50 S.E. 331 | N.C. | 1905
This was an action for the recovery of real estate, the decision of which was submitted to the court upon a case agreed. On 7 March, 1885, the defendant, Felix Staton, executed two promissory notes to the payees therein named, and for the purpose of securing payment thereof he executed to W. H. Johnston, Esq., a deed conveying the locus in quo, which was duly recorded in the office of the register of deeds of Edgecombe County, upon the following trust: "To have and to hold said land (671) unto said W. H. Johnston, his heirs and assigns, in special trust, however, to hold the same for the uses and purposes hereafter specified, to wit: That if said bonds, with the interest thereon, shall not be paid on or before the day on which they will be due, as before stated, the said Johnston shall, on demand of either of said obligees, after sixty days notice in writing to said Felix Staton that payment of said bonds is required and thirty days advertisement of the time and place of sale at the courthouse door in Tarboro and three other public places in said county, expose said land at public sale before said courthouse door, for cash or on a credit, as he may deem best, and the proceeds apply to the satisfaction of said bonds and interest, or so much as may be due thereon, after retaining reasonable commissions for his trouble, and the residue, if any, shall pay to said Felix Staton or his assigns." On 18 April, 1892, a judgment was recovered against the defendant Staton, which was duly docketed in the Superior Court of said county. At October Term, 1895, of the Superior Court of Edgecombe judgment was rendered in a suit properly instituted for the recovery of the said notes executed by the defendants and secured as aforesaid and sale of said land, in which it was ordered and adjudged that if the indebtedness was not paid by 1 February, 1896, the land conveyed to secure the payment of the same should be sold for cash at the courthouse door at Tarboro by a commissioner therein named. On 10 April, 1902, execution was issued on the aforesaid judgment recovered on 18 April, 1892, against the defendant Staton, and his homestead was duly allotted by metes and bounds; upon such allotment it was ascertained that the judgment debtor owned 80 acres of said land in excess of his homestead, which was also described by metes and bounds and due return made thereof. The (672) sheriff duly levied said execution upon the excess of realty, and *481 after advertising the same at the courthouse door offered the said 80 acres for sale on the first Monday of September, 1902, when the plaintiff, N.J. Mayo; purchased the same for the sum of $250 and paid the purchase money therefor, receiving a deed from the sheriff for said land, which was duly recorded and made a part of the case agreed. That it appears from said deed that the sheriff sold the said 80 acres of land, making no reference to the deed in trust hereinbefore mentioned or other encumbrance thereon. On the first Monday in January, 1903, the commissioner appointed by the court for that purpose offered for sale at the courthouse door in Tarboro all that portion of the land embraced in the deed in trust to Mr. Johnston of 7 March, 1885, which included the part of said land allotted to the defendant Station as his homestead; he did not expose to sale the portion of said land in excess of the said homestead; the land was bid off at said sale for the sum of $2,000; the bid was raised 10 per cent, and at March Term, 1903, an interlocutory judgment was rendered in which the court used the following language: "I am of opinion that Mayo, being a purchaser for value of the 80 acres in the mortgage outside of homestead boundaries, and having paid his money ($250) therefor, acquired title thereto, subject to this mortgage lien, and has an equity as against defendant to have the land in the mortgage and within homestead boundaries sold first and before the 80 acres. This equity is strengthened by the admitted fact that the land within the homestead boundaries will bring sufficient to give defendant $1,000 and to pay the mortgage debt and the balance due on the judgment debt, and still leave a surplus to be paid defendant." It was adjudged that if the defendant Station failed to pay the judgment on or before the day therein named, that the commissioner should proceed to advertise the land described in the deed of trust, excepting the 80 acres, and sell the same at the courthouse door for cash, etc. The (673) defendant Station thereafter sold and conveyed all his right, title, and interest in the entire tract of land to his codefendant, Lucy C. Staton, who, prior to the day fixed, paid off and discharged the debt secured in the said deed in trust to Mr. Johnson. At September Term, 1903, of said court the said commissioner made his report, in which he set forth the payment of said judgment, etc. At the said term final judgment was rendered confirming said report and directing the payment of costs, etc. There are other facts stated in the case agreed which it is conceded are not material to be set forth or considered for the purpose of passing upon this appeal. His Honor, Judge Peebles, adjudged upon the case agreed that the plaintiff was the owner of the land and entitled to the immediate possession thereof, to which the defendant excepted and appealed. *482 After stating the facts: It is conceded by counsel in their well-considered briefs that the case agreed presents for decision the question whether, at the time of sale by the sheriff and purchase by the plaintiff, the interest of the judgment debtor in the locus in quo was subject to sale under execution. His Honor in his carefully prepared opinion and judgment makes an able and exhaustive review of the cases decided by this Court and answers the question in the affirmative, rendering judgment for the plaintiff. The case was ably and exhaustively argued and counsel have furnished us full briefs of the authorities. The act of 1812 may be found in The Code, sec. 450, subsecs. 3-4, and sec. 452. It has been frequently construed by this Court. It must be conceded that the decisions are not in harmony, and that there is much dicta to be found which it is difficult to reconcile. The question being of (674) much practical importance, especially since deeds in trust have so largely superseded the use of mortgages for the security of debts, we have deemed it well to endeavor to "run the line" and "mark the boundaries," removing, if possible, such confusion as may exist in our decided cases. We are not unmindful of the difficulty of the undertaking. As we shall see, several of the ablest and most learned of the judges who have sat upon this bench have given the subject careful consideration. It may be that some of them have failed to carefully examine the decisions made by those who have preceded them. However this may be, our investigation brings us to a conclusion different from that reached by the learned judge of the Superior Court, and it is proper that we set forth the reasons by which we have been controlled in our conclusion.
