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MERCHANTS NATIONAL BANK, VICKSBURG, MISSISSIPPI v. LARRY B. STEWART

MARCH 16, 1988

MERCHANTS NATIONAL BANK, VICKSBURG, MISSISSIPPI
v.
LARRY B. STEWART, HARRY A. STEWART, SR., AND BETTY STEWART



BEFORE DAN M. LEE, P.J.; ROBERTSON AND GRIFFIN, JJ.

ROBERTSON, JUSTICE, FOR THE COURT:

I.

This appeal from an adjudication of civil contempt arises from the prior settlement of an action to enjoin a foreclosure and the failure of the secured party to carry out the agreed and court ordered settlement. The judgment appealed from amounts to little more than a directive that the secured party bank do what it has been ordered to do, albeit a daily penalty is assessed for future non-compliance.

 As in all civil contempt matters, of course, the party in contempt metaphorically has the keys to the jailhouse door in his pocket.

 The adjudication below was within the law and the evidence. We affirm.

 II.

 Harry A. Stewart, Sr., and Betty Stewart, Plaintiffs below and Appellees here, farmed in Madison County, Mississippi, and financed those operations by a history of annual loans with Merchants National Bank of Vicksburg, Mississippi (MNBJ. Increasingly, the Stewarts had problems servicing their debt, and in January of 1983 MNB refused to extend them further credit under the then present circumstances.

 Harry Stewart devised a plan for the 1983 crop year that would place the farming operations under the control of his son and son-in-law. They would obtain new loans and he would guarantee their debt. In February of 1983, the Stewarts divided their farm land in Madison County into equal shares. They conveyed one-half to their son, Harry A. Stewart, Jr., and the other half to their son-in-law, Eddie Ray Ellis. Stewart, Jr., and Ellis paid for the land each acquired as follows: First, on May 23, 1983, each executed a note in favor of the Stewarts in the sum of $170,000 payable January 1, 1984. Each such note was secured by a purchase money deed of trust on the property each had acquired. In addition, Stewart, Jr., and Eddie Ellis each borrowed $500,000 from MNB in the form of Farmer's Home Administration guaranteed loans. The $500,000 FmHA guaranteed loans and deeds of trust were subordinate in right to the lien of the $170,000 deeds of trust in favor of the Stewarts.

 Stewart, Jr., and Ellis each then obtained crop production loans. More precisely, MNB extended a line of credit to Stewart, Jr., and Ellis in the amount of $170,000 each. Stewart, Jr., and Ellis, of course, gave their notes to the bank in these amounts, secured by a security interest in the crops. The Stewarts then executed and delivered to MNB a continuing guaranty and hypothecation agreement guaranteeing performance by Stewart, Jr., and Ellis of their obligations under the line of credit. To secure their guaranty obligations, the Stewarts assigned to MNB their notes from Stewart, Jr., and Ellis and their rights under the $170,000 deeds of trust securing each.

 As fate would have it, the 1983 farming operations

 conducted by Stewart, Jr., and Ellis were unsuccessful. All loans fell into default. W. C. Way, Trustee, in the two $170,000 deeds of trust of May 23, 1983, commenced foreclosure proceedings with April 27, 1984, designated as the date of foreclosure sale. On April 4, 1984, MNB, as the holder of the assignment of these two deeds of trust, filed a substitution of trustee appointing and substituting C. E. Sorey, II, as trustee instead of W. C. Way. Way, however, continued with the foreclosure, in fact conducted the sale on April 27, 1984, and on April 30, 1984, executed and delivered two trustee's deeds to Larry B. Stewart. Each trustee's deed recited a consideration of $112,500.

 Notwithstanding, C. E. Sorey, II, as substituted trustee, on April 30, 1984, commenced foreclosure proceedings on the same two deeds of trust. This second foreclosure sale was scheduled for May 25, 1984.

 On May 18, 1984, Larry B. Stewart, taking the position that he had acquired good title to the properties, brought an action in the Chancery Court of Madison County to enjoin MNB and Sorey from proceeding with this second foreclosure sale. The Chancery Court entered a temporary restraining order on that same date followed by a preliminary injunction on May 22, 1984, and the MNB/Sorey foreclosure sale scheduled for May 25 was effectively enjoined. The Stewarts were joined as additional plaintiffs in this action on May 27, 1984. Thereupon a complete settlement of the action was made and an agreed order of dismissal was entered by the Chancery Court on the same day, July 27, 1984.

 The pertinent portions of the Agreed Order provide that:

 (1) The foreclosure held on April 27, 1984, by W. C. Way is null and void;

 (2) MNB shall advance $34,200 to the Stewarts upon entry of the Agreed Order as" an advancement of the equity held by "the Stewarts," by virtue of an ...


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