Banks v. HunterÂ, 251 N.C. App. 528

In Feb 2014 Banks loaned Hunter $3,606.46 evidenced by a promissory note due in 90 days; the note stated the house & land would be "titled to me" upon receipt of funds and that lender becomes owner on default.
On Feb 11, 2014 Hunter executed and recorded a deed of trust on the property naming Banks trustee and beneficiary; the deed of trust contained a power-of-sale clause.
Hunter defaulted. Banks sued in district court (count on the note) seeking specific performance to convey Hunter’s real property to him rather than seeking a foreclosure sale or money judgment.
Hunter failed to answer; default was entered. The district court entered a Default Judgment ordering Hunter to convey the property and later entered an Order of Divestiture vesting title in Banks to enforce the judgment.
Hunter filed a Rule 60(b) motion; the district court denied it. On appeal Hunter argued (among other things) the district court lacked subject-matter jurisdiction to order conveyance of encumbered property.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court had subject-matter jurisdiction to order conveyance of mortgaged property by specific performance (i.e., effectively a strict foreclosure)	Banks sought specific performance to transfer title and argued the court could enforce the note and deed of trust as pleaded	Hunter argued the remedy sought was a strict foreclosure (transfer of title without sale) that is not authorized by North Carolina foreclosure statutes and thus the court lacked jurisdiction	The court held the district court lacked subject-matter jurisdiction to order conveyance of the encumbered property because Banks sought a form of relief (strict foreclosure) not authorized by the exclusive statutory foreclosure schemes; vacated conveyance-related orders
Whether denial of Hunter’s Rule 60(b) motion was erroneous	Banks defended the denial of relief	Hunter argued the judgment was void for lack of jurisdiction and thus relief was required	The court did not reach abuse-of-discretion review for Rule 60(b) because lack of subject-matter jurisdiction made the underlying conveyance orders void

Walston v. Twiford, 248 N.C. 691 (discussion of mortgage as security and the equities of redemption)
Bunn v. Braswell, 139 N.C. 135 (equity of redemption and abhorrence of strict foreclosure)
Boseman v. Jarrell, 364 N.C. 537 (pleadings invoke subject-matter jurisdiction; courts cannot grant relief outside statutorily authorized schemes)
Obriant v. Lee, 214 N.C. 723 (when an absolute deed is accompanied by a written agreement to reconvey, parol evidence may be admissible to show the agreement's true character)
Lifestore Bank v. Mingo Tribal Pres. Trust, 235 N.C. App. 573 (creditors may pursue money judgment, judicial foreclosure, or power-of-sale foreclosure; foreclosure statutes are the exclusive means)
Riddick v. Davis, 220 N.C. 120 (mortgagor retains equitable right to redeem until foreclosure)