Newton County Bank, Louin Branch Office v. Jones

• Decision Date: 26 August 1974
• Docket Number: No. 47381,47381
• Citation: 299 So.2d 215
• Parties: NEWTON COUNTY BANK, LOUIN BRANCH OFFICE and B. T. (Jack) Amos v. Myrtis JONES.
• Court: Mississippi Supreme Court

Page 215

299 So.2d 215

NEWTON COUNTY BANK, LOUIN BRANCH OFFICE and B. T. (Jack) Amos v. Myrtis JONES.

No. 47381.

Supreme Court of Mississippi.

Aug. 26, 1974.

Wells, Gerald, Brand, Watters & Cox, Jackson, B. T. Amos, Bay Springs, Scott P. Hemleben, Jackson, for appellants.

John M. Sims, Heidelberg, Paul G. Swartzfager, Laurel, for appellee.

BROOM, Justice:

Previously a majority of the court affirmed the decision of the Chancery Court of Jasper County. On petition for rehearing an opposite result was reached, and the former opinion of the court is withdrawn.

This is an appeal from a final decree of the Chancery Court of Jasper County which permanently enjoined appellant, Newton County Bank (Louin Branch), from foreclosing its deed of trust on homestead land of appellee, Mrs. Myrtis Jones. We now reverse and render.

Mrs. Myrtis Jones, the appellee, owned the fee simple title to the land in controversy. Her husband had only a homestead interest. She and he contemporaneously executed the deed of trust contract dated November 4, 1968 which stated that it would secure the original indebteness in a specific sum. The instrument further stated in obvious, clear and unambiguous language that its purpose was:

(F)urther to secure all loans and advances which Beneficiary has made or may hereafter make to the Grantor, or any one of them. (Emphasis added.)

Subsequently the bank made additional advances to the husband who gave additional security on cows allegedly owned by him. The cows were missing when the bank sought to replevy them. In obtaining the advances Mrs. Jones' husband acted alone and independently of further participation or knowledge on her part. Default was made in payment of the indebtedness. The bank sought to foreclose its deed of trust against the land, but the lower court enjoined the foreclosure proceedings.

The decisive question before us is whether or not competent spouses may by a contemporaneously executed deed of trust contract permit the lien thereby created to be enlarged when one of such spouses procures a subsequent advance or additional loan from the beneficiary (lender) designated in the deed of trust contract. We conclude that Mrs. Jones, her husband, and the bank contracted in such a way in this case. This conclusion is clearly consistent with a long line of decisions rendered by this Court beginning in 1882. To rule otherwise now would in effect put attorneys, borrowers, and lenders on notice that no longer may they use as a dependable guide our published decisions which have not been overruled. With this in mind, reference is made to several cases wherein the court has spoken to the question before us.

In the early case of Smith v. Scherck, 60 Miss. 491 (1882), the court recognized that where a wife joins with her husband in executing a deed of trust on homestead property to secure a debt due by him, he, acting alone, may make a new promise before the debt is barred by the statute of limitations, and establish a new period for both the debt and the security to run. Similar interpretations of contractual rights in spouses occupying homestead property are noted in the following cases: McFarlane v. Plant, 185 Miss. 616, 188 So. 530 (1939); Herron v. Land, 151 Miss. 893, 119 So. 823 (1929).

In Walters v. Merchants & Manufacturers Bank of Ellisville, 218 Miss. 777, 67 So.2d 714 (1953) the court held that a 'dragnet clause,' similar to the one in this case, which is clear and unambiguous in a deed of trust may cover subsequent loans made to either grantor (one) and is enforceable. In that case the facts were not significantly different from facts now before us although the court said in the subsequent case of Hudson v. Bank of Leakesville, 249 So.2d 371 (Miss.1971) that Walters, supra, 'was not decided upon the theory of an increased encumbrance of the homestead by one of the parties, and that this question remains undecided by any decision of this Court.' The quoted dictum from Hudson, supra, was not necessary to the decision there, which dealt with facts not similar to the instant case. Examination of Walters, supra, reveals that the lands involved therein which constituted the security were 'the homestead of appellants.' At different places in the Walters opinion, the court noted and pointed out the homestead feature of the case which dealt with reformation of a land description. In that case (as in the case at bar) the subsequent notes were signed by only the husband. The court ruled that the homestead property of the parties was encumbered by the deed of trust to the extent of the total indebtedness which included the additional loans obtained by the husband acting independently of his wife. Walters said:

. . .. The dragnet clause here involved expressly covers 'any and all debts that the said grantors or either of them may incur with or owe to the said beneficiary, . . ..' The parties clearly agreed that it would secure debts incurred by both of them and by either of them. No fraud is shown, and under the contract and the decisions we must enforce the provision as written. Limitations if any upon the use of that clause must stem from the Legislature and not from this Court. (218 Miss. at 784-785, 67 So.2d at 717-718.)

