Bank of Union v. Redwine

• Decision Date: 24 May 1916
• Docket Number: 413.
• Citation: 88 S.E. 878,171 N.C. 559
• Parties: BANK OF UNION v. REDWINE ET AL.
• Court: North Carolina Supreme Court

88 S.E. 878

171 N.C. 559

BANK OF UNION v. REDWINE ET AL.

No. 413.

Supreme Court of North Carolina

May 24, 1916

Clark C.J., dissenting.

Appeal from Superior Court, Union County; Carter, Judge.

Suit for an injunction by the Bank of Union against R. B. Redwine and others. From judgment for plaintiff after order of reference and overruling his motion to dismiss, defendant Redwine appeals. Affirmed.

Since the statute prescribes the penalties for usury, but does not declare that no action may be maintained upon contracts tainted with illegal interest, motion to dismiss an action because usurious interest was charged as the basis of the contract cannot be allowed.

This action was instituted by the Bank of Union against the defendant R. B. Redwine and others for the purpose of establishing its right in and to ten shares of the capital stock of the Lake Land & Lumber Company, belonging to the defendant E. C. Williams, and by him assigned to the plaintiff bank as security for certain indebtedness; the immediate purpose of the action being to restrain the defendant John C. Sikes, trustee for R. B. Redwine, from proceeding to sell said shares of stock under a deed of trust alleged by plaintiff to constitute a junior lien upon the same. Issue was joined by defendant Redwine on the priority of plaintiff's lien and on the amount of the debts secured thereby, the said defendant claiming that the plaintiff bank had charged defendant Williams usurious interest on the loan secured by said stock, and asking that plaintiff's debt be reduced on that account. He also invoked the doctrine of marshaling assets, and asked that before proceeding against said stock plaintiff be compelled to exhaust its security on the home place of the defendant Mrs. J. W. Griffin. Mrs. Griffin, who had signed with defendant Williams the note secured by the mortgage of her home place and by the pledge of the said corporate stock answered that she had signed said note as a surety, and demanded that the plaintiff, before foreclosing the mortgage on her home, exhaust its security on the stock.

An injunction pending the hearing was obtained from Judge Shaw in December, 1914, and the case came on for hearing before Judge Devin at May term, 1915. At this hearing the issues involving the priority of plaintiff's lien were tried and determined in favor of plaintiff. And it was also found by the jury and adjudged by the court that Mrs. Griffin was merely a surety on the note secured by mortgage of her home and the corporate stock. Judge Devin then referred the case to W. J. Pratt, Esq., to determine the amount of the debts of plaintiff secured by the stock, and to pass upon the question of marshaling. The referee made his report to Judge Carter at October term, 1915, who passed upon exceptions thereto filed by both sides, and sustained plaintiff's contention that the defendant Redwine, being merely a junior incumbrancer could not plead usury in the debt of Williams to plaintiff, and held that this was not an appropriate case for the application of the principle of marshaling assets. The court also overruled a motion to dismiss the action because usury had been charged. From these judgments of Judges Devin and Carter adverse to him the defendant Redwine appealed to this court.

The verdict of the jury before Judge Devin was as follows:

"(1) Was the paper writing from E. C. Williams to J. C. Sikes, trustee, executed by said E. C. Williams subsequent to the execution of the assignment of the Bank of Union? Answer: Yes.

(2) Was the name 'W. S. Blakeney' in said paper writing from E. C. Williams to J. C. Sikes, trustee, inserted therein in lieu of the words 'the Bank of Union,' by mistake of draftsman, as alleged in the complaint? Answer: Yes.

(3) Did defendant Redwine take the paper writing executed by E. C. Williams to J. C. Sikes, trustee, with notice of assignment by said Williams to the Bank of Union of the ten shares of stock in controversy? Answer: Yes.

(4) Was the subscribing witness of the paper writing executed by E. C. Williams to J. C. Sikes, trustee, in proving same before the deputy clerk of court, sworn upon the Holy Bible? Answer: No.

(5) Was the defendant Mrs. J. W. Griffin surety on the note for $7,500 to the Bank of Union, as alleged in her answer? Answer: Yes."

