Opinion ID: 1707287
Heading Depth: 1
Heading Rank: 2

Heading: was it error to allow state farm to receive a credit against the contract damages awarded to the simpsons?

Text: During the trial in Simpson II George Johnson, a State Farm superintendent, was called by Gloria Simpson as an adverse witness. On direct examination, he testified that Kimbrough Investment Company had held the mortgage on the Simpson property. State Farm introduced through Johnson a sworn statement of proof of loss and a letter, submitted by George Smith of Kimbrough Investment Company. The letter requested that the Simpsons' mortgage debt of $27,813.75 be paid off, after which Kimbrough would assign the deed of trust to State Farm. State Farm also introduced a draft for $27,813.75, by which it had paid Kimbrough. Gloria Simpson did not object to the introduction of these items. The assignment and the deed of trust were never introduced. State Farm filed a post-trial motion, asking that the jury award be reduced by the amount it had paid to Kimbrough. A hearing was held on this and other post-trial motions on December 5, 1986. Despite argument that a setoff could not be given based on a note and deed of trust which were not before the court, the court decided that as a matter of law State Farm was entitled to the setoff, and reduced the jury award from $50,690.00 to $22,876.25. Gloria Simpson argues that State Farm cannot ask for a setoff and cancellation of the mortgage when it has not introduced the note or deed of trust in question, and when there has been no allegation of default or affirmative action on the note, such as foreclosure. She also relies on Miss. Code Ann. § 11-7-65 (1972), which requires that an account be filed with the pleading, along with a copy of any writing intended to be set off. State Farm attached only a copy of the Simpsons' policy to its answer. State Farm relies on Talman Federal Savings & Loan Ass'n v. American States Insurance Co., 468 So.2d 868 (Miss. 1985), to the effect that it had an independent contractual obligation to pay Kimbrough. This may be true, but nothing in Talman provides that State Farm should gain any greater rights than the original mortgagee, Kimbrough. See Ford v. White, 495 So.2d 494 (Miss. 1986); Indiana Lumberman's Mutual Insurance Co. v. Curtis Mathes Manufacturing Co., 456 So.2d 750 (Miss. 1984). State Farm, however, gained all rights vested in Kimbrough by the note and deed of trust executed by Simpson and assigned by Kimbrough. What State Farm attempted to do via setoff was to accelerate the note and deed of trust without any evidence of default on the part of the Simpsons. There is nothing in the record or case law which persuades us that Kimbrough would have been able to take such an action, and as such State Farm may not. The setoff cannot be allowed when the documents containing the rights of the parties, the note and deed of trust, are not before this Court. The trial court erred in allowing the setoff, and the original jury verdict of $50,690.00 is reinstated. The award of prejudgment interest discussed in Part II will be based on this amount. The remainder of the circuit court's judgment is affirmed. AFFIRMED IN PART, REVERSED AND RENDERED IN PART. ROY NOBLE LEE, C.J., HAWKINS, DAN M. LEE, P.JJ., and PRATHER, ROBERTSON, SULLIVAN, ANDERSON and BLASS, JJ., concur.