Bank of Clinton v. Goldsboro Savings & Trust Co.

• Decision Date: 22 October 1930
• Docket Number: 212.
• Citation: 155 S.E. 261,199 N.C. 582
• Parties: BANK OF CLINTON v. GOLDSBORO SAVINGS & TRUST CO.
• Court: North Carolina Supreme Court

155 S.E. 261

199 N.C. 582

BANK OF CLINTON v. GOLDSBORO SAVINGS & TRUST CO.

No. 212.

Supreme Court of North Carolina

October 22, 1930

Appeal from Superior Court, Duplin County; Grady, Judge.

Action by the Bank of Clinton against Goldsboro Savings & Trust Company. Judgment for plaintiff, and defendant appeals.

Modified and affirmed.

Transferee without recourse of first in series of unpaid notes secured by single mortgage held not entitled to payment in full to prejudice of holder of subsequent notes.

Transferee of note, reciting that it was secured by mortgage, had notice of terms of mortgage.

The judgment of the court below was as follows: "This cause coming on to be heard, and the jury having returned the following verdict: (1) Did the Bank of Clinton purchase the $2,000.00 note of J. O. Bizzell from the defendant, and pay for the same, as alleged in the complaint? Answer: Yes. (2) Was the note so purchased, the first in the series of unpaid notes to mature, as alleged in the complaint? Answer: Yes. And the defendant having admitted in open Court that it held three notes of J. O. Bizzell, each in the sum of $2,000.00 all secured by mortgage deed on lands in Wayne County; that said lands have been sold under foreclosure, and that it brought $3,500.00, which money the defendant now has in hand and the Court being of the opinion that the plaintiff, the transference of said first maturing note is entitled to priority and preference over defendant's transfer to the extent of the amount due on said note, in accordance with the rulings in Whitehead v. Morrill, 108 N.C. page 68 12 S.E. 894, and Etheridge v. Vernoy, 74 N.C. 800, it is now ordered and adjudged that the plaintiff recover of the defendant the sum of One Thousand and Five Hundred ($1,500) Dollars, with interest on the same from December 10, 1926, together with the costs of the action to be taxed by the Clerk."

The necessary facts will be set forth in the opinion.

E. A. Humphrey, of Goldsboro, and George R. Ward, of Wallace, for appellant.

R. L. Herring and Butler & Butler, all of Clinton, for appellee.

CLARKSON J.

On August 16, 1922, J. O. Bizzell and wife, Iola Bizzell, made and executed a mortgage on certain land to Mary F. Edwards, executrix, which on August 28, 1922, was duly recorded in the office of the register of deeds of Wayne county, N.C. The mortgage was to secure $11,000, as follows: $1,000 due on or before January 1, 1923; $2,000 due on or before January 1, 1924; $2,000 due on or before January 1, 1925; $2,000 due on or before January 1, 1926; $2,000 due on or before January 1, 1927; $2,000 due on or before January 1, 1928.

The following provision is in the mortgage: "But if default shall be made in the payment of said notes, or either of them or the interest on the same, or any part of either at maturity, then and in that event, all of said notes shall became due and it shall be lawful and the duty of said party of the second part to sell said land hereinbefore described, to the highest bidder, for cash, at the Courthouse door in Wayne County, first advertising the same for thirty days in some newspaper published in Wayne County, and convey the same to the purchaser in fee simple, and out of the moneys arising from said sale to pay said notes and interest on the same, together with costs of sale, and pay any surplus, if any, to said parties of the first part, or their legal representatives."

All the notes have been paid, except $5,500, which were transferred to defendant bank, as trustee for the estate of Mr. Edwards by Mrs. Mary F. Edwards, executrix. The controversy is over the following note:

"$2,000.00 Goldsboro, N. C.

"On or before January 1st, 1926, we promise to pay Mary F. Edwards, Executrix, the sum of Two Thousand Dollars, with interest from date, at the rate of six per cent. per annum, payable annually, for value received. This note is secured by mortgage deed on real estate of even date. This the 16th day of August, 1922.

"J. O. Bizzell (Seal.)

"Witness: Z. T. Brown. Iola Bizzell (Seal.)"

Five hundred dollars was paid on this note on January 2, 1926. The defendant was pressing J. O. Bizzell for the balance due on the note of $1,500 and interest. Bizzell made arrangements with plaintiff bank to take up the note from defendant bank. This was done on October 11, 1926, Bizzell paying plaintiff bank the interest $85. No part of the $1,500 has been paid the plaintiff bank by Bizzell. The contention of plaintiff on the first issue was to the effect that it had purchased from defendant the $2,000 note, balance due on same $1,500. This was denied by defendant. The defendant claiming that the plaintiff paid the note for Bizzell and the money sent defendant bank, $1,570, by plaintiff bank, was a payment of the note.

It was admitted that the note in controversy was not canceled by defendant bank, but "transferred without recourse" by the president of defendant bank, and plaintiff sent defendant the principal and interest due on the note, $1,570. The defendant contends that there was no evidence to go to the jury as to the bargain and sale of the note. We cannot so hold. We think the transfer on the note, with other evidence, sufficient to be submitted to the jury. We think it unnecessary to set forth the evidence.

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