Wright v. Lincoln County Bank

• Decision Date: 30 October 1970
• Citation: 62 Tenn.App. 560,465 S.W.2d 877
• Parties: M. H. WRIGHT, Complainant-Appellant, v. The LINCOLN COUNTY BANK, et al., Defendants-Appellees.
• Court: Tennessee Court of Appeals

Page 877

465 S.W.2d 877

62 Tenn.App. 560

M. H. WRIGHT, Complainant-Appellant, v. The LINCOLN COUNTY BANK, et al., Defendants-Appellees.

Court of Appeals of Tennessee, Middle Section.

Oct. 30, 1970 Certiorari Denied by Supreme Court April 5, 1971.

Charles A. Trost, of Courtney, Trost, Leech & Hardin, Columbia, for complainant-appellant.

Arthur E. Simms, Jr., of Simms & Simms, Fayetteville, for defendants-appellees.

OPINION

PURYEAR, Judge.

This appeal involves construction and application of an 'open-end' provision for future advancements contained in a deed of trust executed by the complainant and others to secure payment of an indebtedness to the defendant, Lincoln County Bank, to which we will refer herein as 'the bank.'

The salient facts of the case, as we find them to be, are as follows:

At the time of the transaction in question here the complainant and his two brothers, Carl and Jesse Wright, owned, as tenants in common, a tract or parcel of land in the Seventeenth Civil District of Lincoln County, Tennessee, upon which tract of land the complainant, his wife, and his two brothers, Carl and Jesse, made their home.

At that time, and for a period of time prior thereto, Carl was engaged in the insurance business in Ardmore, Tennessee, under the name of Ardmore Insurance Agency. Eunice Wright, wife of the complainant, worked as secretary for this insurance agency. The complainant was an independent insurance adjuster, engaged in adjusting claims for several companies, including companies represented by Ardmore Insurance Agency. At odd times, complainant also did some work for the Ardmore Insurance Agency, for which he was paid a small salary.

For some time prior to the transaction involved here, the Ardmore Insurance Agency had been losing ground financially and the three Wright brothers were indebted to First National Bank of Pulaski, Tennessee, which indebtedness was secured by deed of trust on their home place. The original amount of this indebtedness was $8,000.00, but the amount due thereon at the time of the transaction in question here does not appear from the proof.

At some time about February 1, 1965, the three brothers obtained a loan from the defendant bank for the purpose of paying the balance due on the indebtedness to First National Bank of Pulaski, and on February 1, 1965, these three brothers, Jesse B. Wright, Carl Wright, M. H. Wright and wife, Eunice B. Wright, executed a note to the defendant bank in the principal sum of $8,000.00 and on that same date they executed a deed of trust conveying the home place of ten acres to J. D. Pylant, as Trustee, for the purpose of securing payment of said indebtedness. This deed of trust was executed on a printed form in which the blanks were filled in with a typewriter and the security provision of such deed of trust is as follows:

'To secure the full, prompt and final payment of any and all indebtedness, principal, interest, attorney's fee and costs, as may be provided in instruments evidencing such indebtednesses, now or hereafter owing, directly or indirectly, or, as indorser or security for others, to Lincoln County Bank, Fayetteville, Tennessee, its successors and assigns, by the undersigned, or either of them, and specifically, but not limited to, for the following purpose, to-wit:

To secure the payment of our joint promissory note of even date herewith and any extension or renewals thereof in the amount of $8,000.00 payable to the order of Lincoln County Bank, Fayetteville, Tennessee in five (5) equal annual installments, of $1600.00 each beginning February 1, 1966, and a $1600.00 installment being due and payable on or before February 1, of each and every consecutive year thereafter until paid in full, with interest from date at 6% Per annum and the interest on the entire unpaid Principle balance being due and payable on each installment payment date.'

(Rec. p. 117)

The first paragraph of the above quoted language is printed in the deed of trust and the second paragraph of same is typewritten. This deed of trust was signed by the grantors therein before Mabron Lewter, Notary Public, at a hardware store in Ardmore, Tennessee.

At the time this loan was closed, a checking account was opened at the bank in the name of Ardmore Insurance Agency and an authorized signature card was signed by Carl Wright, Eunice Wright, Betty Ryer and the complainant.

At some time between February 3, 1965, and March 8, 1965, Carl Wright borrowed an additional $4,000.00 from the bank and repaid it. This loan is not in question here and therefore we need not make any further reference to it.

Thereafter, on or about March 8, 1965, Carl borrowed another $8,000.00 from the bank and executed a note date March 8, 1965, due thirty days after date, which note is signed as follows: 'Ardmore Insurance Agency Carl Wright.'

The entire amount of $8,000.00 advanced by the bank at the time this second $8,000.00 note was executed was deposited in the checking account of Ardmore Insurance Agency.

Default was made in payment of both $8,000.00 notes and when demand for payment therefor was made by the bank, the complainant insisted that the second $8,000.00 note was not secured by the aforementioned deed of trust and therefore, he tendered to the bank the sum of $6,784.00, which he admitted was due upon the first $8,000.00 note, but the bank refused to accept this payment except in partial satisfaction of the indebtedness which it deemed to be secured by such deed of trust which, according to the bank's insistence, included the second $8,000.00 note.

Upon the bank refusing to accept this tender of payment, except in partial satisfaction, complainant filed suit in Chancery Court of Lincoln County, tendering said sum of $6,784.00 and seeking to remove the deed of trust as an encumbrance on the property described therein.

After this suit was filed, foreclosure proceedings were instituted by the bank and then an amended and supplemental bill was filed by complainant joining J. D. Pylant, Trustee, as a defendant and enjoining foreclosure of the deed of trust. Neither Carl nor Jesse Wright was joined as a party to the suit.

Upon filing of said amended and supplemental bill, a temporary injunction was granted enjoining the foreclosure of the deed of trust. After the defendants, Lincoln County Bank and J. D. Pylant, Trustee, filed their answer to the original and also the amended and supplemental bill, the case was tried before Chancellor Templeton upon oral proof and documentary evidence on October 14, 1969.

As a result of said trial, the Chancellor concluded that the assailed provision in the deed of trust was not contrary to law or against public policy and that it secured the whole debt, that is, both of the notes in the sum of $8,000.00 each, whereupon, the complainant's suit was dismissed and the injunction dissolved. Neither Carl nor Jesse Wright testified at the trial.

After a petition to rehear was filed and overruled, the complainant prayed and perfected his appeal to this Court, in which he appealed from the decree dismissing his bills and has filed two assignments of error as follows:

I.

'The Honorable Chancellor erred in dismissing the Original and Amended Bill filed by Appellant.

II.

The Honorable Chancellor erred in ruling as a matter of law that Appellant's interest in the real estate conveyed by the deed of trust executed by Appellant and others on February 1, 1965, secured payment of the note in the principal amount of $8,000.00 executed without Appellant's knowledge or consent by his co-tenant on March 8, 1965.'

After considering all of the evidence in this case, we have concluded that the Chancellor reached a correct result.

The two assignments of error actually present only one issue for...