Jason Murphree v. Helen Cook
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IN THE COURT OF APPEALS
OF THE
STATE OF MISSISSIPPI
NO. 1999-CA-01854-COA
JASON MURPHREE
v.
HELEN COOK
APPELLANT
APPELLEE
DATE OF TRIAL COURT
JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANT:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
CERTIORARI FILED:
MANDATE ISSUED:
06/23/1997
HON. ANTHONY THOMAS FARESE
MARSHALL COUNTY CHANCERY COURT
B. SEAN AKINS
RICHARD JOSEPH BABB
CIVIL - REAL PROPERTY
APPELLANT DIVESTED OF TITLE TO LAND
REVERSED AND REMANDED - 07/31/2001
08/13/2001 - DENIED - REVERSED AND REMANDED 4/9/2002
4/22/2002; denied 7/25/2002
8/15/2002
ON MOTION FOR REHEARING
EN BANC.
McMILLIN, C.J., FOR THE COURT:
¶1. The motion for rehearing is denied. The original opinion of this Court is withdrawn and the following
opinion is substituted therefor.
¶2. This case comes before the Court as an appeal from a judgment in a real estate partition action filed in
the Chancery Court of Marshall County by the appellant, Jason Murphree. Murphree sought to partition by
sale a tract of commercial property, record title to which was vested in Murphree and Helen Cook as
tenants in common. The Bank of Holly Springs was an additional defendant, solely because it was a
necessary party as the holder of a deed of trust on the property securing a purchase money loan on the tract
made to Murphree and Cook.
¶3. The chancellor, rather than partiting the property as prayed for by Murphree, determined what the
chancellor felt to be the fair value of Murphree's half interest in the property through a rather complex
calculation, and ordered that Murphree convey his interest in the property to Cook upon receipt of the
payment of that sum. Murphree has appealed that decision, alleging that it exceeded the authority of the
chancellor under these circumstances.
¶4. Cook contended at the trial level that Murphree was not entitled to partition because he had
contractually agreed to convey his interest in the property to Cook a number of years earlier and had simply
failed to complete the formalities of the conveyance through a mutual oversight. However, apparently now
satisfied with the terms of the chancellor's judgment, Cook has not cross-appealed to advance that same
proposition before this Court. Rather, she seeks only to have the chancellor's judgment affirmed in its
present form.
¶5. This Court finds that the chancellor manifestly abused his discretion in attempting to fashion a unique
remedy to sever the cotenancy that he apparently found to be more equitable under the circumstances than
a partition but which ignored the statutes of this State defining the only lawful method available to
accomplish that purpose. We, therefore, conclude that the matter must be reversed and remanded for
further proceedings consistent with this opinion.
I.
Facts
¶6. Certain essential facts of this case are beyond dispute. In practically every remaining instance where no
concrete proof exists, the parties offer markedly contrasting versions of the facts.
¶7. These facts are not in dispute. Murphree and Cook borrowed $85,000 from the Bank of Holly Springs
on June 29, 1993, on a joint note and used the loan proceeds to purchase the assets of a business known
as Hoover Distributing. The purchase included the real property which is the subject of this suit and a
certain limited amount of equipment useful in the business operation. Title to the real property was conveyed
to Murphree and Cook as tenants in common. The real property had, prior to purchase, been used
exclusively in the operation of Hoover Distributing and continued to be used in the same manner after the
transaction was consummated. Murphree and Cook secured the repayment of the $85,000 loan by a deed
of trust on this real property. The parties did not enter into a formal written agreement as to their intentions
in purchasing the property, and, at trial, they gave sharply contrasting accounts of what their intentions were.
¶8. Cook testified that the parties had purchased these assets, including specifically the real estate, to
acquire the existing business of Hoover Distributing and operate it as a partnership under the trade name of
Cook Oil Company. However, Cook contended, after only a month of operation, the parties decided to
end their partnership and, as a result, entered into a dissolution agreement styled "Notice of Dissolution"
dated July 27, 1993, under the terms of which Cook assumed all partnership liabilities and was, in turn,
entitled to receive all partnership assets. No specifics were provided as to what constituted the assets of the
partnership. The agreement was entered into evidence as an exhibit and its authenticity is not in dispute.
According to Cook, the dissolution agreement's mention of the word "assets" was intended to specifically
include the real property. She said that it was a mere oversight that Murphree did not contemporaneously
execute a deed formally conveying his fractional interest in the property to her, but that by virtue of the
dissolution agreement, he remained obligated to do so without further consideration.
