IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI NO. 2015-CA-01173-COA THE PENNINGTON GROUP, LLC, JOE PENNINGTON, HELEN PENNINGTON, AND PENNIBUNKPORT INVESTMENTS, LLC APPELLANTS

v. PRIORITYONE BANK APPELLEE DATE OF JUDGMENT: 07/07/2015 TRIAL JUDGE: HON. W ILLIAM R. BARNETT COURT FROM W HICH APPEALED: RANKIN COUNTY CHANCERY COURT ATTORNEYS FOR APPELLANTS: SEAN A. MILNER STEVEN PRICE NIXON ATTORNEY FOR APPELLEE: DEREK ANDREW HENDERSON NATURE OF THE CASE: CIVIL - REAL PROPERTY TRIAL COURT DISPOSITION: JUDGMENT ENTERED THAT APPELLEE HOLDS FIRST PRIORITY LIEN AS TO CERTAIN REAL PROPERTY DISPOSITION: AFFIRMED - 02/07/2017 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC. LEE, C.J., FOR THE COURT: ¶1. The R ankin County Chancery Court f ound that Priority O ne B an k h e l d a f i r s t lien position over H elen Pennington, and t hat the f oreclosure conducted by Helen was subject to Priority One’s priority

position. Finding no reversible error, we af f i rm . FACTS AND PROCEDURAL HISTORY ¶2. O n J u n e 1 0 , 2008, The P ennington Group LLC (TPG) executed a d eed of tru s t t o Priority One Bank, pledging a cer t a i n t r act of real p roperty located in Rankin County ,Mississippi, to secure t he d e bt of Ridgeview Hom es L LC f or the a m ount of $ 80,454. On February 17, 2009, T PG executed a second deed o f trust to Priority One, again pledging the

sam e p roperty to secure the d ebt of Ridgeview Hom es f or the am ount of $ 151,129. And on October 3 1 , 2 0 1 1, TPG executed a t hird deed of trust to Priority One, pledging the sam e property to secure the debt of D epco Holdings LLC f or the am ount of $143,066.55. David Pennington signed all t hree deeds of trust a s a m a nager o f TPG. David was also a m em ber and m anager of both Ridgeview Hom es and D e p c o Holdings. D epco Holdings was also listed as a m e m

ber and m anager of Ridgeview Hom es. A l l three d e e d s of trusts were recorded in the Rankin County Chancery

Clerk’s Of

f ice. ¶3. On Novem

ber 9, 2011, TPG executed f our d eeds o f

trust to Helen, David’s m other, pledging the sam e property to secure t he debt of TPG f or the f ollowing a mo unts: $19,875.36; $56,000; $27 , 000; and $27,322.33. Each of the f our deeds of trust indicated that interest on these loans began accruing on a date p rior to Novem ber 9 , 2011 – one dated

as f ar back as Decemb e r 22, 2005. There is no record, however, of any loan, p rom issory note, or check corresponding with these debts. These f our deeds of t rust were signed by Joe Pennington (Joe), David’s f ather and Helen’s husband, as a m anager and m e m ber of TPG. The deeds were r ecorded on the sam e dat e , N o vem ber 9 , 2011, in the R a nkin County Chancery Clerk’s Of

f ice. ¶4. Depco H oldings def aulted on the 2011 Priority One loan. C onsequently , Priority One instituted f

oreclosure proceedings in July 2012. It is undisputed that at that tim e, Priority One held f irst lien position on the subject property , and H e l e n held s econd lien position. The

2f

o r e c l osure sale of the subject p r operty was s cheduled f or August 23, 2012. During t h e bench trial, J oe A llbritton (Allbritton), senior vice president and loan of f icer at Priority One, testif i ed that Joe a

pproached him and requested t hat Priority One n ot f ollow through with the f oreclosure. Allbritton also testif ied that Joe’s request stem m ed f rom t he f act that TPG owned the subject property , and Joe owned TPG. According to A llbritton, Joe hoped he could “clean [ the property ] up and perhaps sell the lots.” ¶5. At Joe’s r equest, Priority One stopped the f oreclosure and i ssued a $160,837.46 loan

to TPG. Allbritton testif

ied that the am ount ref

lected the unpaid sum s of Depco Holdings,

m inus interest Joe requested not t o pay . On behalf of TPG, Joe executed a prom issory note
to Priority One Bank on August 22, 2012, w hich listed the sam e subject property as collateral f or the loan. The prom issory n ote also read: “Borrower acknowledges this Note is secured by 1st Deed of

