Blanton v. Bostic

• Decision Date: 24 April 1900
• Citation: 35 S.E. 1035,126 N.C. 418
• Court: North Carolina Supreme Court
• Parties: BLANTON et al. v. BOSTIC et al.

35 S.E. 1035

126 N.C. 418

BLANTON et al.

v.BOSTIC et al.

Supreme Court of North Carolina.

April 24, 1900.

TRUST DEED—DEFECTIVE ACKNOWLEDGMENT —RECORDING—SUBROGATION — RENEWAL, OF SECURED NOTES—AMENDMENT OF PLEADINGS BEFORE REFEREE—PARTIES.

1. Where sureties on a note are secured by a trust deed executed to them by the maker of the note, the renewal of such note does not release the lien, in the absence of a showing of such an intention.

2. A referee has power to permit the amendment of pleadings in an action referred to him.

3. Where a note on which an action was brought was assigned during the pendency of the action, the assignee was properly substituted as a party plaintiff.

4. Where a deed of trust is given to two sureties on a note by the principal, and the third surety paid the debt, he is entitled to be subrogated to the rights of his co-sureties.

5. Where a deed of trust is given to sureties on a note to secure its payment, the payee of the note has an equitable interest in the property, by virtue of such deed, superior to that of the sureties, which cannot be defeated by a release of the deed by the sureties.

6. Where the maker of a note executed a trust deed to two sureties on the note for their protection, which deed was defectively acknowledged before another surety, and the payee of the note and his assignees knew of such acknowledgment, the registration of the deed did not make the lien of plaintiff's assignee superior to the interest of subsequent purchaser of the property, as the registration of a conveyance does not give notice against one claiming thereunder who knows of a latent defect in the acknowledgment.

Appeal from superior court, Cleveland county; McNeill, Judge.

Suit by B. Blanton and others against J. B. Bostic and others for subrogation. From the findings of the referee, both parties appeal. Reversed on defendant's Appeal.

D. W. Robinson, for plaintiffs.

T. H. Cobb, for defendants.

CLARK, J. D. D. Suttle on January 4, 1890, executed his promissory note, with three sureties. On the same day he executed his deed in trust to secure two of said sureties, and his acknowledgment of the deed and privy examination of his wife were taken before a justice of the peace, who was the other surety, and who was not named in the deed. The notes were renewed in 1892, and by successive assignments have become the property of the present substituted plaintiff. The deed in trust was released by the two sureties, beneficiaries named therein, and the grantor then made the conveyance under which defendants claim. This is an action by the payees of the notes to subject the land under the deed of trust.

It needs no discussion to say that it was correctly held by the referee, and approved by the judge: (1) That the renewal of the notes did not relinquish the lien, in the absence of evidence to show such Intent. Hyman v. Devereux, 63 N. C. 627; Vick v. Smith, 83 N. C. 82; Matthews v. Joyce, 85 N. C. 266; Traders' Nat. Bank v. Lawrence Mfg. Co., 96 N. C. 298, 3 S. E. 363; Bank v. Ireland, 122 N. C. 574, 29 S. E. 835. (2) The referee had power to permit amendments to the pleadings. Code. § 422.

The note having been again assigned, since this action began, it was also proper to make the assignee a substituted party plaintiff.

It was also correctly held that the surety, omitted in the deed in trust, was entitled to be subrogated to the rights of his co-sureties, pro tanto, If he had paid the debts, and the payees in the notes had a superior equitable right of subrogation to the benefit of any security given by the principal debtor to his sureties (James v. Gaither, 93 N. C. 362; Sherrod v. Dixon, 120 N. C. 63, 26 S. E. 770: Haprlson v. Styres, 74 N. C. 290; Wlswall v. Potts, 58 N. C. 189), whether they knew of it or not (Matthews v. Joyce, supra; Brandt, Sur. § 282).

It is also true that, if the payees in the note acquired a valid right to subrogation to the security given the sureties, this right could not be released by the sureties, to the detriment of the principal creditor. Matthews v. Joyce and James v. Gaither, supra; Ingram v. Kirkpatrick, 41 N. C. 475; Souther-land v. Fremont, 107 N. C. 571, 12 S. E. 237; Bizzell v. McKinnon, 121 N. C. 189, 28 S. E. 271; Brandt, Sur. §§ 282, 283.

The effect of the acknowledgment of the trust deed before the third surety, who is not named therein, was earnestly presented. The principle that the probate of a deed taken by one who is disqualified for any cause is void (White v. Connelly, 105 N. C. 65, 11 S. E. 177) applies equally to invalidate the deed when the officer taking an acknowledgment and privy examination is...