Federal Land Bank of Baltimore v. Garman

• Decision Date: 07 January 1942
• Docket Number: 750.
• Parties: FEDERAL LAND BANK OF BALTIMORE v. GARMAN et al.
• Court: North Carolina Supreme Court

18 S.E.2d 182

220 N.C. 585

FEDERAL LAND BANK OF BALTIMORE v. GARMAN et al.

No. 750.

Supreme Court of North Carolina

January 7, 1942

Civil action to recover on judgment alleged to have been entered in the Court of Common Pleas of York County Pennsylvania.

It appears uncontroverted that on 22 March, 1918, defendants executed an amortization first mortgage note in the sum of $6,000, payable to the Federal Land Bank of Baltimore "on an amortization plan and in accordance with amortization tables provided by the Federal Farm Loan Board" in the manner and form set out. In this note it is provided that "if any default be made in any of such payments, or in case of failure to comply with any of the requirements or covenants contained in the mortgage given by the makers to secure the payment of this note, then at the election of the holder *** the principal sum hereof and all accrued interest thereon shall at once become due and payable, including a collection fee of five per cent, and costs, and immediately upon such defalcation and maturity I hereby authorize any prothonotary or attorney of any court of record in Pennsylvania or elsewhere to confess judgment against me therefor, with costs of suit, release of errors and with five per cent additional for collection fees ***". The note further provides that it is secured by first mortgage of even date therewith on real estate in York County, Pennsylvania. Such mortgage was effected. And though the defendants collaterally attacked the proceedings, the mortgage was foreclosed under order of court and the lands were sold, under writ of levari facias, to plaintiff at the price of $1,000, from which costs and expenses were deducted leaving the net amount of $697 to be credited on the note.

Plaintiff in its complaint, alleges that on 17 January, 1938, judgment in its favor, and against defendants, was rendered and duly filed and enrolled in the Court of Common Pleas in and for the County of York, State of Pennsylvania, for $6,538.67, all of which with interest is due and owing to plaintiff by defendants after demand upon them and payment refused.

Each of defendants, in separate answer filed, admits demand and refusal to pay, but denies all other material allegations of the complaint.

Defendants aver as defense that plaintiff knew the addresses of defendants, and of George S. Garman, to whom defendants had deeded land in question on 15 November, 1926, and who had assumed payment of indebtedness to the Land Bank, and had for a period of several years made regular payments to said bank; that in the foreclosure proceeding there was failure to comply with quoted statute of the State of Pennsylvania as to service of scire facies sur mortgage; that, notwithstanding no service of the scire facies sur mortgage was made upon these defendants or George S. Garman, the sheriff proceeded with the foreclosure of said land, and on 13 February, 1936, on a writ of levari facies sold said land to plaintiff for the unconscionable sum of $1,000 and conveyed same to him by deed dated 24 February, 1936, which sale the defendants upon information aver "To be unlawful, invalid, and a fraud" upon them, and "hence void and of no effect", and, therefore, no deficiency judgment could be established or sustained upon which to base judgment; and that in the proceeding for deficiency judgment there is failure to comply with the authority given in the note in that no prothonotary or attorney of any court of record therein authorized to confess judgment has done so, and, hence, judgment entered constitutes a fraud on rights of defendants. Defendant Sarah Edith Garman avers that the judgment sued on in this action is invalid as to her for that she, a married woman, signed the note on which the judgment was obtained as an accommodation maker thereof, or surety for her husband, and without receiving before or at the time any value or consideration therefor.

