Monday, November 25, 2013

Central Financial Services, Inc. v. Spears case brief

Central Financial Services, Inc. v. Spears case brief summary
425 So. 2d 403 (Miss. 1983)


CASE SYNOPSIS
Appellant mortgagee sought review of the judgment of the Chancery Court of Lauderdale County (Mississippi), which ordered it to pay the mortgagor damages based on the difference between what the trial court determined to be the fair market value of the property and the price paid for the property at the foreclosure sale by the mortgagee, who had re-sold the property within two weeks for two and one-half times that amount.

CASE FACTS
The mortgagor borrowed money from the mortgagee and executed a deed of trust covering certain real property described therein to secure the debt. The mortgagee brought a foreclosure proceeding after the payments fell into arrears. The mortgagee successfully purchased the property at the foreclosure sale for $ 1458, the amount of the indebtedness then due plus costs of foreclosure. There were no other bidders. The mortgagee sold the property within 2 weeks for $ 4,000. Those purchasers sold the property 4 months later for $ 6,500.

PROCEDURAL HISTORY
After the mortgagor filed suit against the mortgagee, the trial court found that the price paid at the foreclosure sale had been so inadequate as to shock the conscience of the court. The trial court determined that the fair market value was 6,000 and ordered the mortgagee to respond in damages based on the difference between the fair market value and the price paid at the foreclosure sale.

DISCUSSION

  • On appeal, the court agreed that the bid of the mortgagee had obviously been inadequate. 
  • However, the damages were modified to the difference between the amount bid and the $ 4,000 received by the mortgagee at its private sale.

CONCLUSION
The trial court's judgment, which ordered the mortgagee to respond in damages to the mortgagor after it determined that the bid of the mortgagee at the foreclosure sale had been grossly inadequate, was affirmed. However, the court modified the amount of the award to the difference between the amount bid and the price actually received by the mortgagee at its sale.


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