IN THE COURT OF APPEALS

OF THE

STATE OF MISSISSIPPI

NO. 1999-CA-02000-COA

ANNIE MASON APPELLANT

v.

SOUTHERN MORTGAGE COMPANY APPELLEE

DATE OF JUDGMENT: 11/03/1999

TRIAL JUDGE: HON. GLENN ALDERSON

COURT FROM WHICH APPEALED: BENTON COUNTY CHANCERY COURT

ATTORNEY FOR APPELLANT: JAMES D. MINOR

ATTORNEY FOR APPELLEE: B. SEAN AKINS

NATURE OF THE CASE: CIVIL - REAL PROPERTY

TRIAL COURT DISPOSITION: JUDGMENT FOR APPELLEE FOR $24,883.12.

DISPOSITION: AFFIRMED - 5/8/2001

MOTION FOR REHEARING FILED: 5/23/01 - DENIED; DISSENT MODIFIED - 10/16/2001

CERTIORARI FILED: 10/30/2001; granted 1/31/2002

MANDATE ISSUED:

EN BANC.

McMILLIN, C.J., FOR THE COURT:

¶1. Annie Mason has appealed from a judgment in the Chancery Court of Benton County that purported to

resolve a dispute between Mason and Southern Mortgage Company regarding a loan in the amount of $54,

400 to be secured by a deed of trust on Mason's residence. We affirm the judgment.

I.

Facts

¶2. Mason applied for a loan from Southern Mortgage in the amount of $54,400, the purpose of which was

to pay off her existing home loan with First South Bank in the amount of $24,658.34 and to provide extra

funds for a number of other purposes, including some contemplated home improvements. Mason, pursuant

to instructions from Southern Mortgage, appeared in the company's office on January 29, 1999, where she

signed a number of loan instruments that included a promissory note and a deed of trust on her residence.

In addition to these documents, Mason signed a disbursement sheet that authorized Southern Mortgage to

make certain disbursements of the loan proceeds that included the payoff to First South Bank and $224.78

to the Benton County Tax Collector to satisfy ad valorem taxes on the property that were due.
¶3. Because the loan was to be secured by a non-purchase-money deed of trust on Mason's homeplace,

the transaction was subject to federal law that permitted Mason a three day right of rescission. Therefore,

no loan funds were disbursed on January 29, 1999. Rather, Mason executed a document entitled

"Conditions of Funding" indicating that, if the right of rescission were not exercised, the loan funds would be

available for disbursement on February 3, 1999. This "Conditions of Funding" instrument further provided

that loan fund disbursement was subject to Southern Mortgage receiving "a written property appraisal in an

amount and of a character which is adequate as determined by Lender in its sole discretion . . . ."

¶4. Mason testified that she did not hear from Southern Mortgage on February 3 and that when she called

shortly thereafter to check on the status of her loan, she was told that the loan had not yet been funded

because of a problem with the appraisal that was in the process of being straightened out. According to

Mason, she inquired again about a week later and was told that, because of the value of her property

shown on the appraisal, she would not be eligible for a loan in the full amount of $54,400, but that if she

wanted a loan in some unspecified lower amount, she could come back to the office and sign some

additional loan papers. At that point, Mason said she informed Southern Mortgage that she did not desire

to pursue a loan in a lesser amount than that indicated in the January 29 loan documents.

¶5. Unknown to Mason or to the Southern Mortgage representative with whom she was dealing, the

closing attorney who had been holding the various disbursement checks in escrow mistakenly made two of

the disbursements on or shortly after February 3 and forwarded the deed of trust for filing with the Benton

County Chancery Clerk. The two disbursements were the payment to First South Bank of $24,658.34 and

the Benton County Tax Collector of $224.78. The deed of trust was filed for record on February 5, 1999.

Mason did not become aware of these occurrences until mid-February when she noticed some unexplained

transactions on her bank statement that, upon inquiry, she found to be related to the payoff of her First

South Bank loan.

¶6. It is at this point that the evidence of what transpired becomes disputed. Mason claims that she was

prepared at all times to take reasonable steps to remedy the problem but that she was never treated civilly

by Southern Mortgage representatives nor did they ever propose a resolution of the problem that she

thought was fair. She said that, finally, a Southern Mortgage representative showed up at her place of

employment accompanied by a deputy sheriff and that, though she was not present and, thus, did not meet

with these individuals at the time, it did cause her substantial embarrassment and humiliation. She testified

that she did, shortly thereafter, meet with the Southern Mortgage representative at the sheriff's office, at

which time he requested that she sign a document that he said would have reinstated her prior loan at First

South Bank, but that she refused to sign the instrument.

¶7. Southern Mortgage presented evidence indicating that Mason had been uncooperative in resolving the

problem from the beginning and seemed to be taking the position that she had no obligation regarding the

payments erroneously made on her behalf. The president of the company indicated that he had directed the

Southern Mortgage representative sent to meet with Mason to take a disinterested witness with him

because of the somewhat volatile nature of previous conversations with Mason, and that was the reason the

representative had sought to have a deputy sheriff accompany him to Mason's place of employment.

