Pearman v. West Point National Bank

West Point National Bank (West Point) (plaintiff) filed foreclosure proceedings against Harold Dean Pearman (defendant). On May 14, 1991, the lower court issued judgment against Pearman in the amount of $44,271 plus interest and ordered the sale of the property. The property was appraised at $45,000. On July 11, during the pendency of the foreclosure proceedings, West Point entered into a purchase agreement with a third party for $45,000. On July 12, West Point purchased the property at the sheriff’s sale for $31,000. On July 30, the judgment and order confirming the sale for $31,000 was entered, and a deficiency judgment was entered against Pearman for $16,000. Upon its receipt of the deed, West Point conveyed the property to the third-party for $45,000 in accordance with the purchase agreement. In the foreclosure action, Pearman raised the defense that his obligation to West Point was extinguished because West Point resold the property for an amount in excess of the debt owed by Pearman, thereby eliminating any deficiency. The circuit court upheld the deficiency judgment on the basis that West Point’s purchase of the property for $31,000 created the deficiency, and upon ownership, West Point was entitled to sell the property for its fair market value. The court entered judgment in favor of West Point, and Pearman appealed.