The first question involved as stated by plaintiff, is as follows: “If the attorney and agent who acts for the trustee to sell property sells to himself, as the record in this case discloses was done, does the deed of the trustee conveying the property to his attorney and agent pass the equitable interest of the mortgagor?” We think not, if nothing else appeared.
We think the principle of law relied on by the referee, sound in principle and the law of this jurisdiction as set forth in Gibson v. Barbour, 100 N. C., 192 (197-198) : “‘It is an inflexible rule/ are the words of the late Chief Justice, an Associate Justice when they were uttered, ‘that when a trustee buys at his own sale, even if he gives a fair price, the cestui que trust has his election to treat the sale as a nullity, not because there is, but because there may be, fraud. Brothers v. Brothers, 7 Ired. Eq., 150.
In Joyner v. Farmer, 78 N. C., 196, after land had been bid off by an agent of the mortgagee, the mortgagor being present and not objecting, and as tenant of the latter remaining in possession for a year, nevertheless, as no intervening rights had been acquired by others, and no misconduct in the selling was alleged, the mortgagor was held to be entitled to have a resale, because, as was said by Rodman, J., in the opinion, *179'the interest of a vendor and a purchaser are so antagonistic that the same man cannot be allowed to fill both characters.’
'In all cases where a purchase has been made by a trustee,’ (we quote from section 322 of the 1st volume of Mr. Justice Story's excellent treatise on Equity Jurisprudence), 'on his own account, of the estate of his cestui que trust, although sold at public auction, it is in the option of the cestui que trust to set aside the sale, whether bona fide made or not.’ ”
In Hayes v. Pace, 162 N. C., 288 (292) : “In Jones v. Pullen, 115 N. C., 471, it is said: 'There is no question, according to our authorities, that if a mortgagee with power to sell indirectly purchases at his own sale, the mortgagor may elect to avoid the sale, and this without reference to its having been fairly made and for a reasonable price. This is an inflexible rule, and it is not because there is, but because there may be fraud.’ Gibson v. Barbour, 100 N. C., 192; Froneberger v. Lewis, 79 N. C., 426; Cole v. Stokes, 113 N. C., 270.”
In Owens v. Mfg. Co., 168 N. C., 397 (399) : “In exercising such a right, however, the utmost degree of good faith is required, the mortgagee being looked upon as a trustee for the owner as well as the creditor, and, in applying the principle, it is very generally held that such a mortgagee is not allowed, either directly or indirectly, to become the purchaser at his own sale, and where this is made to appear the transaction, as between the parties and at the election of the mortgagor, is ineffective as a foreclosure, and the relationship of mortgagor and mortgagee will continue to exist. Pritchard v. Smith, 160 N. C., 79.”
The serious question involved in this action is whether B. A. Smith and wife, Bessie T. Smith, obtained a good title? They contended that they were innocent (bona fide) purchasers for value and without notice. We think so under the facts and circumstances of this ease. From the finding of the referee they did not get a good title. The referee found “that B. A. Smith and wife, Bessie T. Smith, in purchasing said property had knowledge of the capacity in which J. R. Davis served in connection with the sale and resale,” et cetera. To this finding, defendants excepted and assigned error as follows: “Eor that the referee’s findings of fact No. 14 are erroneous and unsupported by any of the evidence, and that his deductions therefrom are unwarranted, wherein the referee finds that B. A. Smith and wife, Bessie T. Smith, in purchasing the said property from J. R. Davis had knowledge of the fact that J. R. Davis acted as agent for the trustee, and that the said agent purchased at his own sale; and failed to state the agreement whereby J. R. Davis became the purchaser of the said lands, when the referee should have found for his fourteenth findings of fact that B. A. Smith and wife, Bessie T. Smith, were innocent purchasers for value, *180and without notice of any infirmity in the sale by the trustee, if any existed.”
The judge in the court below sustained defendants’ exception and assignment of error and found: “As a fact that B. A. Smith and wife, Bessie T. Smith, are innocent purchasers for value and without notice and are entitled to hold said property free and clear from any claim or demand for resale on the part of A. A. Lockridge, overruling the finding of the referee as to this fact and, upon the foregoing findings of fact.”
There was evidence to sustain these findings of fact. B. A. Smith testified in part: “I bid the first time it was sold. I was informed that my bid had been raised. I did not attend the second sale. For the time being, I was not further interested in the property. Mr. J. R. Davis did not represent me in bidding in the property at the second sale. . . . I know of no irregularity in the sale of this land, if there was any. I bought the property from Mr. Davis and paid for it. My wife and I executed a mortgage or deed of trust to the Home Building and Loan Association to borrow money on this property. ... I had no knowledge or information that there was any controversy about the sale of this property, or I would not have bought it. . . . On 15 May, 1931, $2,500 for that property in controversy was a full and fair price. After buying it, I was willing to sell it. I will sell anything I have got except my wife and children.”
Mrs. Bessie T. Smith testified in part: “I am the wife of B. A. Smith, who was just on the stand. I had no knowledge of any possible illegality in the sale, or of any complaint by Mr. Lockridge, at the time of the sale of this property. Mr. Davis was not representing me.”
