Dennis Nichols v. Fred M. Bush, Jr.
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2003-CA-00816-COA
DENNIS NICHOLS
APPELLANT/CROSS-APPELLEE
v.
FRED M. BUSH, JR., JAMES G. YOUNG,
JULIA YOUNG, CHRISTOPHER A.
LODEN AND JOY Y. LODEN
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEYS FOR APPELLANT:
ATTORNEYS FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
IRVING, J., FOR THE COURT:
APPELLEES/CROSS-APPELLANTS
8/14/2002
HON. JOHN C. ROSS, JR.
ITAWAMBA COUNTY CHANCERY
COURT
TOMMY DEXTER CADLE
KENNETH EUGENE FLOYD
RICHARD SHANE MCLAUGHLIN
J. MAX EDWARDS
CIVIL-REAL PROPERTY
FORECLOSURE SALE SET ASIDE AND
AMOUNTS FOR BRINGING NOTE
CURRENT DETERMINED BY THE COURT
REVERSED AND RENDERED ON DIRECT
APPEAL AND THE FORECLOSURE SALE
IS REINSTATED ON CROSS APPEAL:
04/19/2005
¶1.
A foreclosure sale was conducted on October 11, 2001, on property that was secured by a note
and deed of trust executed by Dennis and Teresa Nichols. Nichols later filed suit, and the chancellor set
aside the foreclosure sale. After setting the foreclosure sale aside, the chancellor determined that the
amount necessary to bring the note and deed of trust current was $64,466.47, and the amount necessary
to satisfy the debt was $81,440.15. Nichols appeals, contending that the chancellor erred in his
determination of the amount necessary to bring the note current and satisfy the note. The appellees crossappeal, arguing that the chancellor erred in setting aside the foreclosure sale.
¶2.
We find that the chancellor was in error in setting aside the foreclosure sale and reverse and render
that decision.
FACTS
¶3.
Dennis Nichols and his wife, Donna Nichols, executed a land deed of trust and promissory note
on October 31, 1994, in the amount of $70,000 securing real property located in Itawamaba County,
Mississippi. James G. Young was the original secured party and later he substituted Fred M. Bush, Jr.,
as trustee, as authorized by the deed of trust and note. The original note called for an annual payment of
$7,000 for ten years plus interest.
¶4.
Nichols defaulted under the deed of trust on numerous occasions, resulting in the substitute trustee
initiating foreclosure proceedings. In 1996, Nichols prevented the foreclosure sale by verbally agreeing
to a monthly amortization schedule on the property. At the time, he had not paid the first two payments
under the note and could not come up with the money to pay off the foreclosure. Nichols agreed to bring
the note current with interest and to begin making monthly payments.
¶5.
Nichols defaulted on the note several times after agreeing to make monthly payments, and separate
foreclosure sales were scheduled for February 10, 2000, July 20, 2000, September 14, 2000, and May
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3, 2001. On each occasion that a foreclosure was scheduled during 2000, Nichols avoided foreclosure
by contacting Young’s attorneys and making payment in the amount necessary to bring the note current.
However, prior to the foreclosure sale scheduled for May 2001, Nichols filed for Chapter 13 bankruptcy
on the morning of the foreclosure sale.
¶6.
Because of the automatic stay pursuant to the bankruptcy filing, the foreclosure sale was suspended
for May 3, 2001. Young then filed a motion to lift the automatic stay in the bankruptcy court, seeking court
approval to go forward with the foreclosure sale. At the hearing held in the bankruptcy court on June 12,
2001, the bankruptcy court ordered Nichols to make “regular monthly payments directly to [Young] in the
amount of $1,025.52 under the subject Land Deed of Trust beginning July 1. 2001.” The bankruptcy court
also ordered Nichols to provide proof of payment of property taxed for 2000, and proof of insurance
coverage.
¶7.
