This was an action in ejectment instituted by the plaintiff appellant against the defendants, and tried in the General County Court of Buncombe County, N. C., at October Term, 1931. The description of the property is not in question. The plaintiff claimed title under a trustee’s deed, dated 6 January, 1931, from George H. Wright, trustee, which was had under the foreclosure of a deed of trust dated 12 January, 1925, executed by the defendants to George H. Wright, trustee, securing to Buffner Campbell, attorney, one note in the amount of $3,500 due two years after date.
The defense relied on in- the answer was that the private acknowledgment of the defendant, Nannie L. Gash, wife of the defendant George A. Gash, in the deed of trust, was taken, if at all, over the telephone and was invalid. Plaintiff replied, denying and demanding strict proof that the private examination of the defendant, Nannie L. Gash, had not been taken, and setting up as a further defense to the matter alleged in the further answer, that, in substance, the proceeds secured under the Campbell deed of trust were procured and used for the purpose of paying off a prior deed of trust, dated 27 September, 1921, executed by the defendant appellees to James J. Britt-, trustee, securing one promissory note in the amount of $2,500, payable to Hattie L. Baumgardner, or order, and due one year after date. That the proceeds from the Campbell deed of trust were used directly by Buffner Campbell, attorney, at the request of the defendants to pay off the indebtedness under the Baumgardner deed of trust on the same day that the loan was made, *129and tbat at the time the said Euffner Campbell, attorney, took possession of the Baumgardner deed of trust and the note secured thereby endorsed in blank, plaintiff contends that he held same for the protection of the second mortgage, the Campbell deed of trust, and that in effect and in equity, the Campbell deed of trust was but a continuance of the old loan known as the Baumgardner deed of trust, and prayed for an equitable lien based on the Baumgardner deed of trust and foreclosure by a commissioner.
The question involved: Where the owner of land executes a new mortgage to a person who pays off, and holds as additional protection, a prior first mortgage, the transaction taking place on the same day, and the new mortgage being invalid by reason of an improper acknowledgment, which is perfect and valid on its face, in equity, is not the invalid second mortgage considered as merely an assignment of the old valid mortgage, or the old mortgage itself under a different form, so that a purchaser under the same would take good title, or, at least, be entitled to a right to foreclose under an equitable lien based on the valid first mortgage? We think so.
The principle involved in this cause is thus stated in 25 E. C. L., pp. 1338-9, as follows: “So it has been held that the execution by the owner of land of a new mortgage to persons who pay off prior mortgages upon their being released, such execution and release taking place on the same day, operates in equity as an -assignment of the old mortgages in consideration of the money advanced by the second mortgagees, and is not the creation of a new encumbrance, but changing the form of the old. Therefore, if after the execution of the first mortgage, but before executing the second, the mortgagor married, and the second mortgage was not signed by his wife, neither he nor his grantor, after his wife’s death, can claim and hold the property free of the second mortgage, on the ground that the property became homestead property on the mortgagor’s marriage, and not subject to be encumbered by such second mortgage. The last mortgagees would be, in equity, assignees of the debts they paid, and be subrogated to the rights of their assignors; for in equity the substance of the transaction would be an assignment of the old mortgages in consideration of the money advanced.” Tiffany on Real Property, p. 1248-9; Hyman v. Devereux, 63 N. C., 624, at p. 627; Wilkes v. Miller, 156 N. C., at p. 431; Grantham v. Nunn, 187 N. C., 394.
Euffner Campbell testified, in part: “I have never received any payments on principal of the note executed by Mr. Gash to me in June or July, 1925; I did receive several interest payments. The deed of trust executed in June of 1925, to George Wright, trustee, securing this in*130debtedness to me, was delivered to me by Mr. Gash. I relied on Mr. Gash to see to and properly execute it, and of course, relied on the certificate of the notary public, an officer of the State of North Carolina. The notation on the back of plaintiff’s ‘Exhibit 2’ being the Baum-gardner deed of trust, is in my handwriting; I made that notation on or about the time the deed of trust was taken. (Mr. Miller.) We particularly offer in evidence the following words, for the purpose of corroboration only, written on the back of plaintiff’s ‘Exhibit 2,’ being the Baumgardner deed of trust — ‘Held for protection.’ I have delivered this note — Baumgardner note — and deed of trust to Investment Securities Company.”
The power of attorney by James J. Britt to O. K. Bennett, trustee, long years after, 2 September, 1931, to cancel the deed of trust made to him as trustee for Harriett Baumgardner, dated 27 September, 1921, and the cancellation by O. K. Bennett is inoperative.
This principle contended for by plaintiff is settled in its favor by the case of Edwards v. Turner, 202 N. C., 628. On the evidence as a whole, the judgment of the county court is sustained. The question of making the trustee a party (Alexander v. Bank, 201 N. C., 449), under the facts and circumstances of this cause, can be now allowed by amendment if it be found necessary. C. S., 547. The judgment below is
Reversed.