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DALE J. LEININGER v. MERCHANTS & FARMERS BANK

JANUARY 29, 1986

DALE J. LEININGER
v.
MERCHANTS & FARMERS BANK, MACON, MISSISSIPPI AND CHARLES G. PERKINS AND W. L. STOKES



BEFORE ROY NOBLE LEE, DAN LEE AND PRATHER

PRATHER, JUSTICE, FOR THE COURT:

A constitutional challenge to Miss. Code Ann. 89-1-55 (1972), the Mississippi power of sale foreclosure statute, gives rise to this appeal from the Chancery Court of Copiah County. Appellant Dale J. Leininger perfects this appeal and assigns the following error:

The ruling of the court deprived the appellant of his right to own property by upholding the Mississippi foreclosure notice requirements on a deed of trust, which are in violation of appellant's rights to due process of law.

 FACTS

 On December 7, 1981, Dale J. Leininger executed a deed of trust to the Merchants & Farmers Bank of Macon, MS, to secure a note of $73,392.57. The principal and interest on the note were due December 7, 1982. The note contained language saying, "Any notice of sale or other intended disposition of the Collateral by Bank sent to maker at the address specified above, or such other address of Maker as may be shown on Bank's records, at least five days prior to such action shall constitute reasonable notice to Maker." The deed of trust contained a power of sale provision upon publication of a notice in a newspaper for three consecutive weeks and the posting of the notice at the county courthouse.

 When the note became due in December of 1982, Mr.

 Leininger was unable to make any payment. The bank, in February of 1983, allowed Mr. Leininger a sixty day extension, but the debt continued to go unpaid. The bank again offered Mr. Leininger more time to pay the debt, but no specific time was agreed upon.

 On June 9, 1983, Mr. Leininger moved to England to close a business transaction. He did not inform the bank of his address there, nor did he inform them of when he would return. During the absence of Mr. Leininger, the bank turned the matter over to Charles G. Perkins, the trustee named in the deed of trust. Mr. Perkins did not attempt to contact Mr. Leininger, but he contacted John T. Armstrong, Jr., an attorney Mr. Perkins thought to be representing Mr. Leininger in the matter.

 Although Mr. Leininger in the trial of this case denied being represented by Mr. Armstrong, Mr. Armstrong claimed to have spoken with Mr. Leininger numerous times concerning this matter. During the ensuing months Mr. Armstrong had a continuing dialogue with the bank, trying to prevent foreclosure. He also, on several occasions, discussed the impending foreclosure with Mr. Leininger.

 In November of 1983, Charles Perkins commenced foreclosure proceedings. He caused publication to be had in the Copiah Courier for three consecutive weeks in accordance with Miss. Code Ann. 89-1-55 (1972), as well as posting a notice at the Copiah County Courthouse bulletin board. At no time did Mr. Perkins or anyone else associated with the bank, attempt to serve actual notice on Mr. Leininger. However, two days before the sale, Mr. Leininger, still in England, received actual notice of the date of the sale from his aunt, who read about the sale in the newspaper.

 The foreclosure sale was conducted December 16, 1983. That morning Mr. Armstrong, acting in the best interest of Mr. Leininger, encouraged Mr. Perkins to attempt to sell the land in parcels. Mr. Armstrong also searched the courthouse for potential buyers, but there were none. The property was sold to the Merchants and Farmers Bank for $74,300.

 Subsequently, Mr. Leininger returned from England and petitioned in Chancery Court to have the foreclosure sale set aside on the ground he had been denied due process of law. The chancellor upheld the foreclosure sale finding that Mr. Leininger had failed to meet his burden of proof. In addition, the chancellor commented, "[T]o hold that a person who goes abroad and is unable to be reached can prevent a foreclosure, would work hardships against banks and lending

 institutions that would be ...


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