Barnes v. Crawford

• Decision Date: 07 October 1931
• Docket Number: 52.
• Parties: BARNES v. CRAWFORD et ux.
• Court: North Carolina Supreme Court

160 S.E. 464

201 N.C. 434

BARNES v. CRAWFORD et ux.

No. 52.

Supreme Court of North Carolina

October 7, 1931

Appeal from Superior Court, Nash County; Harris, Judge.

Action by Mrs. Ida Barnes, administratrix de bonis non of D. D Odom, deceased, against B. C. Crawford and his wife, Nellie W. Crawford, formerly Nellie W. Holt. Judgment for plaintiff against defendant last named, and such defendant appeals.

Reversed.

In the record "Odom" is also spelled "Odum." We will correct the record and spell it "Odom."

The parties agreed to the following statement of facts:

"1. That Mrs. Ida Barnes is administratrix de bonis non of D D. Odom, deceased, and in such capacity is the holder of a certain promissory note executed by S. F. Austin to D. D. Odom on January 16, 1926, in the sum of Four Thousand ($4,000.) Dollars, and said note was given as renewal of a like note first executed on February 9, 1923; that on or about February 1, 1927, S. F. Austin paid on the said sum of Four Thousand ($4,000.) Dollars the sum of Two Thousand ($2,000) Dollars, which is credited on said note.

"2. That on February 9, 1923, at the time the said S. F. Austin first executed the note, as mentioned above, to D. D. Odom, the Austin-Stephenson Company in order to secure the payment of the said note transferred and assigned to D. D. Odom a certain note and mortgage deed in the sum of Eleven Thousand ($11,000.) Dollars, which had been executed by S. S. Holt and wife, Nellie W. Holt, on May 14, 1920, to the said Austin-Stephenson Company, and due and payable on January 14, 1921.

"3. That the said note and mortgage had been executed to the said Austin-Stephenson Company by S. S. Holt and wife, Nellie W. Holt, to secure an indebtedness of the said S. S. Holt, and that the lands covered by the mortgage were the individual property of the said S. S. Holt; that the said Nellie W. Holt had executed said note and mortgage in her capacity as wife of S. S. Holt to fully convey any contingent interest which she might have in the lands securing said note.

"4. That since the execution of the note and mortgage to the Austin-Stephenson Company neither S. S. Holt nor Nellie W. Holt has ever paid any sum on the indebtedness and the lands conveyed by the mortgage deed have been sold under prior liens and nothing received from the sale to be applied on this indebtedness.

"5. That on September 12, 1921, Nellie W. Holt secured a divorce from the said S. S. Holt and since that time has intermarried with said B. C. Crawford, and is now the wife of the said B. C. Crawford. And since such divorce the said Nellie W. Crawford has never been advised of the nonpayment of the note, and has never agreed to any extension of the note to the holder of the same, and she specifically pleads as a bar to the action the statute of limitations applicable to her as surety, and the forbearance on the part of the creditor as the principal of said note.

"6. That S. S. Holt died on or about the month of June, 1925, and his estate did not have assets to be applied to said indebtedness, and final account has been filed by his administratrix, who has been discharged from further duties by the courts.

"7. That summons in this case was issued out of the Superior Court of Nash County on September 24, 1928, and due service had on the said B. C. Crawford and wife, Nellie W. Crawford, formerly Nellie W. Holt.

"8. That the plaintiff does not claim any right of action against the said B. C. Crawford and agrees that he is not indebted to the plaintiff in any amount whatsoever.

"9. That since the execution of the renewal note, as set out above, by S. F. Austin to D. D. Odom, the said S. F. Austin has been adjudicated a bankrupt and discharged in accordance with the bankruptcy statutes; and the said Austin-Stephenson Co. since said date has been adjudicated a bankrupt.

"From the foregoing facts the plaintiff contends that Nellie W. Crawford, who was formerly Nellie W. Holt, is indebted to her in the sum of Four Thousand ($4,000.) Dollars, with interest, subject to a credit of Two Thousand ($2,000.) Dollars, all of which is fully set out above.

"From the foregoing statement of facts the defendant, Nellie W. Crawford, contends that she is not liable to the plaintiff in any amount.

"If the Court from the foregoing facts is of the opinion that the plaintiff is entitled to judgment, then judgment to be given in her favor, but if the Court is of the opinion that said cause of action is barred as to the defendant, Nellie W. Crawford, then judgment should be rendered in her favor." The note in controversy is as follows: "$11,000.00. Smithfield, N.C. May 14, 1920.

