Hayes v. Pace
| Decision Date | 22 May 1913 |
| Parties | HAYES et al. v. PACE et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Henderson County; Lyon, Judge.
Action by Robert G. Hayes, as trustee, and another against M. Toms Pace, trustee, and another. From an order restraining sale until final hearing, defendants appeal. Affirmed.
A junior mortgagee or lienholder will be protected by courts of equity, the same as a mortgagor, from a fraudulent sale.
Smith Shipman & Justice, of Hendersonville, for appellants.
Brooks Sapp & Hall, of Greensboro, for appellees.
This litigation grows out of the case of C. E. Roper et al. v National Fire Ins. Co. et al., 76 S.E. 869, at last term. In the present action the judge restrained the defendants from completing the sale of certain lands referred to in the pleadings.
From the pleadings and affidavits in the record these facts appear: On November 26, 1908, C. E. Roper and wife executed to A. L. Holmes a deed of trust to secure $3,200 and interest; the land included in the conveyance being a boundary of about 300 acres situated near Hendersonville. The grantors subsequently built a hotel on one of the lots included in the boundary, and gave other mortgages and deeds of trust upon the same property. On the 6th day of May, 1910, C. E. Roper individually, and as executor of his wife, executed a deed of trust upon the same property to Smith, as trustee for J. M. Stepp, and thereafter procured a fire insurance policy on the hotel to be written by the plaintiff, the National Fire Insurance Company, with a standard mortgage clause payable to J. M. Stepp. Thereafter the hotel was destroyed by fire, and the National Fire Insurance Company, in obedience to a decree of this court at its last term, paid the amount due on the mortgage, with interest, to G. H. Valentine, trustee in bankruptcy for J. M. Stepp, and took an assignment of the said deed of trust. That subsequent to the execution of the Stepp deed of trust in 1910 several parties filed liens against C. E. Roper for materials furnished in the construction of his hotel. Subsequently judgments were taken thereon. That R. C. Clark was one of these junior judgment holders, having purchased the hotel tract at a sheriff's sale under one of these judgments, know as the Loenhardt and Garren judgment, for the sum of $265, and took deed therefor. Thereafter, in order to forestall the rights of the National Fire Insurance Company as assignee of the Stepp mortgage, Clark caused an insolvent clerk in his employ, M. Toms Pace, to purchase for him the Holmes mortgage of $3,200 and interest, and take an assignment of the said mortgage to the said M. Toms Pace as assignee and trustee for Clark. Following this up, Clark requested Pace, assignee of the Holmes mortgage, to advertise the Roper lands for sale on the 14th day of February, 1913, and engaged K. G. Morris to attend the sale as his agent and bid for the land, with the understanding between himself and M. Toms Pace at the time that it was to be sold in separate lots. On the day of the sale plaintiffs offered to pay to Pace the entire amount of his mortgage, interest, costs, and expenses, and take an assignment of the mortgage, without prejudice, to await a settlement of the equities between the parties. This was declined. The plaintiffs then requested that the land be sold en masse. This was refused. Immediately after the last lot of land was knocked down to K. G. Morris, he having purchased it all, as per prior agreement, at the price of $394, the plaintiffs offered $4,000. This bid was declined.
The following notice in writing was read by plaintiffs at and immediately preceding the sale:
It appears from the affidavits that the land is worth $7,000 to $8,000, and that it was bid off for Clark at $394. It does not appear in the record that Holmes, the original trustee in the deed in trust, executed a formal deed to Pace conveying the land...
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