Opinion ID: 1138261
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: Nancy Beard was a licensed real estate broker with twenty years experience working for her husband at P.O. Beard Real Estate before returning to her former teaching career in 1984. Nancy and her husband, P.O., were the joint owners of Lot 7 and Lot 44, two sections of property in the same subdivision. The Beards' home was built on Lot 7, and Lot 44 remained undeveloped. On November 23, 1982, the Beards obtained a loan and executed a note to Iuka Guaranty Bank for the principal sum of $46,512.31. Previous notes to Iuka in the sum of $1,300 and $15,000 were consolidated into the balance of this new note on the advice of Gene Jourdan, a banker at Iuka Guaranty since 1962, who noted that P.O. had been having difficulty making payments on previous loans. The Beards signed two deeds of trust as security for the 1982 loan. One deed of trust gave the bank a first mortgage on the vacant Lot 44, and the other, a second mortgage position on Lot 7. Iuka's interest in Lot 7 followed an outstanding $12,000 mortgage previously given to Nancy's mother. Both of these deeds of trust contained a dragnet clause asserting that the instruments secured not only the principal scheduled debt, but also any other separate or joint indebtedness owed to Iuka by either party. Nancy maintained that P.O. was responsible for making all of the necessary loan payments. P.O. informed Nancy in August of 1985 that Iuka was anticipating foreclosure due to his failure to make the necessary installments on the 1982 loan. Nancy had been unaware of this problem because Iuka had failed to provide her with notice, having addressed all of the correspondence to P.O. Gene Jourdan testified that the Beards were erratic with their payments on the 1982 loan beginning with their first payment. He claimed that the installments were 90 days past due as early as mid-1983. P.O. scheduled a meeting with Fidelity Federal Savings and Loan (Fidelity Federal) in August of 1985 in hopes of refinancing the Iuka loan. Nancy testified that she received a $38,000 loan in her own name from Fidelity Federal to satisfy the entire Iuka debt. On August 23, 1985, Nancy and P.O. signed a deed of trust on Lot 7 to Fidelity Federal as security for the new loan. As part of the Fidelity Federal loan agreement, Nancy convinced her mother to subordinate her mortgage interest behind Fidelity Federal's interest. Nancy and P.O. met with Gene Jourdan at Iuka on the same day and forwarded the entire outstanding balance of the 1982 Iuka loan using the $38,000 in proceeds obtained from Fidelity Federal. Nancy also expressed dissatisfaction about not having received personal notices from Iuka in the past. She testified that before they satisfied the loan, Jourdan assured them that he would immediately cancel the deeds of trust on Lot 7 and Lot 44 upon payment. She claimed that Jourdan repeated his guarantees that they had successfully fulfilled all of their obligations to Iuka necessary to release the two deeds of trust. She testified that Jourdan made no mention of any other debts preventing Iuka from releasing both deeds of trust. Though the Beards paid the entire balance of the loan on August 23, 1985, Jourdan testified that the bank would have been equally content had the Beards merely tendered their overdue payments. Jourdan said he canceled the Lot 7 deed of trust on the day following full payment of the 1982 loan. P.O., in fact, received another loan of $406 in order to fully cancel the loan. Jourdan testified that he did not specifically remember the conversations between the parties on this day. Nancy and P.O. subsequently divorced. In January of 1990, some five years later, Nancy learned that the deed of trust on Lot 44 had not been released. She said that she received a letter from Iuka indicating that it was initiating foreclosure proceedings on Lot 44. Notice of the foreclosure appeared in the paper under Nancy and P.O.'s name. It also listed under P.O.'s name individually for his personal loans dating back to March 26, 1973. Jourdan produced records showing that P.O.'s individual notes had been properly renewed by the bank. Lot 44 had been registered as security for the loan afforded P.O. on March 26, 1973. P.O. had been renewing this debt throughout the 1980's by merely paying the interest due on the loans. Jourdan explained that P.O.'s previous debts had become commingled with the 1982 loan since P.O. had renewed his original note so many times. P.O. had even continued to borrow money after the 1982 loan was satisfied. Nancy had neither borrowed additional money from Iuka, nor signed any of the notes which were given or renewed by her husband. She was not aware of her husband's previous dealings with Iuka even though she had worked at his real estate office for twenty years. However, the deed of trust on Lot 44 remained properly recorded in the chancery court's office even after the Beards paid the balance owed on the 1982 loan. Prior to foreclosure, Jourdan received a letter from Nancy requesting that the deed of trust on Lot 44 be released. Jourdan denied the request, ultimately purchasing Lot 44 on behalf of Iuka in the foreclosure sale for the sum of $3000. He estimated that the value of Lot 44 at foreclosure was approximately $3000. He said this value had not changed since P.O., offered it as security for his 1973 debt because of continued poor access to the property. He claimed that Iuka lost $10,189.98 in the foreclosure. Bruce Dillingham, a real estate appraiser for Fidelity Federal, appraised Lot 44 at a 1990 value of $10,500.