Certain-Teed Products Corp. v. Sanders

• Decision Date: 14 April 1965
• Docket Number: No. 284,CERTAIN-TEED,284
• Citation: 264 N.C. 234,141 S.E.2d 329
• Parties: PRODUCTS CORPORATION CORPORATON v. R. M. SANDERS, J. C. Sedberry, Trustee, Lynn S. Challis, T. Fred Challis, Herbert Howze and wife, Viola Howze, R. E. McDaniel, Trustee, and S. A. Dover, Jr.
• Court: North Carolina Supreme Court

Page 329

141 S.E.2d 329

264 N.C. 234

CERTAIN-TEED PRODUCTS CORPORATION CORPORATON v. R. M. SANDERS, J. C. Sedberry, Trustee, Lynn S. Challis, T Fred Challis, Herbert Howze and wife, Viola Howze R. E. McDaniel, Trustee, and S. A. Dover, Jr.

No. 284.

Supreme Court of North Carolina.

April 14, 1965.

Dockery, Ruff, Perry, Bond & Cobb, Charlotte, for plaintiff appellee.

J. C. Sedberry, Charlotte, for R. M. Sanders, Lynn S. Challis, T. Fred Challis and S. A. Dover, Jr., defendant appellants.

BOBBITT, Justice.

Before considering directly the questions presented, it seems appropriate to advert to the following uncontroverted matters.

(1) The deed of trust to Sedberry, Trustee, duly recorded since 1959, was a valid first lien on the property described therein.

(2) Plaintiff did not seek a personal judgment against defendants Howze on their $10,908.84 promissory note to Institute. (Note: Defendants Howze made no payment on said $10,908.84 promissory note.)

(3) The foreclosure by Sedberry, Trustee, is attacked solely by plaintiff, allegedly the owner and holder of the $10,908.84 second lien promissory note.

(4) According to the terms of the $595.00 note secured by the deed of trust to Sedberry, Trustee, the entire unpaid balance, $145.00 plus interest, was past due and in default at the time of the alleged agreement between defendant Herbert Howze and Sanders and at the time of the foreclosure proceedings.

We consider first appellant's contention, based on appropriate exception and assignment of error, that plaintiff's action should have been nonsuited. The rules applicable in the consideration of the evidence when passing on a motion for nonsuit are well settled. 4 Strong, N.C. Index, Trial § 21. It is noted that a plaintiff must make out his case secundum allegata. His recovery, if any, must be based on the allegations of his complaint. Nix v. English, 254 N.C. 414, 421, 119 S.E.2d 220, and cases cited.

The complaint attacks the foreclosure on the grounds considered below.

Plaintiff, relying on the alleged oral agreement between defendant Herbert Howze and Sanders, contends the debt secured thereby was not in default at the time the deed of trust to Sedberry, Trustee, was foreclosed.

With reference to the alleged agreement, defendant Herbert Howze, a witness for plaintiff, testified in substance as follows:

He had a conversation with Sanders 'about (his) plan to build a house through the Institute for Essential Housing, on the lot.' On the occasion of such conversation, he offered to pay Sanders $20.00 to apply on the then unpaid balance of $145.00 and interest; that Sanders would not take the $20.00 so offered, stating he (Howze) would 'probably * * * need this money for something else' and it would be all right for him to wait until the house was completed and then pay the entire balance. At one time, he referred to the conversation as having taken place 'the latter part of 1961' before 'they started to build the house.' Later, he testified that during the conversation he told Sanders 'they had started the house.' Later, he testified the conversation was in December 1961 or in January 1962.

Howze testified further that, after said conversation, Sanders made no demand for payment; that, when construction was in progress, he (Howze) visited the lot about twice a week; and that he had no notice of the foreclosure prior to completion thereof.

Howze on cross-examination testified: His last payment to Sanders was made on October 9, 1961. His conversation with Sanders was 'around the early part of February 1962.' He testified: 'It was in February that I offered (Sanders) $20.00.'

While not pertinent in passing upon the motion for judgment of nonsuit, it seems appropriate to say that Sanders' testimony was in direct conflict with that of Howze.

It is noted: Howze testified to one conversation with Sanders concerning the matters referred to above. Too, apart from Howze's testimony concerning such conversation, there is no evidence that Sanders, prior to completion of the foreclosure, had knowledge or notice that a house was being built on the lot.

Conceding the sufficiency of the evidence to support a finding that Sanders assured defendant Herbert Howze that he need make to further payments until the house was completed, the evidence discloses no consideration sufficient to support a contract enforceable in law. Craig v. Price, 210 N.C. 739, 188 S.E. 321; Woodell v. Davis, 261 N.C. 160, 134 S.E.2d 160. The debt was and had been past due. There is no evidence defendant Herbert Howze made any promise of any kind to Sanders.

