Guthrie v. Moore, 182 N.C. 24 (1921)

Sept. 14, 1921 · Supreme Court of North Carolina

182 N.C. 24

F. F. GUTHRIE v. D. O. MOORE et al.

(Filed 14 September, 1921.)

1. Bills and Notes — Mortgages—Trusts—Maturity—Purchasers—Notice.

A purchaser of a note secured by mortgage or deed in trust, after maturity takes subject to outstanding equities.

Same — Public Sale — Injunction—Equity—Courts. fc5

The owner of land gave two mortgages or deeds of trust thereon, and afterwards sold the land to the plaintiff by deed to be held in escrow with notes secured by mortgage for the balance of the purchase price, and. to be turned over to him when the prior mortgages should have been paid. The notes secured by the third mortgage were bought after maturity by one of the prior mortgagees, and sales under the powers thereof in all three of the mortgages are sought to be enjoined: Held,, the purchaser of the third mortgage notes after maturity took with notice of plaintiff’s equity; and as the question as to the distribution of the proceeds of the sale of the land affected them all, and a serious question has arisen, the injunction as to all was properly continued to the hearing to await the result of the suit. Mosby v. Bodge, 76 N. C., 387, cited and applied.

Appeai by defendant from restraining order granted by Allen, J., at chambers, Washington, N. 0., 4 March, 1921, from Beaueobt.

This is an appeal from an order restraining the defendants from selling certain lands under powers contained in two deeds of trust.

On 12 December, 1919, the defendant, Fenner B. Godley and wife, executed a deed of trust to E. A. Daniel, trustee for J. B. Patrick, upon a tract of land securing an indebtedness of $1,275, and on 5 December, 1919, the said Godley executed a deed of trust to H. 0. Carter, trustee for D. 0. Moore, securing an indebtedness of $1,950.

On 12 December, 1919, the defendant, Fenner B. Godley, and wife, executed to the plaintiff a deed for the consideration of the sum of $10,000, $4,000 of wbicb was to be paid in casb and tbe balance of $6,000 to be secured by deed of trust, and twelve notes of $500 eacb were executed to represent said $6,000 balance. When tbe parties closed tbe said deal, tbe plaintiff bad only $2,700 in casb and executed a note due on 1 January, 1920 (about two weeks laten), for tbe sum of $1,300, representing tbe balance of tbe casb payment. Said note of $1,300, together witb four or five of tbe notes for $500 eacb, were deposited witb J. D. Grimes in escrow, and were to be turned over to said Godley wben tbe notes secured by tbe two deeds of trust to E. A. Daniel and H. G. Carter, above set out, were paid. Tbis agreement was ill writing. Tbe said $1,300 note was not paid wl^en it was due.

That during tbe fall of 1920 tbe defendant Moore purchased from tbe defendant Godley twelve of tbe notes of $500 eacb, and tbe note of $1,300, wbicb said notes were secured by a deed of trust upon all of tbe property described in tbe two deeds of trust to Daniel and Carter, wbicb deeds of trust provided that upon default in payment of any note or tbe interest on any note, that tbe whole debt should become due and payable.

On 18 December, 1920, H. O. Carter, trustee for D. O. Moore, advertised under tbe deed of trust to him tbe lands therein described, and on 11 January, 1921, E. A. Daniel advertised under tbe deed of trust from E. F. Guthrie, tbe plaintiff, to him; that at tbe time of tbe advertisements no part of either tbe principal or interest on any of tbe notes bad been paid, and tbe whole, under tbe terms of tbe deed of trust, was then due. On 21 January, 1921, tbe plaintiff secured a restraining order, and said restraining order was continued to tbe bearing at tbe February Term, 1921, of tbe Superior Court of Beaufort County, and tbe defendants appealed.

Ward & Grimes for plaintiff.

Daniel & Garter for defendants.

Alien, J.

It is admitted in tbe brief of tbe defendants that tbe notes purchased by the defendant Moore and secured by one of tbe deeds of trust under wbicb tbe defendants proposed to sell tbe lands in controversy, were past due at tbe time of tbe purchase, and tbis being true, tbe defendant took tbe notes subject to and witb notice of any equities and defenses existing in favor of the plaintiff against Godley, who sold tbe notes to tbe defendant Moore. • (C. S., 446; Capell v. Long, 84 N. C., 17), and as against Godley, tbe plaintiff has tbe right to rely upon tbe agreement that tbe prior liens created by tbe deed of trust to secure tbe notes to Patrick and Moore should be paid off and discharged before all of tbe notes secured in tbe last deed of trust should be valid obligations .against tbe plaintiff.

It is also well settled that powers of sale “are looked upon by the courts with extreme jealousy, because the mortgagor is thereby put entirely in the power of the mortgagee.

The exercise of the power is only allowed in plain eases when there is no complication and no controversy as to the amount due upon the mortgage debt, and the power is given merely to avoid the expense of foreclosing the mortgage by action; but that where there is such complication and controversy the Court will interfere and require the foreclosure to be made under the direction of the Court, after all the controverted matters have been adjusted and the balance due is fixed, so that the property may be brought to sale when purchasers will be assured of a title and not be deterred by the idea that they are ‘buying a lawsuit.’ ” Mosby v. Hodge, 76 N. C., 388.

It follows therefore as there was a real dispute between the parties as to the amount for which the plaintiff was liable, that the restraining order was properly continued until the final hearing.

Affirmed.

Note. This opinion was written in accordance with the Court’s, decision and filed, by order of the Court, after Justice Allen’s death.

14 September, 1921. Stacy, J.