First Nat. Bank v. Sauls
| Decision Date | 15 March 1922 |
| Docket Number | 187. |
| Citation | 110 S.E. 865,183 N.C. 165 |
| Parties | FIRST NAT. BANK OF KINSTON v. SAULS ET AL. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Craven County; Cranmer, Judge.
Controversy on agreed statement of facts, by the First National Bank of Kinston against W. R. Sauls and others. Judgment for defendants, and plaintiff appeals. Affirmed.
The defendant J. L. Sauls, on September 8, 1919, executed to Sauls & Lamb his notes for $6,000 secured by mortgage upon a tract of land in Craven county, which was duly registered September 10, 1919, and thereafter on November 18, 1919, the mortgagees obtained a loan of $4,000 from the plaintiff First National Bank of Kinston, to which they delivered the mortgage notes aforesaid as collateral security and left with the bank, without an assignment thereof, the mortgage securing the notes. Thereafter on January 27, 1920, the mortgagor, J. L. Sauls, executed a warranty deed for the same tract of land to Lafayette King and wife, who executed to William Dunn, Jr., trustee, a deed of trust thereon to secure the notes executed for the purchase money thereof. On July 13, 1920, the mortgagees, Sauls & Lamb, in the first mortgage, canceled the record of the mortgage which had been executed to them by J. L. Sauls on the record thereof in the register's office of Craven by making this entry thereon:
And thereafter they obtained a loan for $8,500 from the People's Bank of New Bern by placing as collateral security for such loan the notes executed by King and wife and secured by deed of trust above referred to.
The said entry of satisfaction on the margin of the record of said mortgage given by said J. L. Sauls to Sauls & Lamb was made without the knowledge, consent, or authority of the plaintiff, and plaintiff did not discover such entry until about December 8, 1921, just prior to the commencement of this action.
The court adjudged upon the facts agreed that the loan made by the People's Bank upon the notes secured by the King deed of trust is protected by the cancellation of the mortgage which was a prior mortgage to the King deed of trust until its cancellation, and held that such cancellation upon the record operated upon the mortgage and the record of registration for the discharge of this prior incumbrance. Appeal by plaintiff.
R. A Nunn, of New Bern, for appellant.
Guion & Guion, of New Bern, for appellees.
Upon the facts agreed there was no assignment of the mortgage from J. L. Sauls to Sauls & Lamb to the plaintiff, First National Bank of Kinston, but the said mortgage was merely left by them with the cashier of the bank. Therefore the legal title of the land described in this mortgage was never divested from the mortgagees, Sauls & Lamb (Williams v. Teachey, 85 N.C. 402); and under C. S. § 2594 (1), the mortgagees, Sauls & Lamb, still holding the legal title were alone authorized to cancel the mortgage.
The First National Bank of Kinston, with whom Sauls & Lamb left the notes which they held as mortgagees of J. L. Sauls, could have protected itself by requiring the transfer and assignment of the mortgage which conveyed the land therein described, and by registration of such assignment would have given notice to the world that as assignee of such mortgage this bank alone was authorized to make cancellation thereof. But in the absence of such notice the mortgagees having entered cancellation thereof, this became an absolute release and discharge.
The question above presented has been so fully and well considered by this court in several cases, to wit, Weil v. Davis, 168 N.C. 298, 84 S.E. 395, Hayes v. Pace, 162 N.C. 288, 78 S.E. 290, Jones v. Williams, 155 N.C. 179, 71 S.E. 222, 36 L. R. A. (N. S.) 420, Morton v. Blades Lumber Co., 154 N.C. 278, 70 S.E. 467, which have been cited with approval in Parrott v. Hardesty, 169 N.C. 669, 86 S.E. 582, that it is not necessary to look further for authority for the ruling therein so clearly announced that there must be an assignment of a mortgage on real estate, to operate upon the land described in the mortgage in order that the power of sale may pass to the assignee. If this is not done, the legal title will remain in the mortgagee and the assignment of the notes can operate only on the notes.
It follows that in this case the legal title remained in Sauls & Lamb, the mortgagees, after the deposit of the mortgage notes and of the unassigned mortgage with the National Bank of Kinston, and by virtue of C. S. § 2594, already cited, the mortgagees were authorized to make the entry of cancellation.
The following is the language of C. S. § 2594:
"Discharge of Record of Mortgages and Deeds of Trust.--Any deed of trust or mortgage registered as...
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