Freeman v. Mebane, 55 N.C. 44, 2 Jones Eq. 44 (1854)

Dec. 1854 · Supreme Court of North Carolina

55 N.C. 44, 2 Jones Eq. 44

RICHARD P. FREEMAN AND OTHERS against WILLIAM MEBANE AND OTHERS.

A as principal and B as his surety, executed a bond to C, with a condition to make a title to land on the payment of the purchase money: before the purchase money was all paid, the land was sold at sheriff’s sale to satisfy executions against A who became insolvent: 0 sued B. for the remainder of the purchase money, and recovered it. Held that B had a right to follow the land and have remuneration out of it in the hands of the purchaser at sheriffs sale for the money he had thus paid.

Cause removed from tlie Court of Equity of Bertie County, at tlie Fall Term, 1854.

The bill alleged that one John A. Sutton contracted to sell to Harry Nicliols a certain hotel and tlie appurtenances in tlie Town of Windsor, at the price of eight thousand dollars, for which Nichols executed to Sutton three bonds for the sum of $26661 dated 1st January 1841, payable one, two and three years after date, and bearing interest from date: that a 2>art of the contract was, that Sutton should retain the legal title until the payment of the bonds. At the same time, and as a part of this contract, Sutton executed to Nichols a penal bond in tlie siun of $10,0C0, with the plaintiff, Bichard P. Freeman, as surety, conditioned to be void if the said Sutton should make to Nichols a good title in fee simple for the property in question as soon as Nichols should pay the purchase money in full: and that Nichols immediately went into possession of the purchased property. That at the time of this bargain, Sutton was a man of large property.

It further alleged, that Nichols paid towards these bonds, during the next month (February) $6000, and some time during the same year $900 more.

.That in 1842, Sutton became much embarrassed with debt, and his entire estate was sold under executions: that in 1843, the property in question was levied on and sold at sheriff’s, sale to satisfy executions against Sutton, and that the same was purchased by Alexander W. Mebane, who took a deed from the sheriff for the same, and that at the time of the purchase Mebane had full knowledge of the premises: that from the fact of this incumbrance, and from the great scarcity of money, then existing, the property sold for $1301, which was only about one fourth its value, and that Mebane bought with the expectation of being liable to the claim of FTichols:

That Mebane instituted an action of ejectment in 1845, and having recovered, ousted Nichols and took possession, which has ever since been retained by him and those claiming under him:

That Mebane died in 1846, having devised the hotel and appurtenances in question to the infant defendants, his children ; and having appointed the other defendant, Moring and J. H. Mebane, his executors, who qualified :

That Sutton continued insolvent until the year 1844, when he died intestate, (still insolvent) and one John L. Webb became his administrator, de bonis non.

That Nichols, in 1848, brought suit on the penal bond given by Sutton with p aintiff, Freeman, as surety, which having abated as to the administrator, Webb, by his death, judgment was rendered against Freeman alone for the sum of $201 80 cents with interests and costs, which has been paid by him: that it is impossible to get any thing by the way of remunertion from the estate of Sutton.

It is further alleged in plaintiff’s bill, that the rule of damage adopted by the Supreme Court, (to which the case of Nichols against Freeman, was carried by appeal) was the difference between the value of the property when sold by the sheriff, and the amount then due to Sutton by Nichols, which was ascertained to be the sum of $207 80 cents, as above stated.

The bill alleges that the plaintiff has demanded the amount paid by him from the defendants, and that they have refused payment.

The plaintiff states that Freeman had conveyed his interest in this claim by a deed of trust, and that the trustee having died, his heirs at law, who are infants, are made parties to represent him in this suit.

The prayer is, that Freeman, to the use of the representatives of the trustee, may be substituted to the rights of Nichols, and that he may be reimbursed for the amount paid by him, and for general relief.

Richard P. Freeman, ITarry Nichols, Gilliam, adm’r de ho-nis non, of Sutton, and the infant heirs of Allen, the trustee, by their next friend, are the plaintiffs, and the devisees and executors of A. "W. Mebane, are the defendants.

The defendants demurred to the bill, and the cause being set for argument on the demurrer, was sent to this Court by consent.

Winston, Jr., for the plaintiffs.

No counsel appeared in this Court for the defendants.

Pearson, J.

By this purchase, at sheriff’s sale, Mebane acquired the legal estate which was in Sutton, but he purchased with notice: indeed, notice was not material, for a purchaser at sheriff’s sale, with or without notice, only acquires the estate which the debtor could rightfully pass: so he put himself “in the shoes” of Sutton, and took the legal estate subject to all the equities to which it was liable, in his hands.