¶9. Murphree, on the other hand, disputes the fact that he and Cook ever entered into a partnership to
operate the business bought from Hoover Distributing. Rather, he contends that he intended only to
purchase a half interest in the real property as an investment and that he had done so primarily as an
accommodation to Cook since she did not have the necessary credit to arrange for the necessary financing
to purchase the property. According to Murphree, the plan had been that, at some time in the future when
Cook was on a firmer financial foundation, she would buy out Murphree's interest in the property at an
agreeable price that would give him a satisfactory return on his investment. He claims that the dissolution
agreement's true purpose was to dissolve certain business partnership interests then existing between him
and Cook's husband, Thomas Wayne Cook. He testified that Cook insisted on inserting the references to
possible partnerships with her in the agreement and that he did not object because he knew that such
partnerships did not exist so that any such references would be meaningless and, thus, harmless surplusage
in the agreement.
¶10. The parties do not dispute that Cook was in complete control of the property from shortly after the
date of purchase until January 30, 1997, when Murphree filed this partition action to sever their tenancy in
common. There is no dispute Cook used the property solely to advance the purposes of the business
bought from Hoover Distributing. It is also not disputed that Cook has maintained the property, made all
loan payments due to the Bank of Holly Springs, paid the taxes on the property, and made a number of
improvements to the property at her sole expense. Cook contends that this demonstrates conclusively that
the parties intended for her to have exclusive ownership of the property under the relevant provisions of the
dissolution agreement. Murphree, on the other hand, testified that, since Cook had exclusive possession of
the property, he would have been entitled to rent on his half interest and that he considered Cook's
payments for taxes, maintenance, and improvements as having been made in lieu of rent.
II.
The Chancellor's Decision
¶11. The chancellor found as a matter of fact that the parties had intended to and did, in fact, enter into a
partnership to operate the business acquired from Hoover Distributing under the trade name of Cook Oil
Company, but that the partnership had been dissolved by mutual agreement on July 27, 1993, as evidenced
by the dissolution agreement. However, the chancellor found as fact that the term "assets of said
businesses" as used in the agreement was not intended to cover the real property held by the parties as
tenants in common. Therefore, he found that Murphree had continued to own an undivided one-half interest
in the property during the entire period of Cook's sole occupancy.
¶12. The chancellor then found that Murphree and Cook were jointly liable for the various debts and
obligations related to the property during their period of equal ownership and he calculated those obligations
to be $103,805. Because Cook had paid all of these debts, the chancellor awarded her a judgment against
her cotenant Murphree for one-half those amounts, or $51,902.
¶13. At that point, the chancellor proceeded to value Murphree's one-half interest in the property and set
that value at $42,500. This valuation was based on nothing more than the fact that it represented one-half
the original loan amount used to purchase the land and other assets. The chancellor ordered that
Murphree's title to his one-half interest be divested out of Murphree and into Cook, in exchange for which
Murphree would receive a credit of $42,500 on the judgment previously awarded, leaving a balance on that
judgment of $9,402.
¶14. Lastly, the chancellor determined that Murphree was entitled to additional credit equal to one-half of a
fair rental for the property during the period of Cook's exclusive occupancy and ordered that the parties
attempt to negotiate an agreed rent. He further ordered that, if they were unable to do so within the allotted
time, he would consider the matter further and adjudicate a proper credit for rent.
¶15. As it turned out, the parties were unable to agree on a rental figure and returned to court to have the
matter resolved by the chancellor. By that time, Hon. Anthony Farese, the original chancellor sitting on the
case, had left the bench. The matter was taken up by Hon. Glenn Alderson, another chancellor in the
district. Chancellor Alderson declined any attempt to have him reconsider matters already adjudicated by
Chancellor Farese and limited himself solely to a determination of a fair rent for the period in question under
the terms of Chancellor Farese's earlier ruling. After an evidentiary inquiry, he determined the fair rental
value to be $19,200 for the affected period and, therefore, awarded Murphree a credit of $9,600 based on
his one-half interest in the property. Crediting this $9,600 against the original judgment (as said judgment
had already been reduced by Chancellor Farese's adjudicated credits for expenses and costs) resulted in a
net credit in favor of Murphree of $198.
¶16. Thus, from the state of the record now before us, it would appear that the ultimate outcome of the
case was that, upon receipt by Murphree of the sum of $198 from Cook, Murphree would be divested of
his one-half interest in the subject property and Cook would become the sole owner, subject only to the
deed of trust lien held by the Bank of Holly Springs.
¶17. Murphree, dissatisfied with this relief, has appealed. He presents three issues for consideration. Two
of the issues relate to the nature of the relief granted by the chancellor and the third alleges reversible error
in the chancellor's refusal to recuse himself after the Marshall County Chancery Clerk testified as an expert
witness on rent values at the hearing to determine fair rental value for the property.
III.
