Cavenaugh v. Thompson, 201 N.C. 469 (1931)

Oct. 14, 1931 · Supreme Court of North Carolina

201 N.C. 469

A. L. CAVENAUGH and R. E. QUINN, Executors of O. W. QUINN, Deceased, v. R. J. THOMPSON et al.

(Filed 14 October, 1931.)

Receivers A d — Surety on bond filed to prevent receivership held liable for loss of rents and profits for one year only.

Where an order is given requiring a bond with sureties for a specified crop year as a condition for permitting the mortgagor to retain possession, otherwise a receiver to be appointed, and the order stipulates that if the case is not tried within a year that another bond should be given to prevent the appointment of a receiver, the order and the bond given in pursuance thereof will be construed together to determine the liabilities of the obligors thereon, and where the case is not tried within a year and no further bond is given, but a receiver is appointed who fails to take possession of the property, the bond covers a period of one year only, and a judgment against the sureties thereon for a three-year period to the extent of the penalty of the bond is error.

Appeal by the defendant, Z. J. Quinn, from Grady, J., at February Term, 1931, of LeNOIe.

Reversed.

This was an action for the foreclosure of two mortgages executed by the defendants, R. J. Thompson and his wife, Ella Carter Thompson, to secure their notes recited therein and owned by the plaintiffs. The action was begun on 21 December, 1927, and was tried at June Term, 1930, of the Superior Court of Lenoir County. There was a judgment for the plaintiffs and a decree for the sale of the lands described in the mortgages. The sale made pursuant to the decree has been confirmed. The proceeds of the sale were not sufficient in amount for the satisfaction of the judgment.

During the pendency of the action, on the motion of the plaintiff, an order was made therein by Hon. Henry A. Grady, resident judge, appointing a receiver, who was authorized to take possession of the lands described in the complaint, and to rent the same for the year 1928. The appointment of the receiver was to be effective upon his filing a bond in the sum of $300.00, for the faithful performance of his duties. It was provided in said order that “If the defendants file a like bond in the sum of $300.00, for the payment of all damages that may be recovered for rents and profits in this action, within 10 days, then this order for a receiver shall be of no effect. At the end of the year 1928, if this action is not tried, then a new bond is to be fixed by the judge having jurisdiction.” This order is dated 16 February, 1928.

Pursuant to this order, defendants filed a bond in the action dated 20 February, 1928, in the sum of $300.00, payable to the plaintiffs. The condition of this bond is as follows:

“The conditon of the above obligation is such that whereas the above named A. L. Oavenaugh el als., have brought suit to foreclose a mortgage on property belonging to R. J. Thompson and have asked that a receiver be appointed for the same. On motion, Hon. Henry A. Grady, resident judge, has ordered that the defendants give bond in the above amount in lieu of a receivership;

Now, therefore, the condition of the above obligation is such that the sureties agree to pay any damage up to $300.00 that may be recovered for rents and profits in the above set out action; otherwise, this obligation to be void.”

The foregoing bond was signed by the defendants, R. J. Thompson, Ella Thompson and Z. J. Quinn.

On 4 December, 1928, it was made to appear to the court that the action had not been tried, but was still pending. It was thereupon ordered, on motion of plaintiffs that “defendants on or before 10 December, 1928, executed a bond in the penal sum of $300.00 conditioned to pay to tbe plaintiffs rent for tbe lands described in tbe complaint in tbis cause in a sum not exceeding $300.00 and in tbe event tbat said bond is not given, it is ordered and adjudged tbat Murpby Tbigpen be and be is hereby apj>ointed receiver, to take charge of tbe lands described in tbe complaint in tbis cause, and rents therefor, and to pay tbe same out under tbe orders of tbe court.”

No bond was filed pursuant to tbis order. Tbe receiver appointed therein did not take possession of tbe land, or rent tbe same for tbe year 1929. After tbe lands described in tbe complaint were sold under tbe decree of foreclosure, and it was ascertained tbat tbe proceeds of said sale were not sufficient to satisfy tbe judgment, plaintiffs moved for judgment in tbis action on tbe bond dated 13 February, 1928. Tbis motion was called for bearing at February Term, 1931, of tbe Superior Court of Lenoir County. At tbis bearing, tbe reasonable rental value of tbe lands for each of tbe years 1928, 1929 and 1930 was found by a jury to be $100.00.

Upon tbis finding it was ordered and adjudged tbat plaintiffs recover of tbe defendants, R. J. Thompson, Ella Thompson and Z. J. Quinn, tbe sum of $300.00 for rents and profits for the laud described in tbe complaint for tbe years 1928, 1929 and 1930.

From tbis judgment, tbe defendant, Z. J. Quinn, appealed to tbe Supreme Court.

No counsel for appellee.

S. H. Newberry cmd Dawson & Jones for appellant.

CONNOR, J.

Tbe appellant, Z. J. Quinn, contends tbat as surety on tbe bond for $300.00, dated 20 February, 1928, be is liable only for tbe rent for tbe year 1928, and tbat be is not liable for tbe rents for tbe years 1929 and 1930. He assigns as error tbe judgment tbat plaintiffs recover of him as surety on tbe bond tbe sum of $300.00 for tbe rents for tbe years 1928, 1929 and 1930. Tbis assignment of error is sustained.

Tbe bond dated 20 February, 1928, was executed and filed pursuant to tbe order dated 16 February, 1928. Tbe order was made on motion of tbe plaintiffs to secure tbe rent for tbe year 1928 and expressly provided tbat at tbe end of tbat year, a new bond for tbe rents and profits should be given by tbe defendants, and tbat upon their failure to give such bond, a receiver should be appointed by tbe judge having jurisdiction. Tbe bond executed by tbe appellant and tbe order pursuant to which it was filed, must be construed together in order to determine tbe liability of tbe obligors. As thus construed, tbe appellant is liable only for tbe rent for tbe year 1928. He is not liable for tbe rent for tbe years 1929 and 1930. There is error in tbe judgment. It is

Reversed.