The plaintiff, the Bank of Union, claimed the 10 shares of stock under a written assignment made to it by said Williams on January 12, 1902, which assignment was not recorded until November 17, 1914. And, notwithstanding the fact that the deed of trust made to Sikes, trustee, was dated January 4, 1912, and the trust was accepted by Sikes, trustee, January 6, 1912, the plaintiff contended that this deed of trust was executed subsequent to the assignment to the plaintiff. The jury found it was executed subsequently. The plaintiff further contended that it was entitled to the stock in controversy under and by virtue of another assignment. This assignment was dated April 1, 1914, and recorded on the same date. The plaintiff further contended that the name "W. S. Blakeney" was inserted in the deed of trust to Sikes by mutual mistake of the parties or by inadvertence or mistake of the draftsman in lieu of the name "the Bank of Union." The jury so found. The defendant contends that there was not sufficient evidence of a mistake, and the judge should have so instructed the jury. The plaintiff further contends that the defendant Redwine had notice of the assignment of the ten shares of stock to the Bank of Union, and therefore he took the same subject to said assignment. The jury so found.

The defendant contends that the shares of stock, as evidenced by certificate is personal estate, and a mortgage of it as made by Williams to the plaintiff, should have been recorded, and, not having been recorded, no notice, however full and formal, is sufficient.

The plaintiff further contended that, notwithstanding the order of probate of the clerk directing the registration of the deed of trust to Sikes for the benefit of the defendant Redwine was in due form, the execution of same was not proven upon oath legally administered, and the registration is a nullity. The jury so found.

The defendant contends that for the purpose of registration or notice the probate, being in due form, cannot be attacked by evidence aliunde. The defendant further contends that, the certificate of stock for the ten shares having been placed in the possession of the trustee, Sikes, this would be a pledge--a delivery of the property--and no registration was necessary. The deed of trust to Sikes, trustee, after conveying certain personal property, purported to convey the certificate of stock, and then followed the following clause:

"This certificate subject, however, to any conveyances heretofore made of said certificate of stock to J. R. English or the English Drug Company, and also subject to any existing conveyance of said certificate of stock to W. S. Blakeney, and this only in event the security, including personal he now holds, when exhausted, will not pay off and discharge his existing debt against Williams."

The plaintiff contended that this provision in the deed of trust does not apply to the security then held by Blakeney, but to that held by Redwine. The effect of the judgment is to give the construction contended for by the plaintiff to this language, which the defendant contends is erroneous.

Judgment was rendered in favor of the plaintiff, and the defendant appealed.

Armfield & Adams, of Monroe, and Cansler & Cansler, of Charlotte, for appellant.

Stack & Parker, of Monroe, for appellee.

ALLEN J.

It is well to consider first the exceptions taken by the defendant upon the trial of the issues submitted to the jury, as the verdict has an important bearing on the construction and legal effect of the deed of trust under which the defendant claims the certificate of stock in controversy, and the following are the material questions raised by these exceptions:

(1) Are the issues sufficient to sustain the judgment correcting the deed of trust?

(2) Was there sufficient evidence of mistake to justify submitting the question to the jury?

(3) Was the maker of the deed of trust guilty of such negligence in failing to read the deed that equity will deny him, and the plaintiff claiming under him, the right to correct the deed?

(4) Will a court of equity correct a deed upon the ground of mistake except as between the original parties?

The issue as to mistake was tendered by the defendant, and if, in any reasonable view, it contains the material facts, the defendant ought not to be heard to complain. The criticism of the issue is that it does not embrace the agreement of the parties, but, while the agreement does not appear in the issue in express terms, it is necessarily involved, because there could be no mistake of the draftsman, unless there was a previous agreement which he failed to insert in the deed.

Nor do we think there was such negligence on the part of the maker of the deed as will deprive him of the benefit of the equity for correction. The general rule is, as contended by the defendant, that equity helps those who are diligent, and not those who are negligent (Capehart v. Mhoon, 58 N.C. 178), and ordinarily one who is able to read who signs an instrument without reading will not be aided (Dellinger v. Gillepsie, 118 N.C. 737, 24 S.E. 538); but the rule is not of universal application and is subject to exceptions.

Mr. Pomeroy says in his work on Equity Jurisprudence (volume 2, § 858):

"It has sometimes been said in very general terms that a mistake resulting from the complaining party's own negligence will never be relieved. This proposition is not sustained by the authorities. It

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