# FILED

February

5, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk CITY BANK &

TRUST COMPANY and ) B. TIMOTHY PI

RTLE, Trustee, ) ) Plaintiff s/Appellees, ) Appeal No. ) 01-A-01-9605-CH-00198 v. ) ) Warren Chancery DAVE ALL

EN WEBB and ) No. 5991 DEBBIE LYNN WEBB, ) ) Defend ants/Appe

llants. )

COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE

APPEAL FROM THE CHANCERY COURT FOR WARREN COUNTY

AT McMINNVILLE, TENNESSEE

THE HONORABLE JOHN W. ROLLINS, CHANCELLOR

TIMOTHY L . REED Suite 302, City Bank Building McMinnville, Tennessee 37110 ATTORNEY FOR PLAI

NTIFFS/APPEL

LEES

KEITH S. SMARTT 107 College Street P. O. Box 869-B McMinnville, Tennessee 37110 ATTORNEY FOR DEFENDANTS/APPEL LANTS

AFFIRMED AND

REMANDED

SAMUEL L. LEWIS, JUDGE-2- 

# O P I N I O N

This is an appe al by de fendants D ave Allen Webb a nd wife D ebbie Ly

nn Webb, from

the trial court's judgment setting aside a foreclos ure sale and, in ef fect, putting the parties in the same position they were in before the forec losure.

We find that the facts, as found by the t rial court , a re su ppo rted by a preponder ance of th e evidenc e and they are as f ollows: Defenda nts were in

default on

a prom issory note pay able to Plaintiff bank, secured by a deed of trust describing thre e parcels of real estat e. Wh en negotiation failed, and foreclosure was immine nt, B. Ti moth y P irtle, Trustee name d in the De ed of Trust and attorn ey for [Plaintiff ] Bank, agre ed to the re quest of Defenda nts' then attorney

to forec lose on the p arcels seq uen tia lly. The parcels were L ot 13 and Lo t 12 of McClaren Subdivision, plus a parcel ownedby the mothe r of Dav e Allen W

ebb. Lots 13 and 12 were adjacent, but had been acquired by different deeds at differenttime s. It wa s agreed t hat the house

tract w ould be sold first und er t he forec losure, i n the hope tha t it would no t be necessar y to fo reclose t

he vacant lot or the m

other's pa rcel. To disti ngui sh between the vaca nt lot and the

lot upon which the house was located, Mr. Pirtle exam ined the tax map a

nd data in the property tax appraiser's office. T his clearly showed thatthe house w as on Lot 12 . In fac t, howev er, the hous e was entirely on Lot 13. Mr. Pirtle, as Trust

ee, adve rtised and soldatauction L ot 12 underthe erro neous assu mption that it w as the house tract. Plaintiff bank bid and bought the property for $80,0 00.00, an d credited that am

ount against

the prom

is sory no te, err

oneously believing it had bought the house. On the date of

foreclos ure, De cemb er 8, 1993 , the indebtedness was $156,475.42 before credit for the foreclosure. Plaintiff bank sold the "house" (actually vacant L ot 12) to Mr. and Mrs. Riks for $9 7,500.00. Mr. and Mrs. Riks improved the house, and it has incre ased in value since the foreclosure. After l ear[n] ing of the title problem, Plaintiff bank repurchased Lot 12 fro m Mr. and Mrs. Riks for $1 25,000.00. Meanwhile, Lot 13, w ith the house on i t, h as remained unforecl osed becau se Defendants filed a Chapter 13 bankruptcy in order to stay the fore closur e. However, the bankruptcy court has deferredto the judgment of this court on the issues involved in this acti on. THE COURT: I 'mconvinced t hat th e Com

plaint a s originally draf

ted, the relief that was sought would have been inappropriate. I re all y t hink it would have been because it's asking the C ourt to substi tute a for eclosure on alot that w as not-3-

actually sold, foreclosure at an arm 's length t ransacti on, and

that's just fraught with all kinds of difficulties, but would have worked in my opinion to the

potential detrim

ent of the W

ebbs through no f ault of their o wn, that

they w ould not have

been aff orded the opportunity

o f havi ng someone there, the highest, best bidder. Mr. Webb admitted

he owes this money. Mr. Webb sa ys he w ants to pay it back. He even filed a Chapter 13. I don't think the relief as origin all y as requested is appropriate, however, I think Mr. Cam p hi t it right square on the head to put these parties back where they were before this initial foreclosure. It s eems to me thatis, as he said, equity regards done, what ought to be done, and that's clearly what ought to be done in this situation as far as I'm concerned as a Judge. I think we need to go r

ight back toit, put them back in the sam

e position they we

re befor e. . . . [T] he defendant's own exper

t ha s said this pr

operty has actua

lly appreciated in value b y some $20,0 00. 00 or $30,000.00, which potentially

could inure

to the We

bbs--I don' t know that

it will. I have no idea wh at [eff

ect] th is decision is going to have on what the Bankruptcy Court does or doesn't do, but I think th e forecl osure is appropriate on both of the lots. I think the clerk and Master ou ght to be supe rvisor of t he sale, although

[he ma y] authorize[] or em

ploy an auctionee

r of his cho os ing to conduct the auction if

the Clerk an d Master feel s it appro priate. I feel l ike the proceeds ought to be

applied first to the indebtedness over at CityBank and T

rust Com pany, andthen any ove

rage should

go to the Webbs. I think it's only fair that the debt tha t the We bbs owe CityBank and T

rust Com panybe set at the amount that was owed at the time of the very first forec losure ba ck in whenever thatwas. T

he clock of

debt should no t run again st them from the point forwar d. It's not their f ault. It was nothin g they d

id or didn't do, but wh atever th at dollar f igure is, that is wh at the indebtedne ss that . . . I find t he Webb s owe City

Bank and T

rust Compa ny . I 'm talking way

back in December of whenever that was. I don't know what the date was right off the top of my

head. Whenever

the foreclosure was initiated as of that day, whenever the first for

eclosure noti ce was forwarded to the Webbs. T hat's what they ow e in m

y op i nion. I thi nk Decem ber 8th is th e appropriate date.