Preliminary Discussion
¶18. At trial, there was a disputed issue of fact as to whether the real property constituted an asset of the
partnership or whether title remained in the two grantees as tenants in common. Cook maintained that the
property was an asset of the partnership since it was purchased with partnership funds and its purpose was
clearly intended to advance the interests of the anticipated partnership. Because this real estate was a
partnership asset, according to Cook's position at trial, the dissolution agreement granting Cook all of the
assets created a contractual obligation on the part of Murphree to formally convey his interest in the land to
Cook. According to Cook's contention, the failure to obtain a deed at the time the dissolution agreement
was entered was a mere oversight that did nothing to alter Murphree's obligation to execute such a deed
when duly called upon to do so. Of course, the result of Cook's prevailing on this issue would have been
that Cook would have been entitled to compel Murphree to convey his interest without further
consideration and the various issues regarding expenses related to the property during the intervening period
would have been rendered moot since equity considers as done what ought to have been done and the
transfer would have been given effect back to the 1993 dissolution date. Faulkner v. Faulkner, 192 Miss.
358, 365, 5 So. 2d 421, 422 (1942).
¶19. The question of whether a particular piece of real property is a partnership asset is generally a question
of fact that is not necessarily determined by the record title, but rather hinges principally upon the intent of
the parties. Crowe v. Smith, 603 So. 2d 301, 305-06 (Miss. 1992). The chancellor concluded that (a) the
failure of the dissolution agreement to specifically mention the real property, (b) the fact that there was not a
formal instrument of conveyance contemporaneous with the execution of the dissolution agreement, and (c)
the fact that record title was held by the individual partners as tenants in common without any reference in
the deed to a partnership were enough in combination to overcome any contrary indication of intent arising
from the fact that the property was purchased with partnership funds. See Miss. Code Ann. § 79-12-15
(Rev. 1996). Because Cook did not file a cross appeal asserting before this Court the same argument made
to the chancellor, we conclude that it would be improper to search for error in the chancellor's ruling on this
score no matter what merit it might appear to have on its face. We, therefore, proceed in our deliberations
on the basis that the property, for the entire period in question, was held by the parties as tenants in
common without any formal agreement or understanding as to the use and occupancy of the property
beyond those arising under the laws of Mississippi pertaining to jointly-owned property.
IV.
Issue One: Severance of a Tenancy in Common by Means Other Than Partition
¶20. Murphree brought suit seeking to partite the property under authority of Section 11-21-3 of the
Mississippi Code of 1972. Rather than granting the relief requested, the chancellor ordered Murphree
divested of his interest in the property at a price calculated upon such factors as the original cost, the
subsequent expenses of maintaining and operating the property, and a fair rental factor based on the fact
that one tenant was out of possession during the entire period of joint ownership.
¶21. The Mississippi Supreme Court has said that the right of partition created by statute is an absolute right
of a tenant in common. Cheeks v. Herrington, 523 So. 2d 1033, 1035 (Miss. 1988). Cook suggests that
the chancellor's authority to divest Murphree of his title at a price set by the chancellor can be found in
Section 11-5-117 of the Mississippi Code, which provides, in part, that "the Chancellor . . . is authorized in
all matters providing for a sale . . . of real property, including . . . partition . . . to order or decree the sale . .
. under such terms and conditions as the Chancellor may impose . . . ." We find no reported cases decided
by the Mississippi Supreme Court suggesting that this statute would permit the chancellor to override one
co-tenant's assertion of his "absolute" right mentioned in Cheeks v. Herrington to have his interest in the
property set apart to him according to procedures provided in the partition statutes. It may well be that the
invocation of this more general statute would be appropriate when the parties themselves have agreed to a
process for partition different from that outlined in the partition statutes. There may be other circumstances
where this statute might have some application. Nevertheless, we think that, in every case that the
chancellor proposes to subvert the detailed statutory procedures for a partition in favor of some ad hoc
means of sale, especially when it is undertaken over the strenuous objection of one of the co-tenants, that
decision would be subject to being set aside on appeal on an abuse of discretion standard. See McNeil v.
Hester, 753 So. 2d 1057, 1063 (¶21) (Miss. 2000). In this case, the chancellor set the price to divest
Murphree of his interest as the original purchase price of the property. The purchase had occurred some
three and one-half years prior to the commencement of the partition action and there was no evidence that
this figure accurately reflected the market value of the property at the relevant time. We conclude that this
means of valuing the co-tenants' respective interests in the property was entirely arbitrary and, thus, an
abuse of discretion.
