Opinion ID: 1719022
Heading Depth: 1
Heading Rank: 2

Heading: Duty to establish market value.

Text: ¶ 82. A few years later, this Court again advanced the ball. In Haygood v. First National Bank of New Albany, 517 So.2d 553 (Miss. 1987), the mortgagee obtained a deficiency judgment, and the mortgagor appealed. On appeal, this Court harkened back to Weyburn (but no further, lest that pesky fraud requirement be noticed and, perhaps, revived) to recall that [i]nadequacy of price is insufficient to set aside a foreclosure sale unless the price is so inadequate as to shock the conscience of the Court. Id. at 556. The Haygood Court-after reciting the ratio of the bid-to-market-value found in several cases, including Weyburn, [13] -then held: The legal determination of the adequacy of the purchase price depends upon establishment of fair market value. Lake Hillsdale Estates, Inc. v. Galloway, 473 So.2d 461, 465 (Miss.1985). We are of the opinion that the fair market value of the property is an issue of material fact in the case at bar and that the value of the property constituted a genuine issue which should have been submitted to the jury.... Haygood, 517 So.2d at 556. ¶ 83. Thus, Lake Hillsdale and Haygood, read together, established that a debtor challenging a deficiency judgment could simply file the complaint, after which the burden of proof immediately shifted to the mortgagee to establish the fair market value of the property in order to prove that the price paid at foreclosure was equitable. Apparently impressed by the ease with which it had changed, and added to, the statutory requirements regarding foreclosure sales, this Court found it had more to do.
¶ 84. The final assault (prior to the majority's decision today) on the legislative prerogative expressed in Mississippi's foreclosure statutes came in Wansley v. First National Bank of Vicksburg, 566 So.2d 1218 (Miss.1990). There, the creditor bank, as the only bidder at the foreclosure sale of two deeds of trust of property held by two brothers, bid $500,000 for each brother's interest. Id. at 1219. The bank then sought and obtained a deficiency judgment against the two brothers, one for approximately $500,000, and the other for approximately $230,000. Id. at 1220. ¶ 85. In seeking to have the foreclosure and deficiency set aside, the brothers argued that the Court should void the foreclosure because the Trustee ... was personally financially interested in the Bank and hence was not an impartial and disinterested trustee. Id. In analyzing the brothers' challenges, the Wansley Court began by stating: In today's context, our focus has been and isupon assuring that the debtor is given credit toward his obligation in an amount fairly reflecting the market value of the collateral, all to the end that he may not be saddled with an inequitable deficiency judgment. Id. at 1221. The Wansley Court was unwilling, however, to confine itself to the previously-adopted shock-the-conscience or equitable tests. After waxing eloquent on the general nature and philosophy of foreclosure sales and trustees, the Wansley Court paraphrased language from Lake Hillsdale and Haygood, and likened it to a requirement that the terms of a foreclosure sale must be commercially reasonable. Id. at 1224. The Wansley Court, after inexplicably looking to Mississippi's Uniform Commercial Code (which addresses the requirements for a creditor's sale of personal property held as collateral [14] ), concluded: We see no reason on principle why a similar rule should not govern disposition of real property held as collateral and foreclosed upon. Id. at 1225. [15] ¶ 86. Thus, with the judicial amendments provided by Mississippi Valley Title, Lake Hillsdale, Haygood, and Wansley, a mortgagee who follows every statutory requirement for foreclosure and a deficiency judgment will nevertheless be denied the deficiency unless such mortgagee establishes that: 1) the foreclosure sale was conducted according to the guidelines set out in the Uniform Commercial Code; 2) the bid was high enough to be deemed equitable by a reviewing Court (when compared to the market value of the property); and 3) it was not high-handed. Which brings us to today's case.
¶ 87. It seems to me that a foreclosure sale sufficiently flawed so as to deprive a creditor of a deficiency judgment should be set aside altogether. However the majority upholds the sale, finding it perfectly legal and commercially reasonable, but denies Bancorp its deficiency judgment [16] because it did not present enough evidence to establish fair market value of the properties. Thus, the foreclosure was good enoughand legal enoughto satisfy the majority that the sale should not be set aside; but it was not good enough to allow the creditor to obtain a deficiency judgment, even though a deficiency judgment is unquestionably justified under the terms of the contract and the provisions of our foreclosure statutes. I am unable to agree with such an illogical and unjustified approach to the application of statutory and contract law. ¶ 88. For the reasons previously stated, I would eliminate any requirement regarding the conduct of the sale which materially deviates from the requirements of our foreclosure statutes and the contractual agreement of the parties. Furthermore, I would discard the requirement that the mortgagee prove fair market value of the property. Both of these constraints were entirely created by the judiciary. ¶ 89. My dissent should not be read to imply that I believe a debtor facing foreclosure should be deprived of the opportunity to present all available legal and equitable defenses. For instance, the law does not condone a fraudulently conducted foreclosure sale, and the common-law defense of fraud had been around since before Henry VIII. However, absent fraud or some other common-law defense (equitable or legal), a result that some justice or another considers to be an inequitable is not an appropriate basis for this Court to ignore statutes and deprive a party of enforcement of a valid contract. If it were otherwise, our courts would be in the business of monitoring all business transactions to ensure that all contracting parties get what a majority of justices on this Court consider to be a fair deal. ¶ 90. I do not deny that strict enforcement of statutes can sometimes produce harsh results. As pointed out in Lake Hillsdale, Unlike other states, our statute provides no statutory safeguards for mortgagors subject to deficiency judgments. Lake Hillsdale, 473 So.2d at 466 (internal citation omitted). While some justices may question the wisdom of such an omission by the Legislature, I strongly believe thatabsent the suggestion of a constitutional violation [17] we must defer to the Legislature on questions of the fairness of statutes, and the need for statutory amendments. Unless and until it does, I respectfully submit that our hands are constitutionally tied. ¶ 91. The natural desire and temptation to amend legislation when we think it's a good idea must give way to our constitutional duty to defer to the Legislature on such matters, excepting only cases where we find in a statute or its application a constitutional violation. ¶ 92. The Justices comprising the majority in today's decision are persons I admire and respect. And I am convinced that a majority of this Court is committed to both the doctrine of separation of powers and the rejection of judicial activism. Nevertheless, backsliding can take place on a court as easily as in a church. True justice in the constitutional sense is accomplished only when we follow the law as it is written. Perhaps, in some future case, this Court will see fit to return to the language of the statute which was created by those who actually have the constitutional power to create statutes. It is, in my view, unfortunate that today is not that time. For the reasons stated, and only as to the fair-market value issue, I respectfully dissent. CARLSON, J., JOINS THIS OPINION.