BancorpSouth Bank v. Brantley
156 So. 3d 822
Miss.2014Background
- BancorpSouth Bank sued Van Burén Group, LLC for declaratory judgment, judicial foreclosure, and related relief; four purchasers moved for summary judgment and were granted, while two members’ motions were denied.
- BancorpSouth loaned $5.4 million to Van Burén secured by a deed of trust on 30 condominium units in Oxford, MS.
- Van Burén presold units before loan closing; several purchasers’ deposits were held by escrow; some sales were later discounted or altered.
- Bank released certain released units from the deed of trust without crediting the debt, after those units had been alienated by the mortgagor, and learned of prior conveyances.
- Purchasers argued inverse alienation and Pongetti require crediting released value against the debt; the trial court granted summary judgment for some defendants; on appeal, judgment as to four purchasers was affirmed but reversed regarding others, leading to certiorari.
- Court adopts Pongetti rule requiring actual notice of prior alienations to trigger credit against the debt when releasing later-alienated parcels.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Pongetti require actual notice to apply? | BancorpSouth argues notice suffices. | Purchasers argue notice not required; constructive notice ok. | Actual notice required; issue of material fact exists. |
| Is the Pongetti rule triggered by actual notice of earlier alienations when releasing later parcels? | Bank must credit value of released units if aware of prior alienations. | If aware, credit applies; otherwise no. | Actual notice of prior alienations triggers Pongetti credit; disputed here. |
| Was summary judgment proper given material facts in dispute? | No genuine issues if Pongetti applies. | Material facts disputed; summary judgment inappropriate. | Summary judgment reversed for the four purchasers; remanded. |
| What is the proper notice standard (actual vs constructive) under Pongetti? | Actual notice should be required. | Constructive notice may suffice. | Court adopts actual notice requirement. |
| What is the effect of crediting released units on the remaining debt? | Debt would be satisfied by released units' value. | Credit only applies if Pongetti rule triggered. | If actual notice proves triggering, debt may be discharged accordingly. |
Key Cases Cited
- Pongetti v. Bankers Trust Savings & Loan Ass'n., 368 So.2d 819 (Miss. 1979) (establishes Pongetti rule and inverse alienation concept)
- Agric. Bank of Miss. v. Pallen, 16 Miss. 357 (Miss. 1847) (inverse alienation doctrine origin)
- AmSouth Bank v. Gupta, 838 So.2d 205 (Miss. 2002) (defines actual notice standard in context of notice analysis)
- Fidelity & Cas. Co. v. Mass. Mut. Life Ins. Co., 74 F.2d 881 (4th Cir. 1935) (court recognizes inquiry notice and duty to investigate)
- In re Penn Central Transp. Co., 494 F.2d 270 (3d Cir. 1974) (cited for applicability of principles in complex lien releases)
- Interstate Land & Inv. Co. v. Logan, 196 Ala. 196, 72 So. 36 (Ala. 1916) (actual notice requirement cited by court)