Jarrett v. Holland, 213 N.C. 428 (1938)

April 13, 1938 · Supreme Court of North Carolina

213 N.C. 428

O. W. JARRETT v. KERMIT FLETCHER HOLLAND.

(Filed 13 April, 1938.)

1. Lis Pendens § 5—

A party purchasing property, the title to which is involved in a pending suit, of which he has actual or presumptive notice is bound by the judgment as much as the party to the action from whom he bought.

2. Lis Pendens § 1—

When an action involving title to realty is instituted in the county in which the land lies, the action itself is notice, and no notice under C. S., 500, is required, but mere description of the land in the complaint is insufficient, it being necessary that its allegations show that title to the land is involved.

S. Mortgages §§ 2, IS — Mortgagee has prior lien to that of judgment against mortgagor for purchase price in absence of notice of lis pendens.

There is no lien for purchase money in North Carolina, and while the judgment debtor cannot claim homestead as against a judgment for purchase money (N. C. Constitution, Art. X, sec. 2), the lien of a mortgage executed to a third person has priority over the judgment lien, when the mortgage is executed prior to the rendition of the judgment and prior to an amendment putting the title to the property in issue.

4. his Pendens § 1 — Action for recovery of purchase money held not to involve title so as to constitute notice of lis pendens.

This action was instituted in the county in which the land lies to recover balance of the purchase price, the property being described in the complaint. Defendant mortgaged the property to a third person after the institution of the action, but prior to the amendment of the complaint alleging that defendant had agreed to give plaintiff a purchase money mortgage. Held: The action, prior to the amendment, did not involve title to the realty, but was for a money recovery only, and the action did not constitute Us pendens, and plaintiff, upon recovery of judgment, was not entitled to judgment that the land be sold free from the lien of the mortgage, plaintiff’s sole remedy to attack the mortgage being by independent action.

Appeal by plaintiff from Rousseau, J., at February Term, 1938, of Catawba. Affirmed.

This is a civil action in which the court below denied a motion made by the plaintiff, after judgment, for a supplemental order directing the commissioner appointed to sell the lands described in the complaint free and clear of the encumbrance created by a mortgage from the defendant to Mrs. Gordie Holland, executed and recorded prior to the rendition of the judgment.

The complaint alleges that on 16 November, 1935, plaintiff sold to defendant a certain tract of land described in the complaint for the sum of $485.00; that at the time plaintiff delivered deed for said premises to the defendant, the defendant stated that he did not have the full purchase money. It was then agreed that the defendant should pay $140.00 and should pay the balance of $345.00 within one year thereafter; that the plaintiff, relying upon the defendant’s promise to pay the balance of the purchase money within one year, delivered deed to the defendant, and that the defendant has failed and refused to pay said amount now due. The complaint contains a prayer for judgment for the amount of the debt and for a decree declaring said judgment a lien upon the lands described in said deed.

At tbe time of tbe trial tbe plaintiff was permitted to file an amended complaint setting up an agreement by defendant to give a purchase money mortgage on tbe real estate as an additional allegation to tbe original complaint. At tbe December Term, 1937, issues were submitted to and answered by tbe jury as follows :

“1. Did tbe defendant, at tbe time of tbe execution of tbe deed, or prior thereto, agree with tbe plaintiff to execute a purchase money mortgage? Answer: ‘Yes.’

“2. How long after 16 November, 1935, was tbe defendant to have to pay tbe balance of tbe purchase money? Answer: ‘One year.’ ”

Thereupon tbe court rendered judgment for tbe debt and decreed that said judgment was a specific lien upon tbe lands described in tbe complaint. A commissioner was appointed to sell tbe land for tbe satisfaction of said judgment.

Prior to tbe rendition of said judgment tbe defendant executed and delivered to Mrs. Gordie Holland, bis mother, a mortgage upon said premises to secure tbe payment of $1,200, which amount exceeds tbe value of tbe land. This mortgage was recorded prior to tbe rendition of tbe judgment in tbe pending cause, but approximately seven months subsequent to tbe institution of tbe action.