¶8. In all events, the matter remained unresolved and, as a result, Southern Mortgage commenced a nonjudicial foreclosure of the deed of trust. Prior to the sale date, Mason filed this action and obtained a

temporary restraining order to halt the proposed sale. In addition to the restraining order, Mason sought to
have the note and deed of trust canceled and asked for compensatory and punitive damages against

Southern Mortgage. Southern Mortgage answered, claiming its entitlement to reimbursement for the funds

expended, together with interest and the costs associated with undertaking the foreclosure. The chancellor

granted a stay of the foreclosure and set the matter for hearing as to all issues, which trial was ultimately held

on November 3, 1999.

¶9. At the conclusion of the trial, the chancellor issued a ruling that gave Mason thirty days to pay off the

amounts advanced by Southern Mortgage to First South Bank and the Benton County Tax Collector,

which totaled in the aggregate the sum of $24,883.12, without interest. Upon the condition that the sum be

paid within that time, the chancellor directed Southern Mortgage to immediately satisfy and cancel its

recorded deed of trust on Mason's residence. Finally, the chancellor ordered that, should Mason fail to pay

the amount ordered within the allotted thirty day period, the stay of foreclosure would be lifted to permit

Southern Mortgage to undertake a non-judicial foreclosure to recover the sum of $24,883.12 "plus the cost

of foreclosure and nothing further." All other claims for relief from either party were denied.

¶10. Dissatisfied with that ruling, Mason perfected this appeal.

II.

A Preliminary Discussion Regarding the Issues Presented on Appeal

¶11. In order to fully understand the issues raised in this appeal and our disposition of them, certain matters

presented at trial and occurring post-trial must be understood.

¶12. First of all, though Mason's complaint takes the position that she owes nothing to Southern Mortgage,

she conceded during her testimony at trial that, under equitable principles, she did owe Southern Mortgage

those amounts erroneously disbursed to First South Bank to satisfy her existing mortgage loan and to the

Benton County Tax Assessor to satisfy taxes that were due.

¶13. Secondly, the parties have stipulated in the briefs before this Court that Mason has, during the

pendency of this appeal, elected to voluntarily pay to Southern Mortgage the amount ordered by the

chancellor. This has the effect of rendering that aspect of the judgment moot, so that the only issue left for

this Court to deal with is Mason's contention that she is entitled to actual and punitive damages for the

attempted wrongful foreclosure of the deed of trust on her property.

III.

Discussion

¶14. There can be little doubt that Southern Mortgage, when it began non-judicial foreclosure of its deed of

trust, did so wrongfully. Mason's testimony was unequivocal that her prospective loan transaction was

effectively ended when Southern Mortgage refused to fund the loan in the full amount indicated in the loan

documents and, instead, attempted to modify the terms of the loan by offering her a lesser amount. There is

nothing in the loan documents before this Court that would indicate that Southern Mortgage had the right to

unilaterally modify the loan terms in such a way while still keeping Mason contractually bound to accept

those modifications.

¶15. Though Southern Mortgage's position is unclear as to exactly when the loan agreement was rescinded,
the company president testified that, once Mason's dissatisfaction became clear, the company agreed to

cancel the loan, and the company admits that the money advanced to satisfy Mason's existing mortgage

loan and property taxes was advanced in error. That position is incompatible with the proposition that the

deed of trust executed by Mason could serve as security for an unintended and unauthorized disbursement

of funds.

¶16. However, as Mason herself conceded, there is no doubt that, under equitable principles of unjust

enrichment, Mason was not entitled to retain the benefit of the funds erroneously advanced by Southern

Mortgage on her behalf. Milliken & Michaels, Inc. v. Fred Netterville Lumber Co., 676 So. 2d 266,

269 (Miss. 1996); Magnolia Federal Savings & Loan Assn. v. Randall Craft Realty Co., Inc., 342 So.

2d 1308, 1311 (Miss. 1977). It was not, therefore, the fact that Southern Mortgage sought the return of the

funds that gave rise to potential liability. Rather, it was that Southern Mortgage pursued the wrong remedy

when it sought to non-judicially foreclose a deed of trust that had been rescinded by the time the company

began the foreclosure process.

¶17. Because Mason has conceded her obligation to repay the amounts advanced on her behalf and has, in

fact, actually done so, her sole remaining claim would appear to be an action for slander on title against

Southern Mortgage for its attempt to detrimentally affect the title to her home place by asserting rights in the

property under a deed of trust that it knew was no longer valid. Walley v. Hunt, 54 So. 2d 393, 396

(Miss.1951).

¶18. We are satisfied that Mason had a viable claim for slander on title by virtue of Southern Mortgage's

attempt to foreclose a deed of trust that had been previously rescinded by mutual agreement. However, it is

also beyond dispute that Southern Mortgage had a claim, sounding in equitable principles that prohibit

unjust enrichment, against Mason for the return of the money erroneously advanced in her behalf, and that

the attempted foreclosure, though ill-advised, was simply an attempt to obtain the return of those funds.

Thus, the extent of Southern Mortgage's wrongful conduct is that it employed an incorrect remedy in

pursuing what was, undoubtedly, a legitimate claim. There is the added consideration that, based on the

chancellor's findings, Southern Mortgage was compelled to pursue formal proceedings to recover its funds

only because Mason was uncooperative in efforts to return the parties to the status quo ante once the error

came to light. These factors tend to militate against any finding that Mason suffered substantial damages at

the hands of Southern Mortgage.