Nichols failed to make payments as required by the bankruptcy court, and the bankruptcy court
entered an order lifting the automatic stay and authorizing the foreclosure sale to go forward. Because
Nichols also failed to insure the property as required and failed to appear for any creditors’ meetings, the
bankruptcy trustee sought to have the bankruptcy proceedings dismissed. The bankruptcy was later
voluntarily dismissed. It was after these events that the substitute trustee again published full notice of the
foreclosure sale to be held on October 11, 2001. It is this foreclosure sale which is the subject of this
appeal.
¶8.
On the day prior to the foreclosure sale, October 10, 2001, Nichols’ attorney contacted Young’s
attorney and requested the payoff figures for the arrearage on the note and the underlying balance.
According to Nichols’ attorney, he was told that the amount necessary to bring the note current was
$29,000 plus and the amount necessary to satisfy the note and deed of trust was $60,000. There are
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conflicting affidavits from the attorneys as to whether Nichols’ attorney also requested a breakdown of the
numbers due to “glaring defects.” According to Nichols’ attorney, he never received the requested
accounting. Young’s attorney contends that there was nothing else to explain or provide the other attorney
and that there was no request for an accounting.
¶9.
The foreclosure sale was held at the Itawamba County Courthouse on October 11, 2001, at eleven
o’clock a.m. The sale was conducted by Scott Ellzey, one of Young’s attorneys, as agent for the substitute
trustee, Fred M. Bush, Jr. Sam Brown was present at the sale and stated to Ellzey that he was participating
in the sale for Nichols.
¶10.
The trial court in its judgment found that Brown “was bidding on behalf of Dennis Nichols,” and
Nichols in his complaint stated that “a bid was submitted on [his] behalf” at the foreclosure. Brown later
denied that he was participating in the sale as an agent of Nichols.
¶11.
At the foreclosure sale, Brown made progressive bids on the property up to $83,000, but was
unsuccessful in securing the highest bid as Young’s agent eventually submitted the highest bid of $83,500.
A substitute trustee’s deed for the property was obtained by Young and recorded in the land records of
Itawamba County. Young subsequently conveyed the property via warranty deed to himself and
Christopher and Joy Loden.
¶12.
Nichols then refused to vacate the property after the foreclosure sale, requiring Young and the
Lodens to file an unlawful entry and detainer action in justice court. The justice court directed Nichols to
vacate the property within five days and to pay damages of $250. Nichols’ appeal from justice court was
later consolidated with the present litigation.
¶13.
Because the trial court found that the foreclosure should be set aside but without specifically stating
why, the evidence presented at the trial court was limited to the amount necessary to satisfy the note and
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extinguish the deed of trust on the date of the foreclosure. The court found that the amount necessary for
Nichols to bring the note current as of July 1, 2002, was $64,466.67 and the amount necessary to satisfy
the note and release the deed of trust was $81,440.15. Young’s attorney agreed that the amount of the
arrearage on the note was $64,466.67, but argued that the total amount necessary to pay the note and
satisfy the deed of trust was $99,031.72. Nichols takes the position that the amount necessary to bring
the note and deed of trust current was $13,286.10, and the amount necessary to satisfy the note and deed
of trust was $45,679.04. The differences are in the amount of attorney’s fees and publication costs which
are assessed to the Nichols.
¶14.
Nichols filed his complaint to contest the foreclosure on November 19, 2001. The order of the
chancellor was entered on August 23, 2002. The notice of appeal was filed on February 6, 2003, from
the denial of the motion to reconsider rendered on January 9, 2003.
DISCUSSION
¶15.
Nichols argues that the note was not in default at the time of the foreclosure sale. He contends that
the foreclosure could only have been conducted after October 21, which was the original annual payment
date. To reach this conclusion, the Court would have to ignore both the facts of this case and the case law.
¶16.
As a result of an agreement, the payment schedule was made monthly, rather than annually as in
the original note. The bankruptcy court ordered monthly payments as part of the bankruptcy plan and lifted
the stay when Nichols failed to make the monthly payments. As a result of this change in position, the seller
had reason to believe that monthly payments would be forthcoming, although Nichols refused to sign a new
note. Nichols’ contention that the note was current at the time of the foreclosure sale is directly
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contradicted by his actions in seeking the payoff information and in having a representative present at the
foreclosure sale.
