367 N.C. 594
N.C.2014Background
- Falk, as Trustee of the Charlotte Falk Irrevocable Trust, sues Fannie Mae to determine lien priority on Ridgewood Apartments.
- The Trust's Deed and promissory note were recorded in 1994 to secure a 1992 loan; default and interest disputes followed.
- Wachovia lent 1999–2000; a subordinating instrument favored the lenders; later refinancings occurred with Lend Lease and then FNMA.
- Fannie Mae foreclosed in 2011; the Trust sought declaratory relief and to foreclose; the trial court granted summary judgment for Fannie Mae.
- The Court of Appeals reversed, holding that 45-37(b) conclusive presumption did not apply to Fannie Mae due to timing of its interest.
- The Supreme Court reverses, holding that 45-37(b) applies to creditors or purchasers for value irrespective of when acquired.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 45-37(b)’s conclusive presumption terminates the Trust Deed for Fannie Mae. | Falk argues presumption only aided after debtor’s delay extended period. | Fannie Mae contends its interest qualifies for presumption despite timing. | Yes; presumption applies to Fannie Mae. |
| Whether the Trust Note/Deed expired under 45-37(b) without an affidavit. | Trust asserts lien remains; no affidavit filed. | Lien expired after 15 years from maturity. | Trust Deed expired; lien terminated. |
| Whether Fannie Mae may benefit from 45-37(b) irrespective of when its interest was acquired. | Smith limited benefit to after 15 years. | Statute unambiguous; creditor may benefit irrespective of acquisition time. | Yes; creditor may benefit irrespective of acquisition timing. |
Key Cases Cited
- Smith v. Davis, 228 N.C. 172 (1947) (conclusive presumption applies to creditors who rely on it when contracting)
- Peek v. Wachovia Bank & Trust Co., 242 N.C. 1 (1955) (equitable subrogation depended on excusable ignorance)
- Piedmont Memorial Hosp. v. Guilford Cnty., 221 N.C. 308 (1942) (statutory interpretation; retroactivity principles)
- Caldwell v. Rodman, 50 N.C. (5 Jones) 139 (1857) (note payable on demand; accrual for liens timing)
- Adair v. Orrell’s Mut. Burial Ass’n, Inc., 284 N.C. 534 (1974) (contract law incorporation of law at time of contract)
- N.C. Dep’t of Corr. v. N.C. Med. Bd., 363 N.C. 189 (2009) (statutory interpretation and constitutional considerations)