Mid-State Trust Iii v. Avriett, 99-976

• Decision Date: 24 May 2000
• Docket Number: 99-976
• Parties: TRUST III v. Johnny AVRIETT and Ida J. Avriett CA 99-976 ___ S.W.3d ___ Opinion delivered
• Court: Arkansas Court of Appeals

MID-STATE TRUST III v Johnny AVRIETT and Ida J. Avriett

CA 99-976 ___ S.W.3d ___

Opinion delivered May 24, 2000

Court of Appeals of Arkansas

Division I

Appeal from Chicot Chancery Court; Robert C. Vittitow, Chancellor; affirmed.

1. Appeal & error -- chancery cases -- appellate review. -- In reviewing chancery cases, the appellate court will not set aside a chancellor's findings of fact unless they are clearly erroneous or clearly against the preponderance of the evidence.

2. Equity -- protection of debtor -- court of equity's role. -- Principles of justice permit a court of equity to protect the debtor against an inequitable acceleration of the maturity of a debt.

3. Mortgages -- foreclosure -- no error where trial court found appellees' account was placed in foreclosure based on reimbursement claim. -- Where appellant contended that the trial court was clearly erroneous in finding that appellees' account "was placed in foreclosure ... based on the claim for reimbursement of insurance premiums rather than the delinquency in the monthly payments, the appellate court found no such clear error where, in returning the checks to appellees, the company representative told them that they owed more than that amount, which was attributable to appellant's claim that appellees owed for insurance premiums.

4. Mortgages -- foreclosure -- no abuse of discretion in determination that foreclosure would be inequitable. -- Even if appellant's foreclosure action was based upon one delinquent payment rather than upon a claim for insurance premiums, the appellate court found no abuse of discretion in the chancellor's determination that it would be inequitable to allow foreclosure under the facts of the case.

5. Mortgages -- foreclosure -- allowing appellant to rely upon claim distant in time would be inequitable. -- Where appellant contended that appellees' failure to obtain insurance coverage during a period of approximately two years immediately following the purchase of the property provided a sufficient basis for seeking foreclosure, the appellate court found no abuse of discretion in the chancellor's failure to allow such a basis for foreclosure, concluding that it would clearly be inequitable to allow appellant to rely upon a claim that was so distant in time in order to claim default, acceleratepayment, and foreclose upon the property.

6. Insurance -- sufficiency of coverage -- chancellor not clearly erroneous in determination. -- The chancellor was not clearly erroneous in determining that $20,000 of coverage was sufficient under the terms of the parties' agreement where, under the terms of the building contract and mortgage, appellees agreed to maintain insurance on the property in an amount equal to the lesser of the actual cash value of the house or the unpaid balance of the cash price of the house; where appellee husband testified that he did not consider the property to have a value of more than $20,000; where appellee wife testified further that they were only able to procure coverage for $20,000 because their insurance agent did not consider the property to be worth more than that amount; and where appellant presented no proof on the issue.

7. Mortgages -- extending rights & duties of parties -- chancellor did not err. -- The chancellor did not err in extending the rights and duties of the parties with reference to the note for a period of twenty months past the original payoff date where the twenty-month delay was actually attributable to appellant's premature attempt to accelerate the debt and foreclose on the mortgage; affirmed.

Depper Law Firm, by: Vicky Bussey Lowery, for appellant.

Gibson Law Office, by: Charles S. Gibson, for appellees.

John F. Stroud, Jr., Judge.

This is a foreclosure action in which appellant, Mid-State Trust III, sought judgment against the appellees, Johnny and Ida Avriett, on a promissory note and foreclosure of the mortgage securing the note. The chancellor found in favor of the appellees. Appellant's sole point of appeal is that the trial court erred in holding that it was not entitled to accelerate the debt. We disagree and affirm.

In reviewing chancery cases, we will not set aside a chancellor's findings of fact unless they are clearly erroneous or clearly against the preponderance of the evidence. Mid-State Trust II v. Jackson, 42 Ark. App. 112, 854 S.W.2d 734 (1993). Moreover, principles of justice permit a court of equity to protect the debtor against an inequitable acceleration of the maturity of a debt. Id. In his decree, the chancellor found in pertinent part: 1) that appellees had complied with the terms of the mortgage by providing insurance in the amount of $20,000, and that consequently appellant's demand for reimbursement of premiums paid by it in excess of $20,000 had no contractual basis; and 2) that, therefore, appellant's conduct was inequitable in conditioning its acceptance of house payments upon an additional requirement that it be reimbursed for its premium costs. We find neither clear error in the chancellor's finding of fact with respect to the insurance coverage, nor an abuse of discretion in the chancellor's conclusion that it would be inequitable to allow foreclosure under the facts of this case.

In 1989, the appellees executed a promissory note and mortgage in connection with their purchase of a home from Jim Walter Homes, Inc. The sum of all payments under the note was $67,560, payable in 240 monthly installments of $281.50. However, the amount financed was $29,180. Through various assignments, appellant eventually became holder of the note and the lien securing it. The terms of the note provided in pertinent part that the holder had the right to declare the entire balance due and collectible if appellee...