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Home Owners Loan Corp. v. Wiggins

Supreme Court of Mississippi, Division B
May 13, 1940
188 Miss. 750 (Miss. 1940)


No. 34123.

April 15, 1940. Suggestion of Error Sustained May 13, 1940.


In suit for deficiency after mortgage foreclosure sale, evidence that fair cash market value of mortgaged property equalled or exceeded entire mortgage indebtedness at time of sale was incompetent, in absence of allegations in notice of affirmative defenses, filed with general issue plea, or proof, of facts sufficient to render sale fraudulent, so as to entitle defendants to recoup difference between sale price and reasonable market value of property at time of sale.


Mere inadequacy of sale price does not render mortgage foreclosure sale fraudulent, even in equity court, unless bid was so low as to shock court's conscience.


The price at which property is sold on foreclosure of trust deed in pais is full measure of credit which grantors may legally demand, in absence of allegations and clear and convincing proof of facts constituting fraud.


A trust deed beneficiary, finding it necessary, in absence of higher bidder, to purchase mortgaged property at foreclosure sale in pais, though for less than actual value thereof, is not required to credit full value of property on mortgage indebtedness, in absence of actual or legal fraud affecting sale.


Mortgagors, failing to procure attendance of other bidders than trust deed beneficiary at sale on foreclosure in pais or to seek information as to amount of indebtedness due, though they had right under law and terms of trust deed to sell mortgaged property at private sale, subject to beneficiary's rights and ample opportunity to make sale or invite bidders, were not entitled to credit of full value of property on indebtedness secured, though beneficiary declined to furnish such information to interested persons sometime before sale.


The fact that trust deed beneficiary's agent was authorized to start bidding for mortgaged property at foreclosure sale in pais at sum less than full amount of indebtedness secured and to raise bid to such amount if necessary in event of competitive bidding, did not render such starting bid invalid or fraudulent when it became highest bid because of absence of other bidders, where it amounted to over 50 per cent. of value of property.


Where proceedings to foreclose trust deed in pais were regular and sufficient in all respects, balance due on indebtedness secured after crediting net proceeds of foreclosure sale was clearly established, and mortgagors' testimony on issue whether fair market value of property equalled or exceeded amount of debt at time of sale was incompetent, peremptory instruction to find for plaintiff in amount of difference between indebtedness in default and sale price should have been given.

ON SUGGESTION OF ERROR. (Division B. May 13, 1940.) [196 So. 240. No. 34123.]


Where the Supreme Court clearly announced that the court below should have entered judgment for balance due on debt after foreclosure of trust deed with interest, submitting to jury only issue of a reasonable attorney's fee, and on suggestion of error plaintiff remitted all attorney's fees in due time, the Supreme Court had authority to enter such judgment as the court below should have entered in favor of plaintiff against defendant for balance due and interest (Code 1930, secs. 755, 3378).


Where defendant on suggestion of error by plaintiff stated that case should be remanded so that he might interpose other defenses, but there was no suggestion in record of any defense available, all evidence offered by defendant in defense of action in court below was held incompetent by the Supreme Court, and in response defendant offered no satisfactory suggestion that any other defense was available, case would not be remanded to permit defendant to interpose other defenses.

APPEAL from the circuit court of Hinds county; HON. J.P. ALEXANDER, Judge.

Luther Manship, H.G. Hall and J. Thomas Dunn, all of Jackson, for appellant.

It is the contention of the appellant in this case that nothing contained in the defendant's plea or notice under the general issue or in their amended notice presented any defence to the declaration on the promissory note by plaintiff. It has never been the law in Mississippi or elsewhere that we know of that a defendant can defeat a suit for deficiency judgment, in the absence of allegation of and proof of fraud in foreclosure by submitting to the jury evidence that the property was worth more than the amount it brought at the foreclosure sale.

It is not an available defence that the price for which the property sold on foreclosure was less than its real value, unless fraud in making the sale is charged.

