Holland v. Dulin

• Decision Date: 21 March 1934
• Docket Number: 22.
• Citation: 173 S.E. 310,206 N.C. 211
• Parties: HOLLAND et al. v. DULIN et al.
• Court: North Carolina Supreme Court

173 S.E. 310

206 N.C. 211

HOLLAND et al. v. DULIN et al.

No. 22.

Supreme Court of North Carolina

March 21, 1934

Appeal from Superior Court, Cherokee County; Clement, Judge.

On defendants' petition for rehearing.

Petition dismissed.

For original opinion, see 205 N.C. 202, 170 S.E. 784.

The facts are these:

1. On August 16, 1921, S. M. Holland purchased from W. B. Fisher and wife two tracts of land in Cherokee county, giving notes due one, two, and three years after date for part of the purchase price and securing said notes by deeds of trust to T. J. Hill, trustee, on the lands purchased.

2. These purchase-money notes were hypothecated with the Anderson-Dulin-Varnell Company of Knoxville, Tenn., to secure a large indebtedness which Fisher owed to said company.

3. Thereafter, on December 5, 1923, S. M. Holland and wife reconveyed the two tracts of land above mentioned to W. B Fisher and wife in full settlement of the purchase indebtedness then outstanding against said lands. This deed was registered March 23, 1925.

4. The original notes and deeds of trust were not delivered up and surrendered to S. M. Holland and wife for the reason that they were then held by Anderson-Dulin-Varnell Company as collateral security.

5. On December 29, 1925, Fisher's indebtedness to Anderson-Dulin-Varnell Company had been reduced to $2,518.28, and they were pressing for payment. On that date, W. B. Fisher borrowed from H. L. Dulin enough money to pay his indebtedness to the Anderson-Dulin-Varnell Company, executing his note to H. L. Dulin in the sum of $2,766.70, and securing the same by collateral and taking from Dulin receipt for said collateral which included the notes and deeds of trust executed by S. M. Holland and wife mentioned in paragraph 1, above, and other collateral not held by the corporation. In a letter to Fisher, dated December 31, 1925, Dulin, writing on behalf of the corporation, said: "It has been very gratifying to us and we know it must be gratifying to you, that when you were here this week you were in a position to settle everything owing to Anderson-Dulin-Varnell Company with interest on all past due business and your account was closed up in full and in a very, very satisfactory way."

6. Thereafter, the lands in question were divided into lots and, beginning in 1927, various conveyances were executed by W. B. Fisher and wife to the plaintiffs in this action for different portions of the tracts covered by the deeds of trust of S. M. Holland and wife. Moneys have been borrowed on other portions and secured by deeds of trust to some of the plaintiffs.

7. In 1932, Dulin caused T. J. Hill, trustee, to advertise the lands for sale under the powers contained in the Holland deeds of trust, and this action was instituted to enjoin the sales and to have the said deeds of trust removed as clouds on plaintiffs' titles.

The jury found, upon issue submitted, that the Holland notes were paid and extinguished by the reconveyance mentioned in paragraph 3, above, and, upon peremptory instruction answered that H. L. Dulin was not a holder in due course of the Holland notes.

Judgment on the verdict, from which the defendants appeal, assigning errors.

Plaintiff who took purchase-money notes secured by trust deed after maturity and when notes had been paid, took subject to equities of makers.

H. A. Tapp, of Knoxville, Tenn., and Alfred S. Barnard, of Asheville, for appellants.

Harkins, Van Winkle & Walton, of Asheville, and Gray & Christopher, of Murphy, for appellees.

STACY Chief Justice.

It is the contention of H. L. Dulin that he stands in the shoes of Anderson-Dulin-Varnell Company with respect to the Holland notes and deeds of trust, because the money loaned by him to Fisher on December 29, 1925, was advanced to take up the note held by the corporation; that the collateral transferred to him was a continuing security for the original indebtedness; and that the note executed to him was but an evidence of the original debt.

But the note held by Anderson-Dulin-Varnell Company was not transferred or assigned to Dulin. This obligation was canceled, and Fisher executed a new note direct to Dulin for an amount in excess of the corporation's debt. Dulin in turn gave Fisher a written receipt for the collateral "received of W. B. Fisher," which was more than that originally held by the corporation; additional collateral having been demanded and put up. "Mr. Degroat brought the collateral (held by the corporation) there and handed it to me (Fisher testifying) and I handed it to Mr Dulin after a receipt was given." The Holland notes were past due...