Davison v. Gregory

• Decision Date: 21 April 1903
• Parties: DAVISON et al. v. GREGORY et al.
• Court: North Carolina Supreme Court

43 S.E. 916

132 N.C. 389

DAVISON et al. v. GREGORY et al.

Supreme Court of North Carolina

April 21, 1903

Appeal from Superior Court, Granville County; McNeill, Judge.

Action by G. W. Davison and another against N. A. Gregory and others. From the judgment, defendant Mrs. Pattie McCrary appeals. Affirmed.

Where creditors secured by a third trust deed furnish their trustee the money with which to pay off or take up the note secured by the first trust deed, they are entitled to be substituted to the rights of the payee thereunder, though the form of the indorsement on the note is to their trustee, as trustee for the debtor.

John W Graham and A. W. Graham, for appellant.

T. T Hicks and A. A. Hicks, for appellees.

CONNOR J.

This was an action brought by the plaintiffs, Geo. W. Davison and Chas. E. Baker, trustees, against N. A. Gregory, Laura N Gregory, his wife, and Pattie M. McCrary. The plaintiffs allege that on the 30th day of January, 1885, Nathaniel A Gregory borrowed of John Y. Gholson $1,000, for which he gave his bond, to be due January 30, 1886, with interest at 8 per cent., and to secure its payment he and his wife, Laura N. Gregory, executed a deed of trust to Robert T. Winston, of the same date, conveying the tract of land, containing 100 acres, situate in Granville county, and fully described therein. Said deed was duly recorded. On December 7, 1886; said Gregory and wife executed to Mrs. Pattie McCrary his bond for the sum of $1,500, and executed to John A. Williams, trustee, a deed in trust to secure said note, conveying the equity of redemption of said Gregory in the said 100 acres of land, and also another tract of 260 1/2 acres, which deeds were duly recorded. On September 15, 1887, W. A. Davis and N. A. Gregory, being partners, became embarrassed, and they and their wives conveyed certain of their property, including any remaining interest of N. A. Gregory in that above referred to, to plaintiffs, G. W. Davison and Chas. E. Baker, trustees, to secure the payment of certain debts therein set out, payable to 20 different persons. Said conveyance was duly recorded. Thereafter the assignee of the said Gholson demanded payment of the note executed to him as aforesaid, and threatened to collect the same by foreclosure of the first trust deed, and the sale of the 100 acres therein conveyed. That said Davis & Gregory stated to the plaintiffs, Davison & Baker, that a sale of the said 100 acres at that time would greatly prejudice their creditors; the land would not bring a fair price; and that it was worth far more than the amount of the said incumbrances. That thereupon the plaintiffs solicited the creditors of said Davis & Gregory, secured in the deed of trust to them, to raise the money to take up and purchase said Gholson note; and these plaintiffs did take up said Gholson note on March 17, 1890, as trustees for themselves and said other last-named creditors, who furnished the money for said purpose. That 10 of said creditors agreed to furnish the money for the purpose stated, and they signed an agreement in the following words: "We the undersigned creditors of Davis & Gregory, of Oxford, N. C., hereby agree to pay Geo. W. Davison and Chas, E. Baker 10 per cent. of our claims due us by said firm of Davis & Gregory, and which claims are secured by deed in trust dated September 15, 1887, for the purpose of protecting 100 acres of land, which is about to be sold under mortgage, and the said G. W. Davison and Charles E. Baker are authorized to purchase said mortgage note or do whatever is considered best in their judgment for all parties concerned." And they at once paid into the hands of plaintiff C. E. Baker the said sum, and the same was at once applied by these plaintiffs to the purchase of said note and its security. That said note was at that time held by the Bank of Oxford by assignment from Gholson. That the president of said bank inadvertently indorsed said note to G. W. Davison and C. E. Baker, trustees of Davis & Gregory, whereas he should have indorsed same to the plaintiffs as trustees or agents of the parties who furnished the money to buy the same. Plaintiffs promptly informed said President Herndon of the error in the assignment of said note and its security, and requested a correction of the indorsement, and said Herndon at once authorized its correction. The plaintiffs allege that they still have the same, and offer to produce them in court when necessary in the progress of this cause. Shortly after the purchase of the said Gholson note, during the year 1891, plaintiffs took possession of said tract of 100 acres of land, and held the same continuously thereafter until about the year 1900, when the defendant Pattie McCrary, by her agents, unlawfully and wrongfully entered and took possession of the same, to the exclusion of plaintiffs and their agents. That the said Gholson note had divers small credits on it at the time it was taken up by the plaintiffs, aggregating $461.67, and the plaintiffs received from the rents of said land amounts aggregating $618.56, leaving a balance due on said note February 13, 1902, of $1,150. That said John A. Williams, trustee, on September 18, 1895, sold under the trust deed executed to him the tract of 266 1/2 acres for the sum of $1,740, which nearly, if not quite, extinguished the debt due to the defendant Mrs. McCrary. That thereafter the said John A. Williams attempted to advertise and sell the 100 acres under his said second deed of trust some time during the year 1897, and that it was bid off by some one for the defendant Mrs. McCrary. That they had no knowledge or notice of said sale or the amount bid. That no deed was ever made by said Williams to Mrs. McCrary for said land. That there is no such person known to the plaintiffs as Robert T. Winston. There was at the time of this execution residing in Oxford the Hon. Robert W. Winston, who now resides in the county of Durham. That the said Gholson is dead. That the said 100 acres is not now worth the amount due on the Gholson note. That the said N.H. Gregory is insolvent and has left the state, and that W. A. Davis is dead. That John A. Williams trustee, is dead, leaving a large number of heirs at law. They demand judgment that the said 100 acres be sold by a commissioner to be appointed by the court, the proceeds to be applied to the payment of the Gholson note for the benefit of the parties furnishing the money for the purchase thereof, and that Mrs. McCrary account for rents and profits on said land, and for other relief. Thereafter, in accordance with the order of the court made herein, Walton & Whann Company and others, being the creditors of Gregory & Davis secured in the trust deed to the plaintiffs, who furnished the money with which to take up the Gholson note, came in and made themselves plaintiffs, and jointly and severally adopted and made their own the complaint, and united in asking the relief as therein prayed. The defendant Pattie McCrary demurred to the complaint for defect of parties. Said demurrer in that respect was sustained. The necessary parties were thereafter made pursuant to the order of the court. The third and fourth causes of demurrer were as follows: "(3) That it will appear from an inspection of the note, which plaintiffs offer to produce in court, that the said note was assigned to Davison & Baker, trustees for Davis & Gregory, and defendant McCrary insists that said assignment was an extinguishment of said note, and the plaintiffs have no cause of action thereon, as by said assignment the note of January 30, 1885, was paid, and the mortgage then executed satisfied, and should be canceled, and the mortgage executed December 7, 1886, to John A. Williams, for the benefit of Mrs. Pattie McCrary, became the first lien on said land. (4) That if said mortgage of January 30, 1885, is still operative, then the title to the tract of land is still in Robert W. Winston, and until a sale under said mortgage is had by the said Robert W. Winston, trustee, and a purchase made thereunder, no action can be maintained--certainly not by the plaintiffs, who have only an equity of redemption in said land, subject to the two mortgages recited in the complaint." His honor overruled the third and fourth causes of demurrer, and rendered judgment, upon which the defendant Pattie McCrary excepted and appealed.

In this court the...