In Nichols v. Freeman, 11 Ire. Rep. 99, it is said “Nichols had the right to file a bill in Equity for a specific performance, and the decree would have been for the conveyance of the property upon his paying the balance of the purchase money with interest.” He did not choose to resort to Equity, and brought an action at law against Freeman, who was the surety of Sutton, with the expectation, no doubt, < »f being able to recover from him all that he had paid Sutton towards the price of the land. In that case, it was decided that he had a right to recover the difference between the value of the property at the date of the sheriff’s sale, and the balance of the purchase money which then remained unpaid. Ereeman has paid the amount recovered, and the question is, has he an equity to call upon the defendants, who are the representatives of Mebane, and are in the enjoyment of the property, for exoneration?

There is no question of the equity as against Sutton, but he is dead and insolvent, and the object of the bill is to follow the property in the hands of the representatives of Mebane. Of this equity, we think there can be as little doubt.

Sutton held the legal estate in trust for himself, to secure the balance of the purchase money, and then in trust for Nichols. After the purchase by Mebane, Nichols had two remedies : — to pay the balance of the purchase money to Sutton, and call upon Mebane for the legal title, Ratledge v. Smith, Bus. Eq. 283, or to sue at law on the bond: He elected to sue Ereeman, who was the surety, and upon the payment of the amount recovered, Ereeman had a clear equity, as- surety, to be substituted to the rights of the creditor, and to have the benefit of all the securities to which the creditor might have resorted. This is a well settled principle in Equity, and is applicable to our case, and gives Freeman a right to hold the property in the hands of the representatives of Mebane, bound for his exoneration.

If, as is contended for by the defendants, Mebane, by his purchase at sheriff’s sale, acquired not only the legal title, but also the equitable interest of Sutton, that is, his lien for the balance of the purchase money, Freeman’s equity is manifest on two grounds: If a surety pays for the property he has a .right to hold it bound for his exoneration. Green v. Crockett, 2 Dev. and Bat. 390; Polk v. Gallant, ibid 395; Smith v. Smith, 5 Ire. Eq. 34; Egerton v. Ally, 6 Ire. Eq. 188. Freeman as the surety of Sutton, under whom Mebane claimed,, has been forced to pay, in part, for the property which the representatives of Mebane now enjoy.

Secondly. If Nichols had filed a bill-for a specific performance, Mebane would have been forced to convey the property to him, upon his paying to Sutton, the balance of the purchase money: and Mebane could have set up no greater equity than to be repaid, out of the fund, the amount which he had paid to the sheriff: whether he would have had this equity, need not now be enquired of: it is certain his equity would have extended no further: ITe, therefore, by taking the pla.ce of Sutton, was obliged to rely on Freeman for protection against the loss of the property, and substituted himself asjprincipal in regai d to it: Freeman was not be benefited: the gain, if any, was to be Mebane’s, and by thus having an innocent man between him and danger, he, in Equity, adopted'him as his surety, and can not, with a good conscience, take advantage of the accident, that .Nichols elected to proceed at law, and throw the loss upon his protector. Freeman’s equity cannot be made clearer than by a mere statement of the facts.

The demurrer is to the whole bill, and being bad as to part, must of course be overruled as to all.

It is unnecessary now to decide whether the representatives •of Sutton have an equity to call for a conveyance of the property either absolutely, or subject to Mebane’s right to hold it as a security for the repayment of the amount paid by him to the sheriff.

The alleged equity is based on the ground that at the time of the sheriff’s sale, Sutton held the legal title in trust to secure the payment of the balance of the jmrehase money, and then intrust for Nichols; that although the naked legal title was subject to execirtion sale, yet the equitable interest of Sutton was not: so the purchaser acquired only the legal, and did not acquire the right to recover from Nichols the balance of the purchase money: that right,'as is contended, still remained in Sutton, and as the equity of Nichols has been extinguished by his election to proceed at law, the representatives of Mebane hold the legal title in trust to exonerate Freeman as surety for what he has paid in order to extinguish the equity of Nichols, and' then in trust for the representatives of Sutton, whose equitable interest never passed to Mebane.

This is an interesting question, and we prefer to leave it cp.-"'» for future investigation. We call attention to it now only with the view that it may be fully discussed if it should be again presented to us.

Piss Oueiam. Demurrer overruled