42 C.J. 304; 19 R.C.L. 666; Newman v. Meek, Freeman Chancery 441; Weyburn v. Watkins, 44 So. 145, 90 Miss. 728; Fed. Land Bank v. Robinson, 160 Miss. 546, 134 So. 180; Wheeler v. Cleveland State Bank, 174 Miss. 542, 164 So. 400; Federal Credit Co. v. Boleware, 163 Miss. 830, 142 So. 1; American Oil Co. v. Williamson, 154 Miss. 441, 122 So. 488; Chandler v. Bank of Brooksville, 181 Miss. 529, 178 So. 797; Hardin v. Grenada Bank, 182 Miss. 689, 180 So. 805; Anthony v. Bank of Wiggins, 183 Miss. 885, 184 So. 626; Bradbury v. Carter, 291 Fed. 363; Belmont v. Cornen, 48 Conn. 338; Markel v. Evans, 47 Ind. 326; Richard v. Michinard, 33 La. Ann. 380; Hicks v. Beedle, 98 Mo. App. 223, 71 S.W. 1074; Fischer v. Spierling, 93 N.J.L. 167, 107 A. 420; Randrup v. McBeth, 116 App. Div. 195, 101 N.Y.S. 604; Merchants Ins. Co. v. Hinman, 34 Barb. 410; Smith v. Bunting, 86 Pa. 116; Hollister v. Buchanan, 11 S.D. 280, 77 N.W. 103; Bray v. Sewall (Civ. A.), 171 S.W. 795; Sabin v. Stickney, 9 Vt. 155; Howard v. McNaught, 9 Wn. 355, 43 Am. St. 837.

Sale price, so long as sale stands, must be taken as between parties, as conclusive of the value.

Fischer v. Spierling, 93 N.J.L. 167, 107 A. 420.

If originally liable for the mortgage debt, he remains liable for any unsatisfied balance, including unpaid costs and expenses. And this rule is not affected by the fact that the mortgagee bid in the premises at the foreclosure sale, although for much less than their value, if no fraud or inequitable conduct is shown. And the fact that land increased in value after sale, enabling the mortgagee to make a profit, does not affect the liability of the mortgagor.

42 C.J. 286; Young v. Clifford, 61 Mo. A. 450; Mollenauer v. Smith, 51 Pa. Sup. 48; Fischer v. Spierling, 93 N.J.L. 167; Bonds v. Lawless, 33 N.J. Eq. 413; Randrup v. McBeth, 101 N.Y.S. 604; Robinson v. Sumner Brick, etc., 11 Pa. Super. 48; Newman v. Meek, 1 Freeman Chancery 441; Weyburn v. Watkins, 90 Miss. 728, 44 So. 145; Federal Credit Co. v. Boleware, 163 Miss. 830.

Inadequacy of land sold at judicial sale may not after confirmation be urged as defence to a deficiency judgment.

Anderson v. Walsh, 109 Nebr. 759, 192 S.W. 328; Manning v. Liberty Trust Co., 125 N.E. 691, 8 A.L.R. 999.

The fact that the lands sold at the foreclosure sale for a price greatly disproportionate to their real value does not invalidate or affect the sale.

Hunter v. Mellen, 127 Ala. 343, 28 So. 468; Harmon v. Dothan Nat. Bank, 186 Ala. 360, 64 So. 621; Hudgins v. Morrow, 47 Ark. 515, 2 S.W. 104; Roby v. Smith, 261 Mo. 192, 168 S.W. 965; Routt v. Milner, 57 Mo. App. 50; Betzler v. James, 227 Mo. 375, 126 S.W. 1007; Klein v. Glass, 53 Tex. 37; Clark v. Freedman's Sav. T. Co., 100 U.S. 149, 25 L.Ed. 573; Bailor v. Daly (D.C.), 7 Mackey 175; Hopkins v. Gibens, 119 Va. 578, 89 S.E. 871.

The defendants in the court below alleged in their plea that the trustee was not entitled to charge a fee because it was alleged that the trustee, A.J. McLaurin, was a salaried employee of the mortgagee. We have been unable to find any authorities to uphold their contention in this behalf, and it must be remembered that the mortgagors themselves were the ones who appointed the trustee in their deed of trust.

Neither the 2 1/2% trustee's fee nor the 10% attorney's fee was charged but only the $35 paid out to the agent for the trustee and the advertising cost, stamp and recording trustee's deed.

Wheeler v. Cleveland State Bank, 174 Miss. 542.

We contend that the plea and notice as filed by the defendants offered no defence to the suit on the note and that consequently none of the evidence offered in their behalf was competent. And since no defence or denial of the debt was made that the appellant is entitled to have the case reversed and judgment entered for the amount sued for.

William Harold Cox, of Jackson, for appellees.

The appellant instituted this action for a deficiency judgment against the appellees. The appellees are seeking no affirmative relief in this case. They simply seek to recoup defensively the actual value of the property up to the amount of the debt. The appellant had the burden of proof in this case to establish a deficiency in its demand. The appellees' plea of the general issue was sufficient to require such proof from the appellant.