¶19. The chancellor did not make his decision based on considerations of slander on title and did not award

a fixed amount of damages to Mason on that basis. However, Southern Mortgage was substantially

penalized to Mason's benefit when the chancellor denied Southern Mortgage the right to recover any of its

interest costs for the funds advanced from the time of advancement through thirty days after entry of

judgment. Assuming an eight percent interest factor, this represented a sum in the approximate amount of

$1,500. In view of the fact that, as the chancellor remarked in his findings, neither party was above

reproach in this matter, we conclude that $1,500 is not so unreasonable an award for a slander on title

action on the facts of this case that it would be warranted to reverse and remand this case for further

consideration of damages due Mason.

¶20. It is a common practice for an appellate court to affirm the trial court when it appears that the trial

court reached the right result, even if perhaps for the wrong reason. Puckett v. Stuckey, 633 So.2d 978,

980 (Miss. 1993). On that principle, we determine that it would be proper to view the approximate amount
of $1,500 in interest costs that were denied Southern Mortgage as an award of damages for slander on title

and, on that basis, to conclude that such amount is within the range of discretion afforded the chancellor on

the facts of this case.

¶21. The chancellor, sitting as fact-finder, has substantial discretion in the matter of determining whether an

assessment of punitive damages is warranted. Aqua-Culture Technologies, Ltd. v. Holly, 677 So.2d 171,

185 (Miss. 1996) (citing Fought v. Morris, 543 So. 2d 167, 173 (Miss. 1989)). Such damages are

appropriate only to punish and deter particularly egregious conduct. Id. (citing South Central Bell v. Epps,

509 So. 2d 886, 892 (Miss. 1987)). In this case, the chancellor found both parties to be at fault for their

inability to resolve the difficulty that arose through inadvertence and declined to consider assessing punitive

damages against Southern Mortgage for its attempt to recoup money that was undoubtedly due to it.

Though we have concluded that non-judicial foreclosure was the wrong remedy, we do not consider that

choice to demonstrate malice or a reckless disregard for Mason's rights under the circumstances, and,

therefore, do not find error in the chancellor's decision not to award punitive damages.

¶22. We affirm the judgment of the chancellor; however, in view of the unique nature of this case, basic

considerations of fairness suggest that appeal costs should be divided equally between the litigants.

¶23. THE JUDGMENT OF THE CHANCERY COURT OF BENTON COUNTY IS

AFFIRMED. COSTS OF THIS APPEAL ARE ASSESSED EQUALLY, ONE-HALF TO THE

APPELLANT AND ONE-HALF TO THE APPELLEE.

SOUTHWICK, P.J., THOMAS, AND MYERS, JJ., CONCUR. CHANDLER, J.,

CONCURS IN RESULT ONLY. IRVING, J., DISSENTS WITH SEPARATE WRITTEN

OPINION JOINED BY KING, P.J., PAYNE AND BRIDGES, JJ. LEE, J., NOT

PARTICIPATING.

IRVING, J., DISSENTING:

¶24. The majority finds that the closing attorney, unbeknownst to Mason and the Southern Mortgage

representative with whom Mason had been dealing, mistakenly made the tax and mortgage payments from

the proceeds of the $54,000 loan that was never in fact consummated. The majority calls this an error and

faults Mason for not cooperating with Southern Mortgage to correct this so-called error. My reading of the

record indicates (1) that the payments were not mistakenly made, (2) that Southern Mortgage refused to

furnish all of the loan proceeds that it was obligated to furnish under the loan contract, (3) that Southern

Mortgage unilaterally attempted to rescind the loan contract after the deadline for doing so had expired and

(4) that Southern Mortgage wilfully and deliberately initiated foreclosure on Mason's residence to foreclose

a deed of trust securing a loan that it never fully funded although it was obligated to do so.

¶25. As a result of the majority's view of the facts, a view which in my opinion is unsupported by the

record, the majority concludes that Mason is not entitled to punitive damages and even assesses her with

half of the costs of this action. For the reasons that follow, I respectfully dissent.

¶26. I find persuasive circumstantial evidence and direct testimony that the payments were made consistent

with the original intent and agreement of the parties because at the time the payments were made Southern

Mortgage had not unilaterally decided, as was within its power to do, to not fund the loan. A proper and

close reading of the record compels the inescapable conclusion that Southern Mortgage, after learning that it
could not sell the loan paper because the purchaser would not accept the comparables undergirding the

appraisal, attempted to get Mason to accept a loan for a lesser amount without telling her that it had already

disbursed payments under the original loan agreement. When Mason refused to agree to apply for a new

loan in a smaller amount, Southern Mortgage's scheme fell apart, ultimately ending in its unlawful and

malicious attempt to foreclose Mason's property.

