Trustmark National Bank v. Pike County National Bank

Citation: Not availableDocket: 97-CA-00184-SCT

Court: Mississippi Supreme Court; November 19, 1996; Mississippi; State Supreme Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Trustmark National Bank appeals a judgment from the Chancery Court of Pike County, where Pike County National Bank (PCNB) sought to establish its status as the primary lienholder on land owned by William Watkins. Trustmark was the sole remaining defendant after other parties were dismissed. The lower court ruled that Trustmark's lien had expired and issued a judgment quieting the title in favor of PCNB, leading to the property's sale.

Trustmark contends that the seven-year duration of a judgment creditor's statutory lien, as per Mississippi Code Annotated § 15-1-47, should be extended by the duration of the automatic stay imposed during Watkins' bankruptcy proceedings. The Court agrees, concluding that the stay prevented Trustmark from executing its judgment, thus extending the limitations period by 4 years, 4 months, and 16 days. Consequently, Trustmark's judgment lien remained superior to PCNB's deed of trust as of the date of PCNB's complaint.

The Court reverses the lower court's decision and remands for further proceedings consistent with its opinion. Trustmark had originally obtained a judgment against Watkins in 1987, which became a lien on his property, including the 59.60 acres in question. Watkins filed for Chapter 11 bankruptcy in 1987, later converting to Chapter 7, during which the automatic stay was in effect. This stay protected Trustmark's lien, which had priority over the deed of trust executed in favor of PCNB during the bankruptcy. Watkins was discharged from bankruptcy in 1992.

PCNB filed a complaint on September 28, 1995, to quiet title and assert its claim to the property, arguing that Trustmark's judgment was barred by Miss. Code Ann. 15-1-43, having expired on July 10, 1994, seven years after its enrollment on July 10, 1987. PCNB sought to remove Trustmark's judgment as a cloud on the title or to declare it void. Trustmark contended that the seven-year period was extended by 4 years, 4 months, and 16 days due to an automatic stay from bankruptcy proceedings. 

The chancellor ruled that the automatic stay did not toll the seven-year period and that Trustmark had not renewed its judgment within this timeframe, deeming its judgment lien expired and invalid. Trustmark appealed, raising the issue of whether the statutory lien's seven-year period under Miss. Code Ann. 15-1-47 is extended by the duration of an automatic stay in bankruptcy.

Both parties agreed on the facts but differed in their legal interpretations. Under Miss. Code Ann. 15-1-47, a judgment lien lasts seven years unless action is taken before this period ends. The statute specifies that time during which execution is stayed is not included in the seven-year calculation. Trustmark's judgment lien was filed on July 10, 1987, and would ordinarily expire on July 10, 1994, unless stayed.

Watkins filed for bankruptcy on September 1, 1987, which resulted in an automatic stay against Trustmark's execution of its judgment until Watkins was discharged on January 16, 1992. The Bankruptcy Act allows for extensions of time regarding claims against a bankruptcy debtor, permitting the time during which execution is stayed to be added to the original period. Therefore, at the time of the bankruptcy filing, Trustmark's judgment lien was still valid and could potentially be extended due to the suspension of execution.

Watkins' bankruptcy petition resulted in a suspension of Trustmark's ability to execute its judgment, effective from September 1, 1987, until his discharge on January 16, 1992. During this period, the statute of limitations under Miss. Code Ann. 15-1-47 was not running. PCNB contends that the Bankruptcy Act governs whether the statute of limitations is tolled, referencing the case Home Building Mart, Inc. v. Parker, which affirmed that the running of state statutes of limitations is suspended during bankruptcy proceedings. PCNB asserts that Mississippi law relies on federal statutes for determining the impact of bankruptcy on statutes of limitations, a view supported by the court’s interpretation that the statute of limitations should have been tolled upon Watkins' bankruptcy filing. 