The deed of trust executed by appellees, although a deed of trust in form, was a mortgage in effect. The trustee in the deed of trust, A.J. McLaurin, was a full time employee on a salary basis. A corporation can only act through its representatives and since this instrument contained no provisions authorizing appellant to become the purchaser of the property, it has no such authority.

It is settled law in this state that a mortgagee cannot purchase, directly or indirectly, at a sale under his mortgage, unless the mortgage confers such right or the mortgagee consents to such purchase.

Houston v. National Mutual Bldg. Loan Assn., 80 Miss. 31, 31 So. 540.

Never having conceded that appellant purchased this property, the appellant was wholly without authority to compel appellees' acceptance of some arbitrary amount as a relative pittance for credit on their indebtedness.

This foreclosure sale was conducted on September 2, 1938. At that time there obtained Chapter 346, Laws 1938. This act was approved March 16, 1938, only a few months prior to this foreclosure. The legislature of this state at that time made the declaration of public policy, which declared that the times were such as to prevent fair, open and competitive bidding at the time of sale and in the manner provided now by law.

When this foreclosure sale was conducted, just as the chancellor found in the case of Hardin v. Grenada Bank, 182 Miss. 689, there was no fair and open sale of the property such as was contemplated by the legislature under its provisions for such sales.

Section 2167, Mississippi Code 1930, as amended by Chapter 248, Laws 1934, require the public advertisement and sale of property for a wholesome purpose. As a means of furthering this wholesome purpose, it has been held that a sale of lands advertised for a lesser time and sold in a different manner than required by statute is void even though it conforms with the provisions of a contract therefor. It would be an idle and vain thing to say that it was so important to have a sale so safeguarded and advertised when economic conditions made it so that property would be sacrificed under the guise of legal foreclosure by the simple expedient of tracking the statute. The legislature then intervened by its announcement in Chapter 346, Laws 1938, and declared that such an economic condition existed as that a fair and reasonable price could not be had by public sale. Manifestly, such announcement superseded all contrary views on the subject, and must have its weight with the court in passing upon the right of a mortgagor, whose property has been foreclosed under such conditions, to claim defensively that his property was worth as much as the debt. That is all we assert in this case. That, we overwhelmingly proved in this case.

Our position in this case would be definitely untenable if we were seeking to reclaim the property by setting aside the sale. That move would be definitely precluded by the case of Standard Lumber Co. v. Deposit Guaranty Bank Trust Co., 169 Miss. 120, 152 So. 639. But such is not in any sense the purpose of appellees. We simply want credit on this debt for the fair and reasonable value of the property, which appellant has been permitted to take and dispose of.

The instrument did not vest appellant with any authority to purchase the property under the rule announced in Houston v. National Mutual Building Loan Association, 80 Miss. 31.

The appellees were entitled to have the jury pass upon the question of the reasonable value of the property at the time of the foreclosure sale. The jury found that the property was reasonably worth as much as the debt of appellant against it.

National Bank of Brunswick v. Gorenflo et al., 160 So. 911, 173 Miss. 646.

The jury heard the evidence and determined that it was sufficient to establish that appellees owed appellant nothing under the facts. The appellant filed no motion for a new trial setting up that such finding was contrary to the overwhelming weight of the evidence. The appellant is seeking here for the first time to have this this court say that the finding of the jury in the court below in such case was contrary to the overwhelming weight of the evidence.

Flynn v. Kurn, 184 So. 160, 183 Miss. 413.

The trustee was shown to be in the full time employ of appellant on a salary basis at the time of the execution of the deed of trust, and at the time of the foreclosure. In other words, his time all belonged to appellant, and it could incur no further expense in availing itself of his services in foreclosing the deed of trust by calling on him to do so. Under such circumstances, it is submitted that such charge for the trustee, or agent for the trustee, would not be allowable or proper. This question is well settled in this state.

Nixon v. City of Biloxi, 25 So. 664, 76 Miss. 810.

Argued orally by Luther Manship and J. Thomas Dunn for appellant, and Harold Cox, for appellees.

