O'Neal Steel, Inc. v. Millette

• Decision Date: 08 February 2001
• Docket Number: No. 1999-CA-01213-SCT.,1999-CA-01213-SCT.
• Parties: O'NEAL STEEL, INC. v. Terrence John MILLETTE and Theodore J. Millette.
• Court: Mississippi Supreme Court

797 So.2d 869

O'NEAL STEEL, INC. v. Terrence John MILLETTE and Theodore J. Millette.

No. 1999-CA-01213-SCT.

Supreme Court of Mississippi.

February 8, 2001.

Nicholas Van Wiser, Biloxi, for Appellant.

Stephen Walker Burrow, Ashley Hutchings Hendren, Pascagoula, for Appellees.

Before BANKS, P.J., SMITH and MILLS, JJ.

SMITH, Justice, for the Court:

STATEMENT OF THE CASE

¶ 1. On May 29, 1998, O'Neal Steel, Inc. (hereinafter "O'Neal") filed the instant action against Terrence John Millette (hereinafter "Terry Millette") and Theodore J. Millette ("Ted Millette") in the Chancery Court of Jackson County. The complaint alleged that after O'Neal obtained a judgment in Alabama against Ted Millette, he then conveyed certain real property to his son, Terry. The complaint asserts, "[t]hat said conveyance was fraudulent as being an attempt to place assets beyond the reach of creditors and to defraud creditors by conveying property for less than adequate consideration." The Millettes answered the complaint, separately, and asserted the applicable statute of limitations as an affirmative defense.

¶ 2. On May 4, 1999, the Millettes filed a Joint Motion for Summary Judgment. The sole grounds for their motion was that O'Neal's claims were time-barred pursuant to Miss.Code Ann. § 15-1-49 (1995), the "catch-all" statute of limitations. After a hearing upon said motion, Chancellor Barlow granted same by written opinion dated June 16, 1999. The court entered a judgment on June 29, 1999.

¶ 3. Nine days later on July 8, 1999, the Millettes jointly moved to amend the judgment, asserting, inter alia, that O'Neal's claim was alternatively time-barred pursuant to Miss.Code Ann. § 15-1-45 (1995). They contended that since O'Neal's complaint was based upon a foreign judgment against a Mississippi resident, it failed to file any action to enforce said judgment within three years after its rendition, as required by § 15-1-45. The chancery court amended it judgment, by order dated September 7, 1999, to reflect that the Millettes were entitled to summary judgment since O'Neal's claims were alternatively barred by the three year limitations found in § 15-1-45. O'Neal now appeals to this Court, arguing that the chancellor applied the incorrect statute of limitations and that the applicable limitations period was tolled due to concealed fraud.

STATEMENT OF THE FACTS

¶ 4. O'Neal Steel, Inc. is an Alabama corporation which specializes in the fabrication and sale of steel.¹ Thomas Millette, William Millette, and Theodore Millette owned a company in Pascagoula, Mississippi named "Fabricators, Inc." which purchased steel from O'Neal. As a condition for extending a line of credit to Fabricators, O'Neal required the Millettes to execute an agreement guaranteeing the payment of the debt of Fabricators to O'Neal.

¶ 5. In 1990 suit was filed in the state of Alabama on the personal guaranties. Following a trial, judgment was rendered in favor of O'Neal. The Millettes appealed this judgment to the Alabama Supreme Court where the jury verdict was reversed on a procedural defect, and the case was remanded to circuit court. On remand, the circuit court entered summary judgment in favor of O'Neal and against the Millettes in the amount of $164,335.89.

¶ 6. Via warranty deed dated December 20, 1993, Ted Millette conveyed certain real property located in Jackson County to his son, Terry Millette. O'Neal Steel enrolled its Alabama judgment with the Circuit Clerk of Jackson County, Mississippi, on January 20, 1994. On May 18, 1994, the December 20, 1993 warranty deed was filed and recorded in the land deed records of the Chancery Clerk of Jackson County. Over four years later on May 29, 1998, O'Neal filed a complaint with the Chancery Court of Jackson County to set aside the December 20, 1993, warranty deed as a fraudulent conveyance. The chancellor granted defendants' request for summary judgment.

STANDARD OF REVIEW

¶ 7. Rule 56(c) of the Mississippi Rules of Civil Procedure allows summary judgment where there are no genuine issues of material fact such that the moving part[y] is entitled to judgment as a matter of law. To prevent summary judgment, the nonmoving party must establish a genuine issue of material fact by means allowable under the rule. Richmond v. Benchmark Constr. Corp., 692 So.2d 60, 61 (Miss.1997); Lyle v. Mladinich, 584 So.2d 397, 398 (Miss.1991).

