Farmville Oil & Fertilizer Co., Inc. v. Smith

• Decision Date: 12 November 1930
• Docket Number: 184.
• Citation: 155 S.E. 606,199 N.C. 722
• Parties: FARMVILLE OIL & FERTILIZER CO., Inc., v. SMITH et al.
• Court: North Carolina Supreme Court

155 S.E. 606

199 N.C. 722

FARMVILLE OIL & FERTILIZER CO., Inc., v. SMITH et al.

No. 184.

Supreme Court of North Carolina

November 12, 1930

Appeal from Superior Court, Pitt County; Small, Judge.

Action by the Farmville Oil & Fertilizer Company, Inc., against Mrs Ella A. Smith and others. From the judgment, defendants appeal.

Reversed.

Creditor's agreement to apply proceeds of note assigned by debtor when collected amounted to payment at instant funds were properly available for purpose of payment.

David S. Smith owned two tracts of land. The first tract was situated in the town of Greenville, N. C., and contained one-half acre, more or less, and the second tract was a farm known as the Ringgold property, lying south of the town of Greenville. On November 26, 1924, David S. Smith and his wife, Ella A. Smith, executed and delivered six notes of $1,000 each, payable to bearer, and in order to secure the same executed and delivered to W. A. Darden, trustee, a deed of trust on the property in the town of Greenville, which said deed of trust was duly recorded on December 30, 1924. Thereafter, on April 30, 1926, the said David S. Smith and wife, Ella A. Smith, executed and delivered four promissory notes each in the sum of $1,899.22, and in order to secure said notes executed and delivered to D. L. Turnage, trustee a second deed of trust upon the town property above mentioned, which said deed of trust was duly recorded. The said Smith and wife were also indebted to Mrs. Nannie E Quinerly in the sum of about $5,400, and in order to secure said indebtedness had executed and delivered a mortgage or deed of trust to said Mrs. Quinerly on the Ringgold farm. Mrs. Ella A. Smith did not sign any of the six $1,000 notes secured by the first deed of trust to Darden, trustee, but did sign the deed of trust. David S. Smith died, and thereafter his wife, Ella A. Smith, with her own money, paid to the holder of note No. 4, secured by the Darden deed of trust, the amount due thereon and had said note assigned to her in the following language: "This note taken up by and assigned to Mrs. Ella Smith, but it is understood that it is subordinated to notes Nos. 5 and 6 of the same series which are outstanding so that in case of sale the other two notes are to be paid first. In other words, the Nos. 5 and 6 notes take priority as to the security. 2/16/29. W. H Woolard, Agent for Holders."

Smith and wife did not pay the note secured by the deed of trust to D. L. Turnage, trustee, and demand was made upon the said trustee to foreclose the deed of trust. The testimony tended to show that Turnage, trustee, before advertising the property, discovered that three notes of the six thousand secured by the Darden deed of trust had been paid and two of these notes were held by a trust company, and the other note of $1,000 was held by Mrs. Ella A. Smith. Turnage, trustee, talked with Mrs. Smith on December 5th. The evidence further tended to show that Mrs. Quinerly, who held the notes for $5,400 secured by deed of trust on the Ringgold place, was pressing Mrs. Smith for payment of past-due interest. Thereupon, on January 3, 1930, Mrs. Smith transferred to F. G. James, attorney for Mrs. Nannie E. Quinerly, the said $1,000 note held by her with the understanding that Mr. James was authorized to collect the note and apply it on the Quinerly indebtedness. In the meantime Turnage, trustee, was advertising the Greenville property under the deed of trust held by the plaintiff, and said land was sold on the 6th day of January, 1930. After paying the balance of $2,000 due on the first mortgage and certain other charges not involved in this appeal, there was a balance of $2,610.95 due on the indebtedness held by the plaintiff. Whereupon, plaintiff instituted this action to collect from the defendant Ella A. Smith the said deficiency of $2,610.95.

Issues were submitted to the jury, and the court charged the jury to answer the first issue in the sum of $7,179.16, the second issue in the sum of $2,610.95, and the third issue, "Yes." The court answered the fourth issue, ""No," and the fifth issue, "Yes."

Whereupon, the following judgment was entered:

"This cause coming on to be heard before His Honor, Walter L. Small, Judge presiding at the August Term, 1930, of Pitt Superior Court, and a jury, and being heard and issues having been submitted to and answered by the jury, as follows, to-wit:

"1. At the time of the sale by D. L. Turnage, Trustee, referred to in the pleadings, in what amount were D. S. Smith and wife indebted to plaintiff, as evidenced by the notes secured by said trust? A. Yes, $7,179.16, with interest from Oct. 15, 1927, less $61.30 on Dec. 1927.

"2. In what amount is the defendant, Ella A. Smith, indebted to the plaintiff after applying the proceeds of said sale to said notes? A. Yes, $2,610.95, with interest from Jan. 3, 1930.

"3. Was the note for $1,000.00, referred to in the pleadings, delivered by the defendant, Ella A. Smith, to F. G. James, attorney, upon condition that if collected, same was to be applied to the payment of the Quinerly note, and if not collected, no credit was to be made on the Quinerly note? A. Yes.

"And the court having answered the fourth and fifth issues as follows, to-wit:

"4. Is the said note of $1,000.00 a lien upon the property described in the W. A. Darden trust? A. No.

"5. Is the plaintiff entitled to have the balance of the purchase price paid for the property described in the D. L. Turnage trust applied to the payment of the balance due and owing it by Ella A. Smith, as evidenced by the notes executed to the plaintiff by the said Ella A. Smith and her husband, D. S. Smith? A. Yes.

"It is now, therefore, upon motion of Harding & Lee, and Albion Dunn, attorneys for the plaintiff, considered, ordered and adjudged that the

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