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FIRST NATIONAL BANK OF JACKSON, MISSISSIPPI v. WILLIE E. HUFF

NOVEMBER 23, 1983

FIRST NATIONAL BANK OF JACKSON, MISSISSIPPI
v.
WILLIE E. HUFF, ET AL.



BEFORE PATTERSON, ROY NOBLE LEE AND PRATHER

PRATHER, JUSTICE, FOR THE COURT:

Willie E. Huff filed this suit in Hinds County Chancery Court First Judicial District, to reinstate real estate trust deed executed by James E. Barrett in Huff's favor which was mistakenly cancelled of record by the First National Bank of Jackson (Bank). The Bank, the heirs of James E. Barrett, deceased, and Charles W. Taylor, et ux., the purchasers from the Barretts, were named defendants. After paying the amount of the trust deed wrongfully cancelled by it, the Bank seeks through its cross-bill to be subrogated to Huff's rights and to have the lien of the trust deed reinstated and foreclosed. From an adverse ruling on its cross-bill, the Bank appeals assigning as error that the trial court erred (1) in denying the bank its right to be subrogated to Huff's position because of its own negligence and (2) in failing to establish a constructive trust and equitable lien in favor of the Bank against

the Taylors' deed of trust to the Barrett heirs.

 I.

 On November 23, 1973, Willie Huff sold 19.7 acres of land in Hinds County to James Barrett and Eugene Fowler. In return, Barrett and Fowler executed a promissory note and a deed of trust to Willie Huff in the amount of $29,947 as partial consideration for the purchase of the property. Thereafter in a totally different transaction on July 1, 1974, Willie Huff borrowed $12,000 from the First National Bank of Jackson, and as security for this loan, the bank required that Huff assign the Barrett-Fowler note and deed of trust. On November 1, 1974, Fowler conveyed to Barrett his interest in the 19.7 acres of land, and Barrett assumed the Barrett-Fowler note and deed of trust originally due to Willie Huff, but now assigned to the First National Bank of Jackson.

 On March 2, 1977, Willie Huff paid in full his $12,000 note with the bank. Upon payment of this note a bank employee mistakenly cancelled the Barrett-Fowler deed of trust given to the bank as security. This was done on March 7, 1977.

 Mr. Barrett had made the monthly payment from 1973, and had continued to make monthly payments on the promissory note to Willie Huff until his death on June 8, 1977. Barrett's widow, Mrs. Louise Barrett, continued to make the monthly payments through her husband's estate after his death.

 Mrs. Louise Barrett probated her husband's will on July 5, 1977. The first publication of the notice to creditors to probate claims in Barrett's estate was published on July 18, 1977, causing all claims against Barrett's estate to be filed within the 90 day period ending October 18, 1977. During this 90 day period, Willie Huff made no attempt to probate his claim against Barrett's estate since the monthly payments on the promissory note were being kept current by Mrs. Louise Barrett, and Huff's ignorance of the mistaken cancellation of record.

 On December 1, 1977, Mrs. Barrett made a payment to Willie Huff on the note, but discontinued them thereafter on her attorney's advice to cease making payments. The advice was based upon the fact that the 90 day period for probating claims had expired and the deed of trust securing the note had been cancelled by the bank. It was after this discontinuance of payments that the bank's error in cancelling the Barrett deed of trust was discovered. On March 14, 1978, Harris Collier, Vice President with the bank, wrote to the

 Barrett estate attorney and asked him to consult with Mrs. Barrett about having the deed of trust reinstated and the past due note payments brought current. The request of the bank was reported to Mrs. Barrett, but she communicated her refusal by letter dated March 20, 1978.

 Mrs. Barrett entered into a contract on March 29, 1978, for the sale of the 19.7 acres of land to the Taylors. A chancery court order authorizing the administratrix to sell this property was entered on April 20, 1978, and the executrix did convey the property to the Taylors on April 28, 1978, for a purchase price of $75,000. In return, the Taylors executed a deed of trust for the benefit of the Barrett estate, securing a promissory note in the amount of $56,250.

 Since Mrs. Barrett discontinued her monthly payments on the note, Willie Huff sued the First National Bank on January 19, 1979, in the Circuit Court of Hinds County for negligence in cancelling the Barrett deed of trust in March of 1977. On February 20, 1979, the estate of James Barrett was closed, and on March 1, 1979, the administratrix assigned the balance due on the Taylor note to herself individually.

 On April 8, 1980, a judgment was rendered in favor of Willie Huff against the First National Bank for wrongful cancellation of the Barrett deed of trust. The amount of the jury award was $28,583.53 as damages for the unpaid principal and interest owed on the Barrett deed of trust to Willie Huff. Additionally, $15,000 was awarded for general damages against the bank making a total judgment of $43,583.53 in Huff's favor.

 On April 22, 1980, Huff filed the present lawsuit in the Chancery Court of the First Judicial District of Hinds County requesting that the Barrett deed of trust be reinstated and the Taylor deed of trust be subordinated to the Barrett deed of trust and the Barrett deed of trust be foreclosed. The defendant parties to this chancery action included Mrs. Barrett, the Taylors, the bank, and the two trustees in the two deeds of trust. After the filing of this chancery suit on June 9, 1980, the First National Bank paid the judgment awarded to Huff in the circuit court action (and did not appeals). However, the bank did file a cross-bill in the chancery court matter seeking subrogation of all rights and claims Huff had against the remaining defendants since the bank had now paid the obligation under the Barrett note and deed of trust. The bank requested the court to impose a constructive trust or equitable lien in favor of the bank as to the Taylor deed of trust. At the

 trial neither Huff nor his counsel appeared. The only disputed matter remaining was the bank's cross-bill for ...


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