that the times were such as to prevent fair, open and competitive bidding at the time of sale and in the manner provided now by law.

When this foreclosure sale was conducted, just as the chancellor found in the case of Hardin v. Grenada Bank, 182 Miss. 689, there was no fair and open sale of the property such as was contemplated by the legislature under its provisions for such sales.

Section 2167, Mississippi Code 1930, as amended by Chapter 248, Laws 1934, require the public advertisement and sale of property for a wholesome purpose. As a means of furthering this wholesome purpose, it has been held that a sale of lands advertised for a lesser time and sold in a different manner than required by statute is void even though it conforms with the provisions of a contract therefor. It would be an idle and vain thing to say that it was so important to have a sale so safeguarded and advertised when economic conditions made it so that property would be sacrificed under the guise of legal foreclosure by the simple expedient of tracking the statute. The legislature then intervened by its announcement in Chapter 346, Laws 1938, and declared that such an economic condition existed as that a fair and reasonable price could not be had by public sale. Manifestly, such announcement superseded all contrary views on the subject, and must have its weight with the court in passing upon the right of a mortgagor, whose property has been foreclosed under such conditions, to claim defensively that his property was worth as much as the debt. That is all we assert in this case. That, we overwhelmingly proved in this case.

Our position in this case would be definitely untenable if we were seeking to reclaim the property by setting aside the sale. That move would be definitely precluded by the case of Standard Lumber Co. v. Deposit Guaranty Bank & Trust Co., 169 Miss. 120, 152 So. 639. But such is not in any sense the purpose of appellees. We simply want credit on this debt for the fair and reasonable value of the property, which appellant has been permitted to take and dispose of.

The instrument did not vest appellant with any authority to purchase the property under the rule announced in Houston v. National Mutual Building & Loan Association, 80 Miss. 31.

The appellees were entitled to have the jury pass upon the question of the reasonable value of the property at the time of the foreclosure sale. The jury found that the property was reasonably worth as much as the debt of appellant against it.

National Bank of Brunswick v. Gorenflo et al., 160 So. 911, 173 Miss. 646.

The jury heard the evidence and determined that it was sufficient to establish that appellees owed appellant nothing under the facts. The appellant filed no motion for a new trial...