There was evidence neither defendants Howze nor the holder of their $10,908.84 note secured by the second lien deed of trust to MeDaniel, Trustee, were given personal notice of the foreclosure sale. However, '(i)n the absence of a valid contract so to do, there is no requirement that a creditor shall give personal notice of a foreclosure by sale to a debtor who is in default.' Woodell v. Davis, supra, 261 N.C. p. 163, 134 S.E.2d p. 163, and cases cited. Nor, under such circumstances, is there any requirement that personal notice of such sale be given to the holder of a second lien deed of trust.

We need not determine whether, under the circumstances, a failure to give personal notice to defendant Howze would constitute inequitable conduct as between Sanders and defendants Howze. Defendants Howze have not attacked the foreclosure. There is no evidence that Doggett Lumber Company (Doggett) or Institute or plaintiff had any dealings of any kind with Sanders prior to completion of the foreclosure.

The agreement, if any, was between Sanders and defendants Howze. Obviously, it was not made for the benefit of Doggett or Institute or plaintiff. Defendants Howze, in their agreement of December 8, 1961 with Institute and in their deed of trust to McDaniel, Trustee, represented that they owned the lot free and clear of encumbrances. Probably, the disclosure of the alleged (oral) agreement would have resulted either in full payment to Sanders or in immediate discontinuance of negotiations between defendants Howze and Institute. Indeed, the delay in foreclosure, coupled with the failure to determine by search of the records that the deed of trust to Sedberry, Trustee, was the first lien, were the primary causes of plaintiff's present plight.

'If the contract was not made for the benefit of the third party, he has no cause of action upon the contract to enforce it, or sue for its breach.' American Trust Co. v. Catawba Sales & Processing Co., 242 N.C. 370, 379, 88 S.E.2d 233, 239; Traders Land Co. v. Abbott Realty Co., 207 N.C. 453, 177 S.E. 335. 'The real test is said to be whether the contracting parties intended that a third person should receive a benefit which might be enforced in the courts.' 17 Am.Jur.2d, Contracts § 304; 17A C.J.S. Contracts § 519(4) c.

Appellants contend further the foreclosure sale was invalid because the clerk did not confirm the sale or order that Sedberry, Trustee, execute and deliver a deed to Sanders, the purchaser. With reference to said contention, we consider first whether, under the provisions of G.S. Chapter 45, Article 2A, such confirmation or order was required as a prerequisite to consummation of such foreclosure in accordance with law.

It is noted: An allegation in the complaint and a recital in the judgment indicate that a preliminary report of the foreclosure sale (of March 5, 1962) by Sedberry, Trustee, was filed in the office of the clerk as required by G.S. § 45-21.26. No upset bid was filed with the clerk. See G.S. § 45-21.27.

This Court held 'that the powers of supervision and control conferred upon the clerks of the superior court' by C.S. § 2591, later G.S. § 45-28, 'did not arise * * * unless and until there had been the advance bid specified in the statute paid into the hands of said clerk.' Lawrence v. Beck, 185 N.C. 196, 116 S.E. 424; Foust v. Gate City Savings & Loan Ass'n, 233 N.C. 35, 62 S.E.2d 521, 22 A.L.R.2d 975; In re Sermon's Land, 182 N.C. 122, 108 S.E. 497, 17 A.L.R. 965; Pringle v. Winston-Salem Building & Loan Ass'n, 182 N.C. 316, 108 S.E. 914, 19 A.L.R. 175. G.S. § 45-28 was repealed expressly by Chapter 720 (Section 5) of Session Laws of 1949. The 1949 Act is a comprehensive statute relating to sales under a power of sale in a mortgage, deed of trust or conditional sale contract. Its provisions constitute Article 2A of Chapter 45 of the General Statutes, being G.S. § 45-21.1 through G.S. § 45-21.33. It is expressly provided that Article 2A 'does not affect any right to foreclosure by action in court, and is not applicable to any such action.' G.S. § 45-21.2. (Note: G.S. Chapter 1, Article 29A, relates expressly to 'Judicial Sales.') If a trustee fails to report a foreclosure sale within the five days as directed by G.S. § 45-21.26, the clerk is authorized to compel such report. G.S. § 45-21.14; Gallos v. Lucas, 252 N.C. 480, 113 S.E.2d 923. Otherwise, Article 2A confers no authority upon the clerk in respect of an initial foreclosure sale. Supervisory authority conferred by G.S. § 45-21.27 relates to resales and does not arise until an upset bid has been filed with the clerk as provided therein. G.S. § 45-21.29(h) provides: 'When a resale of real property is had pursuant to an upset bid, such sale may not be consummated until it is confirmed by the clerk of the superior court. No order of confirmation may be made until the time for submitting any further upset bid, pursuant to G.S. § 45-21.27, has expired.' (Our italics)

Even so, plaintiff contends that, absent confirmation, the foreclosure is subject to attack on the ground the bid was inadequate and inequitable. G.S. § 45-21.34 and G.S. § 45-21.35, upon which plaintiff bases his contention, are provisions of Article 2B of Chapter 45. They are codifications of Sections 1 and 2, respectively, of Chapter 275, Public Laws of 1933.

G.S. § 45-21.34, in part,...