1 N.C. App. 168 | N.C. Ct. App. | 1968
Is a remainder interest in devised real estate cut off by the mere execution of a deed of trust by the life tenant who has discretionary power to mortgage, sell, or lease?
We hold that under the facts presented in this case, it is not.
Upon the execution of a mortgage or deed of trust on real estate, legal title to the land vests in the mortgagee or trustee, as the case may be, but only as security for the payment of the debt. Gregg v. Williamson, 246 N.C. 356, 98 S.E. 2d 481, and cases cited therein.
In the case at bar, the real estate in question was devised to Daisy Stowe “during the period of her natural life, with the right and power to mortgage, sell, or lease the same, at her discretion.” She exercised her power to “mortgage” the property — nothing more — and when the debt secured by the mortgage (deed of trust) is paid, thereby preventing foreclosure of the instrument, the estate conveyed by the deed of trust completely terminates.
Appellant cites and strongly relies on the case of Hicks v. Ward, 107 N.C. 392, 12 S.E. 318. Our holding in the instant case is not inconsistent with Hicks.
The opinion in Hicks does not disclose the nature of the action before the court and does not state whether or not the mortgage involved in the action had been foreclosed. From the original record in the case, we find that the Hicks case was an action to foreclose the mortgage referred to therein and to determine who would receive the proceeds from the sale of the land after paying the indebtedness secured by the mortgage, expense of the sale, etc.
In Hicks the parties agreed “to rest the decision upon the construction of said will in reference to the authority of the said Hicks to execute the mortgage in question.” The testamentary provision in question was to “Edward, in trust for such person, or persons, and use, or uses, as he (should) by deed or will appoint, and until, and in default of, such appointment in trust, for the sole and separate and exclusive use and benefit of his daughter-in-law Harriet (wife of said Edward), during her life and at her death to be equally divided between the children,” etc. The Supreme Court held that this very clearly conferred upon Edward a general power of appointment and under it he had the power to appoint to his own use and execute a valid mortgage.
We also find in Hicks the following:
“The other question to be determined is, whether the execution of the mortgage was such an appointment or revocation as to wholly defeat the trusts declared in the will. It is argued that, conceding the power to execute the mortgage, its execution was but an appointment or revocation pro tanto, leaving the equity of redemption, or the surplus after a sale, subject to the trusts above mentioned. This, as a general proposition, is well estab*171 lished by the authorities, as in equity mortgages are considered as only securities for money, and no alteration in the estate is made thereby. 1 Sugden Powers, 361. (Emphasis added).
“It is equally well settled that where there is not only a mortgage, but an ulterior disposition inconsistent with the former (uses), it will operate in equity as a total appointment or revocation, unless there be a declaration that it shall be an appointment or revocation only pro tanto. Sugden, supra, 4 Cruise Dig., 202.”
The court then declared that the provision in the Hicks mortgage providing that “the overplus is to be paid over to the said Edward H. Hicks, his heirs, executors, administrators or assigns” constituted a plain manifestation of the intention of the donee of the power to revoke the settlement and assume entire dominion over the estate.
We summarize some of the distinctions between Hicks and the instant case: In Hicks there was a general power of appointment, by deed or will; in the instant case there is only the power'to mortgage, sell or lease. In Hicks there was a foreclosure of the mortgage, thereby fully implementing the terms and conditions of the mortgage; in the instant case there is no foreclosure of the deed of trust and “no alteration in the estate is made thereby.”
We have carefully reviewed the record in this case and find no prejudicial error.
The judgment of the Superior Court is
Affirmed.
