Bateman v. Sterrett

• Decision Date: 15 June 1931
• Docket Number: 287.
• Citation: Bateman v. Sterrett, 201 N.C. 59, 159 S.E. 14 (N.C. 1931)
• Parties: BATEMAN v. STERRETT et al.
• Court: North Carolina Supreme Court

159 S.E. 14

201 N.C. 59

BATEMAN v. STERRETT et al.

No. 287.

Supreme Court of North Carolina

June 15, 1931

Appeal from Superior Court, Robeson County; Daniels, Judge.

Action by W. C. Bateman against T. W. Sterrett, trustee, and others. Judgement for defendants, and plaintiff named and another appeal.

Affirmed.

Civil action to determine validity of removal and substitution of trustee in deed of trust under the provisions of a recent act of the General Assembly (Pub. Laws 1931, c. 78), Senate Bill No. 67, ratified March 4, 1931.

This act (section 1) provides that, in addition to other existent rights and remedies, "the holder and/or owners of all or a majority, in amount, of the indebtedness, notes, bonds, *** secured by mortgages, deeds of trust *** may *** substitute a trustee by the execution [and registration] of a paper writing [to be certified by the Clerk of the Superior Court] whenever it shall appear that the trustee then named in such mortgage, deed of trust *** has removed from the State become incompetent to act *** or has been declared a bankrupt," etc.

It is further provided by said act (section 4) that, whenever the right of substitution given therein "is exercised in respect to any deed of trust, mortgage or other instrument creating the lien which was executed prior to the ratification of this act," any person interested may appeal from the findings of the clerk of the superior court where the matter shall be heard de novo, with the further right of appeal to the Supreme Court.

It is conceded that the provisions of this statute have been observed in the instant case, and that, if valid, the judgment is correct, as the facts bring it within its terms.

The specific facts are that on April 21, 1926, W. C. Bateman executed and delivered to the Chickamauga Trust Company trustee, a deed of trust on certain lands in Robeson county, to secure a $1,000 note executed to The Prudential Insurance Company of America.

The Chickamauga Trust Company was adjudged a bankrupt December 20, 1930, and is still in bankruptcy. Frank A. Nelson is its trustee in bankruptcy.

On account of the bankruptcy of the said trustee, T. W. Sterrett was duly substituted in its stead under the provisions of the act aforesaid. The appeal challenges the validity of this act as applicable to the present facts.

W. C. Bateman, the trustor, and Frank A. Nelson, trustee in bankruptcy of Chickamauga Trust Company, and the Chickamauga Trust Company appeal, assigning errors.

Vernon Townsend, of Lumberton, and Henry A. McKinnon, of Maxton, for appellant Bateman.

David H. Fuller, of Lumberton, for appellants Chickamauga Trust Co. and Nelson.

Varser, Lawrence & McIntyre, McLean & Stacy, and Junius J. Goodwin, all of Lumberton, for appellees Sterrett and Prudential Ins. Co.

STACY C.J.

We have no hesitancy in holding that the act in question is not subject to successful challenge on the ground that it is a law "impairing the obligation of contracts" within the meaning of the constitutional provisions on the subject. Article 1, § 10, U.S. Const.; article 1, § 17, N.C. Const. This is the only point raised by the appeal.

In the first place, the right of removal and substitution of trustees in deeds of trust existed at the time of the execution of the Bateman-Chickamauga-Prudential deed of trust. C. S. § 2583; McAfee v. Green, 143 N.C. 411, 55 S.E. 828; Raleigh Real Estate & Trust Co. v. Padgett, 194 N.C. 727, 140 S.E. 714.

True, the provisions of mortgages and deeds of trust are contractual. Mitchell v. Shuford, 200 N.C. 321, 156 S.E. 513; Brown v. Jennings, 188 N.C. 155, 124 S.E. 150; Eubanks v. Becton, 158 N.C. 230, 73 S.E. 1009. And the obligation of a contract, within the meaning of the constitutional prohibition against impairment, includes all the means and assurances available for the enforcement of the contract at the time of its execution. Green v. Asheville, 199 N.C. 516, 154 S.E. 852; Barnes v. Barnes, 53 N.C. 366; Jones v. Crittenden, 4 N. C. 55, 6 Am. Dec. 531; 6 R. C. L. 324 et seq. But it is also true that the laws in force at the time of the execution of a contract enter into and become a part of the convention of the parties. Wachovia Bank & Trust Co. v. Hudson, 200 N.C. 688, 158 S.E. 244; House v. Parker, 181 N.C. 40, 106 S.E. 137; Guilford Lumber Mfg. Co. v. Holladay, 178 N.C. 417, 100 S.E. 597.

As pertinent and illustrative of this principle may be instanced Clark v. Reyburn, 8 Wall. 322, 19 L.Ed. 354, where it was said that the remedy provided by statute for the foreclosure of a mortgage, in existence at the time of its execution, enters into and becomes a part of the contract of the parties, and any change by legislative action, which substantially and materially affects this remedy to the injury of the mortgagee is a law "impairing the obligation of the contract," within the meaning of the constitutional provision on the subject; and Brine v. Ins. Co., 96 U.S. 627, 24 L.Ed. 858, where it was held that a statutory right of redemption, existent at the time of the making of a mortgage, enters into and became a part of its terms. See 6 R. C. L. 365, and cases there cited.

With the right of removal and substitution of trustees in deeds of trust given by statute at the time of the execution of the instrument in question, which entered into and became a part of the agreement of the parties, we see no valid objection to a procedural change in the method provided for the enforcement of this right, so long as the rights of the parties, and especially those of the cestui que trust, are not injuriously affected thereby. 6 R. C. L. 356. "No person can claim a vested right in any particular mode of procedure for the enforcement or defense of his rights." Martin v. Vanlaningham, 189 N.C. 656, 127 S.E. 695, 696; Dunn v. Jones, 195 N.C. 354, 142 S.E. 320; Statesville v. Jenkins, 199 N.C. 159, 154 S.E. 15. The 1931 act provides for registration, hearing, right of appeal, etc.

It is recognized that any unreasonable alteration in the remedies afforded by the lex loci contractus at the time of the making of a contract is prohibited by the contract clause of the Constitution. Green v. Biddle, 8 Wheat. 1, 5 L. Ed. 547. And a law which enlarges, abridges, or in any manner changes the intention of the parties, though professing only to regulate the remedy, necessarily impairs the obligation of the contract. State v. Carew, 13 Rich. (S. C.) 498 91 Am. Dec. 245. But a statute which facilitates the intention of the parties neither impairs the obligation of the contract nor divests vested rights. National Surety Co. v. Architectural Co., 226 U.S. 276, 33 S.Ct. 17, 57 L.Ed. 221; Lowe v. Harris, 112 N.C. 472, 17 S.E....