Trust covering [ the subject property ].” Allbritton testif ied that Priority One did not actually receive any cash m oney in this transaction with Joe. Rather, as part of the transaction, Joe signed a “Disbursem ent Request a nd A u thorization” f o rm on behalf of TPG, i n dicating how the f

unds were to be applied. Specif ically , the f

orm indi c a t e d t h a t $160,607.46 was the “am o unt paid to others on Borrower’s behalf .” The docum ent also indicated that the “specif

ic purpose of the loan is: [ a ] REFINANCE OF BUSINESS DEBT.” TPG also executed a deed of trust dated August 22, 2 012, in f a vor of P riority One, pledging the sam e property as security interest f o r the loan. The deed of trust was s i gned by Joe and recorded on August 23, 2012. ¶6. In Novem

b er 2013, P riori t y O n e r e c e i v ed notice t hat Helen was f oreclosing on the

3subject property

. Priority One notif ied Helen that it retained f i rst lien position b y way of its 2008, 2009, 2011, and 2012 deeds of trust, a nd t hat any f oreclosure sale o f the property was subject to Priority One’s priority position. Helen responded that she held f irst lien priority ,

a n d she c ontinued with f oreclosure proceedings. The f oreclosure s ale took plac e o n Decem ber 5, 2013. The winning b i d d e r w a s Pennibunkport Investm ents LLC, which was created the sam e date o f the f oreclosure sale. Helen was the sole m em ber and m a nager of Pennibunkport. ¶7. Priority One f

iled suit against T PG, J o e, Helen, and Pennibunk port. T he chancellor held that Priority One had f irst l ien position by v irtue of its 2008, 2009, 2011, and 2012 deeds

o f trust, and theref

ore, t he f o reclosure conducted by Helen was subject t o Priority One’ s priority

. The Penningtons appeal, and we have condensed their issues a s f ollows: (1) whether t he chancellor erred in f i nding that Priority One held f irst l ien position over Helen, and (2) w h e t her the chancellor erred in f inding that the e ntire p roceeds of the 2012 Priority One loan were used to pay the 2008, 2009, a nd 2011 loans, and (3) whether the chancellor erred in f

inding that all of the debtors in this case were f am ily

. STANDARD OF REVIEW ¶8. This Court reviews a chan c e l l o r ’ s f a c t u a l f i n d ings under an abuse-of

- discretion

s t a n dard. Stokes v. Campbell , 794 So. 2d 1045, 1047-48 (¶9) (Miss. Ct. App. 2 0 0 1 ) (citations om itted). “The chancellor’s f indings will n ot be disturbed upon review unless the chancellor was m anif

estly wrong, clearly erroneous or applied an incorrect legal standard.” Id

. W e review q

uestions of l aw de novo. Graves v. Dudley Maples L.P. , 950 So. 2d 1017,

41020 (¶14) (Miss. 2007).
DISCUSSION

I. Priority ¶9. The P enningtons a rgue that the chancellor er r e d w h e n he held that Priority One had

a priority lien position ov e r H elen. Though the chancellor d id not give a rationale f or his holding, the Penningtons suggest that the c hancellor f ound the 2 012 Priority One loan to be

a renewal of its previous loans, particularly given t he chancellor’s citation to S m i t h v. Childress, 119 Miss. 20, 80 So. 345, 346 (1919) (holding that a subsequent loan m ade as a renewal of a prior loan will k eep t he priority date of the deed of trust f r om the prior loan and prevail o ver an intervening lien holder). W e decline to state whether the 2012 Priority One loan w as a renewal as there was no renewal language i n any of the loan docum ent s . T h e ultim ate issue—whether Priority O ne held f irst lien position—is an issue o f law, which we review de novo. ¶10. In Mississippi, the p riority positions of deeds of trusts are “governed by the priority in tim e of the f

iling of the several instrum ents.” M iss. Code Ann. § 89-5-5 ( Rev. 2 011). A “deed of trust shall take ef

f ect, as to all creditors and subsequent purchasers f or a valuable consideration without notice, only f rom t h e t i me w h e n delivered to the clerk

