Walker v. Asheville Building Securities Co., 205 N.C. 165 (1933)

Sept. 20, 1933 · Supreme Court of North Carolina

205 N.C. 165

ROWLAND H. WALKER et al. v. ASHEVILLE BUILDING SECURITIES COMPANY and ARTHUR O’BRIEN.

(Filed 20 September, 1933.)

1. Pleadings D d—

By answering the complaint defendant waives defects appearing upon the face thereof.

2. Pleadings D b — Demurrer for misjoinder of parties and causes held properly overruled in this case.

Plaintiff bondholders brought action against the company issuing the bonds and an individual defendant, alleging that the individual defendant liad purchased some of the bonds and given the issuing company’s note therefor endorsed by him, and deposited the note and the bonds for the benefit of plaintiff bondholders and had promised plaintiff bondholders that he would pay the taxes assessed against the property, that he failed to do so, but that he procured the county and city authorities to foreclose the property for the taxes and thereafter had the county’s bid at the sale assigned and deed executed to him. Plaintiffs seek primarily to set aside the tax foreclosure sale, and to have the property sold under their deed of trust and further to have the proceeds of the sale of the property, after deducting taxes, applied to the payment of the company’s note given for the purchase price of the bonds and endorsed by the individual defendant. Held, there was no fatal misjoinder of parties and causes of action, and the individual defendant’s demurrer on that ground was properly overruled.

Civil action-, before Alley, J., at April Term, 1933, of BuNoombe.

The original complaint alleged that on 15 March, 1926, the defendant, Asheville Building Securities Company, executed and delivered to the Citizens Bank of Norfolk, trustee, a deed of trust upon a certain apartment house in Asheville to secure bonds in the sum of $150,000. The plaintiffs other than A. P. Grice, trustee, are the holders of said bonds in due course, and A. P. Grice is the duly substituted trustee in said deed of trust. It further alleged that in July, 1930, the defendant, O’Brien, purchased $115,000 worth of said bonds and in payment of the purchase price executed and delivered the promissory note of the Asheville Building Securities Company in the sum of $57,500, payable to the Norfolk Bank of Commerce and Trust for the benefit of the bondholders “in proportion to their respective interests in said bonds and pledged as security for said collateral note all of said bonds of the Asheville Building Securities Company purchased by the said Arthur O’Brien as hereinbefore set forth, and the said Arthur O’Brien personally endorsed said promissory collateral note,” etc. It was further alleged that the said note for $57,500 was renewed from time to time and that on or about 15 June, 1931, as a cause of extension of payment the said O’Brien agreed with the plaintiff bondholders that he would pay all past due taxes of the Asheville Building Securities Company on the property described in the deed of trust, and that thereafter on 28 January, 1932, said O’Brien notified the plaintiffs that he was sending “his check for $3,352.08 in payment of the taxes for the year 1928,” etc. It was further alleged that at the time the said O’Brien was receiving-all the rents and profits of all of said Asheville Building Securities Company, and that he falsely and fraudulently procured the board of commissioners of Buncombe County to institute a tax foreclosure sale of the property described in the deed of trust and succeeded in procuring Buncombe County to institute a foreclosure suit against the Asheville Building Securities for the collection of 1928 taxes; that in said pro-eeeding a commissioner was appointed to sell tbe land, and at tbe sale tbe property was purchased by tbe board of commissioners of Buncombe County, and thereafter said bid was duly assigned to O’Brien and a deed for tbe property executed and delivered to O’Brien. It is further alleged that said tax foreclosure proceeding was void in various particulars specified in tbe complaint. Wherefore, tbe plaintiffs prayed that tbe deed from tbe commissioner to Arthur O’Brien for tbe property be declared void, and that all tbe decrees, notice and judgment in tbe attempted tax foreclosure proceeding be declared void, and that Grice, trustee in tbe deed of trust, be declared tbe legal owner of tbe property.

Tbe defendant, O’Brien, filed an answer admitting certain allegations of tbe complaint and denying others, and alleged that be was tbe owner of notes aggregating $55,956.65 secured by a second deed of trust upon tbe apartment bouse or property described in tbe complaint, and further that be held a valid title to said property in bis own right by virtue of a deed in a tax foreclosure suit referred to in the complaint.

Tbe cause came on for bearing before Judge McElroy, who ordered a mistrial and granted tbe plaintiffs time to file an amended complaint and tbe defendants time to file an amended answer. Pursuant to tbe order so made tbe plaintiffs filed an amended complaint setting out tbe bonds in detail, and also tbe note for $57,500 heretofore referred to, and asked that tbe deed of trust to Grice, trustee, be foreclosed, and that tbe plaintiffs recover from O’Brien tbe sum of $57,500 after crediting tbe proceeds of said foreclosure sale, and that whatever taxes should be found to be due upon tbe property should be paid from tbe proceeds of said foreclosure sale. Plaintiffs further ask that they recover from O’Brien all past due taxes remaining unpaid.

Tbe defendant, O’Brien, demurred to tbe amended complaint upon tbe ground of misjoinder of parties and causes of action. Tbe trial judge overruled tbe demurrer and tbe defendant, O’Brien, appealed.

Paul W. Kear, W. L. Parker and B. B. Williams for plaintiffs.

Clinton K. Hughes and George H. Wright for defendant, Arthur O'Brien.

BeogdeN, J.

Tbe defendant filed an answer to tbe original complaint and thereby waived defects appearing upon tbe face of tbe complaint. Lanier v. Pullman, 180 N. C., 406, 105 S. E., 21; Little v. Little, ante, p. 1. Compressing tbe rather meandering allegations of tbe complaint and amended complaint, it appears that tbe plaintiffs, as owners of indebtedness secured by a deed of trust upon an apartment bouse, pray for a foreclosure of tbe deed of trust; and as it is alleged that the property has been fraudulently conveyed by means of void judicial proceedings, it is further prayed that such proceedings be set aside together with the conveyance by the commissioner appointed in said proceeding, and further, that the proceeds of the sale be applied to the payment of the $57,500 note endorsed by the defendant, O’Brien, after deducting all taxes due upon the property. The main relief sought is the foreclosure of the deed of trust and the cancellation of the tax foreclosure proceeding whereby the defendant, O’Brien, acquired title to the property and to set aside the conveyance made to him. As the complaint and amended complaint are interpreted, the court perceives no fatal misjoinder, certainly in the light of decisions, disclosing a trend of liberality in the construction of complaints as against demurrers. The principles of law involved in the case of England v. Garner, 86 N. C., 366, are strikingly similar to those appearing upon the present record. See, also, Chemical Co. v. Floyd, 158 N. C., 455, 74 S. E., 465; Carswell v. Talley, 192 N. C., 37, 133 S. E., 181; Bank v. Mosely, 202 N. C., 836, 162 S. E., 923.

Affirmed.