The defendant s present

one issue: "W

hether the trial cour t err[e d] in set

ting

a side the foreclosure sale at the request of the trustee and the mortgagee under th e deed of trust and ordering a new foreclosure sale?"

The defendant s assert t

hat the pla

intiff Ba nk, as a purchaser

at a foreclosure sale, should not be

allowed to escape

the consequ ences of i ts own negl igence. In so-4-

doing, the defen dants point ou t that ther e is no evidence that they contribute d to the mista ke by prov iding erroneous information to the state tax appraiser. However, we do not believe

that it makes any

difference whet

her they did or did not

provide erroneous information. This is not determ inative of the issues in this instance.

In Alston v. Porter , 219 S.W .2d 745 (T enn. App. 1949), a suit was br ought for cancella tion or ref

orma tion o f a deed which was p repared in error without any fault of the grantor or grantee. This court has held that the evide nce clea rly established that the d escriptio n in the de ed was such a s to inclu de two tracts of land, whereas the unders tanding of t he partie s was for

the purcha se of

one tract an d that the

erroneous descripti on was due to an inadve rtent m istakeof t he g ran tor s' at tor ney. In upholding the trial court's decree to correc t the inacc urate dee d, thecourt cite d Hicks v. Gooch , 3 Tenn. (Shannon) 447, 451 (Tenn. 1875):

"Itis stated to be the we ll- define d and well

established rule upon

this subject, that when the mista ke is of so fundam

ental a c haracte

r that the mind s of the par

ties have n ever, in

fact, m et; or where an unconsci onable adva ntage has be en gained by mistake or m

isapp rehension, and there was no gross negligence on the part of plaintiff, ei t her in falling in to the erro r, or in n ot sooner c laimi ng redress, and no inter

vening rights have

accrued , and the parties m

ay sti ll be place d in statu quo, equity will interpose

in its discretion to prev ent intolerable injustice ." Alston , 219 S.W. 2d at 746; see also Re ntenbach Eng'g Co., Co nstr. Div. v. G eneral Realty Ltd., 707 S.W.2d 524, 527 (Tenn. App. 1985).

Quoting from

19 Am . Jur. Relief-- Mistakes of Fact § 53, the Alston Court further state d tha t, "[a] court of c hancery has juri sdiction to relieve parties f rom t he consequences of a mistake of fact

. . . . [T]o perm

it the jus t rights of

a party to be lost [because of a mi stak e], when rel ief would not be prej udicial to t

he rights of

others, would be manifestly unrighteous and inequitable." Id. at 31; see Martin v. Martin , 755 S.W. 2d 793, 797 ( Tenn. A pp. 198 8) (m ain taining cha ncery court's i nherent jurisdic tion to correct mistakes). In order to be subj ect to cor

rection, a mis take which is not induced by fraud must have been mutual. Kozy v. W

erle , 902 S.W .2d 404, 41 1 (Tenn. App. 1995)

. Reformation will be decreed only where the eviden ce is cle ar and-5-

conclusive

as to the pa

rties intentions. Pierce v. Flynn , 656 S .W. 2d 42, 46 (Tenn. App. 1983).

While the trial court's d ecision

does not provide the

defendant s with the win dfall that they de sire, the record do es not ref

lect that the defen dants will be prejudiced by the setting aside of the foreclosure sale. Indeed, the undisputed evidence at trial from

the testim

ony of defendants ' own re altor wa s that the f air market value of th e realty

had s ignifi cantly increased since the tim e of the original sale. Fur th ermo re, it w ou ld be ma nifestly un just and i nequitable

to perm it the defendant s to gain a w indfall w hen the cir cumst ances givin g rise to the error a rose out of a plan f

or the sequ ential sal e of diff erent pr ope rties - - a method which wa s devised for the

sole purpose

of preser ving for them any

real est ate that m

ight not be

necessar y to pay the outstan ding indebte dness to the bank.

The trial cour

t rendere d equi t y in re scinding the foreclos ure proce edings and in restori ng the part ies to the ir respecti ve posit ions pri or to the o riginal s ale. To the exten t that th e defendants' liability on the indebtedness owed to the bank had already been discha

rged in bank

ruptcy , defend ants stand only to gain by another sa

le of bo th lo ts. We are therefore of opinion that the judgment of the trial court should in all things be a ffirm

ed, and the cause remanded to the trial court for further

necessar y proc eedings. Costs on appe al are ta xed to the de fendants/a

ppellants.

_____________

__________

__________

_ SAMUEL L . LEWIS, JUDGE

CONCUR:

__________________________________ HENRY F. TODD, PRESIDI NG JUDGE, MIDDL E SECTION

__________________________________ BEN H. CANTRELL , JUDGE