Raper v. Coleman, 192 N.C. 232 (1926)

Oct. 6, 1926 · Supreme Court of North Carolina
192 N.C. 232

HERM RAPER v. GEORGE S. COLEMAN and LUTHER RICHARDSON.

(Filed 6 October, 1926.)

1. Mortgages — Notes in Sets — Acceleration of Payment.

A mortgage for the balance of the purchase money due by the mortgagor of lands, securing several notes maturing at different periods, may by its terms hasten the maturity of the sum total of the indebtedness by expressly providing that should one of the notes or interest thereon not be paid at its maturity, then all the indebtedness should become due and payable.

2. Same — Sales—Maturity.

Where by express provision in a mortgage the power of sale is given when one in a series of notes it secures and interest thereon should remain unpaid after maturity, the exercise of the power of sale need not await the maturity of all of the notes in the series, but may be exercised when a note of earlier maturity or interest thereon remains unpaid under its terms.

*233Appeal by plaintiff from Sinclair, J., who dissolved a temporary restraining order. From JohNstoN. Affirmed.

On 28 November, 1923, tbe defendant Coleman sold and conveyed to tbe plaintiff sixty acres of land in Johnston County at tbe agreed price of $15,000. Tbe plaintiff paid $6,000 in casb and executed and delivered to said Coleman a purchase money mortgage on tbe same land for tbe sum of $9,000, payable at tbe rate of $1,000 a year for nine years, tbe first payment to be made on 1 December, 1924, and tbe last on 1 December, 1932. Tbe mortgage, wbieb was duly registered, contained, tbe. following foreclosure provision: “But tbis deed is made on tbis special trust; that if said party of tbe first part shall well and truly pay to said party of tbe second part, or bis legal representatives, tbe bonds herein-before described, at their maturity, then tbis deed to be null and void. But if default shall be made in tbe payment of said bonds, or tbe interest on tbe same,' or any part of either, at maturity, then and in that event it shall be lawful for and tbe duty of said party of tbe second part to sell said land hereinbefore described to tbe highest bidder for casb, at tbe courthouse door in Jobnston County, first advertising said sale, etc., . . . and out of tbe moneys arising from said sale to pay said bonds and interest on same, together with costs of sale.” Tbe plaintiff made tbe first payment, but failed to meet tbe second installment of $1,000, wbieb was due 1 December, 1925; and on 10 December, 1925, Coleman as mortgagee caused tbe land to be advertised for sale under tbe mortgage, and at tbe alleged sale made 11 January, 1926, tbe defendant Richardson bid off tbe land at tbe price of $8,500. On 19 January, 1926, tbe plaintiff instituted tbis action and obtained a temporary order restraining Coleman from executing and delivering any conveyance of tbe mortgaged premises, and thereafter tbe restraining order was dissolved by Judge Sinclair, whereupon tbe plaintiff excepted and appealed.

Charles U. Harris and Ed. F. Ward for plaintiff.

Paul B. Grady, Pou & Pou, and J. L. Emanuel for defendants. ■

Adams, J.

Tbe appeal raises tbe question whether under tbe clause of defeasance tbe mortgagee’s right to foreclose accrued upon tbe mortgagor’s failure to pay tbe bond of $1,000 maturing on 1 December, 1925. The plaintiff, admitting that tbis is tbe only question presented by bis exception, stresses tbe point that tbe mortgagee cannot sell before tbe date at which tbe last bond is to become due, while tbe defendants say that a sale of tbe mortgaged property is authorized by tbe terms of tbe defeasance upon default in tbe payment of tbe bonds, or tbe interest thereon, or upon default in tbe payment of any part of either at maturity.

*234As a rule, a court of equity will not decree the foreclosure of a mortgage until the period limited for the payment of the secured debt is past and the estate is forfeited to the mortgagee, for it cannot shorten the time on which the parties have expressly agreed. Harshaw v. McKesson, 66 N. C., 266. Hence, if several bonds maturing at different periods are secured by a mortgage and there is nothing in the contract, pleadings, or evidence .that matures or hastens the maturity of the deferred payments, or any other event which constitutes a default, there is no right of foreclosure either for the whole debt or for any part of it until the last bond becomes due^ — the mortgagee’s remedy meantime being a suit to recover judgment for such part of the debt as may have matured, a similar action from time to time as the other installments become due, and, if reasonably required for his protection, a suit for the present possession of the mortgaged premises. Walker v. Burrell, 172 N. C., 386.

This Court has also held that if the parties to the contract stipulate that the estate shall be forfeited or that the right to sell may be exercised upon the debtor’s failure to pay the specified installments of the debts as they mature, then upon the debtor’s failure to pay any installment that is due the mortgagee may demand his money or proceed immediately to foreclose. Harshaw v. McKesson, supra.

