Opinion ID: 1109835
Heading Depth: 1
Heading Rank: 1

Heading: was the holder of the second deed of trust entitled to satisfy its junior lien out of the surplus arising from the sale under the first deed of trust?

Text: Mr. and Mrs. Baker executed a second deed of trust on the 4th day of October, 1968, which secured an indebtedness to Builders Supply Company. The chancellor held that the balance due on March 16, 1977, on the Builders Supply debt was $10,319.22, which was itemized as follows: Principal $5,500.00 Interest 3,473.25 Attorney's Fees (15%) 1,345.98 __________ Total ..................... $10,319.23 The chancellor held that the foreclosure of the Pine Belt's senior deed of trust terminated the lien created by Builders Supply second deed of trust, and that Builders Supply was not entitled to satisfy its lien out of the surplus arising from the foreclosure of the senior deed of trust. This holding by the chancellor was erroneous because we stated in O'Reilly v. Hendricks, 10 Miss. 388, 2 S&M (1844), the following: As a general rule a junior lien entitles the holder to the residue of the encumbered property, after an older lien has been satisfied. In equity the junior claimant would be entitled to the surplus of money arising from a sale under the older lien. (10 Miss. at 400). In Great Southern Land Co. v. Valley Securities Co., 162 Miss. 120, 137 So. 510 (1931), we stated: The general rule is that, where a surplus remains after satisfying a senior mortgage, it should be applied on the junior mortgage. O'Reilly v. Hendricks, 2 Smedes & M. 388. (162 Miss. at 136, 137 So. at 514). We have not departed from the rule announced in O'Reilly v. Hendricks, supra, that the surplus arising from a sale under a senior lien should be applied on a junior lien. We therefore reverse the chancellor on this issue. On remand, the trial court shall allow Builders Supply, from the surplus, the sum of $10,319.23 which was due it on March 16, 1977, plus interest at the rate of 7 1/2% from March 16, 1977, until paid on the principal of $5,500 and attorney's fees of 15% on the additional interest as provided in the note.