. . . .” Id. In other words, f

irst in tim e i s f

irst in right. Cmty. T

r. Bank of Miss. v
. F

i r s t N a t ’ l B a nk of Clarksdale , 150 So. 3d 683, 6 87 (¶10) (Miss. 2014). Here, it is undisputed b y the parties that Priority One f

iled its 2008, 2009, and 2011 deeds of trust p rior to Helen f iling her f our deeds of trust in 2011. It i s f

urther undisputed that at the tim e Helen f iled her f our d eeds of trust,

5Priority One held priority lien position over Helen. Then in 2012, Priority One issued another

loan and f

iled a f o urth deed of

trust, calling into question its priority position. ¶11. Notwithstanding t hat both parties f ocus their a r gum ents o n w h e t her t he 2012 loan renewed the 2011 loan and deed of trust, to the e xtent that the 2012 Priority One deed of trust is secondary to Helen’s deed of trust by virtue of the f iling date, w e f

ind t h a t e q u i t a b l e subrogation applies. ¶12. Equitable subrogation, which has been recognized and its application encouraged by

t h e Mississippi Suprem e C ourt, is the “doctrine w hereby a court m ay . . . substitute a later-f iled lien into the prim ary

lien[ -]holder position o n a tract of real estate, such that the substitute creditor s ucceeds to the rights of the other in relation to the debt or claim , and its rights, rem edies, or securities.” Id. at (¶11) (internal q uotations m arks and citations om itted). The suprem e court has of f ered the f ollowing guidance on equitable subrogation:
W h en determ ining whether eq u i t a b l e s u b r o g a t i o n should apply , t he controlling consideration is the actual f acts. The question is: W hat is natural justice under the actual f

a cts of the situation? Ultim ately , determ ining whether equitable subrogation applies is done on a case-by

- ca s e basis. Above all, subrogation m us t b e equitable to the parties involved. The determ ination o f whether subrogation is a

pplicable is a f

actual determ ination o f each particular case with consideration of f

airness and justice as its guiding principles. The doctrine of subrogation is one of equity and b e n e v o l ence; its basis is t he doing of com plete, e ssential, and perf

ect justice b etween the parties, without regard to f orm , and its object is the prevention o f injustice. It does not rest on contract, but upon principles of nat u r a l equity

. A ccordingly , although certain f actors m ay weig h m o r e heavily f or or against subrogation, ultim ately it is awarded only af t er caref u lly weighing all of the f

acts and circum s tances and deciding what the f

airest result would be. Id. at 687-88 (¶12) (internal citations and quotations om itted). ¶13. Wi t h those guiding p rinciples i n m ind, the relevant f acts we m

ust consi d e r a r e a s

6f

ollows. The 2012 Priority One loan was secured b y a corresponding deed o f t rust f or the

sam e property

. This property was owned by t he sam e owner and allowed t o be pledged by the sam e p e r s o n f

o r the debt of a f

am ily m em

ber’s com p any . Also, the 2012 Priority One loan prom issory note expl i c i t l y s t ated,“Borrower acknowledges this Note is secured by [ f irst] Deed of Trust covering [ the subject property ],” indicating Priority One’s continued priority lie n p o s i t i o n . Joe, i n an ef f ort to stop Priority One’s f oreclosure on T PG’s property , authorized the 2012 loan am ount t o be applied toward the debt of his son David’s com pany ,

as a “ ref i nance” of business d ebt. T he 2012 Priority One l oan a m ount represented the unpaid

sum s owed by

David’s com

pany , m inus interest Joe requested not to pay

. ¶14. A d d i t i o n a l l y relevant is that Priority O ne never cancelled its 2008, 2009, or 2011 deed s of trust. W hile it is true Mississippi Code Annotated section 89-5-21 (Rev. 2011) requires

a creditor to cancel its deed of trust upon i ts r eceipt of f ull pay m ent o f the m o ney due by the deed of trust, we f

ind the f ollowing language f

rom the suprem e court to be instructive:
It would be anom alous indeed to hold that a secured creditor loses his priority position when he r e

finances a debt such as this. It is true [ section] 89-5-21 .