Subsequent to the foreclosure in pais of a deed of trust executed by the appellees in favor of A.J. McLaurin, as trustee, for the benefit of the appellant, Home Owners Loan Corporation, this suit was instituted in the circuit court of Hinds County to recover a judgment for the balance then left due on the indebtedness thereby secured. The amount of the bid at the trustee's sale when the appellant became the purchaser of the property involved, after due and legal notice in the manner provided for in the deed of trust and as required by law, was the sum of $1800, which was in excess of 50% of the value of the property, and which amount, less a reasonable trustee's fee and the other expenses paid by the appellant in connection with the cost of foreclosure, was credited on the indebtedness then in default, amounting to the sum of $3,243.77, leaving a balance of $1,504.57 due on the note sued on, plus a reasonable attorney's fee of not exceeding 10% of the said amount, as contracted for, and for all of which a judgment was demanded.

Appellees filed a plea of the general issue and gave notive thereunder that they would show upon the trial of the case that the property conveyed by their deed of trust and sold by the trustee to the appellant was worth at the time of sale, at a fair cash market value, a sum equal to or in excess of the entire indebtedness then due; and that hence the plaintiff was not entitled to recover a deficiency judgment in any sum whatsoever against them. Over the objections of the plaintiff there was testimony introduced before the jury on that issue, and with the result that the verdict was in favor of the defendants, notwithstanding that there were neither allegations contained in the notice of affirmative defenses which was filed with the general issue plea, nor proof made upon the trial, of such facts as would be sufficient to render the sale fraudulent, so as to entitle the defendants to recoupment for the difference between the price at which the property sold and its reasonable market value at the time of sale. Mere inadequacy of price alone does not render a foreclosure sale fraudulent, even in a court of equity, unless the bid is so low as to shock the conscience of the court. Newman v. Meek, Freem. Ch. 441; Fischer v. Spierling, 93 N.J.L. 167, 107 A. 420; Weyburn v. Watkins, 90 Miss. 728, 44 So. 145; Federal Credit Co. v. Boleware, 163 Miss. 830, 142 So. 1; Wheeler v. Cleveland State Bank, 174 Miss. 542, 164 So. 400; Hardin v. Grenada Bank, 182 Miss. 689, 180 So. 805. And, in the absence of allegations of facts constituting fraud, as well as clear and convincing proof thereof, the price at which property is sold under a foreclosure in pais is the full measure of credit that the grantors in a deed of trust may legally demand.

We deem it unnecessary to enter into a discussion of the numerous decisions cited in the briefs of counsel, for the reason that it is sufficient to say that an examination of the cases relied upon discloses that they are each distinguishable from the case at bar, both on the issues therein presented, and on the facts involved. None of the decisions of this Court, nor the authorities generally, sustain the view that when a beneficiary in a deed of trust finds it necessary, in the absence of a higher bidder, to become the purchaser at a foreclosure sale in pais, although at a lower bid than the property is actually worth, he is required to credit the full value of the property on the indebtedness held against the same, even though the sale has been unaffected by either actual or legal fraud. When a deed of trust is being foreclosed in pais it is often necessary for the grantors therein to procure the attendance of other bidders at the sale than the beneficiary in order to obtain the benefit of the full value of the property involved as a credit on the indebtedness secured. In this instance the grantors failed to do so, and while complaint is made that the appellant declined to furnish information to interested persons sometime prior to the foreclosure sale as to the amount of indebtedness due, it was neither alleged nor proved that the debtors themselves sought such information, although they had the right under the law and the terms of the deed of trust to sell the property at private sale subject to the rights of the appellant therein. They had ample opportunity to make a sale, or invite bidders to attend the trustee's sale, since they discontinued their payments in January and moved from the premises long before the foreclosure sale during the following September.

Nor does the fact that the proof herein shows that the agent, who was requested to bid for the appellant at the sale here in question, was authorized to start the bidding at only $1,800 plus the expenses, and to raise it to the full amount of the indebtedness if it should become necessary to do so in the event of competitive bidding, cause the bid of $1,800 to be an invalid or fraudulent one when it became the highest bid because of the absence of other bidders at the sale, since the amount thereof, being 50% or more of the value, does not fall within the rule of condemnation against sales made for prices so grossly inadequate as to shock the conscience of the court, referred to in the cases hereinbefore cited.

The foreclosure proceedings being in all respects regular and sufficient, and the balance due on the indebtedness after crediting the net proceeds of the sale having been clearly established, and the testimony given on behalf of the appellees being incompetent, for reasons hereinbefore stated, on the issue of whether or not the fair market value of the property would be equal to or exceed the amount of the debt at the time it was sold, it follows that the peremptory instruction requested by the appellant in the following form should have been given, to-wit: "The Court instructs the jury for the plaintiff to find for the plaintiff in the sum of $1504.57 with interest at the rate of 5% per annum from September 2d 1938, together with reasonable attorney's fee to be fixed by you not to exceed ten per cent."