¶22. Because, under Cheeks v. Herrington, Murphree's right to have his interest in the property set apart
to him by a partition conducted according to the applicable statutes would seem to be preferred over some
alternate plan devised by the chancellor, we find it necessary to reverse that portion of the chancellor's
judgment ordering Murphree to be divested of his fractional title by a procedure of the chancellor's own
making. We remand for further proceedings to sever this tenancy that will be in accord with the statutes
setting out the proper means of doing so, there appearing in the record no justification for ignoring those
procedures, apparently favored by the Mississippi Supreme Court, and proceeding by a private sale
strenuously opposed by one of the cotenants.
¶23. In anticipation of such a proceeding, we conclude that additional matters raised by Murphree in this
appeal ought to be addressed so that the dispute may be finally resolved on remand.
V.
Accounting for Improvements and Expenses of Maintaining the Property
¶24. Although we are remanding for a statutory partition, the issue of accounting between these two
cotenants will remain an issue since the chancellor has the statutory authority, as a part of dissolving the
cotenancy, to "adjust the equities between and determine all claims of the several cotenants . . . ." Miss.
Code Ann. § 11-21-9 (Supp. 2000). This provision has been held to permit adjustments to account for
such matters as rent, improvements to the property, payment of taxes, and other related expenses. Bennett
v. Bennett, 84 Miss. 493, 36 So. 452, 453 (1904); Walker v. Walker, 84 Miss. 392, 36 So. 450, 451
(1904); Reed v. Hinson, 158 Miss. 224, 130 So. 108, 109 (1930). Because these issues remain
unchanged no matter the procedure for severing the cotenancy, a substantial judicial economy could be
realized if the portion of the judgment adjudicating those matters could be affirmed. We will consider them
in that light.
¶25. Murphree complains that, in assessing the extent of his interest in the property, the chancellor deducted
for various costs of operating, maintaining and improving the property that were paid solely by Cook during
her occupancy. He cites Delta Cotton Oil Co. v. Lovelace, which announced the general rule that a tenant
in possession not called upon by his cotenants to pay for his use of the property has a duty to maintain the
property at his own expense in substantially the condition it was when he went into occupancy. Delta
Cotton Oil Co. v. Lovelace, 189 Miss. 113, 196 So. 644, 646 (1940).
¶26. Because the chancellor in this case elected to assess Cook with one-half the rent value of the property
for her occupancy of Murphree's undivided one-half interest in the property, we find that the general rule
announced in the Delta Cotton Oil Co. case has no application. By assessing rent against Cook for the
term of her occupancy, the chancellor has, in effect, "called on" Cook to pay for her exclusive use of the
property. Delta Cotton Oil Co., 196 So. at 646. Murphree may not receive the full rent value of his half
interest in the property while, at the same time, forcing Cook to pay the normal expenses of operating and
maintaining the property, which, in this case, include such matters as repairs, improvements, taxes, and
mortgage payments.
¶27. We have found nothing in the appellant's brief that would cause us to find reversible error in the
manner in which the chancellor computed either the fair rental value properly chargeable to Cook because
of her prolonged exclusive occupancy of the property or those costs and expenses advanced solely by
Cook which, in adjusting the equities upon dissolution of the cotenancy, ought fairly to be chargeable to
both cotenants in proportion to their percentages of ownership. Therefore, if on remand the property is
subjected to a partition by sale, then the one-half of the sale proceeds apportioned to Murphree, whatever
the price might ultimately prove to be, would be increased by the sum of $198, that being the net result in
Murphree's favor from the various adjustments we have considered and found appropriate. The amount
otherwise due Cook for her one-half interest in the property would be diminished by a like amount.
¶28. If, rather than a partition by sale, the chancellor should undertake a partition in kind, then the portion
set apart to Cook may be subjected to a charge in the nature of owelty to secure the payment of the $198.
Miss. Code Ann. § 11-21-33 (1972).
¶29. We do not find reversible error in the chancellor's refusal to recuse himself based on the fact that the
chancery clerk of the county testified as an expert on prevailing rental values in the area. There was no
evidence of any particular close connection between the chancellor, who resided in another county, and the
clerk. The chancellor specifically indicated that he could hear the testimony and give it no greater weight
than he would any other evidence. Such matters are entrusted to the sound discretion of the chancellor,
involving as they must, largely subjective considerations and are reviewed under the manifest error standard.
Walls v. Spell, 722 So. 2d 566, 571 (Miss. 1998). We find nothing in this record to convince us that the
chancellor was manifestly wrong in making his determination not to recuse himself.
¶30. THE JUDGMENT OF THE CHANCERY COURT OF MARSHALL COUNTY IS
REVERSED AND REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH
THIS OPINION. COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLEE.
KING AND SOUTHWICK, P.JJ., BRIDGES, THOMAS, LEE, IRVING, MYERS, AND
CHANDLER, JJ., CONCUR. BRANTLEY, J., NOT PARTICIPATING.
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