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Keywords

contractappealtrustforeclosure
trust

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Kelso v. McGowan, 604 So.2d 726

Facts

In 1982, Herb A. Kelso purchased a one-third interest in a seven-acre parcel from S.E. Pollack and Sal Todaro. In 1987, facing financial difficulties, Kelso sought loans with the assistance of Pollack and Todaro, who agreed to guarantee the loans in exchange for additional payments. After Kelso issued two checks to Pollack that bounced, Pollack initiated foreclosure proceedings under the dragnet clause of the deed of trust. Kelso sought to enjoin the foreclosure, leading to the current appeal.

In 1982, Herb A. Kelso purchased a one-third interest in a seven-acre parcel from S.E. Pollack and Sal Todaro. In 1987, facing financial difficulties, Kelso sought loans with the assistance of Pollack and Todaro, who agreed to guarantee the loans in exchange for additional payments.

Issue

The main legal issues include whether the dragnet clause secured the dishonored checks, whether the parol evidence rule barred evidence of oral agreements, and whether the additional payments to the guarantor were supported by consideration.

Kelso contends that the dragnet clause in the deed of trust securing his debt to Pollack and Todaro does not cover a separate debt owed to Pollack alone.

Rule

The court applied the principle that dragnet clauses are enforceable if clearly stated, and that the parol evidence rule does not bar evidence of subsequent agreements or modifications.

Dragnet clauses are valid and enforceable in Mississippi, Whiteway Finance Co. v. Green, 434 So.2d 1351, 1353 (Miss.1983), if properly executed and stated in clear and unambiguous language.

Analysis

The court found that the dragnet clause in the deed of trust secured the dishonored checks because it referred to debts owed to the secured parties, individually or jointly. The court also determined that the parol evidence rule did not apply to the agreements made after the written contracts were executed, allowing for the introduction of evidence regarding the additional payments. Furthermore, the court held that the additional payments were supported by consideration as they were part of the same transaction.

The court found that the dragnet clause in the deed of trust secured the dishonored checks because it referred to debts owed to the secured parties, individually or jointly.

Conclusion

The court affirmed the lower court's judgment, concluding that the dragnet clause secured the dishonored checks, the parol evidence rule did not bar the introduction of evidence regarding additional payments, and the additional payments were supported by adequate consideration.

The court affirmed the lower court's judgment, concluding that the dragnet clause secured the dishonored checks, the parol evidence rule did not bar the introduction of evidence regarding additional payments, and the additional payments were supported by adequate consideration.

Who won?

Pollack and Todaro prevailed in the case because the court upheld the validity of the dragnet clause and the agreements made regarding the additional payments.

Pollack and Todaro prevailed in the case because the court upheld the validity of the dragnet clause and the agreements made regarding the additional payments.

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