The clear thesis of Walters was to allow enlargement of the original deed of trust lien, though on homestead property, by subsequent action of the husband alone when he obtained additional money. Careful study of Mississippi Code Annotated sections 85-3-21, 85-3-45, 89-1-29 and 89-1-31 (1972) does not reveal that the Legislature intended to preclude spouses from jointly entering into a bargain and executing a deed of trust or contract encumbering homestead property owned by the wife, and incorporating within such instrument a 'dragnet clause.' The statutes simply require that such instrument be executed by both spouses. This was done by Mr. and Mrs. Jones. Of course, the original deed of trust under section 89-1-31 would not be valid unless signed and acknowledged by the wife in cases where she is the owner. Also, under section 89-1-29 the wife of an owner of homestead property must sign deeds of trust, et cetera, executed by her husband (the owner), before the conveyance or encumbrance thereon is valid.

Our decision here is not contrary to Hudson v. Bank of Leakesville, supra. Hudson held that the dragnet clause could not include an indebtedness (for a chain saw) of one of the grantors in a deed of trust made to a third party (not the original lender) subsequent to the original deed of trust. Also pertinent is the case of Davis v. Crawford, 175 Miss. 493, 168 So. 261 (1936). There the court held that the additional advances were not covered by a deed of trust on homestead property. The reason for so holding was that the 'dragnet clause' contained in the deed of trust of that case did not consist of language sufficiently clear to secure additional indebtednesses made to 'either' of the grantors. In Davis the 'dragnet clause' provided that the deed of trust would secure payment of the original indebtedness plus any further amounts that 'may be advanced to them.' (Emphasis added.) The plural term 'them' indicated that both spouses would have to consent to any future enlargement of the deed of trust lien. Language used by the court in the Davis opinion clearly indicates that additional future advances would have been secured by the deed of trust if the 'dragnet clause' had said advances would be covered if made to ONE of them rather than 'to them.'

The deed of trust before us explicitly states that its purpose was 'to secure all loans and advances which the beneficiary has made or may hereafter make to the grantor, or any one of them' (emphasis added). Whoever originally composed it was obviously relying upon and tracking what the court said in Davis and Walters, supra. The quoted language is sufficiently clear and in such unambiguous and unmistakeable terms as to contemplate and secure additional 'loans' obtained from the bank by Mr. Jones alone. Although Mr. Jones may not have acted prudently or in the best interest of himself or his wife when he incurred the additional indebtednesses, the compelling legal aspect is that his action was precisely what she bargained for and contractually authorized him to do. Both spouses, being legally competent, had the right to jointly enter into the deed of trust contract which included the 'dragnet clause.' Mrs. Jones should not be allowed to escape the consequences she risked when she became signatory to such a contract. Such a clause as attacked here is not contrary to any statute cited. When inserted in a deed of trust, such a clause operates as a convenience and an accommodation to borrowing spouses. It makes available additional funds without both having to execute additional security documents, thereby saving time, travel, loan closing costs, costs of extra legal services, recording fees, et cetera.

When Mr. Jones alone obtained the advances or loans and signed promissory notes therefor he pledged certain cattle as additional security. Argument is asserted that when the cattle were treated as security for the advances, the bank in some manner surrendered or waived its security originally provided by means of the deed of trust. We are unable to find any fact in the record or any applicable legal authority whatever to support any theory that the bank lost, forfeited, gave up or waived any of its security granted it by the deed of trust. The additional security (cows which are mysteriously missing) does not defeat or operate in derogation of the clear and unambiguous language of the deed of trust.

Here Mrs. Jones reposed in her husband trust and confidence which resulted in her willingness to make the bargain evidenced by the deed of trust. In this manner she contractually allowed Mr. Jones to use her credit (secured by her property). Having bargained and contracted as she did, it would be unconscionable for us...