On 16 February, 1938, plaintiff filed a motion setting out tbe facts and moving the court that a supplemental judgment or order be issued allowing tbe commissioner to sell tbe lands under tbe prior order, free and clear of tbe encumbrance of tbe purported mortgage to Mrs. Gordie Holland. Tbe court below denied the motion of tbe plaintiff and tbe plaintiff appealed.

G. A. Warlich, Jr., for plaintiff, appellant.

Louis A. Whitener for defendant, appellee.

Per Curiam.

When a person acquires an interest in property pending an action of which be has notice, actual or presumed, in which tbe title to tbe land is in issue, from one of tbe parties to tbe action, be is bound by tbe judgment in tbe action just as tbe party from whom be bought would have been. Tbe rule is considered absolutely necessary to give effect to tbe judgments of courts, because if it were not so held a party could always defeat tbe judgment by conveying in anticipation of it to some stranger, and tbe plaintiff would be compelled to commence a new action against him. Rollins v. Henry, 78 N. C., 342.

It is likewise true that where tbe action is instituted in tbe county in which tbe land is situate tbe action itself is notice to those who seek to deal with tbe property described in tbe complaint and no notice of lis pendens, under C. S., 500, is required, except tbe procedure now provided by C. S., 501. Collingwood v. Brown, 106 N. C., 362; Arrington v. Arrington, 114 N. C., 151; Rollins v. Henry, supra. See Horney v. Price, 189 N. C., 820.

However, to entitle a litigant to tbe protection of tbe lis pendens doctrine tbe suit or action must in some way involve tbe title to tbe real estate. Tbe mere description of a tract of land in a complaint in wbicb only a judgment for debt is sought does not give tbe action tbe force and effect of a lis pendens unless tbe allegations in tbe complaint involve tbe title to lands. Tbus it was beld in Threlkeld v. Land Co., 198 N. C., 186, tbat where a mortgagee of lands brings an action to recover on tbe note secured by the mortgage, and to set aside a deed of tbe mortgagor but not to foreclose tbe mortgage, tbe action is not one affecting tbe title of land within tbe meaning of C. S., 500, and tbe judgment of tbe lower court canceling and removing tbe notice of lis pendens from tbe records was affirmed. In Horney v. Price, 189 N. C., 820, it was beld tbat an action to recover damages for the breach of an option contract is not an action affecting the title to realty within C. S., 500, and tbe filing of notice in such case will not affect a purchaser pending tbat action.

There is no lien for purchase money in North Carolina. Lumber Co. v. Humber Co., 150 N. C., 282; Womble v. Battle, 38 N. C., 182. Tbe mere fact tbat tbe complaint alleges tbat tbe amount due by tbe defendant to tbe plaintiff is tbe balance of tbe purchase money for tbe lands described in the complaint does not convert tbe action into one involving tbe title to real estate. It remains simply an action for judgment upon a debt.

While a judgment debtor cannot claim a homestead as against a judgment for purchase money (N. C. Const., Art. X, sec. 2), this does not affect the rights of tbe mortgagee who acquired an interest in tbe property prior to tbe rendition of tbe judgment, nor can it be said tbat the pendency of tbe action at tbe time Mrs. Holland accepted a mortgage upon tbe premises gives tbe plaintiffs any priority. As tbe action did not involve title to real estate it did not constitute such notice to Mrs. Holland as would bind her and subordinate her lien to tbe judgment procured by tbe plaintiff. Hp until the very day of tbe trial there was no suggestion in tbe pleadings tbat tbe defendant bad agreed to give a purchase-money mortgage or tbat tbe plaintiff was seeking to have it so declared.

Whatever attack tbe plaintiff may wish to make upon tbe mortgage accepted by Mrs. Holland must be made in a separate and independent action. Her mortgage was recorded prior to the rendition of judgment in favor of tbe plaintiff. However binding tbe judgment may be in creating a specific lien upon tlie land described in tbe complaint, inter partes, it creates no lien upon said property in favor of the plaintiff prior to tbat procured by Mrs. Holland under tbe mortgage wbicb was executed and recorded before tbe entry of tbe judgment.

Tbe court below properly denied plaintiff’s motion for an order directing tbe commissioner to sell tbe land free and clear of tbe mortgage beld by Mrs. Holland upon tbe assumption tbat said judgment was a prior lien.

Affirmed.