. . requires [ a secu r e d c r e d i t or] to cancel its d eed of t rust upon its receipt of f ull pay m ent of the m oney due by the m ortgage or deed of trust

. . . . The [ subsequent loan] no doubt “paid” the earlier note in a f orm alistic sense, but it was h ardly “f

ull pay m ent ” w i t h i n the language of the deed of trust nor the statutory im

peratives

. . . . Out of an abundance of precaution, [ the creditor]—while leaving the [ previous] deed of t r u s t uncancelled and unsatisf ied—took new deeds o f t

r u st [ in subsequent y ears]. No s ensible reason is of f ered why we should seize on this added s ecurity p recaution and thereby render [ t he creditor] less secure. Shutze v. Credithrift o

f Am. Inc. , 607 So. 2d 5 5, 60 (Miss. 1992) (em phasis added) (internal citation om itted).

7¶15. Helen t e s t i f i e d a t t r i a l that she was aware that the property had b een pledged to Priority One at the tim e she took her f our deeds of trust. She also t estif ied that she knew her husband, Joe, h ad m et with Priority One to stop t he f o r e c l o s ure. Nevertheless, Helen f oreclo s e d o n t h e p roperty owned by her husband’s com p any , o nly f

or the property to be bought by a com

pany owned by Helen hers e l f

. U n d e r the particular f

a c ts of t his case, it would be inequitable to hold t hat Priority One l oses its priority lien position t o H elen, the wif e and m other of all the debtors to whom Priority O ne showed f avor by stopping its f

oreclosure proceedings and issuing another loan—a loan whose specif ic purpose was to r ef

inance the business debt of

a f am ily m em ber’s com pany . ¶16. Again, though no rationale is stated, it appears the c hancellor reached his d ecision by f inding the 2012 loan to b e a renewal. W e do not say whether the 2012 loan was a renewal. However, we note that a “chancellor will be af f irm ed where he reaches a correct result under the law a n d f

acts, though f

or a w rong reason.” Reed v
. W eathers Refrigeration & Air Conditioning Inc. , 759 S o. 2d 521, 526 (¶17) (Miss. Ct. A pp. 2000) (quoting Estate of Johnson v. Adkins , 513 So. 2 d 922, 926 (Miss. 1 987)). Moreover, “if t he judgm ent of [ the]

court can be sustained for any reason , it m ust be af f irm ed, and even though the trial judge based i t upon the wrong legal reason.” Id

. (em phasis i n original)(quoting P a tel v. Telerent Leasing Corp ., 5 74 So. 2d 3, 6 (Miss. 1990)). H ere, we f ind that t he chancellor reached the

correct c onclusion f

or all t he af

orem entioned reasons. As such, w e af f irm the chancellor’s f in d i n g t h at Priority One has a priority lien over t hat of Helen by virtue o f its 2008, 2009, 2011, and 2012 d e e d s of trust, a nd that the f oreclosure conducted by Helen was subject to

8the f

irst priority

lien position of

Priority O ne. II. Proceeds of the 2012 Priority One Loan ¶17. The c hancellor f

ound that the “entire proceeds of t he [ the 2012 Priority One] loan were used to pay the debts s e c u r e d b y t h e [ d]eeds o f [ t]rusts dated June 1 0, 2008, February 6, 2009, and October 1 1, 2 0 11.” B ut the Penningtons argue that i t is clear f rom testim ony and evidence at trial that “ the proceeds f rom [ t he Priority One 2012] loan t o [ TPG] were used f or the sole purpose of pay ing o f f the [ Priority One 2 011] loan t o [ Depco Holdings].” There was, in f act, docum e ntation indicating that the 2012 loan was used to pay of f the 2011 loan. But Allbritton testif

ied t hat Priority One was not paid on the 2008, 2009, and 2011 deeds of trust and, as a result, pursued f

