Brown v. Turner

• Decision Date: 17 February 1932
• Docket Number: 594.
• Citation: 162 S.E. 608,202 N.C. 227
• Parties: BROWN v. TURNER.
• Court: North Carolina Supreme Court

162 S.E. 608

202 N.C. 227

BROWN v. TURNER.

No. 594.

Supreme Court of North Carolina

February 17, 1932

Appeal from Superior Court, Buncombe County; Stack, Judge.

Action by Lelia M. Brown against Margaret Turner, administratrix of Frank Turner, deceased. Judgment for plaintiff, and defendant appeals.

Affirmed.

Mortgagee may sue mortgagor's grantee who has assumed mortgage debt, without joining mortgagor.

This is an action on a promissory note for $375 executed and delivered to the plaintiff by Frank Turner, the defendant's intestate. Trial by jury was waived, the material facts being as follows.

On May 13, 1926, Frank Turner bought from the plaintiff and her sister, Ida M. Cathey, two houses and lots described as lots 8 and 9 at the price of $3,000. He paid $750 and executed six notes for $375 each, aggregating $2,250. To secure payment he executed a deed of trust on both lots to the Central Bank & Trust Company. Prior to May 8, 1928, the debt had been reduced to $1,500, and prior to this date W. B. Cathey through mesne conveyances had acquired Frank Turner's title to the lots. Cathey made improvements in the house on lot 9, thereby increasing its value $500. The value of lot 9 was then $2,000 and the value of lot 8 was $1,500. On May 8 1928, the plaintiff and her sister, Ida M. Cathey, made an agreement with W. B. Cathey that the trustee should release lot 9 from the operation of the deed of trust, so that said Cathey might obtain a first mortgage loan on the property. By consent of these parties the Central Bank & Trust Company released lot 9 on May 8, 1928, without notice to Frank Turner. Cathey then executed a mortgage or deed in trust on this lot to secure $1,200 which he borrowed from the Blue Ridge Building & Loan Association. At this time Cathey paid $750 of the remainder due on the notes ($1,500) secured by the deed of trust to the Central Bank & Trust Company and paid the interest on the remaining $750 to November 13, 1928 leaving unpaid two notes for $375 each, the one in suit held by the plaintiff and the other by Ida M. Cathey. The trustee held lot 8 as security for these notes. Lot 9 was sold under the mortgage given by Cathey.

The defendant contends upon these facts that Cathey became the principal debtor and Frank Turner a surety, who was discharged from liability to the mortgagee by the trustee's release of one of the lots.

The other question is whether the action is barred by the provisions of section 100 of the Consolidated Statutes.

J. E Baumberger and F. W. Thomas, both of Asheville, for appellant.

John H. Cathey and James E. Rector, both of Asheville, for appellee.

ADAMS J.

An agreement by the purchaser of an equity of redemption with his vendor that he will assume and pay the mortgage debt will render him personally liable not only to his grantor but also to the holder of the mortgage. As between themselves the purchaser is regarded as the principal debtor and the grantor as surety; and the mortgagee's right to maintain an action upon this agreement rests upon the ground that the contract of the purchaser is a collateral stipulation obtained by the mortgagor, which by equitable subrogation inures to the benefit of the mortgagee. The mortgagee is entitled to appropriate for his debt any security held by his debtor for its payment, but he has no rights against the purchaser which could not under the contract of purchase have been claimed by the original debtor; and in the application of this equitable doctrine the mortgagee has been allowed to enforce the personal liability of the purchaser only to the extent of a deficiency upon a foreclosure sale of the mortgaged premises and only if the party to whom the purchaser's agreement was given was himself personally liable for the payment of the mortgage debt. The mortgagor of course remains liable to the mortgagee as the debtor to...