¶27. In order to fully illuminate my view, it is necessary to discuss some additional facts and matters not

discussed in the majority opinion. As stated, the majority finds that the payments were made in error. By

doing so, the majority skirts the issue of the validity of the contract and apparently concludes, without

specifically saying so, that the loan agreement was rescinded. The majority finds that Southern Mortgage's

position is unclear as to when the loan agreement was rescinded. The president of Southern Mortgage was

solely responsible for this lack of clarity. However, this is not surprising given the fact that this witness knew

nothing about the processing of Mason's loan. I note that the judgment entered by the chancellor was

prepared by one of the attorneys. The judgment contains the following finding:

For various reasons, the transaction was not completed. The Defendant erroneously paid off the

existing note and deed of trust in the amount of Twenty-four Thousand, Six Hundred Fifty-eight and

34/100 ($24,658.34) Dollars. The Defendant also paid the taxes then due on the property in the

amount of Two Hundred Twenty-four and 78/100 ($224.78) Dollars.

However, the chancellor made no such finding in his bench opinion. This, in pertinent part, is what the

chancellor found:

I might say this, the business practices of Southern Mortgage Company are very, very sloppy. Not

very professional. I think if I paid 24,000 some odd dollars out of my money I would have started

sending certified letters out return receipt requested stating the policy and stating everything. They

didn't do it. So we've got two people up here swearing two different ways.

* * * *

I'm finding fault on both parties. I think they were both very, very sloppy. So this is what this Court is

going to do. This Court is going to give Ms. Mason thirty days from this date to pay Southern

Mortgage Company the sum of $24,883.12, which represents the amount that they paid off to the

bank at Hardeman Count, Tennessee. The $24,658.34 and that figure also includes the sum of

$224.78 which was paid in taxes.

¶28. It is clear that the chancellor, in the opinion rendered in this cause, did not find that the loan transaction

was not completed or that the moneys were erroneously paid. As stated, these were findings which, for

whatever reason, were inserted into the judgment by one of the attorneys. "[T]he matter of whether a trial

court may adopt verbatim, in whole or in part, the findings of fact and conclusions of law of a party is within

the court's sound discretion." Rice Researchers, Inc. v. Hiter 512 So. 2d 1259, 1266 (Miss. 1987). "[H]

owever, our obligation of appellate deference to such findings is necessarily lessened." Id.

¶29. Further, it seems to me that a completed agreement is a prerequisite to a recission of that agreement;

therefore, I am at a loss to understand how the majority can conclude that the loan agreement was mutually

rescinded without first finding the existence of a completed loan contract. In my opinion, the majority places

too much weight on the testimony of the president of Southern Mortgage who was the only witness to
testify on Southern Mortgage's behalf. I now turn to the facts supporting my view.

¶30. All closing documents, including the "Notice of the Right to Cancel" and the "Federal Truth-in-Lending

Disclosure" statement, were signed on January 29, 1999, the date of closing. The funds were to be

disbursed on February 3 which was after the expiration of Mason's three-day right to unilaterally rescind the

transaction. Since Mason did not rescind the contract during the three business days following the closing,

Southern Mortgage, but for its "Conditions of Funding" discussed in the following paragraph, was obligated

to disburse the funds on February 3.

¶31. The "Conditions of Funding" document signed by Mason provided that the disbursement of the loan

proceeds was subject to "a written property appraisal in an amount and of a character which [was]

adequate as determined by Lender [Southern Mortgage] in its sole discretion." The document further

provided that if the appraisal was not "received and approved by Lender by the scheduled funding date

[February 3, 1999], Lender [could] terminate the transaction without liability to borrower." The "Conditions

of Funding" document also contained a catchall provision which made "funding subject to final approval

from the Lender [Southern Mortgage]." The "Condition of Funding" document, however, is silent as to what

rights were accorded the borrower in the event the appraisal was not received and approved prior to the

funding date.

¶32. Nevertheless, according to Southern Mortgage, an acceptable appraisal was not received and

approved by Southern Mortgage by the funding date. This fact, however, is disputed by Mason who

testified that the appraisal was submitted as a part of the loan application documents and that she was told

by the branch manager for Southern Mortgage, before January 29, that her loan had been approved and

that all she needed to do was to come in on January 29 and sign the closing documents. If Southern

Mortgage's version of the facts is accurate, it would have been acting within its rights when it allegedly put a

halt to disbursing the funds on the funding or disbursement date, February 3. I say "allegedly put a halt" to

disbursing the funds because, as discussed later in this opinion, it appears that some funds may have been

disbursed on February 3, and there is no doubt that funds were disbursed at least by February 4, if not on

February 3.

¶33. However, the failure to disburse all of the funds on February 3 or 4 created additional problems which,

in my opinion, are relevant to a complete and full understanding of the maliciousness of Southern

Mortgage's actions. When the funds were not disbursed in total on February 3, the closing documents,

especially the Settlement Statement and the Federal Truth-in-Lending Disclosure statement, were no longer

congruent because the accuracy of both statements is time dependent. They could not become congruent

again without executing new or modified documents which would necessarily involve changing the relevant

dates.

¶34. The record reflects that the First South Bank deed of trust was paid on February 4, 1999. According

to the address on the First South Bank deed of trust, First South Bank is located in Grand Junction,

Tennessee. The January 29 closing of the anticipated loan took place in Corinth, Mississippi. Since the First

South Bank mortgage was paid on February 4, 1999, it is safe to conclude that the funds for that payment

were disbursed on February 3, 1999, unless they were hand delivered on February 4. The record also

reflects that the deed of trust to Southern Mortgage was recorded in the office of the Benton County

Chancery Clerk on February 5, 1999.