In Harrison v. Battle,
In Davis v. Petway,
Returning to Pool v. Glover, supra, we find Ruffin, C. J., con- (678) curring in the decision that the resulting trust could not be sold under the first section, a part of his language we have quoted, referring to the trust, concluding with these words: "But is an equity of redemption within the second branch of it (the act of 1812)? As an authority none could be more apposite to the case before us. The counsel, indeed, endeavored to distinguish the cases upon the ground that in Harrison v.Battle the time for the sale had passed and enough of the estate conveyed had been sold to pay all the scheduled debts; whereas here the time for a sale has not arrived, and no part of the debt has been paid. But that distinction cannot be sustained; for, although there might be something in it, if the case stood on the act of 1812 by itself, yet the subsequent acts subject the legal right of redemption to execution in like manner as the equity of redemption was liable under the previous act." He concludes that whatever might have been sold after the day of forfeiture may be sold before that day. The learned Chief Justice discusses the question at some length. As was his custom, he states his conclusion forcibly and clearly. There can be but one construction put upon his opinion. The case is cited in S. v. Pool,
The question was again before this Court at the same term in McKeithanv. Walker,
Counsel overlooked the fact that the language stricken out in subsection 4, section 450, is incorporated in section 452. Hence, so much of the argument as relates to that phase of the case becomes irrelevant. If the sale is sustained the legal title passed from Mr. (685) Johnston into the plaintiff.
The real test which is applied in all of the cases is whether the trust is pure and unmixed, so that the cestui que trust may, immediately and without affecting or disturbing the relation of the trustee to any other person, call for the legal estate. If so, his estate may be sold under execution; otherwise, it may not be. We think this the true criterion by which to solve the question. To the end that we may be clearly understood, we deem it not improper to say that our decision is confined to deeds of trust, both in form and substance. It does not in any manner involve mortgages wherein an estate is conveyed, either to the creditor or to some third person, upon condition that if the indebtedness be *490 paid at maturity "the deed and every clause thereof are null and void." It has become usual to insert a further clause empowering the mortgagee, who may be either the creditor or some third person named in the deed, in the event of a failure to pay the debt by the mortgagor, to sell and from the proceeds pay the debt, and the residue to the mortgagor. The right left in the mortgagor is twofold; first, to pay the debt before maturity and thus perform the condition by which the deed is avoided at law, and, second, after forfeiture and condition broken, to pay the debt and have a reconveyance. Under our statute this is accomplished by cancellation of record. This latter right is a well-defined estate, created and recognized, originally, only in equity, but by a process of judicial evolution and legislative enactment recognized at law. Bispham Eq., 150. This estate was well known to lawyers prior to the statute of 29 Chas. II., and when it was described in the second section of the act in contradistinction to trusts, it was clearly, as said by Pearson,C. J., a recognition that it was a separate and distinct thing from a resulting trust. While it is true that in the one sense the act of (686) 1812 was remedial and should be construed to advance the remedy and remedy the evil, it was also in derogation of the common law and the statutes then in force, which permitted only well-defined estates to be sold under execution. Henderson, C. J., in Harrison v. Battle, supra, concedes that a resulting trust such as Hunt had in the land is not within the words of the second section of the act, but says that it comes within its spirit. Upon a careful review of the question, the adjudged cases and the language of the act, we conclude:
1. That when land is conveyed to a trustee upon a declaration of trust (and there is no clause of defeasance in the deed) to sell for the payment of debt or to discharge any other duty, in which persons other than the judgment debtor have an interest, or when for any other reason the judgment debtor may not call for an immediate transfer of the legal title, the interest, estate, or right of the judgment debtor, although subject to the lien of a docketed judgment, cannot be sold under execution. The lien can be enforced only by judgment rendered in a civil action.
2. That an equity of redemption, as we have defined it, whether created by mortgage deed made to the creditor or to a third person with or without power of sale, may be sold under execution as provided by section 450, subsection 3, of The Code, being section 2 of the act of 1812.
We do not think the interlocutory judgment rendered by Judge Brown at March Term, 1903, affects the rights of the parties. The recitals by his Honor were made only for the purpose of directing the commissioner how to proceed in that action. It was not a final determination of the rights of the parties. The land was not sold by the commissioner. His Honor's judgment, from which this appeal is taken, *491 does not treat the interlocutory judgment as in any manner affecting the questions decided in this action.
We concur with his Honor in the opinion that the provisions (687) of section 451 of The Code are not mandatory. Thorpe v. Ricks,
For the reasons pointed out, the judgment of the court below must be reversed, with directions to it to render judgment for the defendant upon the case agreed.
Reversed.
Cited: McPeters v. English,
(688)