Demai v. Tart

• Decision Date: 18 March 1942
• Docket Number: 237.
• Parties: DEMAI v. TART et al.
• Court: North Carolina Supreme Court

19 S.E.2d 130

221 N.C. 106

DEMAI v. TART et al.

No. 237.

Supreme Court of North Carolina

March 18, 1942

On January 14, 1928, the defendant, Tart, executed to Jesse B Lee, Sr., plaintiff's intestate, a deed of trust conveying the lands therein described in security for the payment of a debt of $2,000. The defendant at the same time executed to the plaintiff's intestate two promissory notes in the sum of $1,000 each, bearing interest from date due respectively April 13, 1928, and December 15, 1928, which are recited in the deed of trust.

Alleging failure to pay the notes, and hence breach of the conditions of the trust, the plaintiff, administratrix of the mortgagee who had meantime died, brought this action to recover on the notes and foreclose the mortgage. Suit was instituted March 6, 1941.

The defendants admitted the execution of the notes and mortgage pleaded partial payment of the note due April 13, 1928, and pleaded the statute of limitations on the note maturing December 15, 1928.

The jury found with the defendants as to the note maturing April 13, 1928, and no controversy respecting it is involved in the appeal.

On the note due December 15, 1928, there appears the following entry of credit, in the handwriting of the now decedent payee "Paid on this note $2.50 April 20, 1938".

Being of opinion that the indorsement was not sufficient, as there was no evidence aliunde to support it in any aspect, the judge gave the jury a peremptory instruction to find the issue relating to the bar of the statute in favor of defendants and denied recovery on the note. The form of the instruction is, in hac vice, immaterial.

Upon instruction the jury found the action to foreclose the mortgage not barred by the statute of limitation. Judgment of foreclosure followed, with provision that the proceeds of sale be applied, as necessary, in satisfaction of the whole debt, including that evidence by the $1,000 note barred by the statute. The amount due on this note, without application of the statute of limitation, was ascertained by the verdict.

The plaintiff appealed, assigning as error the instruction given to the jury to find that the note due December 15, 1928, was barred by the statute, and refusal of recovery thereupon in the judgment, supporting these objections by formal exceptions to the instruction, to the refusal to set aside the verdict on the appropriate issue, and to the signing of the judgment which does not specifically decree recovery on the note.

Defendant, Tart, appealed, assigning as error the signing of the judgment authorizing the sale of the lands and the application of the proceeds to the barred note, or the debt evidenced thereby. The defendant remained in possession of the lands and was in such possession at the commencement of this action.

The appeals are more conveniently considered together.

J. A. McLeod, of Dunn, for plaintiff.

I. R. Williams, of Dunn for defendant.

SEAWELL Justice.

The appeals of plaintiff and defendant present two main questions: (a) Whether the note due December 15, 1928, was barred by the statute of limitations as a matter of judicial determination; and (b) whether, upon foreclosure of the deed of trust, the proceeds of the sale may be lawfully applied to the debt evidenced by the barred note.

(1) The first question depends upon the effect of the purported credit indorsement on the note maturing December 15, 1928.

Much the greater weight of authority of decided cases is to the effect that a credit indorsement in the handwriting of the payee made upon a promissory note is competent in evidence of the fact of the payment when supported by evidence aliunde that the indorsement was actually made before the bar of the statute fell. Annotation, 59 A.L.R. 905. This is put upon the ground that the credit, by reason of the fact that it diminishes the amount due upon the note, is in the nature of a declaration against interest. Goddard v. Williamson's Adm'r, 72 Mo. 131; Wilson v. Pope, 37 Barb., N.Y., 321; Williams v. Alexander, 51 N.C. 137; Addams v. Seitzinger, 1 Watts & S., Pa., 243. The holding is otherwise as to such an indorsement made after the bar of the statute has become complete, since the indorsement would be obviously in the category of a self-serving declaration. Smith v. Simms, 9 Ga. 418; Young v. Alford, 118 N.C. 215, 23 S.E. 973; Bond v. Wilson, 129 N.C. 387, 40 S.E. 182; Concklin v. Pearson, 1 Rich. 391, 30 S.C.L. 391. Our own court has long been committed to the majority view. Williams v. Alexander, supra; Woodhouse v. Simmons, 73 N.C. 30; Grant v. Burgwyn, 84 N.C. 560; White v. Beaman, 85 N.C. 3; Young v. Alford, supra; Bond v. Wilson, supra. The fact that the entry itself bears date within the statutory period, without evidence aliunde that the indorsement was actually so made, is not accepted as evidence of the date of the indorsement. Goddard v. Williamson's Adm'r, supra; Grant v. Burgwyn, supra; Mills v. Davis, 113 N.Y. 243, 21 N.E. 68, 3 L.R.A. 394.

The credit of a relatively insignificant amount on a large obligation, close to the time at which the bar of the statute would become complete, is looked upon with suspicion, Chambers v. Walker, 4 Rich. 548, 38 S.C.L. 548; Merchants' & P. Nat'l Bank v. Hunter, 113 S.C. 394, 102 S.E. 720; and presents a circumstance which challenges the soundness of the ruling. But it is still within the range of minor tolerances which are often the price of a rule intended to be of general service. Our courts, while agreeable to the admission of indorsements as evidence of payment, when supported by proper evidence aliunde, have not yet adopted the view that such evidence, when admitted, is given a presumptive effect in the sense that it is in law a prima facie establishment of the fact of payment; and the best considered cases in other jurisdictions regard it as a matter for the jury. Brown v. Hutchings, 14 Ark. 83; Smith v. Simms, supra, 9 Ga. 418; Wheeler v. Robinson, 50 N.H. 303; Ward v. Hoag, 78 A.D. 510, 79 N.Y.S. 706; Mills v. Davis, supra, 113 N.Y. 243, 21 N.E.

68, 3 L.R.A. 394; Young v. Alford, supra, 118 N.C. 215, 23 S.E. 973.

In the case at bar it is not necessary to pass upon the legal effect of the indorsement as evidence of payment, since there is in the record no evidence aliunde...