The cases cited in the brief of the plaintiff fall within the first of these two classes and do not support the position taken in his argument. Jones v. Boyd, 80 N. C., 258, and Brame v. Swain, 111 N. C., 540, were suits for the specific performance of contracts to convey land, and while in such cases the relation of vendor and vendee is analogous to that of mortgagee and mortgagor, it was decided that neither 'action could be maintained until the last installment of the debt became due; but these cases did not disclose any provision for accelerating the maturity of the notes or any other event constituting a default by the terms of the contract. In Hinton v. Jones, 136 N. C., 53, the defendant’s deed of trust secured a single note of $6,000 “with interest from date, to be paid semiannually, the principal to be paid one-tenth annually until said note was paid in full,” and contained the clause, “Should the said Jones well and truly pay said note as it falls due, then this deed shall be null and void; but should he fail to do so, then the said O. L. Hinton may sell.” In accord with the authorities, it was held in reference to this provision that the trustee’s sale must await the maturity of the entire debt, the Court emphasizing the absence of any provision that the entire note should become due and payable or that sale should be made upon default in any of its installments. Upon this theory the decision was referred to the principle stated in Harshaw v. McKesson, supra. Martin v. Kirkpatrick, 149 N. C., 400, simply adjudged that the provision of the Bankrupt Act maturing all debts owing by the bankrupt which were payable *235at tbe date of tbe adjudication did not interfere witb tbe terms of tbe bankrupt’s mortgage designating tbe conditions on wbicb tbe power of sale could be exercised. It is obvious, tben, that tbe defeasance in tbe mortgage executed by tbe plaintiff may be distinguished from tbe clauses wbicb were passed upon in these cases, in that a sale by Coleman, tbe mortgagee, is authorized upon default in tbe payment of either bond. Tbe parties did not stipulate in express terms that tbe entire debt should fall due upon default in tbe payment of one bond, as was stipulated in tbe mortgage referred to in Barbee v. Scoggins, 121 N. C., 135, and similar cases; but they provided for tbe application of tbe proceeds of sale to all tbe unpaid bonds and tbe practical effect is tbe same as if such a stipulation bad been set out in tbe mortgage. After naming tbe bonds “hereinbefore described” — those representing tbe deferred indebtedness of $9,000 at tbe rate of $1,000 a year for nine years — tbe mortgagor stipulated that if default should be made in tbe payment of said bonds, or tbe interest thereon, or any part of either at maturity, that is, any part of tbe bonds or any part of tbe interest at maturity, in that event it should be lawful for and tbe duty of tbe mortgagee to sell tbe mortgaged property and out of tbe proceeds to pay said bonds and tbe interest thereon. Tbe language is plain. Tbe mortgagee was empowered to make sale upon tbe mortgagor’s default in tbe payment of either bond at maturity and to apply tbe proceeds in satisfaction of tbe unpaid notes. To say that tbe money derived from tbe sale should be applied in payment only of tbe bond tben due upon its face and remaining unpaid would antagonize tbe express contract and would involve tbe retention by tbe mortgagee or some other disposition of tbe remaining proceeds not within tbe contemplation of tbe parties.

Our conclusion is in agreement witb former decisions of this Court. In Kitchin v. Grandy, 101 N. C., 86, it is said that where several notes due at different dates are secured by a mortgage or deed in trust wherein it is provided that upon default in tbe payment of any one of them tbe mortgagee or trustee may sell, and be does sell after tbe first note is due and before tbe maturity of tbe others, tbe proceeds must be applied ratably to all tbe notes remaining unpaid. To tbe same effect is Whitehead v. Morrill, 108 N. C., 65. The mortgage foreclosed in Gore v. Davis, 124 N. C., 234, specified, “If default should be made in tbe payment of said bond or tbe interest on tbe same, or any part of either at maturity,” tbe creditor could proceed to sell tbe land and out of tbe proceeds of sale should “pay said bond and interest.” There was default in tbe payment of interest, and tbe Court said, “By tbe conditions of tbe mortgage tbe principal and interest became due.” In Eubanks v. Becton, 158 N. C., 230, tbe sale made under tbe power conferred by tbe mortgagor was assailed on tbe ground that tbe mortgage, although containing

*236a provision that tbe land might be sold upon failure to pay either note, did not provide that upon such failure the whole indebtedness should become due, and therefore that no sale could be made until the maturity of the last note. In the opinion it is said: “The mortgage contains the express stipulation that the land may be sold upon failure to pay either note, and requires the proceeds of sale to be applied to ‘the principal and interest which shall then be due on the said bonds.’ The language is clear and the intention of the parties easily ascertained, and we must give effect to it. It is permissible to provide that the whole debt shall become due upon failure to pay any part, but not essential to the exercise of the power of sale. Gore v. Davis, 124 N. C., 234.” The Court has maintained the doctrine in the later cases of Miller v. Marriner, 187 N. C., 449, and Leak v. Armfield, ibid., 625. The judgment is

Affirmed.