Reversed and remanded.


In due time the Home Owners Loan Corporation has filed a suggestion of error in this case, and also what it denominates as a motion to correct the judgment of this court.

On April 15th, 1940, this court handed down its opinion in which it held that on the pleadings and evidence the appellant was entitled to the peremptory instruction refused it in the court below for the recovery from the appellees of the sum of $1,504.57, with interest at the rate of five per cent per annum, from September 2, 1938. The court further held that in addition to the above, the instruction in the court below for the fixing by the jury of a reasonable attorney's fee was proper; and concludes with the words, "reversed and remanded."

In the opinion it was held that the amount of the debt was fully established, and that there was evidence adduced by the appellant as to the amount of a reasonable attorney's fee.

In the suggestion of error filed in this court the appellant offered to remit or waive any right to an attorney's fee in this case, and insisted that this court should have entered a judgment for the amount of its debt, with interest, remanding the case only on the issue of a reasonable attorney's fee to be fixed by the jury.

The appellees filed an objection and reply to the so-called motion to correct the judgment of the court, and insist that the clerk enter the precise judgment indicated by the opinion in the case; that therefore a motion to correct judgment cannot be sustained, because there was no error in calculation, or the like, by the court in its opinion herein; and, therefore, section 755, Code of 1930, has no application. He further insists that this court is without power, under section 3378, Code of 1930, to enter a final judgment here for the debt.

The opinion of the court clearly announced that the court below should have entered a judgment for the amount of the debt, with interest, only submitting to the jury the issue of a reasonable attorney's fee to be assessed by it. On the issue of the debt it was unnecessary for the jury to retire. See Hairston v. Montgomery, 102 Miss. 364, 59 So. 793, Yazoo Mississippi Valley R. Co. v. Pope, 104 Miss. 339, 61 So. 450. No attorney's fee now being claimed, the judgment of this court should be in favor of the appellant against the appellee for the debt and interest. In substance, the appellee also says that the case should be remanded, in order that he might interpose other defenses. There is no suggestion in the record of any defense available. All the evidence offered by him in defense of the action in the court below was held by this court to be incompetent. In the response here the appellees offer no satisfactory suggestion that any other defense is available.

The remittitur of the claim for the attorney's fee in this case was filed in due time. The appellee does not now want to accept that remittitur.

In this state of the record we are of the opinion that this court is fully invested with authority to enter such judgment as the court below should have entered — that is, for the amount of the balance due on the note, $1,504.57, with interest, as above stated. Had our attention been called to it, it would have so appeared in the opinion handed down by this court. Since the appellant waives the right to have the jury assess an attorney's fee, there is nothing now pending upon which to order a remand of the case. The remittitur of claim to attorney's fees by the appellant will be permitted, and to that extent the suggestion of error will be sustained and judgment final entered here for the appellant in the amount of the debt, with interest thereon, as above set forth. Instead of remitting a fixed sum, as is the usual practice in this court, the appellant here remits all attorney's fees.

The case of Couret et al. v. Conner et al., 118 Miss. 598, 79 So. 801, is not in point. If a remittitur was intended, as appellees argue, it came too late, after the time allowed under the rules of this court had expired, and judgment had become final by the adjournment of the court in the interim. That is all that was decided by a majority of the court.

Likewise, the case of Crudup v. Roseboom, 125 Miss. 205, 88 So. 497, is not in point for the reason that here a remittitur of attorney's fees is offered in due time; that is, within fifteen days after the rendition of the final judgment — therein lies the difference.

Section 3378, Code of 1930, authorizes us to enter such judgment as the court below should have entered, and, we think, is ample authority for the procedure here.

To the extent indicated the judgment of this court will be amended, and the suggestion of error sustained insofar as is necessary to accomplish that result. We have treated the motion to correct the judgment as a suggestion of error filed within the time allowed by the rules of this court.

Suggestion of error sustained, and judgment here for appellant.

Summaries of

Home Owners Loan Corp. v. Wiggins

Supreme Court of Mississippi, Division B
May 13, 1940
188 Miss. 750 (Miss. 1940)
Case details for

Home Owners Loan Corp. v. Wiggins

Case Details


Court:Supreme Court of Mississippi, Division B

Date published: May 13, 1940


188 Miss. 750 (Miss. 1940)
195 So. 339

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