¶17.
At no time prior to the foreclosure sale can we find that the argument — that the note was current
or the sale premature — was presented by Nichols either to Young, his attorney, the trustee or the party
conducting the foreclosure sale or to the chancery court in order to halt the sale. Nichols admits that he
sought to find out the amount to bring the account current, although he disputes the amount he was told.
Nichols also freely states that his representative was present at the foreclosure sale and bidding for the
property. Regardless of the nature of the legal relationship of this person to Nichols, neither he nor Nichols
ever raised any objection to the foreclosure sale prior to, during, or immediately after the sale. It is difficult
or impossible to see why Nichols would then be entitled to relief from the chancery court under these
circumstances.
¶18.
Under our review, we must determine whether the chancery court committed error or abused its
discretion. Gillespie v. Gillespie, 594 So. 2d 620, 622 (Miss. 1992). We will reverse a chancellor’s
findings only if the actions were manifestly wrong, clearly erroneous, or the chancellor applied an erroneous
legal standard. Johnson v. Johnson, 650 So. 2d 1281, 1285 (Miss. 1994). In this case, we conclude
that the chancellor was in error.
¶19.
In Chambers v. BankcorpSouth, 822 So. 2d 1113, 1115 (¶9) (Miss. Ct. App. 2002), this Court
stated that the failure to object when given notice, or remaining silent during the foreclosure sale, estopps
a party from subsequently challenging the title of the purchaser. Under that case, “it has been established
that a mortgagor who has actual notice of a foreclosure sale and fails to object to the sale is estopped from
subsequently challenging the title of the purchaser.” Id. at (¶9), citing Kelso v. Robinson, 172 Miss. 828,
161 So. 135 (1935).
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¶20.
In Kelso, the court stated:
Estoppel may arise from misleading silence or passive conduct joined witha duty to speak.
The doctrine lies at the foundation of morals: it is based on equity and good conscience.
Under its application fraud is suppressed; honest and fair dealing is promoted. One of the
merits of equitable estoppel is that it reaches the ends of justice by a direct route, and one
of the established rules of the doctrine is that, if a person knowingly suffers another to
expend money on land under an erroneous opinion of title, although he does it passively
by looking on without making known his claim, he shall not afterwards be permitted to
enforce his legal right against such other.
Id. at 137.
¶21.
In Hamilton v. Federal Land Bank, 184 Miss. 878, 878, 186 So. 832, 833 (1939), the court
stated that”the general rule is that any person who is present and fails to object to the manner in which the
sale is made cannot subsequently have the sale set aside on the ground that it should have been conducted
in a different manner.” See also Baker v. Connecticut General Life Ins. Co., 196 Miss. 701, 18 So. 2d
438, 440 (1944).
¶22.
There is no question that Nichols was fully aware that the foreclosure sale was to take place.
Notice is not an issue. It is also clear that he had the opportunity to make objection to the sale, both as to
the timing and manner and to the proposed payoff of the debt. Although Nichols states that he, through
his attorney, asked for an accounting, no specific objection appears to have been made. Nichols admits
that he had a representative present at the foreclosure sale and bidding. Under case law, by his silence,
Nichols waived any irregularity in the sale and is estopped from seeking to have the foreclosure set aside.
The judgment setting aside the foreclosure sale is reversed and rendered. The remaining issues raised will
not be addressed by this Court.
¶23. THE JUDGMENT OF THE CHANCERY COURT OF ITAWAMBA COUNTY IS
REVERSED AND RENDERED ON DIRECT APPEAL AND THE FORECLOSURE SALE
IS REINSTATED ON CROSS-APPEAL. ALL COSTS OF THIS APPEAL ARE ASSESSED
TO THE APPELLANT.
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KING, C.J., BRIDGES AND LEE, P.JJ., MYERS, CHANDLER, AND ISHEE, JJ.,
CONCUR. GRIFFIS, AND BARNES, JJ. NOT PARTICIPATING.
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