Opinion ID: 1701589
Heading Depth: 1
Heading Rank: 1

Heading: Did the dragnet clause within FMBC's deed of trust operate to secure claims of FMBC which arose as a result of appellee's fraudulent actions while employed at FMBC?

Text: The dragnet clause contained in FMBC's deed of trust provided as follows: Also, to secure any other indebtedness heretofore, now or hereafter (within the period of four years from the date hereof) contracted with either the payee in or the holder of the above described note or notes by the grantor or grantors herein or either of them whether such other indebtedness be evidenced by note, open account, overdraft or any other manner whatsoever, including also any indebtedness of any grantor made as a joint maker, surety, endorser or guarantor. There is no question that dragnet clauses are enforceable if properly executed and stated in clear and unambiguous language. Newton County Bank, Louin Branch Office v. Jones, 299 So.2d 215 (Miss. 1974). Newton County Bank, Louin Branch Office v. Jones, supra , involved the attempted foreclosure of homestead property owned in fee simple by Mrs. Myrtis Jones. On November 4, 1968, Mrs. Jones and her husband executed a deed of trust on their homestead which deed of trust contained a dragnet clause to secure all future loans and advances made to the grantors, or any one of them. Subsequently the husband, who only had a homestead interest in the property, received additional advances from the bank secured by cattle allegedly owned by him. When default was made, the bank sought to foreclose its deed of trust against the land, but the lower court enjoined the foreclosure proceedings. In reversing the lower court, this Court held the advances made to the husband alone were within the purview of the dragnet clause entitling the bank to proceed against the homestead property upon default of the indebtedness by the husband. The case sub judice is clearly distinguishable from Newton County Bank, Louin Branch Office v. Jones, supra . In the present case FMBC sought to foreclose on its deed of trust securing B.E. Tidwell's original promissory note for indebtedness to the bank which arose because of the tortious or fraudulent action of Tidwell and did not involve an innocent third party. Tidwell was not a party to the contracts whereby the indebtedness was created, but was merely instrumental in approving the extension of indebtedness to various individuals. The deed of trust having been drafted by FMBC must be most strongly construed against FMBC. Williams v. Life Insurance Company of Georgia, 367 So.2d 922 (Miss. 1979). In Amos v. Lance, 355 So.2d 84 (Miss. 1978), we held the failure to reduce an alleged deficiency to a liquidated claim or judgment could not be the sole basis for foreclosure of a deed of trust containing a dragnet clause. The chancellor found and we agree that there was no intention, either express or implied, that the dragnet clause attach to an unliquidated claim or tort. The amount of indebtedness allegedly owed by Tidwell as a result of his tortious and fraudulent actions was never reduced to a liquidated amount. In fact, throughout the trial the bank remained unsure as to the exact indebtedness of Tidwell to the bank. The chancellor as the finder of fact specifically found the claims sought to be included under the dragnet clause were acts of Tidwell and others, in the amount of $2,500,000.00, were unliquidated or tort claims and we are unable to say his findings as such were manifestly wrong. Moreover, prior to purchasing the aforementioned property, Mrs. Tidwell met with Ed Caviness, Chairman of the Board and President of FMBC pertaining to the assumption of the Tidwell note secured by the deed of trust containing the dragnet clause. With FMBC's permission, Mrs. Tidwell, who is admittedly a bona fide purchaser in an arm's length transaction, having assumed approximately $120,000 in mortgages on this property, which was its full value, was allowed by FMBC to assume the $32,000 loan. Mrs. Tidwell was never advised of the bank's intentions to include the other claims of indebtedness against her son before she assumed the deed of trust nor was she advised of a different amount due on the deed of trust, including everything the bank now claims under the dragnet clause. The bank having failed to do so, is now estopped from asserting a larger amount secured by the deed of trust. To allow the bank to grant Mrs. Tidwell permission to assume a loan with a balance of approximately $32,000 and then later, to her detriment, accelerate that balance to approximately $103,000 by virtue of an obscure dragnet clause, would offend any concept of justice. Based on our review of the record, extensive briefs, and detailed findings of the chancellor as to both the facts and the law, we are unable to say he was manifestly wrong in his findings of fact or conclusions of law.