"On or before January 14, 1921, with interest from maturity, until paid at the rate of 6% per annum, interest payable annually, we, promise to pay to Austin-Stephenson Company, Inc., or order, the sum of $11,000.00, same being for value received.

"This bond is secured by mortgage deed of even date herewith. It is fully agreed and understood that in default of the payment of this bond when due, either principal or interest, then the whole debt, as evidenced by the other bonds of even date with this which mature later, shall become due and collectible at once, and without demand on the maker of this bond by the owner thereof.

"Given under our hands and seals, this the May 14th, 1920.

"S. S. Holt (Seal.)

"Nellie W. Holt (Seal.)

"Endorsement:

"The Austin-Stephenson Company,

"By W. H. Austin, President."

The court below rendered the following judgment:

"This action came on to be heard at the present term of the Court before Hon. W. C. Harris, Judge presiding, and is heard on the Agreed Statement of Facts found in the judgment roll of this action. It is now on motion by the Court ordered and adjudged:

"That the plaintiff recover of the defendant, Mrs. Nellie W. Holt Crawford, the sum of Four Thousand ($4,000.) Dollars, with interest thereon at 6% per annum from January 16, 1926, subject to credit of Two Thousand ($2,000.) Dollars, February 1, 1927, and the costs of the action taxed by the Clerk of this Court.

"W. C. Harris, Judge Presiding."

Defendant Nellie W. Crawford duly excepted and assigned error to the judgment as rendered, and appealed to the Supreme Court.

Leon G. Stevens, of Smithfield, for appellant.

T. T. Thorne, of Rocky Mount, for appellee.

CLARKSON J.

On January 16, 1926, S. F. Austin executed to D. D. Odom his promissory note in the sum of $4,000. This note was given in renewal of a note executed February 9, 1923. S. F. Austin has paid on the note $2,000. On February 9, 1923, at the time that Austin executed the note to D. D. Odom, the Austin-Stephenson Company, to secure the payment of said note of Austin, assigned to D. D. Odom a note of $11,000, executed by S. S. Holt and wife Nellie W. Holt, now Nellie W. Crawford, and secured by mortgage of even date on land of S. S. Holt. This Holt note was dated May 14, 1920, and payable to Austin-Stephenson Company. It was due and payable on or before January 14, 1921, and indorsed by the payee. The note of S. S. Holt and wife, Nellie W. Holt, has never been paid. S. S. Holt died in June, 1925.

It is contended by Nellie W. Holt (now Crawford) that she was surety for her husband, S. S. Holt, on the note under seal, which was known to the payee, and the three-year statute of limitations which she pleaded is applicable. That the payee transferred the note after maturity to D. D. Odom, who is subject to the defenses existing between the original parties to the note under seal. We think this contention correct.

C. S. § 437, within 10 years an action (2) "Upon a sealed instrument against the principal thereto."

C. S. § 441, within 3 years an action (1) "Upon a contract, obligation or liability arising out of a contract, express or implied," etc.

C. S. § 437(2) is not applicable to actions against sureties. The use of the word "principal" and the omission of the word "sureties" clearly indicates this to be the intention of the General Assembly.

C. S. § 441 (1) is applicable to sureties, and the action against them is limited to three years. Welfare v. Thompson, 83 N.C. 276.

In the Welfare Case, supra, citing numerous authorities, is the following: ""We believe it is conceded that whenever it is proposed to prove that a co-promisor or co-obligor to a note or bond is surety only, the fact not appearing upon the face of the instrument, it is competent to show by parol that fact, and that the creditor knew at the time he received the note that he was surety."

In Goodman v. Litaker, 84 N.C. 8, at page 10, 37 Am Rep. 602: "In the trial of the case of Manley v. Boycott, 75 E. C. L. Rep., 45, when counsel was urging upon the court the right of the maker of a promissory note to show that he signed the instrument as surety only, Lord Campbell interposed the remark that it must be shown that the note was so made with the knowledge of the payee; that allegation is indispensable. Such a conclusion seems not only to address itself to our reason, but to be eminently just; and especially so under a system which like our own prescribes different periods for the protection of principals and sureties." Redmond v. Pippen, 113 N.C. 90, 18 S.E. 50; Hunter v. Sherron, 176 N.C. at page 228, 97 S.E. 5; Kennedy v. Trust Co., 180 N.C. 225, 104 S.E. 464; Chappell v. Surety Co., 191 N.C. 703, 133 S.E. 21; Adamson v. McKeon, 208 Iowa, 949, 225 N.W. 414, 65 A. L. R. 817, see Anno. See Raleigh Banking & Trust Co. v. York, 199 N.C. 624, 155 S.E....