¶ 8. This Court employs a de novo standard in reviewing a trial court's grant of summary judgment. Mississippi Ethics Comm'n v. Aseme, 583 So.2d 955, 957 (Miss.1991); Cossitt v. Federated Guar. Mut. Ins. Co., 541 So.2d 436, 438 (Miss.1989). The evidence is viewed in a light most favorable to the nonmoving party. Palmer v. Biloxi Regional Med. Ctr., Inc., 564 So.2d 1346, 1354 (Miss.1990). If any triable issues of material fact exist, the lower court's decision to grant summary judgment will be reversed. Otherwise, the decision is affirmed. Richmond, 692 So.2d at 61; Brown v. Credit Ctr., Inc., 444 So.2d 358, 362 (Miss.1984).

DISCUSSION

I. WHETHER O'NEAL STEEL FAILED TO FILE SUIT TO SET ASIDE AN ALLEGED FRAUDULENT CONVEYANCE WITHIN THE APPLICABLE LIMITATION PERIOD?

¶ 9. The primary issue presented by this appeal is straight-forward: Which statute of limitations applies to an action to set aside an alleged fraudulent conveyance? O'Neal contends that the ten-year limitation period found in Miss.Code Ann. § 15-1-7 (1995) controls. The appellees assert that the three year limitation period found in Miss.Code Ann. § 15-1-49 (1995) controls in this action. Alternatively, they also argue that the three-year limitation period applicable to foreign judgments in Miss.Code Ann. § 15-1-45 (1995) bars O'Neal's action.

¶ 10. O'Neal asserts that Miss.Code Ann. § 15-1-7² and its ten-year limitations period govern its claim in chancery court to set aside this alleged fraudulent conveyance. That section reads in pertinent part:

A person may not make an entry or commence an action to recover land except within ten years next after the time at which the right to make the entry or to bring the action shall have first accrued to some person through whom he claims, or, if the right shall not have accrued to any person through whom he claims, then except within ten years next after the time at which the right to make the entry or bring the action shall have first accrued to the person making or bringing the same.

Miss.Code Ann. § 15-1-7 (1995) (emphasis added).

¶ 11. "An action to recover land" under both § 15-1-7 and § 15-1-9 presumes that the O'Neal has some ownership or possessory interest in the land. This Court has written:

It would be meaningless to talk about suits to "recover the land" and "making an entry on the land," if the contemplation of the statute were not that possession of the land is an essential feature in the very nature of things.

Kennedy v. Sanders, 90 Miss. 524, 542, 43 So. 913, 916 (1907). Indeed, in all the cases applying § 15-1-7, the contested issue always concerns ownership or possession of the property in question, such as adverse possession, a suit to remove a cloud on title, or confirmation of mineral rights. In fact, this Court has described § 15-1-7 as "[o]ur statute on adverse possession...." Lowi v. David, 134 Miss. 296, 300, 98 So. 684, 685 (1924). This Court has also held that the only person who may claim the limitation defense of § 15-1-7 is one who "has been in adverse possession of the land against the true owner." Continental Oil Co. v. Walker, 238 Miss. 21, 33, 117 So.2d 333, 337 (1960).

¶ 12. In the case at bar, O'Neal seeks to enforce a judgment lien. That judgment lien does not create in O'Neal a possessory interest in the real property. This Court described in detail the scope and effect of a judgment lien in First Nat'l Bank of Commerce v. Donald, 112 Miss. 681, 73 So. 723 (1917), stating "[t]he lien may be said to be a recorded debt." Id. at 688, 73 So. at 724. More specifically, this Court wrote that a judgment lien is not a property in the thing itself, nor does it constitute a right of action for the thing; rather, it constitutes a charge upon the thing. Id. (quoting Dozier v. Lewis, 27 Miss. 679 (1854)). Important to the case sub judice, this Court has held:

But a judgement creditor of the owner has no estate or proprietary interest in the land. He stands wholly upon the law, which gives him a remedy for he collection of his debt by a sale of the land under execution, in case sufficient personal property of the debtor should not be found.

Donald, 112 Miss. at 689, 73 So. at 724 (quoting Gimbel v. Stolte, 59 Ind. 446) (emphasis added). Additionally, this Court has written:

The lien, being a general lien, before levy of execution, is merely a charge upon the property; it is not a right in it nor to it; it is only a right of satisfaction to be had out of it.

Donald, 112 Miss. at 689, 73 So. at 724 (emphasis added).

¶ 13. Although cases with similar facts are scarce, it is clear that absent any possessory interest in the subject property, O'Neal cannot claim that this litigation is "an action to recover land...." This Court has clearly written in Donald that a judgment creditor does not have a possessory interest in the land. Id. at 689, 73 So. at 724. Therefore, the ten year limitations of § 15-1-7 cannot apply to O'Neal's claim of fraudulent conveyance.

¶ 14. O'Neal argues that § 15-1-7 applies to this action to set aside a fraudulent conveyance, based upon Gordon v. Anderson, 90 Miss. 677, 44 So: 67 (1907). However, Gordon is easily distinguishable. In Gordon, the plaintiff's claim was to remove a cloud upon his title to disputed real property. Id. at 682, 44 So. at 67. The Court's discussion shows that the crux of the dispute was which party had property title to certain real property. Id. at 683, 44 So. at 68. Therefore, unlike the case at bar where the issue is whether to set aside a fraudulent conveyance by the defendant so that a...