Specifically, under 11 U.S.C. 362(a)(2), Trustmark was barred from enforcing its judgment, and this automatic stay remained until January 16, 1992. Consequently, the time of the bankruptcy stay does not count towards the seven-year limit for a judgment lien as per Mississippi law. 

PCNB's argument against adding the bankruptcy stay period to the statute of limitations relies on a misinterpretation of Rogers v. Corrosion Products, Inc. In that case, the Fifth Circuit considered whether Louisiana law would apply to toll the prescriptive period due to bankruptcy but ultimately found no applicable state law. The court first examined state law before looking to the Bankruptcy Code, indicating that PCNB's reliance on Rogers to dispute the tolling under Mississippi law was misplaced.

The Fifth Circuit's interpretation of 11 U.S.C. 108(c) clarified that it does not establish a separate tolling provision but allows for suspension of time periods if mandated by federal or state law incorporated through 108(c). In Rogers, no such law existed, leading to the conclusion that the time period was not tolled. In contrast, the current case involves Mississippi law, specifically Miss. Code Ann. 15-1-47, which explicitly states that the seven-year period is tolled while execution on a judgment is stayed. This aligns with the Fifth Circuit's ruling that state law can mandate suspension of time periods under federal bankruptcy law.

Accordingly, the period from September 1, 1987, to January 16, 1992, is excluded from the seven-year duration of Trustmark's judicial lien, which was effective from July 10, 1987. The timeline was paused when Watkins filed for bankruptcy on September 1, 1987, and resumed upon his discharge on January 16, 1992. 

PCNB contends that Mississippi law contradicts Trustmark's position by citing Miss. Code Ann. 15-1-43, which mandates that actions on judgments must be initiated within seven years without a tolling provision. PCNB argues that the only way to extend a judgment's life is through renewal actions. However, it is essential to read Miss. Code Ann. 15-1-43 alongside Miss. Code Ann. 15-1-47 to ascertain legislative intent. The interpretation indicates that while a judgment must be acted upon within seven years, any time during which execution is stayed does not count towards this limitation, thus preserving the judgment's validity during such stays.

A judgment must be enforced within a seven-year timeframe, which begins when the judgment lien is filed and is paused during any stays on execution. The timeframe does not reset with each stay; rather, it resumes from the point it was halted once the stay is lifted. To extend the judgment lien for another seven years, a creditor must renew the judgment before the initial period expires.

Trustmark's judgment lien, filed on July 10, 1987, was suspended on September 1, 1987, when Watkins filed for bankruptcy. By the time of Watkins' discharge on January 16, 1992, 55 days had passed in the seven-year period, extending the expiration date to accommodate the bankruptcy duration. Trustmark was not obligated to take additional actions during or after bankruptcy to maintain its lien, as the lien remained valid and intact post-bankruptcy without requiring litigation against other creditors or executing against other properties. Speculative arguments by PCNB regarding Trustmark's inaction during this period are dismissed, as the statutory protections ensured Trustmark's lien was preserved according to Mississippi law.

The lower court mistakenly ruled that Trustmark's judgment lien had expired, permitting PCNB to foreclose on the property. According to Miss. Code Ann. 15-1-47, a judgment lien's duration is tolled when execution is stayed, as occurred when Watkins filed for bankruptcy, triggering an automatic stay under 11 U.S.C. 362. Under 11 U.S.C. 108, the time spent in bankruptcy (4 years, 4 months, and 16 days) does not count towards the seven-year limit set by Mississippi law. While PCNB sold the property, the specific expiration of the judgment lien is less relevant to the appeal, as PCNB acknowledges the core issue is financial. The case should be reversed and remanded to determine the amount owed by PCNB to Trustmark to satisfy the lien, including interest accrued since the foreclosure and during the appeal. Proceeds from the foreclosure sale should first be allocated to Trustmark to fulfill its lien, which takes precedence over PCNB's deed of trust. The Court's decision is to reverse and remand for further proceedings consistent with this ruling.