Allen v. Stainback, 186 N.C. 75 (1923)

Sept. 19, 1923 · Supreme Court of North Carolina

186 N.C. 75

HENRY ALLEN; EDISON HICKS, Trustee; T. T. HICKS and W. C. HIGHT v. THOMAS STAINBACK, J. C. KITTRELL, EUGENE WORTHAM and MYRTLE WORTHAM, His Wife.

(Filed 19 September, 1923.)

1. Deeds and Conveyances — Mortgages—Contemporaneous Acts — Registration — Liens.

A mortgage executed and registered contemporaneously with a deed by tbe same parties to tbe same land, to secure tbe balance of the purchase price, is one act, giving tbe mortgagee a lien on the land described superior to that of a later executed and registered mortgage thereon.

2. Same — Description—Reference to Prior Mortgage.

Where a mortgage is executed and registered contemporaneously, a reference in the former to a sufficient description in the latter makes it a part thereof, supplying any deficiency of the description therein.

3. Same — Reference to Prior Mortgage — Notice.

A note secured by a mortgage reciting that the note constituted a lien upon the lands, puts a subsequent mortgagor upon inquiry, and fixes him with notice as to the amount of the prior lien, and it does not lose its priority upon prior registration by the failure of the mortgage to recite it.

4. Sam© — Omission to State Amount of Lien.

The omission of a prior registered mortgage to state the amount of the lien created by it cannot prejudice the rights of the holder of a second and later registered mortgage, wherein is recited that this mortgage was subject to the first one.

5. Deeds and Conveyances — Mortgages — Probate — Irregularities — Presumptions — Statutes.

The admission to registration of a mortgage raises a presumption that the probate was by the proper officer and regular, which has to be met by the evidence of a later registered mortgage claiming its- invalidity: and Held,, further, the validity of the probate of the mortgage in this case was established by C. S., sec. 3331, validating orders of probate by the clerk made prior to 1 January, 1919.

Appeal by plaintiffs from Daniels, J., at February Term, 1923, of VaNce.

On 3 December, 19Í8, Joseph M. Stainback conveyed to Henry Allen 42% acres for tbe consideration recited in tbe deed of $2,532, and, as a part of tbe same transaction, executed a deed of trust on said land to J. C. Kittrell, trustee, to secure two notes for tbe balance of tbe purchase price. Tbe deed and deed of trust were simultaneously filed upon tbe record in tbe register’s office of said county on 21 December,' 1918. Tbe deed of trust does not state tbe amount of tbe notes therein secured, but they are thus referred to in tbe deed: “Whereas tbe said Henry Allen is indebted to tbe said Joseph M. Stainback in tbe sum of $., for which tbe said Henry Allen has executed and delivered to tbe said Joseph M. Stainback, as aforesaid, tbe bonds of even date with this deed, in tbe sum of $., payable on tbe., with interest thereon until paid, at tbe rate of 6 per cent per annum, payable annually on 1 December hereafter; and it has been agreed that tbe payment of said deed shall be secured by tbe conveyance of tbe land herein described (here follows tbe conveyance and description), same being tbe land this day bought of Joseph M. Stainback, and this deed of trust is to secure tbe purchase price thereof.”

On 29 November, 1919, Henry Allen purchased of John Stevenson a tract of 50 acres, paid $1,000 in cash, and executed a deed of trust to secure tbe balance of tbe purchase money to E. T. Hicks, trustee, and as additional security, after the description of the 50 acres that day bought, added the following: “Also another tract of land, near tbe tract above described, and bounded by the lands of Breedlove, Mosely, Mumford, Jones, Harris, and others, containing 42% acres. -See deed from Joe Stainback to Henry Allen on record for description. This last tract is subject to a prior mortgage to Mr. Stainback for $1,260.” This second deed of trust was not registered until 1 December, 1919. The question for this Court to decide is, which of these deeds of trust is tbe prior lien on 42% acres of land?

The case came on to be heard before Daniels, J. There was submitted to the determination of the court tbe validity of tbe deed of trust from Henry Allen to J. C. Kittrell, trustee, and tbe question of its priority over the deed of trust to A. T. Hicks, tbe parties admitting that the said Stainback estate had no other security for its debt, and that if the deed of trust to Kittrell, trustee, is valid, the security of A. T. Hicks, trustee, will not be sufficient to pay their debt. The court held, upon tbe evidence and foregoing admission, that tbe trustee in tbe debt of Joseph M. Stainback, referred to as the trustee of J. C. Kittrell, takes precedence over the debt and trustee of A. T. Hicks, and that the plaintiff is not entitled to recover on the said lien in preference to that of tbe said Stainback. Tbe plaintiff excepted and appealed.