In the trial court plaintiff offered in evidence: (1) An exemplified copy from the records and proceedings enrolled in the Court of Common Pleas in and for the County of York, State of Pennsylvania, No. 238, January Term, 1938, under caption "The Federal Land Bank of Baltimore v. Levi S. Garman and Sarah Edith Garman, his wife", (a) of the amortization first mortgage note dated 22 March, 1918, signed by defendants herein payable to the plaintiff herein for $6,000 hereinabove described, and containing the provisions hereinabove set forth, with notation "mortgage foreclosed 12-7-35, see suit of the Federal Land Bank of Baltimore v. Levi S. Garman", and on back of note endorsement of dates and amounts of payments; (b) of affidavit of treasurer of, and on behalf of Federal Land Bank of Baltimore, filed and entered 17 January, 1938, in said action No. 238 above described, in which it is set forth "that the attached amortization first mortgage note, containing a warrant of attorney to confess judgment was duly executed and delivered by Levi S. Garman and Sarah Edith Garman, whose names are signed thereto; that the mortgage given as security for the aforementioned amortization first mortgage has been foreclosed, and it is now the desire of the Federal Land Bank of Baltimore to enter judgment by confession against Levi S. Garman and Sarah Edith Garman, by the virtue of the power of attorney in said note, in order to collect a deficiency of $6,538.67, now due and payable according to law"; "that the amount of said deficiency has been computed according to law as follows: *** (itemized--including credit of net proceeds of sale of land); and that the debtors are, at the present time, still living"; (c) of an order signed by President-Judge reading as follows: "And now, January 17, 1938, upon motion of J. T. Atkins, attorney for the plaintiff, the court grants leave to the plaintiff to enter judgment by confession in the sum of Six Thousand Five Hundred Thirty Eight Dollars and Sixty Seven Cents ($6,538.67), the amount set forth in the foregoing affidavit in favor of the Federal Land Bank of Baltimore and against Levi S. Garman and Sarah Edith Garman, his wife, by virtue of the warrant of attorney in the instrument attached hereto"; (d) of entry of "judgment in favor of the plaintiff for the sum of Six Thousand Five Hundred Thirty Eight Dollars and Sixty Seven Cents ($6,538.67) debt on note dated March 22, 1918, with warrant of attorney payable as conditioned in said note with cost of suit, release of errors, exemption, inquisition, condemnation, stay of execution and right of appeal waived with five per cent collection fees. Filed and entered January 17, 1938. Harry P. Peeling, Prothonotary"; and (e) of judgment cross index entries. Exception. (2) Purdon's Pennsylvania Statutes, Civil & Eq.Rem. & Procedure 12, Section 739, pertaining to entry of judgments by confession under warrant of attorney. (3) Rule 146 of the Rules of the Court of Common Pleas of York County, Pennsylvania, requiring leave of court to be obtained to enter judgment when the warrant of attorney is ten years old and under twenty. Exception.

On the other hand, on the trial below defendants testified to the effect: That they, who on 22 March, 1918, were residing and have since resided in Oxford, Granville County, North Carolina, defendant Sarah Edith Garman never having resided in the State of Pennsylvania, received no notice (1) of any proceeding for the foreclosure in Pennsylvania of the mortgage executed by them on 22 March, 1918, to the Federal Land Bank of Baltimore as security for note of $6,000 payable to said bank, or (2) of any suit in courts of Pennsylvania against them in 1938, or at any other time, to recover of them any amount alleged to be due on the said note; and that defendant Sarah Edith Garman owned no interest in the land conveyed by the mortgage given to the bank, and, derived no benefit from the borrowed money secured thereby.

Defendant further offered exemplified copy, from the records of proceedings in the Court of Common Pleas, York County Pennsylvania, in an action No. 105, entitled "The Federal Land Bank of Baltimore v. Levi S. Garman and Sarah Edith Garman, his wife, original mortgagors, George S. Garman and Carrie M. Garman, real owners", January Term 1936, (1) of affidavit of assistant treasurer of, and on behalf of Federal Land Bank of Baltimore, filed in prothonotary's office, 18 December, 1935, in which it is set forth that "said bank is mortgagee and obligee in a certain mortgage and amortization note, dated March 22, 1918, executed, acknowledged and delivered by Levi S. Garman and Sarah Edith Garman, his wife, as original mortgagors and obligors to the Federal Land Bank of Baltimore to secure the payment of Six Thousand ($6,000) Dollars on a tract *** of land in York County ***; the balance due *** on account of the said mortgage deed *** (itemized--totalling) $6,270.06; that the whole of the said debt has been declared due and payable by reason of default of mortgagors or obligors and their heirs and assigns, in payment of *** (instalments 1931-1935 listed), in failing to pay the taxes on the mortgaged premises for 1934-1935, and in failing to maintain insurance on the mortgaged premises as required by the terms and conditions of the aforesaid mortgage and of the note secured thereby ***"; that the affiant has been unable "to ascertain that there are any other persons interested in said real estate except those above mentioned, and, *** and that the real owners are George S. Garman and Carrie M. Garman, his wife, Reisterstown, Maryland"; (2) of praecipe by attorney for the Land Bank for "writ of scire facias returnable the first Monday of January 1936, sur mortgage given by Levi S. Garman and Sarah Edith Garman, his wife, to The Federal Land Bank of Baltimore, dated ...