¶35. As stated, Southern Mortgage contends that there was a problem with the appraisal and that because
of this problem it halted the disbursement of funding on February 3. However, it fails to explain why on that

very day, or at least the next day, its settlement agent disbursed funds for payment of the first mortgage to

First South Bank. It is indeed perplexing how funding could be halted and disbursements made at the same

time.

¶36. Under the terms of the "Conditions of Funding" document, it was within the sole discretion of Southern

Mortgage whether to terminate the contract on February 3 if one of the conditions of funding had not been

met. If such discretion had been exercised, according to the terms of the "Conditions of Funding," it would

have been without liability to Mason. But even if the loan contract was not rescinded on February 3,

Southern Mortgage, by the terms of its own regulations, would have been without authority to disburse

funds on February 3 since it allegedly had determined that one of the conditions of funding had not been

met.

¶37. Had Southern Mortgage disbursed all of the proceeds on February 3 and later claimed mistake on the

basis that somehow it had inadvertently overlooked the fact that it did not have sufficient comparables to

support the appraisal, its position would be more tenable. The facts, however, are more consistent with the

view that it was Southern Mortgage's intention to lock Mason in the transaction on February 3 while at the

same time refusing to disburse to her the portion of the loan proceeds which were to be given directly to

her. It is interesting that the taxes against Mason's property also were paid off by Southern Mortgage on or

about February 3, thereby assuring clear title in Southern Mortgage in case a foreclosure became

necessary.

¶38. The loan either closed on January 29 or it did not. If it did not close, no funds should have been

disbursed on February 3 or any other date. If it closed, all funds should have been disbursed on February 3

subject only to final approval by Southern Mortgage. Southern Mortgage was not authorized to approve a

partial disbursement of funds. Either all funds were to be disbursed or no funds were to be disbursed. If any

disbursement was to take place on February 3, Mason was to be given the balance of the loan proceeds on

that date.

¶39. Southern Mortgage says the loan did not fund on February 3 but that the loan contract had not been

rescinded. Of interest is the fact that Southern Mortgage never tendered to Mason the balance of the

proceeds which were not disbursed on February 3. If the loan contract had not been rescinded on

February 3, when sufficient comparables to support the appraisal were received later, there would not have

been anything further to negotiate. All Southern Mortgage would have needed to do was forward to Mason

the balance of the loan proceeds which had not been disbursed. Doing that, however, would not have cured

the resulting inaccuracies in the Settlement Statement and the Federal Truth-in-Lending Disclosure

statement, but it would have shown that Southern Mortgage still considered the transaction viable. Of

course, Mason's version of what happened is different from the one told by Southern Mortgage. That is

what I discuss next.

¶40. As stated, Mason testified that the appraisal was submitted as a part of the application documents and

that she had been told by Charles Brumley, branch manager for Southern Mortgage, prior to the January 29

closing that everything was fine. She further testified that she expected, after the passage of three business

days, that Southern Mortgage would call her to get her to sign the checks for the various disbursements that

were supposed to be made from the loan proceeds. In fact, she testified that she expected to be called on

the fourth day and that when she did not receive the call, she called the next day which was the fifth day
(February 5). It was at that time, according to Mason, when she was told by a representative for Southern

Mortgage that he could not release the checks. This is her testimony:

And the next day I called to the office and the representative told me that -- well I can't release those

checks at this time because our home office has detected a problem with the appraisal, and he

informed me that the Property Shop was required to go back and find two homes, at least two homes

of comparable value to mine, and he assured me there would be no problem but they had to first get

that in their files.

* * * *

So I -- I told him that was fine. And I waited again and finally I think that next sometimes [sic] we

talked,(1) and he told me at that time -- he said I have the checks and everything, but I'm not going to

be able to release those checks and we are not going to be able to get that loan funded, and if you

want to come back into the office and make another loan you can do so. And he said, As [sic] a

matter of fact if you come in and sign it today I will drive to De Soto County, I believe he told me,

pickup those checks for you and you can get them today. And he also told me that his boss at that

time was in Jackson, Tennessee, and that he was going to have him call me and I was to tell his boss

that I needed that money right then. And true enough his boss did call, but I never told his boss that I

needed it right then and there, but his boss went onto [sic] tell me that you have to come back in, and

you have to make another loan and you do have to wait your three-day waiting period. And so I

remember at this time -- when I first went over I had a question in my mind about all of the fees, so I

did ask the man that I was talking to at that time, I said, "Well, what about all of these fees that you

have."

(emphasis added). Mason further testified that at that time she thought she would go back in and reapply

but that after talking things over with her family she changed her mind and went back the next morning and

told "Charles" [Brumley] that she had changed her mind and decided not to reapply. She said that when she

was told that there was no way the home office was going to fund the loan she believed at that time the deal

was off.

¶41. Mason testified that when she got her bank statement around February 17 or 20 she saw a deposit

that was unfamiliar to her. She called the Bolivar office of her bank(2) and inquired about the deposit. That

was when she found out that her loan with First South Bank had been paid off and that the deposit

represented a small refund. She testified that after obtaining this information she went about her business,

expecting to get a payment book from Southern Mortgage but never did. Then on March 5 she received a

call from Charles Brumley from the Alcorn County Branch of Southern Mortgage. This is what Mason

testified to about that conversation:

Well, he told me at that time -- he said, "Are you aware that your house was paid off?" I said, "Oh."