There was evidence to support the findings of the court below that B. A. Smith and wife, Bessie T. Smith “are innocent purchasers for value and without notice.”
In Polihoff v. Service Co., 205 N. C., 631 (634), speaking to the subject: “In Trust Co. v. Lentz, 196 N. C., 398 (at page 406), 145 S. E., 716, it is said: ‘In view of the position taken by some of the parties that the judge was without authority to change the report of the referee — the reference being by consent — it is sufficient to say that, in a consent reference, as well as in a compulsory one, upon exceptions duly filed, the judge of the Superior Court, in the exercise of his supervisory power and under the statute, may affirm, modify, set aside, make additional findings, and confirm, in whole or in part, or disaffirm the report of a referee.” Citing numerous authorities.
In Jones on Mortgages (8th ed.), Vol. 1, part sec. 417, p. 534, the law is thus stated: “An absolute conveyance intended as a mortgage will retain its character in the hands of subsequent purchasers with notice of the rights of the parties; and hence, if a purchaser from the original *181grantee knew tbe nature of the transaction, or knew of facts sufficient to put him on inquiry, he cannot claim to be the absolute owner, but the mortgagor may redeem from him, as well as from the grantee. But where the third person has purchased in good faith for a valuable consideration, relying on the apparent absolute title of the original grantee, without notice of the defeasance agreement, he takes an indefeasible title, and the original grantor has no right of redemption against him.”
Jones on Mortgages (8th ed.), part sec. 1060, p. 478, is as follows: “Most authorities treat an assignee who takes in good faith and for value, as a bona fide purchaser, protected against all equities and defenses of which he had no notice, both as against third persons dealing thereafter with the property, and as against the mortgagor and his grantees.” Corporation Commission v. Trust Co., 193 N. C., 696 (700); Nissen v. Baker, 198 N. CO., 433 (438).
27 R. C. L., part see. 466, p. 701, is as follows: “To entitle one to protection as a bona fide purchaser as against outstanding equities or an unrecorded deed his purchase must have been made without notice, actual or constructive, of the equity or the unrecorded deed.”
Russell v. Roberts, 121 N. C., 322; Wood v. Trust Co., 200 N. C., 105; Cheek v. Squires, 200 N. C., 661. In Kelly v. Clark Co., 202 N. C., 750 (754), it is said: “The court’s findings of fact, which are supported by the evidence, are as conclusive as the verdict of a jury.”
In Sash Co. v. Mooney, 202 N. C., 830 (832) : “In a reference it is well settled that the findings of fact of the trial court are conclusive, except when there is no evidence to support them.”
In the present case there was evidence to support the findings of fact by the court below.
A person is an “innocent purchaser” when he purchases without notice, actual or constructive, of any infirmity, and pays valuable consideration and acts in good faith. Republic Power & Service Co. v. Continental Credit Corporation, 12 S. W. (2d), 906, 908, 178 Ark., 966.
To constitute “innocent purchaser,” there must be purchase for valuable consideration in good faith and without notice, actual or constructive, of any defects in title to property purchased whether real or personal, so that receiver of organization having lien on property stands in no better position with reference to being innocent purchaser than organization would have been if it had acted in its own name. Ledbetter v. Wright (Tex.), 13 S. W. (2d), 388, 390.
The record discloses that there was paid $50.11 of the purchase price of the property on the junior mortgage.
The Commercial Bank and Trust Company, the junior mortgagee was not made a party to the action, nor was J. R. Davis. In Guy v. Harmon, 204 N. C., 226 (227) : “Foreclosure is an equitable proceeding and the law as interpreted and applied in this State, has uniformly commanded *182a day in court for parties in interest.”. Bank v. Thomas, 204 N. C., 599 (601). No question was made as to tbe junior mortgage or J. E. Davis, not being made parties. In foreclosures and also in actions of this kind all persons necessary to a complete determination of the controversy should be made parties. C. S., 456.
"We repeat what was said in Alexander v. Boyd, 204 N. C., 103 (108) : “The courts look with jealousy on the power of sale contained in mortgages and deeds of trust and the provisions are strictly construed. It is a matter of common knowledge that money originally loaned is usually some 25 to 50 per cent of the value of the property. In these deflated times of stress and unemployment, where it takes twice as much labor and the product of the soil to equal a dollar in value as compared with the value at the time the debt wras contracted, it behooves security holders to deal gently with the now impoverished real estate and home owners.” This case further sets forth the equitable power of the courts to fix reasonable time and conditions in foreclosure proceedings.
In Home Building and Loan Association v. Blaisdell, United States Supreme Court L. Ed., advance opinions, Yol. 18, No. 5, 255 (273), handed down 8 January, 1934, quoting a wealth of authority, it is said: “In the absence of legislation, courts of equity have exercised jurisdiction in suits for the foreclosure of mortgages to fix the time and terms of sale and to refuse to confirm sales upon equitable grounds where they were found to be unfair or inadequacy of price was so gross as to shock the conscience.”
These principles we adhere to but in the present action the court below found that third parties “are innocent (bona fide) purchasers for value and.without notice.” For the reasons given, the judgment of the court below is
Affirmed.