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FED HARRIS, PEGGY VEST AND CATHY AINSWORTH v. S. CHARLES KEMP

JUNE 06, 1984

FED HARRIS, PEGGY VEST AND CATHY AINSWORTH
v.
S. CHARLES KEMP



BEFORE WALKER, DAN LEE AND SULLIVAN

SULLIVAN, JUSTICE, FOR THE COURT:

This is an appeal from the Chancery Court of Copiah County which dismissed a suit of appellants to cancel a special warranty deed, for an accounting, and for other relief. Also in the action, the chancellor reformed the deed in question from Fed Harris and wife to appellee, cancelled the claims of appellants upon appellee's land as clouds upon his title, and granted appellee a money decree of $750.00 on a promissory note, plus $150 attorney's fees and $175 interest on the note; also, appellee was granted a judgment of $5,000 for rent. For the reasons noted below, we reverse.

Fed Harris and wife had lived on a 264 acre farm in Copiah County for many years and had known and had financial dealings with Kemp and his father for forty or fifty years. Kemp is an automobile dealer in Jackson, Mississippi.

 Harris had fallen upon hard economic times. He had judgment creditors to the tune of some $20,000. He owed a first mortgage to the Federal Land Bank for $35,000 and a second mortgage to Wesson Milling Company for $44,000. Also by 1978, he had a mortgage to Kemp for $18,600.

 In late 1978, Wesson began foreclosure, and, unable to raise money to pay Wesson, Harris sought out Kemp for help. Kemp, through Sam Scott, his lawyer, hired James Nobles to represent Harris in the foreclosure proceedings, paying Nobles' $500 retainer fee for Harris. Kemp then had Harris and wife sign an exclusive option in favor of Kemp to purchase the farm for $92,000 less what was owed to Kemp. This option was never recorded. Kemp then had, on January 26, 1979, the Harrises execute a special warranty deed to him for $100. This was also not recorded. Harris was told that Kemp needed this deed to borrow the money to pay off Wesson. No money ever changed hands on this deed.

 Meanwhile, Nobles had filed to enjoin Wesson's

 foreclosure to which Wesson had consented. Wesson then filed for a judicial foreclosure. In this action, Wesson alleged that Harris owed it a total of $160,000 - $44,000 on the deed of trust and the remainder from business ventures between it and Harris. On April 4, 1979, a decree was entered by consent in that case, providing that Harris pay over to Wesson $50,000. He was given thirty days within which to comply.

 During the pendency of the Wesson Milling Company suit, a meeting was had between the Harrises, Kemp, and their attorneys. At that time, Kemp agreed to put up the $50,000 to pay off Wesson. However he was not willing to make any more loans on the property. Instead the parties spoke of some type conveyance. Eventually on April 4, 1979, an agreement was reached and the above mentioned decree was entered. After agreement was reached, however, Kemp left for Europe for several weeks.

 Then, on May 4, 1979, the last day before expiration of the thirty-day period provided for in the decree, the parties and their attorneys met at the Copiah County court house to consummate their prior dealings. There, after checking to see the amount owed Kemp by Harris for previous loans, the amount of the Federal Land Bank Loan, and the amount owed to the judgment creditors, a special warranty deed to the property was executed by Harris in favor of Kemp and was recorded. Additionally on May 4, an assignment of the $50,000 Harris owed Wesson was executed in favor of Kemp in exchange for Kemp paying Wesson the $50,000. Thus by May 4, 1979, Kemp held a special warranty deed to the 264 acres as well as an assignment of the $50,000 deed of trust on the property.

 During the negotiations and at the May 4th signing, a repurchase agreement was discussed. On request of Harris, Nobles drew up a repurchase agreement calling for a two-year redemption period. The purported agreement would have had Harris repaying Kemp the amounts owed plus 10% interest and an inflation factor to be computed later. This written agreement was presented to Kemp at the May 4th meeting. However, Kemp declined to sign it, saying that Harris would just have to trust him. The testimony as to what was actually agreed upon is conflicting - Harris claiming a two-year redemption period and Kemp claiming a one-year redemption period.

 After the May 4th transaction, Fed and Kathryn Harris continued to live on the property, at least until Kathryn's death on September 12, 1979, and Fed's remarriage

 several months later. However, Fed continues to go to the property daily to maintain it. All witnesses, including Kemp, testified that Kemp allowed Harris to remain on the property rent free, provided he (Harris) maintained the property. During this time, Kemp paid the taxes on the property and assumed the Federal Land Bank deed of trust.

 On several occasions after the May 4th, 1979, transaction, Harris approached Kemp concerning repurchase of the property. However, in November or December, 1980, a representative from Getty Oil Company approached Kemp, stating that the Company was seriously considering drilling for oil on the property. Consequently, when, in December, 1980, Harris approached Kemp, Kemp did not quote a repurchase price, saying, according to Harris's testimony, that he (Kemp) wanted to wait and see the outcome of the Getty exploration. Finally, in February, 1981, Kemp stated that he would allow Harris to repurchase for $177,000, but that he (Kemp) would reserve the mineral rights.

 Harris testified that though he was able to repay the amount he owed Kemp, $177,000 without mineral rights exceeded that amount. However, apparently because he thought $177,000 was more than he owed, Harris never tendered any money. Incensed over Kemp's price, Harris filed suit on May 26, 1981. Thereafter, Kemp posted the property and wrote a letter to Harris informing him that he was no ...


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