F. MICHAEL MATTHEWS APPELLANT
WHITNEY BANK A MISSISSIPPI STATE CHARTERED BANK F/K/A HANCOCK BANK, JOY LAMBERT PHILLIPS AS TRUSTEE, AND JAMES KAIGLER APPELLEES
OF JUDGMENT: 01/31/2018
HARRISON COUNTY CHANCERY COURT, FIRST JUDICIAL DISTRICT. HON.
WILLIAM R. BARNETT TRIAL JUDGE.
ATTORNEY FOR APPELLANT: GEORGE W. HEALY IV
ATTORNEYS FOR APPELLEES: BENJAMIN HARTE HARRIS III JEFFREY R.
BARBER ELIZABETH JONES FUTRELL MICHAEL ANTHONY SHAW GENE D.
J. WILSON, P.J., GREENLEE AND McCARTY, JJ.
Michael Matthews and his wife, Beth, owned A&M Petroleum,
a petroleum jobber. To address cash flow issues in
A&M's business, the Matthewses obtained two
successive home equity lines of credit from Whitney Bank,
which were secured by two successive deeds of trust on the
Matthewses' home. The second deed of trust, executed in
2008, also secured a smaller loan and loan guarantee.
However, Michael alleges that his signatures on the deeds of
trust and loan documents are all forgeries and that he did
not know about the deeds of trust, lines of credit, loan, and
loan guarantee until May 2014. In June and July 2014, the
Matthewses defaulted on all of their obligations to Whitney
Bank. The bank subsequently filed a complaint for a
declaratory judgment that the 2008 deed of trust was valid,
properly executed by Michael and Beth, and subject to
foreclosure by the bank. Michael and Beth filed separate
answers, and Beth eventually settled and consented to the
entry of a judgment against her. But Michael maintained that
the deed of trust and other documents were forged and void,
and the case eventually proceeded to trial.
After the trial, the chancellor found that Michael's
signature on the deed was not forged. The chancellor further
found that the 2008 deed of trust was valid and subject to
foreclosure and that Michael owed in excess of $400, 000 on
the debts secured by the deed of trust. On appeal, Michael
argues that the chancellor erred (1) by applying the
presumption of validity that attaches to a properly
acknowledged document and (2) by finding that Michael failed
to meet his burden of proving forgery. However, we find no
reversible error and affirm the judgment of the chancery
AND PROCEDURAL HISTORY
In the 1970s, Michael joined his father's business,
A&M Petroleum. A&M was a petroleum jobber, meaning
that it bought fuel wholesale from refiners and sold it to
gas stations. In 1985, Michael married Beth, and they later
took over the business. Beth testified that she eventually
assumed full responsibility for A&M's finances,
bookkeeping, and taxes. She testified that Michael had no
involvement in those aspects of the business. Michael was
responsible for operations, sales, and customer relations.
After Hurricane Katrina, A&M began to experience cash
flow problems. A&M's suppliers required A&M to
pay cash on delivery, but A&M allowed its customers
thirty days or more to make payment. To address the cash flow
problems that this "timing gap" created, the
Matthewses secured several loans from Whitney Bank between
2007 and 2013.
In July 2007, the Matthewses obtained a home equity line of
credit (HELOC) from Whitney Bank. The Matthewses executed a
deed of trust covering their home to secure the HELOC. Beth
testified that she met with Whitney Bank employees James
Kaigler and John Hall to discuss the HELOC. On the advice of
counsel, Beth asserted her Fifth Amendment privilege against
self-incrimination and refused to say whether she showed
Michael the deed of trust or whether he signed it.
Sidney Rice, an employee of Whitney Bank, notarized the 2007
deed of trust. Rice testified that if he knew a customer well
enough to recognize his or her voice on the phone, if the
customer told him by phone that he or she had signed a
document, and if he had no doubt that the customer had in
fact signed the document, then he would notarize the document
even if the customer was not present. Rice testified that
Beth took the 2007 deed of trust home for Michael to sign and
later returned to the bank with the signed document. Rice
testified that he called Michael, and Michael confirmed his
signature by phone. Rice then notarized the deed of trust, but
he did not record the event in his notarial
register. Michael denied that he ever signed the
deed of trust or credit agreement or confirmed his signature
In February 2008, the Matthewses obtained a new $326, 000
HELOC from Whitney Bank. The Matthewses executed a new deed
of trust covering their home. The deed of trust secured not
only the HELOC but also all other existing and future debts
and liabilities owed by the Matthewses to Whitney Bank.
The Matthewses used the new HELOC to pay off the prior HELOC.
The Matthewses defaulted on the HELOC in July 2014. As of
October 2017, they owed $326, 186.98 on the HELOC. At trial,
Beth asserted her Fifth Amendment privilege against
self-incrimination and refused to say whether Michael signed
the new credit agreement or 2008 deed of trust. Michael
denied that he ever saw or signed the credit agreement or
deed of trust.
Deborah Estes notarized the 2008 deed of trust. Estes was a
friend of the Matthewses, and her husband, an attorney, had
done legal work for the Matthewses in the past. Beth
testified that Estes notarized the deed of trust even though
she (Beth) signed it outside of Estes's presence.
However, Estes testified that she will not notarize a
document unless the principal is physically present. Indeed,
Estes testified that she could not recall a single time when
she had notarized a document when the principal was not
present. Estes could not specifically recall notarizing the
2008 deed of trust. However, she had no reason to believe
that she would have departed from her normal practice. In
other words, she had no reason to believe that Michael was
not present when she notarized the deed of trust with his
signature. On cross-examination, Estes admitted that on rare
occasions she would notarize a document that had already been
signed. However, she testified that she would only do so when
the principal personally presented the document to her. Even
then, she usually had the signatory sign the document again
in her presence so that she could witness the signature.
Estes admitted that she did not record her notarization of
the 2008 deed of trust in her notarial register.
In May 2013, Beth signed a promissory note in favor of
Whitney Bank for the principal amount of $49, 500. Beth
signed the note on behalf of Sow and Son LLC. Michael and Beth
each signed a commercial guaranty of the note. Michael
alleges that his signature was forged. Sow and Son failed to
make payments due under the promissory note, and in June 2014
the Matthewses failed to make payment as guarantors of the
note. As of October 2017, they owed $47, 941.38 as guarantors
of the Sow and Son note.
On October 30, 2013, Michael signed a promissory note in
favor of Whitney Bank in the principal amount of $30, 000.
The loan was guaranteed by Beth. In June 2014, Michael
defaulted on the promissory note. As of October 2017, he owed