He said, "Yes." And he said, "When you agreed that you would come back and reapply we paid it

off." I told him, I said, No, you didn't, you paid it off on the 4th and that he was well aware when he

talked to me on the 11th that, that note had been paid off. And he didn't bother to tell me anything

about it. And so at the time that he called me it was -- I was in the middle of making arrangements for

a relative -- my uncle that had lived right there with me all my life. And I said I had told him, I said --

asked him -- I said, "Give me a little time on this, because I need to get those funeral arrangements

and all of that behind me."
¶42. Mason admitted that during this conversation Mr. Brumley asked her to go back to First South Bank,

but she did not testify as to the purpose for going. She further testified that she did not tell Brumley that she

would not go to First South Bank. Her testimony was that she told him that she was in the middle of making

funeral arrangements for her uncle and requested that Brumley get back in touch with her.

¶43. According to Mason, the next time she had any contact with anyone connected with Southern

Mortgage was when Brumley, along with an armed Benton County deputy sheriff, came unannounced to

see her on her job. She was away from her desk at the time as it was around lunch time; therefore, she did

not see him. However, Brumley left a card with the receptionist. Mason testified that she went to the

sheriff's office and spoke with Brumley and that Brumley asked her to sign a form that he wanted to take

back to First South Bank. She said she did not look at the form. She was upset and embarrassed. Mason

testified that after she and Brumley had talked a while, he asked her if they had come to her about the

matter when it first happened would she have given their money back. She further testified that Brumley

asked her not to mention that he was there because he had taken it upon himself to come and try to get his

boss's money back. According to Mason, she then got in her car and went back to her office.

¶44. Mason testified that when she arrived back at her office she received a call from Boise McNeil, the

president of Southern Mortgage. She testified that McNeil showed no courtesy. She then described what

happened:

[H]e said, "You are aware that we paid that note off and I want to know what you are going to do

about it." And I responded to him, "What am I going to do about it, it should be what are you going to

do about it." And then I asked him not to call me at work any more. I gave him my phone number and

told him the times that I would be at home, and I have not spoken to anybody from Southern

Mortgage since then.

¶45. Mason described the next episode concerning this matter in this manner:

I really expected at some point to hear from Southern Mortgage in writing or something, which I

never did. So I think it might have been a couple of months later, I tried to contact Diane Taylor to

find out exactly what I needed to do about the whole situation because I was honestly kind of left not

knowing what to do at that point. However, we missed each other and I think I was getting ready to

go on a trip in July and somebody called me at the house and asked me did I know my property was

for sale.

¶46. Mason testified that she never had any thought that she would keep the money paid on her behalf. She

further explained:

[B]ut with all of the times that I've worked in a business for a number of years, whenever we make an

error in whatever we do we are courteous about trying to correct that. And that's exactly what I

expected from Southern Mortgage.

* * * *

I think what would be fair is that -- and what my problem has been somewhat along the way is that

from the beginning given that they were a mortgage company who had made the goof-up error, or

whatever you want to call it, then I felt like that they should have been the one to refinance that loan,
and that's what I felt like they should have done initially. At least we should have been able to get

together and talk about it, rather than have somebody come over and say I want you to sign this, you

know, that's the way I felt about it. And since then, I mean I've been embarrassed. I've had problems

with my family as far as the -- the ad running in the paper, because my parents always told us to pay

our bills. And then for that to be seen by my parents -- I tried to hide it, but somebody, or course,

told them, it was all over the county about Annie Mason being defaulted on a loan.

¶47. Conspicuously absent from the evidence offered by Southern Mortgage is the testimony of Charles

Brumley, the agent for Southern Mortgage who handled the transaction in Southern Mortgage's Alcorn

County office, and Ray M. Gibson, Jr., the settlement agent. Hence, Mason's testimony is not refuted. The

only witness to testify for Southern Mortgage was Boise McNeil, Jr., its president, who had no firsthand

knowledge of what transpired other than what he acquired in the one telephone conversation discussed

earlier in this opinion. McNeil offered this testimony:

Q. So, am I correct, then, that you would not have been familiar with this mortgage -- this application

until some problem arose, there wouldn't be any reason for it?

A. I was familiar when it didn't fund.

* * * *

Q. Did you say, "Hey Brumley, we can't fund this one, we've got a problem. Hold up. Hold up."?

A. This is true.

Q. So if Mrs. Mason testified that she was told that the deal was off, it was off?

A. It wasn't off, we had to get the two comparables. And that is why we have the conditions of

funding signed with each deal, and I think in this situation it prematurely closed a couple of days in

advance due to Ms. Mason's work or couldn't get off or whatever.

* * * *

Q. Do you know -- Ms. Mason's testimony has been diametrically opposed to yours? Do you know

where she would have gotten the idea that the mortgage was rescinded or cancelled by mutual

agreement?

A. All I know is is [sic] Ms. Mason become [sic] belligerent from the start and had continued to stay

that way, so we couldn't talk to her.

