Title: White v. Delta Foundation, Inc.
Citation: 481 So. 2d 329
Docket Number: 55149
State: Mississippi
Issuer: Mississippi Supreme Court
Date: December 18, 1985

481 So. 2d 329 (1985) Roger WHITE and Joyce White v. DELTA FOUNDATION, INC., Lester F. Smith, William A. Murrain and Michael Espy. No. 55149. Supreme Court of Mississippi. December 18, 1985. Rehearing Denied January 15, 1986. *330 David A. Bowers, Thomas, Price, Alston, Jones &amp; Davis, and Lester F. Smith, Perry, Morrison &amp; Smith, Jackson, for appellants. Before PATTERSON, C.J., and HAWKINS and ROBERTSON, JJ. HAWKINS, Justice, for the Court: Roger White and wife Joyce Y. White appeal from a final decree of the Chancery Court of Madison County sustaining a demurrer to their bill of complaint filed against Delta Foundation, Inc., and its trustees under a deed of trust, and dismissing the bill. The bill of complaint challenged the validity of a foreclosure. Finding the bill of complaint stated a cause of action, we reverse. On June 14, 1977, Roger and Joyce Y. White executed a deed of trust to John Nichols, trustee for Delta Foundation, Inc., a non-profit corporation with principal offices in Washington, but domiciled in this state, to secure a principal debt of $5,000, evidenced by a promissory note payable in monthly installments of $115.15 each, beginning July 15, 1977. The deed of trust covered a house and lot in Madison County. The Whites defaulted and Delta Foundation foreclosed. Before instituting foreclosure proceedings the following substituted trustee appointment was filed and recorded on the land deed records of Madison County: [R. 14-15] There was a foreclosure and a substitute trustee's deed executed by William A. Murrain to one Michael Espy of Jackson. The Whites employed counsel, efforts were made to "redeem" the property, and claims were made that the first foreclosure was fatally defective. Apparently, Delta Foundation agreed, because another foreclosure proceeding was begun by another substituted trustee, but later abandoned, and Delta Foundation chose to stand on the first foreclosure. The Whites filed their bill of complaint in the Chancery Court of Madison County challenging the validity of the foreclosure, asserting inter alia, the substitution of trustee was fatally defective. We agree. The deed of trust expressly gave Delta Foundation the right to appoint a substitute trustee, without which Delta Foundation would have had no authority to do so. Webb v. Biles, 192 Miss. 474, 6 So. 2d 117 (1942); Laird v. Bethea, 215 Miss. 64, 60 So. 2d 526 (1952). This power is strictly construed. Powers v. Interstate Trust &amp; Banking Co., 163 Miss. 30, 139 So. 318, 320 (1932); West v. Union Naval Stores Co., 117 Miss. 153, 77 So. 961 (1918). In this case the deed of trust had the following provision: [R. 9-10] Miss. Code Ann. § 89-5-45, the statute authorizing substitution of trustees in deeds of trust, is as follows: Delta Foundation had the authority to designate an agent for substituting a trustee. See: Adams et al v. St. Clair, 185 Miss. 416, 188 So. 559 (1939); Chandler v. Bank of Brooksville, 181 Miss. 529, 178 So. 797 (1938). It would have been subject to proof that Keith Early had such authority from Delta Foundation. This appointment of substituted trustee is woeful draftsmanship. The final paragraph states it is "State Mutual Federal Savings &amp; Loan Association" making the substitution. The instrument, however, *332 purports to be executed by Delta Foundation. The signature is ambiguous; headed "DELTA FOUNDATION," and with a signature "Keith Early," who does not designate whether he signs as agent or in his own individual capacity. The acknowledgment which follows is a personal acknowledgment, not a corporate acknowledgment, nor as agent and attorney for the corporation. Moreover, the notarization contains no final paragraph or date. Miss.Code Ann § 89-3-1 provides that an instrument which has not been duly acknowledged shall not be admitted to record, and if it is, it does not constitute notice. Miss.Code Ann § 89-3-7 is the statutory form of acknowledgment in this state for natural persons. There is no form prescribed for corporations. Early's authority to appoint a substituted trustee had to be expressly granted to him by Delta Foundation, speaking in the only way a corporation can, through its official minutes. Simply as general counsel he had no implied authority to do so. This is elementary corporate law. The appointment of a substituted trustee was the act and deed of Delta Foundation, acting by and through Early, its duly authorized agent. The acknowledgment in this case should have stated that Early signed and delivered the document for and on behalf of Delta Foundation, and as its act and deed, after first being duly authorized by the corporation to do so. He simply acknowledged he signed it as an individual. Furthermore, his signature to the body of the instrument fails to note he signed as general counsel, although it does state "DELTA FOUNDATION, INC." This document was patently defective. Delta Foundation calls our attention to Griffis v. Martin Oil Co., 127 Miss. 606, 90 So. 324 (1921), a case in which this Court considered the validity of an acknowledgment to a deed by a corporation executed many years before a suit to quiet and confirm title. The entire deed read: State of Mississippi, Greene County. 