Clayton Hinton v. Nate Rolison

175 So. 3d 1281, 2015 Miss. LEXIS 519, 2015 WL 5998716
Mississippi Supreme Court·Decided October 15, 2015·No. 2013-CA-02153-SCT·Published·Cited by 3 cases

Opinions

RANDOLPH, Presiding Justice,

for the Court:

¶ 1. The question before us today is whether a quitclaim deed acts to assign [1283]*1283and transfer a grantor’s rights and interests retained in a deed of trust even when that grantor no longer holds title to the property. We hold that it does, and so we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2. In 2004, Clayton Hinton purchased a tract of real property to use as a used-car lot. He financed its acquisition with funds provided by Wells Fargo. Wells Fargo required a Deed of Trust as security for repayment of the contemporaneous promissory note Hinton executed. Page five (5) of the Deed of Trust (Rights and Remedies on Default — Foreclosure) provided that, in the event of foreclosure, any surplus was to be paid to the Grantor or his assigns. In 2007, Hinton conveyed his interests in the property to CZ Inc., a Mississippi corporation, subject to the debt secured by the Deed of Trust. In 2008, CZ Mississippi conveyed its interests in the property to CZ Florida. In 2009, CZ Florida conveyed its interests in the property to Hinton’s children, Nathan Hinton and Seneca Eubanks. All transfers were subject to the aforementioned debt instrument. In May 2012, the loan matured and became immediately payable in full.

¶ 3. In May 2013, Clayton Hinton and Nate Rolison executed a global Settlement Agreement which included Rolison agreeing to pay off the past-due Note and to obtain clear title by judicial foreclosure. On June 7, 2013, CZ Florida and Hinton’s two children conveyed “all of their rights, title, and interest” by quitclaim deed to Rolison.1 Wells Fargo instituted foreclosure proceedings, which resulted in a foreclosure sale on June 28, 2013. Rolison was the highest bidder, bidding $147,000 in excess of the amount owed on the Note and Deed of Trust. Hinton demanded the surplus as the grantor pursuant to the deed of trust. Rolison also demanded the surplus, claiming his quitclaim deed from Hinton’s successors in interest entitled Rolison to the surplus as Hinton’s assign under the deed of trust.

¶ 4. Wells Fargo filed a Complaint in Interpleader in the Lamar County Chancery Court, asking the court to determine who was entitled to the surplus. In answering the complaint, Hinton agreed that he was not the record title holder, having conveyed the property to his children, and that his children had executed a quitclaim deed to Rolison. Hinton claimed the deeds failed to act as assignments of his rights under the Deed of Trust. Rolison filed a motion for judgment on the pleadings, arguing that Hinton’s admission that he was not the title holder and admitting the deeds in Rolison’s chain of title entitled Rolison to the surplus.

¶ 5. Based on Hinton’s admission, the chancellor found as a matter of law that the quitclaim deed to Rolison, coupled with the prior conveyances, acted as an assignment to Rolison of all of Hinton’s rights and interests under the Deed of Trust. The chancellor granted Rolison’s motion for judgment on the pleadings. Hinton filed a motion to amend his pleadings. The chancellor denied that motion and Hinton appealed.

ANALYSIS

¶ 6. On appeal, Hinton raises two issues. The first is whether — as a matter of law— the quitclaim deed acted as an assignment of his right to receive the surplus under the terms of the deed of trust; and the [1284]*1284second is whether the chancellor erred in not allowing him to amend his answer.

¶ 7. A motion for judgment on the pleadings under Mississippi Rule of Civil Procedure 12(c), which we review de novo, is similar to a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6). See Hartford Cas. Ins Co. v. Halliburton Co., 826 So.2d 1206, 1210 (Miss.2001); R.J. Reynolds Tobacco Co. v. King, 921 So.2d 268, 271 (Miss.2005). Under that rule, it must appear “beyond any reasonable doubt that the non-moving party will be unable to prove any set .of facts” that would entitle “the non-movant to relief.” Id.

A; The quitclaim deed and prior conveyances divested Hinton of his rights and interests in the property, assigning and transferring those rights and interests to Rolison.

¶ 8. To whom the surplus is owed depends upon our interpretation of both the Deed of Trust and Section 89-1-43 of the Mississippi Code.2

¶ 9. Page one (1) of the Deed of Trust provides that “Grantor conveys to Trustee for the benefit of Lender as Beneficiary all of Grantor’s, right, title, and interest in and to the following described real property.” However, Hinton retained certain interests pursuant to the Deed of Trust. “Until the occurrence of an Event of Default,3 Grant- or may (1) remain in possession and control of the Property; (2) use, , operate or manage the Property; and (3) collect the Rents from the Property.” Page five (5) of the Deed of Trust (Rights and Remedies on Default — Foreclosure) provides that, in the event of foreclosure, any surplus was to be paid to the Grantor or his representatives, agents, or assigns. Page six (6) of the Deed of Trust provides that it would be “binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested in a person other than Grantor, Lender ... may deal with Grant- or’s successors ... without releasing Grantor from the obligations of this Deed of Trust or liability under the indebtedness.”

¶ 10. The Deed of Trust effectuated a present conveyance of all of Hinton’s “right, title, and interest,” except for those interests explicitly retained, and anticipated that Hinton could convey those interests to another while remaining liable for the debt obligation. Section 89-1-43 provides that, prior to a sale under a deed of trust, the grantor “shall be deemed the owner of the legal title” except as against the trustee after breach of the condition of the deed of trust. Black’s Law Dictionary defines ‘deehi’ as “[t]o treat (something) as if (1) it were really something else, or (2) it has qualities that it does not have.” Deem, Black’s Law Dictionary (10th [1285]*1285ed.2014). Accordingly, legal title passed to the trustee pursuant to the deed of trust as soon as it was executed. The statute merely provides that Hinton, as the grant- or, was to be treated as (deemed) the legal owner except as against the trustee after breach of the Deed of Trust. See Elder v. Jones, 106 Miss. 489, 64 So. 212, 213 (1914) (“Upon the maturity of a debt and a failure to pay, the legal title became absolute in the mortgagee”).

¶ 11. The loan matured and became due in full in 2012.' When payment was not .forthcoming, and Hinton defaulted in paying the Note, Hinton breached the Deed of Trust. Therefore, he was no longer deemed the legal owner under the statute. The trustee had legal title for the purpose of selling the property in order to secure the outstanding debt, not to forever hold the property as absolute owner. The record title owner (in this case, Rolison), as an assignee of the assigns of the mortgagor, retained interests in the property, such as the right to equitable redemption and the right to surplus from a foreclosure sale. See K.F. Boackle, Mississippi Real Estate Foreclosure Law with Forms § 4:16 (2d ed.2014) (Surplus from a foreclosure sale normally would go to “the mortgagor unless he has assigned the equity of redemption, such as by conveyance of the property.”).

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Clayton Hinton v. Nate Rolison, 175 So. 3d 1281, 2015 Miss. LEXIS 519, 2015 WL 5998716 (Mich. 2015).

175 So. 3d 1281 (Clayton Hinton v. Nate Rolison) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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