Q. When did she become belligerent with you personally?

A. The first time?

Q. When was the first time you talked to her?

A. This was the day after Brumley had -- had made contact.

Q. This was way over in March?
A. Okay.

Q. According to her testimony and according to the visitor sheet, March the 11th, and that was the

first time you talked to her?

A. I'm going to say March 11, somewhere -- okay. Yes, March 11, yeah.

As stated, Southern Mortgage says the loan was not funded on the funding date. However, McNeil gave

the following intriguing testimony:

Q. Y'all did not payout any more monies like you had said?

A. All of the checks were in the office laying [sic] there, she never come [sic] and picked them up.

Q. The checks were in the office probably the day of the signing, weren't they?

A. No.

Q. They just weren't supposed to be issued?

A. No, they weren't there the day of the signing.

Q. How did the checks get to the Corinth office?

A. Mr. Gibson [the settlement agent] overnight [sic] them.

Q. And when did Mr. Gibson overnight them?

A. Well, he had them the date that the loan would be funded.

Q. But you said it was not funded?

A. It was not funded?

Q. All right. How did Mr. Gibson come up with this money?

A. Well, I sent him the check.

Q. Did you send him the check?

A. Yes.

Q. But, it's your testimony then, you sent him your check and you couldn't sell the mortgage,

you couldn't turn around and get your money back?

A. At that point we needed two more comparables.

In earlier testimony, McNeil had testified as to the nature of his business. This is what he said:

Q. What business is Southern Mortgage in?

A. Strictly mortgages.
Q. Okay. And you are in the mortgage origination business?

A. Correct.

Q. And it's your business to originate mortgages and then assign those or sell those in the mortgage

market?

A. Yes, sir.

¶48. As stated, Southern Mortgage says the loan did not fund, yet the president of Southern Mortgage says

he sent the funding check to the settlement agent. It simply does not happen that way in the real estate

financing business, and the above colloquy clearly proves that it did not happen that way in this case. No

check would have been sent from headquarters until the documents in the loan application package had

been inspected and approved. A careful evaluation of McNeil's testimony reveals unmistakably that

Southern Mortgage accepted the comparables, approved the appraisal and funded the loan, but when it

attempted to sell the note, the purchasing entity balked at the sale because of the comparables attached to

the appraisal. There is a difference between approving a loan application and funding the loan and

unilaterally rescinding the approval after efforts to sell the negotiable paper have been unsuccessful. In my

judgment, based on my review of the record, this is what Southern Mortgage attempted to do while at the

same time disguising that action as an initial decision not to fund the loan.

¶49. Southern Mortgage claims to have learned about the payoff several days following the funding date of

February 3. However, it contends that approximately three or four days after the funding date, it received

the necessary comparables and was prepared to close the transaction but Mason refused. It claims that

only after efforts at reconciliation with Mason failed that it was compelled to resort to foreclosure. This

contention is simply belied by the facts. First, three or four days after the funding date would have been

February 6 or 7. It is not disputed that on February 5, Mason called Charles Brumley and that Brumley told

her that the home office had detected a problem with the loan. He told her that the home office needed to

get two additional comparables but assured her that that would not be a problem. She said that was fine.

Mason waited, and when she and Brumley again talked, (February 11), she was told that he had the checks

but that he could not release the checks. As stated, he told her that Southern Mortgage was not going to

fund the loan which it had agreed to do and that if she wanted to come back into the office and make

another loan she could do so. In fact, Brumley told her that if she would come in and sign that day, he

would drive to Desoto County and pick up those checks that day. She refused to apply for another loan.

This testimony is not refuted in the record. Nothing McNeil said refutes this testimony. Again, remember

McNeil first talked with Mason on March 11 which was more than a month after the funding date had

expired.

¶50. Mason next heard from Southern Mortgage on March 5 when Brumley called and asked her if she

knew her note with First South Bank had been paid off. She did not immediately let him know that she had

learned that fact. However, when Brumley said to her that Southern Mortgage paid the note off after

Mason had agreed to come in and reapply, she then told him that was not the case because the note had

already been paid off when she and he discussed the possibility of her reapplying. It was during the

conversation that Mason told Brumley that she had death in her family and to give her a little time to deal

with the matter. The next time Mason heard from Southern Mortgage was when Brumley came to her job

unannounced and accompanied by an armed deputy sheriff. All of these facts are not disputed in the record.
Only Brumley could have disputed them and he did not testify. As stated, the only witness to testify for

Southern Mortgage was McNeil, and he could not dispute them because, according to his testimony,

March 11 was the first time he spoke to Mason.

¶51. I agree that Southern Mortgage's remedy was an action for unjust enrichment, not foreclosure, but

even so, I still am unable to accept the notion that Mason did anything to cause Southern Mortgage to

disburse some but not all of the funds. Further, even if I accepted the notion, which I do not, that the

payments were made innocently, without any sinister motive on the part of Southern Mortgage, the initiation

of the foreclosure proceedings cannot be so characterized. It is not debatable that all of the loan funds were

not disbursed by the funding date specified in the contract and had not been disbursed before, according to

Southern Mortgage, the loan contract was mutually rescinded at some unspecified date. Certainly when

Southern Mortgage initiated the two foreclosure proceedings Mason had not received the benefit of her

bargain. The two attempts to foreclose the deed of trust were calculated acts, and Southern Mortgage

should be required to pay for the grief, embarrassment and humiliation it caused Mason when it commenced

foreclosure on her property with knowledge that it did not have a valid lien against it. Even before initiating

foreclosure proceedings, Southern Mortgage showed its heavy handed tactics when one of its agents,

accompanied by an armed deputy sheriff, came to see Mason on her job. Thereafter, Mason had to endure

the humiliation of seeing her property advertised for sale pursuant to a foreclosure notice.

