Mason v. SOUTHERN MORTGAGE CO.
| Decision Date | 01 August 2002 |
| Docket Number | No. 1999-CT-02000-SCT.,1999-CT-02000-SCT. |
| Citation | 828 So.2d 735 |
| Parties | Annie MASON v. SOUTHERN MORTGAGE COMPANY. |
| Court | Mississippi Supreme Court |
James D. Minor, Sr., Oxford, attorney for appellant. B. Sean Akins, Ripley, attorney for appellee.
EN BANC.
ON WRIT OF CERTIORARI
¶ 1. Annie Mason appealed from the final judgment in her lawsuit against Southern Mortgage Company. The Court of Appeals reviewed the matter and rendered a plurality opinion which affirmed the trial court's judgment, but by a different rationale. We granted certiorari and find that the judgment of the trial court should be affirmed in part and reversed in part.
¶ 2. All of the evidence at the trial of this matter was adduced through the testimony of two witnesses, plaintiff Annie Mason and Boise McNeil, the president of Southern Mortgage Company. Their versions of events were often conflicting and sometimes ambiguous. While they named other people as being part of the story, no other witnesses were called to corroborate, rebut or add depth to their testimony. At the end of the trial, the trial court was neutral toward their credibility relative to one another.
¶ 3. In January 1999, Mason decided to borrow money to pay off the existing mortgage on her home, plus pay some other debts and have additional money for home improvements. After seeing an advertisement for the company in the newspaper, she contacted Southern Mortgage Company ("Southern"). Southern is a mortgage originator, which is in the business of packaging loans and security instruments for sale to third parties. After Southern had received some financial information from Mason, she was notified to drive to Southern's branch office to sign the necessary documents.
¶ 4. On January 29, 1999, Mason signed several documents. In addition to a settlement agreement which detailed how the loan proceeds would be disbursed, Mason signed a document which conditioned funding of the loan on Southern's receipt of a satisfactory appraisal of her homestead. She signed a compliance agreement, whereby she agreed to "cooperate and adjust" for all documentation necessary for Southern to sell the mortgage. Mason also signed the deed of trust which would encumber her homestead as the collateral for the loan.
¶ 5. Mason signed the closing documents on a Friday. Under federal truth in lending laws, payout or funding of the loan could not occur until three days had passed. The loan would "fund" on the fourth day, counted as provided by federal law, meaning that on the fourth day the proceeds of the loan would be disbursed to Mason and the other parties designated in the settlement agreement.
¶ 6. During the waiting period, company president McNeil sent a check to his closing attorney. The attorney's job was to disburse those funds as provided in the settlement agreement. Accordingly, on February 3, the day before funding, the attorney sent a check for Mason's share of proceeds by means of next day delivery to Southern's branch office. Presumably also by means of next day delivery, the attorney sent a check to pay off Mason's prior mortgage and also to pay certain real property taxes she owed.
¶ 7. Although the exact time is not revealed by the record, problems arose about this time when Southern learned that its appraisal was inadequate to satisfy the third-party purchaser of Mason's loan. Southern put a halt to further disbursements pending receipt of a satisfactory appraisal. Mason testified that, after not hearing from Southern on the day of funding, she called the branch office the day after to inquire about her share of the loan proceeds. She was told that the loan would fund as soon as the appraisal arrived, and she was agreeable to that procedure. Southern's mortgage was placed on record the day after this conversation.
¶ 8. Mason testified that Southern told her a new or different story the following week. Apparently because the new appraisal placed a lower value on the collateral, she was told that she would have to sign new loan documents to receive any funds. Southern's McNeil testified otherwise, saying that the company stood ready to fully fund the original loan without additional documents. In any event, both sides agree that the loan was cancelled by mutual agreement in the days that followed. McNeil said that Southern was agreeable to this situation, provided the company was repaid the money it had advanced.
¶ 9. While Mason testified at one point that the deal was already cancelled by the time Southern's mortgage was placed on record, she also said she was agreeable to wait for the second appraisal because she had been assured that the loan would fund according to the agreement, without additional paperwork or modifications. Again, whatever may have occurred, there is no question that both parties agreed to walk away from their conditional agreement. Mason says she was unaware of the payoff of her prior mortgage, and so there were no immediate discussions about Southern's premature payment of her existing mortgage and the recording of their own. Those issues would soon arise.
¶ 10. After two or three weeks passed on approximately February 17, 1999, Mason discovered from her monthly bank statement that her old mortgage had been paid. On March 5, she was contacted by Southern's loan agent who told her that she needed to go back to her original mortgagee to have her old mortgage reinstated. McNeil testified that this was possible because the original mortgagee had been contacted and had agreed to help "undo" the situation. When Mason did not respond to this overture, the loan agent appeared at Mason's office with a deputy sheriff. McNeil said that the loan agent chose this method of encounter because of the now vociferous nature of the dialogue between Mason and the agent. The loan agent presented Mason with a form to sign for that purpose, but she never looked at it. With communications between the parties already clearly strained, this visit to Mason's office did nothing to improve relations. McNeil said that he called Mason the next day and her position was that she owed nothing.
¶ 11. This litigation ensued after Southern began procedures for non-judicial foreclosure of its mortgage. On June 30, 1999, Mason filed suit in Benton County Chancery Court to stop foreclosure which was set for July 5, 1999, and to have the mortgage declared void. She also asked for compensatory and punitive damages stemming from the above described events and for Southern's allegedly unconscionable origination fees.
¶ 12. Mason acknowledged during the trial that she owed money to Southern, but less her damages or expenses. Her position was that, instead of initiating foreclosure proceedings, Southern should have filed a lawsuit to settle the matter. After hearing this and the rest of the testimony of Mason and McNeil, the chancellor found in his bench ruling that both parties were at fault. He faulted Southern for "very sloppy" business practices, and he faulted Mason for not making an effort to repay the money by taking another mortgage or by using other means.
¶ 13. On November 5, 1999, the chancellor, noting that Mason had the benefit of Southern's money interest free for ten months, decreed that Mason would have thirty days to repay the money that Southern had advanced, a sum of $24,773.12. If Mason failed to repay the money, the final judgment decreed that Southern could foreclose its mortgage to recover that sum plus the cost of foreclosure. The chancellor deemed that Southern should be penalized by loss of the value of interest on the use of its money.
¶ 14. Mason appealed from the judgment without supersedeas. During the pendency of the appeal, she paid the amount due Southern under the judgment. Her argument on appeal was that Southern had made a mistaken but voluntary payment for which Mason suffered compensatory damages and that the facts supported punitive damages against Southern for intentional conduct.
¶ 15. The Court of Appeals affirmed the chancellor's judgment using a different analysis. First, the Court of Appeals determined that while Mason was unjustly enriched for a period of time at Southern's expense, Southern pursued the wrong remedy when it attempted to foreclose a mortgage which had been mutually annulled before foreclosure proceedings began. The Court of Appeals then stated Mason's proper claim was for slander of title. Due to her failure to make an effort to mitigate damages, however, the Court of Appeals...
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