65 S.E. 611 | N.C. | 1909
Action, tried upon admissions in pleadings and facts agreed. Among other facts, it appeared that on 1 February, 1908, plaintiff Brett executed a mortgage or deed of trust with power of sale, conveying certain lands in Bertie County to defendant J. W. Davenport, trustee, to secure defendant bank in the sum of $460; that at the time this deed was executed there was a prior mortgage upon said land for an existing indebtedness to some third party, which remains unpaid; that in June, 1908, the trustee offered the land for sale, when same was bid in by certain purchasers for $1,850; that, the purchasers having refused to comply with their bids, the trustee, at the instance of the bank, the beneficiary, again advertised the property, as required by the deed, and sold same, subject to prior liens, and made title to the purchaser, the purchase price being much less than that bid at the former sale. Thereupon the plaintiff, the mortgagor, claiming a homestead interest, and certain junior judgment creditors of said mortgagor instituted this present action against the trustee and the bank, contending there had been a breach of trust on the part of defendants, and that *57 the trustee and the bank should be made to account to them, according (58) to their respective interests, for the sum of $1,281, the difference between the amount bid at the first sale and the debt secured in the deed, and interest and costs. The facts found by the court as more directly relevant to the inquiry are as follows:
"The following facts, together with such facts as are established in the pleadings, are agreed to as the facts in this case:
"J. W. Davenport, purporting to act under a deed of trust to him, sold the lands described, at the courthouse door in Windsor, N.C. when W. C. Askew, who is solvent, bid in one tract for $1,650, and G. T. Brett, who is solvent, the other, at $150.
"At the sale, Davenport, through his attorney, announced that all prior liens would be paid out of the sales of the land. Davenport had not advertised the lands according to law or as required by the terms of the deed of trust under which he sold.
"After the sale both bidders refused to comply with their bids — Brett, because the lands were not worth as much as he gave; Askew, because, as he alleged, he had been advised by counsel that the trustee, Davenport, could not make to him a good title.
"After this, without tendering a deed or bringing action to enforce the bid, Davenport again advertised this property, as required in the deed of trust, and sold the same, subject to the prior liens, amounting to $ _____, when Moses B. Gilliam bought the same, at the price of $ _____, and deed was executed to him."
Upon the facts found and admitted in the pleadings, the court gave judgment that defendants go without day, and plaintiffs excepted and appealed. After stating the case: As we understand it, the demand of plaintiffs proceeds upon the theory that the defendant trustee, and the bank, as his aider and abettor, should be held responsible in damages for a breach of trust, in failing to collect or making any endeavor to collect the bids obtained at the first sale; but we are aware of no principle that would justify or sustain such a recovery. The trustee, in effect, offered for sale an unencumbered title, and the instrument under which he was acting, in itself, conferred upon him no such power.
Authority (certainly the decided weight of authority) is to the effect that, except with the consent of the senior mortgagee (59) and of the mortgagor, and perhaps subsequent encumbrancers, or *58
by their ratification, a trustee in a deed of this character, a second mortgage with power of sale, can only sell the interest conveyed to him and which he is authorized to sell by the terms of the instrument under which he is acting. Dearnelly v. Chase,
Again, it appears that at the time of the first sale, or attempted sale, the property had not been advertised "according to law or as required by the terms of the deed of trust under which he had sold"; and on such facts it is very generally held, uniformly, so far as we have examined, that a sale would have been invalid. In an instrument of this kind the law is that a statutory requirement or contract stipulation in regard to notice is of the substance and unless complied with a sale is ineffective as a foreclosure, and even when consummated by deed the conveyance only operates to pass the legal title, subject to certain equitable rights in the purchaser, as of subrogation, etc., in case he has paid the purchase money in good faith. Atkins v. Crumpler,
Affirmed.
Cited: Eubanks v. Becton,
(60)