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J. C. BASS v. C. R. MONTGOMERY and JOHN E. GREGG

NOVEMBER 25, 1987

J. C. BASS
v.
C. R. MONTGOMERY and JOHN E. GREGG



BEFORE ROY NOBLE LEE, C.J., ROBERTSON and GRIFFIN, JJ.

GRIFFIN, JUSTICE, FOR THE COURT:

This case, involving legal malpractice, comes to the Court from the Circuit Court of the First Judicial District of Hinds County, where a jury awarded $1,410.00 to J. C. Bass. We affirm.

On February 14, 1973, J. C. Bass executed a deed of trust on land to Brookhaven Production Credit Association. On August 23, 1974, he also executed a note for $191,560

 to the association, payable August 15, 1975.

 In May, 1975, Bass applied for another loan of $318,995, which Thomas Caves, the association's president, deemed" completely out of line. "In June, Bass reapplied for a loan of $181,120; Caves again responded," I do not intend to be rude, but I want to convey to you that this association does not expect to make such advances to you. "

 On July 29, 1975, Bass met with Hollis Alford, who worked for the association, and together they drafted an application for a loan guarantee from the Farmers Home Administration (FmHA), seeking funds to pay past due debts, purchase calves, plant crops, and maintain the farm. On August 22, 1975, Bass submitted the application; however, the purpose of the loan now read," Refinance PCA Loan. "

 Bass contends that he signed the submitted application in blank, and was unaware of any changes made thereafter. Alford denies the accusation, claiming that Bass signed the completed, submitted application. In either event, the FmHA guaranteed the association to $180,000.

 On September 8, 1975, Bass executed a second deed of trust to the association, when applying for a loan of $205,950, payable the following year. From these proceeds, Bass expected to receive $186,100 in fresh funds as a result of the guarantee.

 The association's loan application stated,

 (c) That unless and until the Association has finally approved this application in whole or in part by giving written notice thereof to applicant, the Association is under no obligation to make any loan or advance to him, and the execution or delivery by applicant to the Association or any employee thereof, of any note, mortgage, or other instrument shall not be construed as an approval of all or any part of the loan here applied for and shall not obligate the Association to make any loan or advance to applicant.

 In fact, Bass received nothing, since the Federal Intermediate Credit Bank of New Orleans, which oversaw the association, denied the loan. Consequently, the association cancelled the second deed of trust, which it had recorded. The association also refused to subordinate its security

 interest to Kansas City Life Insurance Company, which had offered Bass $150,000 in long-term financing in return for a first mortgage.

 On October 28, 1975, Caves wrote Bass that" the association [had] agreed to carry the present loan [due August 15, 1975] in default until January 1, 1976, to allow you time to obtain refinancing. . . . "In response, Bass hired C. R. Montgomery, an attorney, to stop any foreclosure and to recover damages from the association, following the alleged alteration of the FmHA's loan guarantee application.

 Thereafter, when the association initiated a replevin action in Amite County, where Bass' farm was located, Montgomery counterclaimed for $500,000 in damages alleging fraud, and filed in the Chancery Court of Amite County both to enjoin foreclosure and to set aside the first deed of trust, again alleging fraud. On Motion, the chancellor granted the association a demurrer, and Bass appealed to this Court. While the association ...


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