¶52. Perhaps the adage that best sums up the saga in this case is the one that says, "Two wrongs do not

make a right." I readily agree that Mason was not entitled to keep the payments made by the agent for

Southern Mortgage. To do so would have resulted in unjust enrichment to her. However, I fail to see or

understand why she should be penalized for the erroneous legal path taken by Southern Mortgage,

particularly when that course of action caused her so much grief. After all, it was Southern Mortgage, not

Mason, that set in motion the events which bring us to this juncture. Mason did nothing to halt full

disbursement on February 3 or to cause Southern Mortgage to make the payments on her behalf against its

own regulations, and, while she was not entitled to keep the benefit of the payments, the responsibility for

prohibiting that from happening rested with Southern Mortgage, the one who made the error in the first

place. As it sought to do that, Southern Mortgage was charged with the responsibility to pursue the proper

remedy in accordance with the facts. Mason was not the guarantor or protector of Southern Mortgage's

legal rights. That responsibility reposed with Southern Mortgage.

¶53. Further, Mason did not procure the payments. They were made on her behalf without her consent.

Also, the payments were made not in conformity with the terms and conditions of the contract that Mason

had signed, but in violation of them. Even if she wanted to return the payments, she could not simply do so.

The payments were not given to her. In order for her to return what was paid on her behalf, she, in all

likelihood, would have had to obtain a loan. There is some indication in the record that Mason first

attempted unsuccessfully to get the money from her retirement account. I note that the "Substitution of

Trustee" document that was filed in preparation of the foreclosure was executed by Southern Mortgage on

March 24, 1999, just thirteen days following Brumley's visit to Mason's place of employment while

accompanied by an armed deputy sheriff. Even if Mason had initiated the process for obtaining a secured

loan immediately after the visit by Brumley on March 11, she probably could not have completed the

process before March 24.

¶54. Since Southern Mortgage contends that the note and deed of trust are valid, it stands to reason that

Southern Mortgage then would be bound by the terms and conditions of the note and deed of trust.
Southern Mortgage never sent Mason a notice of delinquency or made written demand upon her for

payment of the entire amount due under the terms and conditions of the deed of trust. In this regard, I note

that the note signed by Mason provides in pertinent part:

(c) Notice of Default/Notice of Acceleration

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the

overdue amount by a certain date, the Note Holder may require me to pay immediately the full

amount of principal which has not been paid and all the interest I owe on this amount. The date must

be at least 30 days after the date on which the notice is delivered or mailed to me.

¶55. When Southern Mortgage began advertising Mason's property on June 6, 1999, to be foreclosed on

July 5, 1999, she was only $1,837.72 in arrears(3) because the first payment under the note was not due

until March 5, 1999, and even this figure was not valid because it was predicated on installment payments

for a loan in the amount of $54,400 when only $24,883.12 had been expended by Southern Mortgage on

Mason's behalf. Of interest is the fact, as stated, that Southern Mortgage did not send Mason a notice of

acceleration as it was permitted to do, yet it demanded payment of the entire indebtedness. It was not

entitled to make such a demand because it had not sent Mason a notice of acceleration in accordance with

the terms of the note. In my judgment, this is more evidence of the fact that Southern Mortgage, in initiating

the foreclosure, was not proceeding pursuant to what it perceived as a valid note and deed of trust. Rather,

it was simply exercising its muscle to inflict punishment upon Mason for not immediately acceding to its

demand made in the presence of an armed deputy sheriff.

¶56. In the complaint filed by Mason, she asked, inter alia, that she be awarded compensatory and

punitive damages. During the trial, she testified that she had incurred attorney's fees in the amount of $2,

500, court costs in the amount of $105, suffered embarrassment and humiliation and lost the benefit of $1,

600 which she had paid to take a CPA exam. Clearly, Mason has suffered a compensatory loss. Further, I

believe that, under the circumstances presented, Southern Mortgage's actions evince a willful and malicious

wrong toward Mason or, at a minimum, a gross, reckless disregard for her rights. Accordingly, I believe she

has presented a case for consideration of punitive damages. For the reasons presented, I would reverse and

render judgment here on the question of Southern Mortgage's liability and reverse and remand for

consideration of compensatory and punitive damages.

KING, P.J., PAYNE AND BRIDGES, JJ., JOIN THIS SEPARATE OPINION.

1. It is not entirely clear from the record when this conversation occurred, but all indications are that it

occurred on February 11.

2. It is not clear from the record whether her checking account was at a branch of First South Bank,

but that appears to be the case.

3. The figure assumes the validity of the note and deed of trust. Of course, since Southern Mortgage

never tendered the full amount of the loan proceeds, I do not accept the validity of either.