oreclosure, ref

lecting a c ontinued existence of the i ndebtedness on all three loans. Allbritton f urther testif

ied that the “loan was n ot p aid of f ” and “no collateral [ was] released at all.” ¶18. W e note that “[ o]ur appellate review i s considered in the light m ost f avorable to the party who f o und f avor in t he chancellor’s ruling.” Elchos v. Haas, 178 So. 3d 1183, 1187 (¶3) (Miss. 2015) (citing Bright v. Michel , 242 Miss. 7 38, 743, 1 37 So. 2d 155 (1962)). “If conf licting testim ony is presented, all testim ony f avoring the [ prev a i l i n g party ] m ust be accepted, along with all p e rmi s s i b l e inf erences which the chancellor could draw f rom the proof a nd circum s tances, becom ing established f acts.” I d. “Moreover, since the chancellor is best able to determ ine the c redibility of t he witnesses’ testim ony , it is not [ a n appellate court’s] province to underm ine the chancellor’s authority by replacing the c h a n c e llor’s judgm ent with our own.” In re Estate of Carter , 912 So. 2d 138, 143 (¶18) ( Miss. 2005).

9¶19. In the instant c ase, the chancellor’s f ind i n g w a s s upported by substantial credible evidence. N o n e o f the three prior deeds of trust were ever cancelled to ref lect their satisf a ction, and f

o reclosure proceedings w ere initiated u nder the 2011 deed o f trust—indicating Depco H o l d i n g s ’ c o n t i n u e d i n d e b t e d

n e s s . P r i o r ity One testif

ied that it never received any f

unds f rom David, and the loans were not paid of f

. Given the evidence bef

ore the chancellor, we cannot say that the chancellor erred in f inding t hat the entire proceeds f rom the 2012 loan were used to pay the debts of the prior three deeds of trust

. T h is issue is without m erit.
III. Relationship of the Parties ¶20. The Penningtons also argue that the record does not support t he chancellor’s f inding that “ all of the debtors h erein are f am ily undoubted[ l y ].” W e are not persuaded. At trial, Joe testif i ed t hat he was the owner of TPG, and he allowed the subject property to be pledged as collateral. The 2008, 2009, and 2011 deeds of trust, which pledged the subject property to Priority One, w ere all signed by David to secure the indebtedness of Ridgeview Hom es and Depco Holdings. Priority One’s counsel represented to the chancellor that both Ridgeview
Hom es and Depco Holdings were Joe’s son D avid’s com p anies

. T h i s a s s ertion was not contradicted at trial o r on appeal. In response to Priority One’s com plaint, the Penningtons adm itted David was the m em ber, m a nager, and principal of Depco Holdings. And though the Penningtons strongly contend that there is no evidence that Ridgeview H om e s was also

one o f David’s com

panies, records f

rom the Secretary o f State’s Of f ice dem o n s t r a t e t hat David was i n f

act the owner. S

e e May v. State , 2 40 M iss. 3 61, 127 So. 2d 423, 426 (1961)

1 0(An appellate court “m ay take judicial notice of t he of f i c ial records of the Secretary of State.”). The Penningtons’ r esponse also adm itted that David w as H elen’s son, and at trial, Helen testif

i ed that Joe was her husband. ¶21. All of the deeds of trust in this case, whether execute d t o P r i o r i t y One or to Helen, listed the sam e property

as collateral to secure the debts of David’s com

panies, Ridgeview
Hom es and Depco Holdings, o r Joe’s c om pany , T PG. The c h a n cellor did not com m it

m anif est error by f

inding that “all of the debtors herein are f am ily u ndoubted[ ly ].” This issue is without m erit. ¶22. THE JUDGMENT OF T HE RANK I N COUNTY CHANCERY COURT IS AFFIRMED. A LL COS T S OF THIS APPEAL ARE ASSESSED TO THE APPELLANTS.
I R V I N G A N D G R I F F I S , P .JJ., BARNES, ISHEE, C A R L T O N , F A I R , W I L S O N , GREENLEE AND WESTBROOKS, JJ., CONCUR.

1 1