Davis v. Guaranty Bank and Trust Co.
| Docket Number: | 2009-CA-01827-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 03-29-2011 Opinion Author: Griffis, P.J. Holding: Reversed and remanded. |
|
| Additional Case Information: |
Topic: Contract - Equitable lien - Bona fide purchaser - Section 63-21-43 - Security interest - Joinder - M.R.C.P. 19(a) - Contempt Judge(s) Concurring: Lee, C.J., Irving, P.J., Myers, Barnes, Ishee, Roberts, Carlton and Maxwell, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
|
| Trial Court: |
Date of Trial Judgment: 10-13-2009 Appealed from: Bolivar County Chancery Court Judge: William Willard Disposition: Entered Judgment in Favor of Guaranty Bank and Equitable Lien Imposed Case Number: 2009-0254 |
|
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | James Davis |
CHAKA DENISE SMITH |
|
|
| Appellee: | Guaranty Bank and Trust Company | ARNULFO URSUA LUCIANO | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
|
| Topic: | Contract - Equitable lien - Bona fide purchaser - Section 63-21-43 - Security interest - Joinder - M.R.C.P. 19(a) - Contempt |
| Summary of the Facts: | James Davis procured a loan from Guaranty Bank and Trust Companyin the amount of $5,010 to purchase a truck. Davis agreed to repay the principal, with interest, for a total amount of $5,341.31, which was due in one lump sum on February 1, 2009. In exchange for the loan, Davis granted the Bank a security interest in or lien on the truck. A certificate of title for the truck was issued, which listed Davis as the owner and the Bank as the first lienholder. Davis was unable to repay the Bank by the agreed date. The Bank agreed to refinance Davis’s loan. A new promissory note was executed on January 9, 2009. Under the terms of the new promissory note, Davis agreed to pay the Bank the sum of $6,089.52 on or before March 9, 2009. The Bank retained its security interest in the truck. Davis defaulted. Davis asked an officer of the Bank to release the Bank’s security interest and provide him with a clean certificate of title for the truck. Davis told the officer that this would allow him to sell the truck. Davis committed to then return to the Bank with the proceeds of the sale and pay off his debt to the Bank. The Bank officer agreed to Davis’s proposal. The Bank released its lien, and a new certificate of title for the truck was issued. The new certificate of title listed Davis as the owner, and no lienholder was listed. Davis claims that he sold the truck for $900. Davis did not tender the sales proceeds to the Bank. The Bank filed a complaint against Davis. The Bank asked for a monetary judgment against Davis. The Bank also asked the chancery court to reinstate its previously held security interest in the truck and to prevent Davis from disposing of the truck until a hearing was held. The chancellor found that Davis was in breach of both the first and second promissory notes and entered a judgment for the Bank in the amount of $17,885.99. In addition, the chancellor granted the Bank an equitable lien in the truck. The chancellor also ordered Davis to return the truck and its certificate of title to the Bank by October 19, 2009. Davis did not comply, and the Bank filed a motion to compel and for an order of contempt. The chancellor imposed a new deadline of October 31, 2009, for the return of the truck. After Davis again failed to return the truck by the deadline, the chancellor entered an order granting the motion to compel and an order of contempt. Davis was incarcerated. Davis’s attorney filed a motion to set aside the order of contempt. The Bank filed a response to the motion and attached the bill of sale and the assignment of title. Davis’s attorney filed a notice of appeal which indicated that Davis had appealed both the original order, dated October 13, 2009, and the order of contempt, dated November 2, 2009. |
| Summary of Opinion Analysis: | Davis argues that the chancellor erred when he granted the Bank an equitable lien on the truck and ordered Davis to return the truck and its certificate of title to the Bank. Davis argues that the person who bought the truck, as a bona fide purchaser, now has good title to the truck, free of the Bank’s security interest. Section 63-21-43 provides that a security interest is perfected at the time the owner signs a security agreement describing the vehicle, the secured party gives value, the owner has rights in the vehicle, and an application for certificate of title signed by the owner is presented to a designated agent. The application for certificate of title has to include the name and address of the secured party and the date of the security agreement. Assuming there are no issues with the application, a new certificate of title is then issued that displays, on its face, the lienholder’s security interest. The statute protects innocent purchasers who rely on a clean certificate of title (i.e., a certificate that does not, on its face, communicate that there is a security interest in the subject vehicle). A secured party must note its security interest on the face of the certificate of title or lose it in a contest with a subsequent purchaser. The Bank had a perfected security interest in the truck. At one time, the Bank was entitled to the full protection of the Mississippi Motor Vehicle Title Law. However, the Bank chose to release its security interest. The Bank was under no duress to do so and should have been aware of the potential consequence of its action. The Bank lost its perfected status as a lienholder on the truck based on its knowing and considered action. An unperfected security interest in a vehicle is not valid against a subsequent purchaser. The record contains no evidence offered by the Bank to refute Davis’s claim that the sale occurred even though the chancellor did not believe Davis. If someone did in fact buy the truck from Davis, as Davis alleges, the chancellor may not impose an equitable lien on the truck. While neither Davis nor the Bank has raised the issue of whether the purchaser should be joined as a party to this case, M.R.C.P. 19(a) applies. The purchaser was and is a person to be joined, and the court had the authority to require that he be joined as a party. If joinder is not feasible, the chancellor should conduct the proper analysis under Rule 19 as to whether the case should proceed in the purchaser’s absence and whether the relief granted is appropriate in his absence. Davis also argues that he should not be held in contempt because it was impossible for him to comply with the chancellor’s order to return the truck to the Bank. The Appellee’s Record Excerpts contain an order granting the defendant’s motion to set aside the order of contempt that was executed on November 19, 2009. This order appears to set aside the chancellor’s prior order of contempt. However, this order was not in the clerk’s papers and was executed by the chancellor after the notice of appeal was filed. Thus, the chancellor did not have jurisdiction to enter this order. Nevertheless, Davis has been released from custody and the contempt order is a moot question at this time. Based on the record, it also appears that the chancellor’s monetary award in the judgment is not and cannot be accurate. |
Home | Terms of Use | About the JDP | Feedback | Using JDP | MC Law Library | Mississippi Supreme Court