127 Miss. at 607-608, 90 So. 324. As to the acknowledgment, this Court stated: 127 Miss. at 611-612, 90 So. 324. Delta Foundation argues Griffis mandates our holding that the acknowledgment in this case was sufficient. We cannot agree. In the first place, it should be noted that there is no ambiguity in the face of the deed in Griffis; it is executed by its president and secretary under corporate seal. Furthermore, the acknowledgment clearly identifies the official character of W.H. McIntosh as president executing the deed. These elements are lacking in this case, and the final paragraph of the notarization is likewise missing. Moreover, while the general form of the statute may be followed, we hold that any official acknowledgment for public record of a corporate document should in some manner make it clear that it is the corporation executing the instrument by and through an authorized officer, officers, or agent.[1] A liberal interpretation of acknowledgments encompasses examination of the body of the instrument itself, and an acknowledgment will not necessarily be deemed fatal for an omission which can be supplied from the body of the instrument *334 itself. See: 1 Am.Jur.2d Acknowledgments, § 43, and cases cited thereunder. In Griffis, supra, the body of the instrument made it clear it was the act and deed of the corporation. In this case the body of the instrument is ambiguous and uncertain. From the body of the instrument it could be State Mutual Federal Savings and Loan Association of Jackson, as well as Delta Foundation, which was executing the instrument. It is also relevant to note that in a foreclosure proceeding the need to meet statutory and legal requirements has important additional imperatives than an ordinary case. It is not a voluntary act of all parties involved in the transaction. It is not a private transaction, but a public one, in which any person interested is invited to participate. It is well to quote at some length from this Court, speaking through Justice Griffith, in Federal Land Bank v. Collom, 201 Miss. 266, 28 So. 2d 126, 127-128 (1946): See also, Griffin v. Land, 214 Miss. 557, 59 So. 2d 290, 293-294 (1952); and Seal v. Anderson, 235 Miss. 249, 108 So. 2d 864, 866-867 (1959). Any rational prospective bidder who read the body of this document would find himself bemused by its contradiction. Which corporation was executing it? If he employed counsel to check the record and foreclosure proceedings, it is an affront to the competence of our state bar to suggest any attorney would advise him to offer a bid at the sale. Because of the defects in this document, including the acknowledgment, we hold it *335 was not entitled to be recorded, and that it furthermore would have deterred prospective bidders. This Court is not going to lend its hand encouraging this kind of inferior draftsmanship. Delta Foundation takes the position that Miss. Code Ann. § 89-3-1 dealing with recording instruments applies only to the sale of land. We disagree. In any instrument which will affect title to real property, which includes a substitution of trustee, we hold Miss. Code Ann. § 89-3-1 applies. To hold otherwise would emasculate the purpose of the recordation statute as well as our law pertaining to foreclosure of realty at public auction. The parties are in chancery court, and upon remand, by proper pleadings the chancellor can see that all parties are protected, and a valid foreclosure consummated if one is authorized. In view of our decision, we are relieved to find no need to address the validity of the trustee's deed. We hold that the bill of complaint with the attached exhibits states a valid cause of action for the reason stated, and do not address other errors assigned. REVERSED AND REMANDED. PATTERSON, C.J., WALKER and ROY NOBLE LEE, P.JJ., and DAN M. LEE, PRATHER, ROBERTSON, and SULLIVAN, JJ., concur. ANDERSON, J., not participating. [1] A sample of corporate acknowledgment which clearly would meet the test is as follows: Personally appeared before me, the undersigned authority in and for the said County and State, within my jurisdiction, the within named AB and CD, who acknowledged that they are President and Secretary, respectively of X, a Mississippi Corporation, and that for and on behalf of the said corporation, and as its act and deed, they signed, sealed and delivered the above and foregoing ____ for the purposes mentioned on the day and year therein mentioned, after first having been duly authorized by said corporation so to do. Given under my hand and official, seal, etc.