Rogers v. First Tennessee Bank Nat. Ass'n
| Decision Date | 18 June 1987 |
| Parties | A.G. ROGERS, Plaintiff-Appellant, v. FIRST TENNESSEE BANK NATIONAL ASSOCIATION, Defendant-Appellee. 738 S.W.2d 635 |
| Court | Tennessee Court of Appeals |
Brandt W. Davis, Knoxville, for plaintiff-appellant.
William S. Lockett, Jr., Heiskell, Donelson, Bearman, Adams, Williams & Kirsch, Knoxville, for defendant-appellee.
Plaintiff, A.G. Rogers, has appealed from the trial court's dismissal of his complaint in which he alleged that a certain deed of trust was not additional security for a $400,000 note secured by another deed of trust.
The pertinent facts are as follows:
On April 20, 1978, plaintiff executed two separate promissory notes payable to the defendant, First Tennessee Bank. Each note was secured by a separate deed of trust.
One promissory note was in the principal sum of $400,000 and was secured by a deed of trust on approximately ninety-six acres of unimproved land (hereafter Trust Deed A). Specifically excluded from the description of the land in Trust Deed A was a tract containing 2.31 acres on which plaintiff's residence was located.
The second promissory note was in the principal sum of $50,000 and was secured by a deed of trust on the 2.31 acres (hereafter Trust Deed B).
Trust Deed A contains the following "other debt" clause This deed of trust also secures any extensions, renewals or modifications thereof and any other obligations of every kind and description, however arising, of A.G. Rogers or A.G. Rogers Company to the payee thereof, due or to become due, primary or secondary, direct or indirect, fixed or contingent, liquidated or unliquidated, now existing or hereafter contracted, and whether several, joint or joint and several.
Trust Deed B contains the following "other debt" clause:
In addition to the above described indebtedness, this instrument shall also secure (1) any and all other existing indebtedness or other obligations of [A.G. Rogers] now held by the holder of the indebtedness secured hereby, hereinafter called beneficiary, and any renewals thereof regardless of maturity, and (2) any and all future indebtedness which may be hereafter created by [A.G. Rogers], or any of them, and be held by the beneficiary, and any renewals thereof regardless of maturity, within a period of ten years from date and up to an amount not exceeding the amount of the original indebtedness secured hereby, whether said indebtedness is evidenced by note or notes, draft, check, account, or otherwise.
Plaintiff attempted to pay the defendant the balance owing on Loan B, conditioned upon defendant's releasing Trust Deed B. Defendant refused to do so, insisting that Trust Deed B is additional security for the promissory note secured by Trust Deed A.
The Chancellor, following an evidentiary hearing, first found that Trust Deed A and Trust Deed B were ambiguous but, on motion to rehear, found that the deeds of trust were not ambiguous and further, that there was no evidence in the record from which it could be found that "there was any fraud, accident or mutual mistake regarding [the notes or trust deeds]." He then dismissed plaintiff's complaint.
Plaintiff has presented the following two issues for our consideration:
I
The trial court erred in reversing its previous ruling that the trust deeds in this case were ambiguous and that the cross-collateralization clause of Trust Deed "B" did not carry over to Trust Deed "A", and in granting defendant's motion to alter or amend this judgment and then ruling the instruments were not ambiguous, while also finding them to be inartful and paradoxical, and in granting judgment for defendant.
II
The trial court was not bound by the sole issue of ambiguity in the language of the pre-printed forms used in these documents, and did not create the ambiguity that does exist. The Chancellor erred in failing to also consider the issues of mutual mistake, accident, and the intent of the parties not to have Trust Deed "B" cross-collateralize Trust Deed "A", and to interpret these mortgage clauses as a question of law in light of the unrefuted testimony of plaintiff, the evidence and applicable Tennessee law. The interpretation of these pre-printed, form mortgage clauses, and more specifically the "open end", "boiler plate dragnet", or "cross-collateral" clauses, as they are commonly called, by the Chancellor involved questions of law as well as fact, and the Chancellor erred in failing to look to the surrounding circumstances, the intent of the parties, and the applicable law to determine if the cross-collateral clause in Trust Deed "B" was intended to carry over to Trust Deed "A".
We discuss these together.
Plaintiff argues that the deeds of trust are ambiguous since both were executed...
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