McMurphy v. Three Rivers Planning & Dev. Dist., Inc.


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Docket Number: 2005-CA-02106-COA
Linked Case(s): 2005-CA-02106-COA ; 2005-CT-02106-SCT

Court of Appeals: Opinion Link
Opinion Date: 03-20-2007
Opinion Author: ROBERTS, J.,
Holding: Affirmed

Additional Case Information: Topic: Contract - Assignment of shares of stock - Value of shares
Judge(s) Concurring: MYERS, P.J., CHANDLER AND GRIFFIS, JJ.
Non Participating Judge(s): BARNES AND CARLTON, JJ.
Dissenting Author : LEE, P.J.,dissents with separate opinion
Dissent Joined By : KING, C.J., IRVING AND ISHEE, JJ.
Procedural History: Bench Trial
Nature of the Case: CIVIL - CONTRACT

Trial Court: Date of Trial Judgment: 10-18-2005
Appealed from: PONTOTOC COUNTY CHANCERY COURT
Judge: Jaqueline Mask
Disposition: CHANCELLOR ENTERED JUDGMENT FINDING MCMURPHY ASSIGNED CERTAIN NUMBER OF SHARES OF STOCK.
Case Number: 2004-0302-58-M

  Party Name: Attorney Name:  
Appellant: JUNE H. MCMURPHY




JOHN S. HILL



 

Appellee: THREE RIVERS PLANNING AND DEVELOPMENT DISTRICT, INC. SIDRA PATTERSON WINTER, PHILLIP L. TUTOR  

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Topic: Contract - Assignment of shares of stock - Value of shares

Summary of the Facts: MM&K, Inc., a corporation, did not have sufficient collateral to finance the purchase of a retail business, so Three Rivers Planning and Development District, Inc., one of the two financing entities, demanded additional collateral from the principal owners. June McMurphy, the mother-in-law of Harley Boone, one of MM&K’s principal owners, intended to aid her son-in-law in his collateral obligation. McMurphy executed a document and assigned 1,552 shares of stock to Three Rivers as Boone’s portion of the additional collateral obligation. Eventually, MM&K defaulted on its obligation to Three Rivers. Three Rivers intended to liquidate McMurphy’s stock. Three Rivers interpreted the assignment as a pledge of the stock, including any appreciation in value that accrued subsequent to McMurphy’s pledge. However, McMurphy interpreted the assignment as a pledge of a specific value of the stock as of the date of the assignment. The chancery court agreed with Three Rivers’ interpretation of the assignment, and McMurphy appeals.

Summary of Opinion Analysis: McMurphy argues that she never intended to pledge more than $50,000. The assignment specifically stated that McMurphy “assign[ed] to Three Rivers . . . 1552 [sic] shares of Deposit Guaranty National Bank Stock . . . in the amount of Forty nine thousand six hundred and sixty four ($49,664.00) Dollars, as collateral for a loan to MM&K, Inc.” A fair reading of that language indicates that McMurphy assigned 1,552 shares of DGNB stock to Three Rivers. While the assignment specifies the value of the shares as of the execution of the assignment, no language within the assignment operates to limit the value of the assignment to the value as of that time. Additionally, the assignment states that “Three Rivers . . . is hereby authorized to use the proceeds of the above [the 1,552 shares of DGNB stock] to pay any note or notes representing the unpaid balance of the above loan or loans at maturity or thereafter, with interest and costs, if not otherwise paid.” This language indicates that Three Rivers may use the proceeds of the DGNB stock to off set any unpaid portion of the loan Three Rivers advanced to MM&K. Nothing in the agreement reads to limit of those proceeds at a $50,000 cap.


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