T. T. Hides & Son for plaintiff. Kittrell & Kittrell for defendant.

N. C.] ' FALL TEEM, 1923. Allen v. Stainback.

OlaeK, C. J.

Tbe deed of trust from Henry Allen to J. C. Kittrell is a valid and first lien on tbe 42% acres. Tbe deed and a mortgage securing tbe purchase' price constituted one act, and sucb mortgage, executed and registered at tbe same time witb tbe deed, bas priority. Trust Co. v. Sterchie, 169 N. C., 23; Hinton v. Hicks, 156 N. C., 24; Bunting v. Jones, 78 N. C., 242. Tbis being so, an omission in one instrument will be supplied by’a statement in tbe other; and in tbe case now before tbe Court tbe stated consideration of tbe amount of tbe purchase money of tbe 42% acres, which appears in tbe deed, at least designates a limit beyond which tbe purchase price, as referred to in tbe deed of trust, could not possibly go.

Tbe reference in a mortgage to a note secured by it, without specifying its contents, is sufficient to put subsequent purchasers upon inquiry, and fixes them witb notice. In Harper v. Edwards, 115 N. C., 246, where tbe defendants objected that tbe mortgage was void for uncertainty in tbe amount of tbe debt intended to be secured thereby, tbe condition in tbe deed which recited that tbe “parties of tbe first part have executed to tbe parties of tbe second part certain promissory notes bearing even date witb these presents, due’and payable 1 January, 1887, and which tbis mortgage is given to secure, it was held that tbe mortgage was valid, and its registration was sufficient to put subsequent persons upon inquiry and fix them witb notice.”

To tbe same purport, In re Hawkes, 204 Fed., 319, and Cutler v. Flynn 46 Ark., 70. Also to tbe same purport there is a very clear statement in Fetes v. O’Lauglilin, 62 Iowa, 532, witb tbe citation of numerous authorities, and including tbe following statement: “Tbe record of tbe mortgage imparted notice of tbe amount of tbe debt for which it was given as security, and is a lien prior to tbe mortgage under which tbe defendant claims title to tbe land.” In that case, as -in tbis, tbe amount of tbe promissory note secured thereby was left blank, but its date and tbe land upon which it was secured was sufficiently given, as in tbe present case.

In tbe present instance there was nothing misleading in tbe deed of trust from Henry Allen to J. 0. Kittrell, trustee, and tbe plaintiffs in tbe present case could not have been misled. Tbe plaintiffs (in tbis case) were directed by said deed of trust to tbe record for correct information, and they got that information and wrote into it their mortgage, so that all who held under them should have notice of tbe fact that they held their mortgage on said tract of land (42% acres) themselves as a second lien.

Tbe said deed of trust to J. C. Kittrell, trustee, bad been on record almost a year when tbe deed of trust to E. T. Hicks was executed, and tbe deed of trust to Hicks shows that Henry Allen intended to convey to E. T. Hicks,. trustee, said 42% acres, for it recites that it was “subject to a prior mortgage to Mrs. Stainbaek.” In Hinton v. Leigh, 102 N. C., 28, it was held that suck an express second mortgage would be subject to the first mortgage, even though registered first. This case was not overruled by Blacknall v. Hancock, 182 N. C., 369, but was cited with approval therein to the statement of the ground why it did not apply.

In the case now before the Court the second deed of trust not only recognized the first deed of trust, but the first deed of trust was actually registered more than eleven months before the second deed of trust was written.

As to the contention that the deed of trust of J. C. Kittrell, trustee, was registered on an insufficient probate and is therefore a nullity, the record shows that it was registered 21 December, 1918, and its admission to registration raises a presumption that the probate was by a proper officer and regular. Moore v. Quickle, 159 N. C., 129. No proof was offered to the contrary. The plaintiff admitted the deed of trust to Kittrell, together with the notice in the lower court, without objection as to the evidence. If there was any question of the probate of this deed of trust, it is sufficient to call attention to C. S., 3331, which provides that “Where deeds, etc., which prior to 1 January, 1919, have been ordered registered by the clerk of the Superior Court . . . and actually put upon the books in the office of the Register of Deeds as if properly proven and ordered to be registered, all such probates are hereby validated and made as good and sufficient as though such instruments had been in all respects properly proven and recorded.”

The judgment of the court below is

Affirmed.