Opinion ID: 1634087
Heading Depth: 1
Heading Rank: 7

Heading: Refusal to Furnish the Schmitz Report

Text: The Chancellor, found that under Mitchell, the bank's failure to disclose the Schmitz report violated the duty of fairness which requires a mortgagee to furnish the mortgagor with a copy of the appraisal when it is requested. Trustmark argues that the Schmitz evaluation is simply a report on the geothermal activities of the well, and that the monetary value established by that report is worthless and does not constitute an appraisal. Furthermore, the bank contends that Mitchell addressed the issue of fraud, which is not asserted in this case. In essence, the bank argues that it does not have to reveal the contents of the Schmitz evaluation, as its purpose for procuring that document was not to seek an unfair advantage over the Hammons, as FANB had attempted to do in Mitchell. At first glance, Mitchell may appear to be analogous to the case at bar. There, the Court held that where the mortgagee advised the mortgagors to sell land under threat of foreclosure, the mortgagee owed a duty to mortgagors to disclose a higher price available for the farm. Even though the relationship of the mortgagors to the mortgagee was adverse in regard to the payment of debt, the mortgagee was under duty to disclose facts peculiarly within its knowledge, such a higher available price for the sale of the mortgagor's real property. 359 So.2d at 1379-80. After all, banks are seeking people's trust and confidence and therefore may owe clients a high degree of care. Id. at 1380. A broad reading of this duty would result in a breach by Trustmark due to the refusal to provide the Schmitz report to the Hammons. Although Trustmark appears to be making a highly technical argument in contending the evaluation was simply a report and not an appraisal, the record reveals that the Chancellor did in fact find that the Schmitz report was deficient in approximating the value of the well, as it did not include the costs of production and other measures usually taken into account when valuing a well. It is thus apparent that Mitchell does not apply to facts at bar. In Mitchell, the facts indicate that there was a threat of foreclosure. Here, the foreclosure proceedings were triggered by the Hammons' default. Thus, we find that Mitchell does not apply, and as a result, there is no duty of disclosure owed by the bank to the Hammons. In addition, the bank's evaluation/report/appraisal is the property of the bank, as there is no indication that the bank knew of a better price, and the Hammons were in substantial default at the time of the evaluation. We hold that there is no violation of fairness by Trustmark. Accordingly, there is no merit to this issue.