Eubanks v. Becton

• Citation: 73 S.E. 1009,158 N.C. 230
• Parties: EUBANKS v. BECTON et al.
• Decision Date: 06 March 1912
• Court: United States State Supreme Court of North Carolina

73 S.E. 1009

158 N.C. 230

EUBANKS v. BECTON et al.

Supreme Court of North Carolina

March 6, 1912

Appeal from Superior Court, Jones County; Carter, Judge.

Action by E. E. Eubanks against A. F. Becton and others. Judgment for plaintiff, and defendants appeal. Affirmed.

A mortgagor held not estopped to redeem through having rented from the purchaser.

This is an action by the plaintiff as mortgagor for an accounting and to redeem. The issues raised by the pleadings were by consent referred to Hon. F. A. Daniels, and the following facts are found by him, to which no exception is taken: On the 3d day of April, 1900, the defendant Amos F. Becton, conveyed to the plaintiff, E. E. Eubanks, the tract of land described in the complaint for the consideration of $1,000. On the same day the plaintiff and his wife executed and delivered to said Becton their 10 bonds for the purchase money, in different amounts, and payable the 1st day of January, 1901, and annually thereafter up to and including January 1, 1910, and to secure the payment of the same they also executed and delivered to said defendant a mortgage upon the said land which was duly proven and registered in said county, and in which it is provided "that if default should be made in the payment of either of said sums of money, or any part thereof, the said parties of the first part in such case do hereby authorize and fully empower the said party of the second part, his heirs, executors, administrators and assigns, to sell the said hereby granted premises at public outcry at the courthouse door in Trenton, Jones county, after first advertising the same for thirty days at the courthouse door and four other public places in Jones county, and convey the same to the purchaser in fee simple, and out of the moneys arising from said sale to retain the principal and interest which shall then be due on the said bonds." On the 30th day of December, 1901, the first note not being paid, the defendant, purporting to act under the power of sale contained in the mortgage, offered for sale at the courthouse door in Trenton, N. C., the lands described in the said mortgages, after advertising the said sale by posting notices for 30 days at the courthouse door and three other public places in Jones county, when and where one J. A Smith, being the highest bidder, was declared the purchaser at the price of $1,000; that the said Smith transferred his bid to the defendant Heath, who rented said land to the plaintiff, Eubanks, for the years 1902, 1903, and 1904, and received the rent therefor; that at the time of such renting the plaintiff did not know of any irregularity in the sale; that on November 7, 1902, the said Becton executed a deed to said Heath, purporting to convey said lands in consideration of $1,000, in which deed there is no reference to the said mortgage or the power contained therein; that about February, 1904, the said Becton executed another deed to the said Heath, purporting to convey said land, in which it is recited that the sale was made after advertisement at the courthouse door and three other public places; and that the deed is made pursuant to the execution of the power in said mortgage. The referee stated the account between the parties, to which there is no exception. The report of the referee was confirmed, and from a judgment in accordance therewith the defendants appeal.

T. D. Warren, Loftin & Dawson, and A. D. Ward, for appellants.

Rouse & Land and Shaw & Powers, for appellee.

ALLEN J.

The right of the plaintiff to redeem depends upon the validity of the sale made under the power contained in the mortgage, executed by him. If the sale can be upheld, the defendant Heath is the owner of the land, and, if not, the deed to him is operative only as an equitable assignment of the notes and mortgage, and the plaintiff, nothing else appearing, is entitled to an accounting.

The sale is attacked by the plaintiff upon two grounds: (1) That the mortgage, although containing a provision that the land may be sold upon failure to pay either note, does not provide that upon such failure the whole indebtedness shall become due, and that therefore no sale could be made until the maturity of the last note; (2) that the mortgage requires the notice of sale to be posted at the courthouse door and four other public places, and it was in fact posted at the courthouse door and three other public places.

(1) The mortgage contains the express stipulation that the land may be sold upon failure to pay either note, and requires the proceeds of sale to be applied to "the principal and interest which shall be then due on the said bonds." The language is clear, and the intention of the parties easily ascertained, and we must give effect to it. It is permissible to provide that the whole debt shall become due upon failure to pay any part, but not essential to the exercise of the power of sale. Gore v. Davis, 124 N.C. 234, 32 S.E. 554.

(2) The second question is more serious. Powers of sale in a mortgage are contractual, and as there are many opportunities for oppression in their enforcement courts of equity are disposed to scrutinize them, and to hold the mortgagee to the letter of the contract. If a different view should prevail, and we could dispense with some stipulation in the power because we could not see that injury had ensued from failure to observe it, we could practically destroy the contract of the parties.

The view taken by the courts of such powers is illustrated by what is said in Kornegay v. Spicer, 76 N.C. 97: "The idea of allowing the mortgagee to foreclose the equity of redemption by a sale made by himself, instead of a decree for foreclosure and a sale made under the order of the court, was yielded to, after great hesitation, on the ground that, in a plain case, when the mortgage debt was agreed on and nothing else was to be done, except to sell the land, it would be a useless expense to force the parties to come into equity, when there were no equitites to be adjusted, and the mortgagor might be reasonably assumed to have agreed to let a sale be made after he should be in default. But this power of sale has always been watched with great jealousy." And in Shew v. Call, 119 N.C. 453, 26 S.E. 34, 56 Am. St. Rep. 678: "Mortgages with power of sale are not looked upon with disfavor as they once were. But courts of equity, or of equitable jurisdiction, will still guard the rights of the mortgagor with jealous care." And in Fleming v. Barden, 127 N.C. 217, 37 S.E. 220, 53 L. R. A. 316: "The practice of inserting powers of sale in mortgages was recognized by this court with great reluctance, and has always been regarded with extreme jealousy, but not now with the same disfavor."

In the case of Brett v. Davenport, 151 N.C. 59, 65 S.E. 612, the effect of failure to advertise according to the terms of the mortgage was directly involved, and Justice Hoke, speaking to that question, says: "Again, it appears that at the time of the first sale, or attempted sale, the property had not been advertised 'according to law or as required by the terms of the deed of trust under which he had sold,' and on such facts it is very generally held, uniformly, so far as we have examined, that a sale would have been invalid. In an instrument of this kind, the law is that a statutory requirement or contract stipulation in regard to notice is of the substance, and, unless complied with, a sale is ineffective as a foreclosure, and even when consummated by deed the conveyance only operates to pass the legal title, subject to certain equitable rights in the purchaser, as of subrogation, etc., in case he has paid the purchase money in good faith."

The decisions in other states seem, also, to be practically uniform that there must be a strict compliance with the terms of the mortgage before the power can be exercised.

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