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NORMAN H. HUDSON v. BANK OF EDWARDS

MAY 15, 1985

NORMAN H. HUDSON
v.
BANK OF EDWARDS



BEFORE PATTERSON, DAN LEE AND SULLIVAN

SULLIVAN, JUSTICE, FOR THE COURT:

This is an action in ejectment brought by the Bank of Edwards to recover possession of certain real property which the bank purchased from the buyer at a foreclosure sale. The trial court, the Circuit Court of the Second Judicial District of Hinds County, granted summary judgment for the Bank of Edwards and ordered Hudson to vacate the property. From that judgment, Hudson appeals, asserting that the circuit court erred in:

1. Refusing to transfer appellant's claim for relief to the chancery court;

 2. Granting summary judgment on the basis of a warranty deed, despite appellant's allegations of fraud and conspiracy connected with the deed;

 3. Refusing to hear the claim in its entirety after accepting jurisdiction;

 4. Refusing to join First National Bank of Vicksburg, Alvin Binder, Emanuel and Gerald P. Crystal, and their representatives;

 5. Failing to give the appellant reasonable time to secure certain documents and summon witnesses to prove fraud

 and conspiracy;

 6. Failing to give the appellant time to formulate a measure of damages in relation to the claim; and

 7. Refusing to pursue the appellant's claim that the special warranty deed was voidable from the beginning due to fraud.

 Appellant Norman H. Hudson is chairman of the board of Flying H. Ranch, Inc. (" Flying H "), a Mississippi corporation. On January 29, 1979, Hudson representing" Flying H ", entered into a contract with the Duffys for the purchase of a 111-acre farm near Edwards, Mississippi, for $168,000. In order to finance the purchase of the property," Flying H "executed a note to First National Bank of Vicksburg (FNB), dated February 1, 1981, in the amount of $128,000. This note was collaterally endorsed by the Crystals. Repayment of the note was secured by two deeds of trust." Flying H "executed a land deed of trust to FNB dated February 1, 1979. As collateral guarantors, the Crystals executed a land deed of trust to FNB on four tracts of property in Clinton, Mississippi.

 To secure the balance of the purchase price," Flying H "executed a note and deed of trust to the Duffys for $40,000, covering the ranch.

 On March 19, 1981," Flying H "executed a promissory note to the Bank of Edwards in the principal amount of $38,000, which was also secured by a deed of trust on the ranch.

 On August 11, 1981," Flying H "conveyed the subject property to the Crystals by an assumption warranty deed, the stated consideration of which was the assumption by the Crystals of the indebtednesses secured by the deeds of trust to FNB and to the Duffys. Thereafter, the note to FNB became in default and the bank instituted foreclosure proceedings.

 " Flying H ", which had meantime filed for bankruptcy, sought to enjoin the foreclosure of the subject property by FNB on the grounds that it was a violation of the automatic stay in 362 of the Bankruptcy Code. The bankruptcy court ruled that" Flying H "was not the owner of the subject property, having conveyed all interest thereto to the Crystals on August 11, 1981, by the assumption warranty deed. The bankruptcy court's order dated June 15, 1982, vacated a prior order which had stayed FNB from foreclosing on the subject property.

 On July 19, 1982, the Bank of Edwards filed a petition

 for temporary restraining order and preliminary injunction against FNB and Al Binder, trustee, seeking to enjoin the foreclosure sale of the property on the theory that FNB was required to marshal its assets and seek first to recover the indebtedness owed from the collateral endorsers of the note of" Flying H "to FNB, or from other property owned by the collateral endorsers other than the subject property. On October 19, 1982, substitute trustee Binder posted a notice of sale under the terms of the deed of trust to take place on November 19, 1982.

 On October 28, 1982, the Bank of Edwards made an oral motion to voluntarily dismiss its complaint to enjoin the foreclosure proceeding, which the trial court sustained in an agreed order of dismissal.

 The foreclosure sale was held on November 19, 1982, and the Crystals, the collateral endorsers on the" Flying H "note and holders of the assumption warranty deed, purchased the property for $127,875.14. The trustee's deed conveyed the subject property to the Crystals without any covenant or warranty.

 Thereafter, the Crystals conveyed the property to the Bank of Edwards by a special warranty deed dated November 24, 1982.

 Upon purchasing the property from the Crystals, the Bank discovered that Hudson remained in possession of the property. The bank made demand on Hudson, both directly and through his attorney, to vacate the premises. When Hudson refused to do so, the bank filed an ejectment action on January 11, 1983, in Hinds County Court to determine the ...


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