Hubard & Appleby Inc v. Thacker

• Decision Date: 19 January 1922
• Citation: 110 S.E. 263
• Court: Virginia Supreme Court
• Parties: HUBARD & APPLEBY,Inc., v. THACKER et al.

110 S.E. 263

HUBARD & APPLEBY, Inc.,

v.THACKER et al.

Supreme Court of Appeals of Virginia.

Jan. 19, 1922.

Appeal from Circuit Court of City of Norfolk.

Suit by Hubard & Appleby, Inc., against J. Ernest Thacker and others, to recover the balance due on notes secured by trust deed after the sale of the property. From a decree dismissing the bill, complainant appeals. Reversed, and final decree entered for complainant.

The material facts in this case are that one Portlock executed a certain deed of trust conveying certain real estate to secure the payment of a debt of $3,000 of himself to appellant, evidenced by three notes of the grantor payable to the order of the appellant, one note for $300, payable December 3, 1913, another for $300, payable December 3, 1914, and the remaining note for $2,400, payable December 3, 1915; all of such notes bearing interest from date payable semiannually, with the right of the debtor to anticipate the payment of any or all of such notes. Portlock paid $100 on the first-mentioned note.

Thereafter, in the latter part of 1913, about the time the first note fell due, the appellee, Thacker, entered into negotiations to purchase the property from Portlock, upon the understanding that if the purchase was made Thacker would assume the payment of the deed of trust debt as a part of the purchase money. While these negotiations were under way, and before making the purchase, Thacker called upon the appellant to ascertain what at that time was the amount of the deed of trust debt, what part of it was due, the condition of the notes, interest due, etc. The secretary and treasurer of the appellant "showed Thacker the notes and * * * talked the matter over" with him. Thacker asked for some additional time on the note which fell due December 3, 1913, in case he became the purchaser of the property. Appellant agreed to that, telling Thacker it would "be all right." The secretary and treasurer of-appellant testifies that appellant made that agreement of extension of time because they knew Thacker, and were "mighty glad for him to take the property * * * because [they] thought he was a good deal more responsible than Mr. Portlock, who held it at that time." Thacker does not testify in the case, nor is there any evidence tending to controvert the truth of this statement. The purchase was accordingly closed by Thacker some time in January, 1914, by his taking a deed from Portlock and wife dated December 23, 1913, conveying the property to him, in which it was stipulated that "the said J. Ernest Thacker expressly assumes the payment of certain notes for three thousand dollars ($3,000.00) with interest from the date of these presents secured by deed of trust, " etc., (describing the said deed of trust). Thacker did not sign the deed, but accepted it with such stipulation in it, and thereafter dealt with the property as his own. The appellant was fully informed of all of this; and in accordance with the agreement aforesaid entered into between Thacker and appellant as to the extension of time of payment of the first note falling due. Thacker, in the spring or early summer of 1914, paid to appellant the $200 and accrued interest balance due on the first $300 note, and subsequently the interest which had accrued up to June 3, 1914, on the other two notes. According to the uncontroverted testimony for appellant, the appellant dealt directly with Thacker in giving the aforesaid extension of time and in receiving the payments aforesaid, at his instance and request.

It further appears from the record that the attorneys for Thacker, in examining the title to the property, found a judgment for $1,037, with interest from December 22, 1S95, of record against a former owner, which would not be barred by the statute of limitations until the first rule day in May, 1916. These attorneys thereupon wrote a letter to appellant of date January 15, 1914, calling attention to this judgment of record, and saying that they would like to have a letter from appellant, "stating that the last note secured in the deed of trust" (aforesaid, which note would fall due December 3, 1915, as aforesaid) "may be extended beyond the life of the judgment." Appellant replied by letter to these attorneys of date January 16, 1914, stating that appellant was "the holder of the notes secured in the deed of trust" aforesaid, designating it, and added:

"We hereby agree to extend the time of payment of the principal of the last note secured bv said deed, which note will be due December 3, 1915, to May 8, 1916."

This dealing was directly with Thacker's attorneys at their instance and request, which was equivalent to such dealing directly with Thacker, and is so regarded in the opinion of the court.

The evidence in the record does not disclose whether Portlock was asked to consent or consented to the extensions of time aforesaid before or when they were made.

Thereafter, by deed of bargain and sale, of date August 22, 1914, Thacker and wife conveyed the said property to one Hethorn; the deed containing the express stipulation that Hethorn assumed the payment of the two of said notes then remaining unpaid, aggregating $2,700, "and interest"; Hethorn not executing, but accepting, the deed. Subsequently Hethorn, by similar deed, of date September 16, 1914, conveyed the property back to Portlock; the deed containing the express stipulation that Portlock assumed the payment of the last-mentioned two notes "aggregating the principal sum of $2,700"; Port-lock not executing, but accepting, the deed.

On December 3, 1914, the second note for $300 and the semiannual interest thereon, and on the $2,400 note, from June 3, 1914, fell due; no part of which was paid. The appellant took no action in the matter until some time In June, or the early part of July, 1915, when, at appellant's request, and because of such default, the trustee in the deed of trust aforesaid, duly advertised the property for sale on July 21, 1915, upon the terms of all cash, as he was authorized to do by the deed of trust.

On the day and at the place of sale the president of the appellant's corporation, before the property was put up at auction, saw a real estate agent, whom such president knew had represented Thacker in the purchase aforesaid of the property from Portlock and usually represented Thacker in his real estate transactions, and told such real estate agent that the property was going to be sold. Up to that time appellant thought that Thacker still owned the property, and knew nothing of the subsequent conveyances of the property aforesaid. Appellant had been paid nothing on the debt by any one except Thacker since his purchase and assumption of the debt aforesaid, and appellant had looked upon Thacker as bound to it as principal debtor for the said $2,700 and interest thereon from the time Thacker purchased the property from Portlock and assumed the payment of the debt as aforesaid, and up to the foreclosure sale under the deed of trust recognized and relied upon Thacker as the principal debtor.

Accordingly, the property was offered for sale at public auction on July 21, 1915, and was sold to appellant as the highest bidder at the price of $1,700. The trustee filed an account of the sale before the commissioner of accounts, shqwing that after the payment of the expenses of the sale there was left of such purchase money the net balance of $1,512.15, which, then applied to said $2,700 with interest from June 3, 1914, to July 21, 1915, left a balance of $1,371, principal as of that date, of the said indebtedness remaining unpaid; and this is the amount which the appellant claims in this suit to be entitled to recover of appellee Thacker.

On December 14, 1915, Portlock was adjudged a bankrupt; the funds derived from his estate amounted only to $131.87, which was used to pay costs; and he received his discharge in bankruptcy May 7, 1917.

The bill in the cause was filed in July, 1918, made the said Thacker, Hethorn, and Port-lock parties defendant, and asserted the alleged personal liability of the said appellee Thacker to appellant for the deficiency aforesaid, as growing out of the facts and circumstances aforesaid.

The court below gave no effect to the dealings directly between the appellant and Thacker, considered the case as the same as these of Crowell v. St. Barnabas Hospital, 27 N. J. Eq. 650, and Osborne v. Cabell, 77 Va. 462, in which it was held that the mortgagee could not recover against a defendant-grantee of the mortgaged property who had assumed the payment of the mortgage debt by taking a deed with that stipulation in it, whore the defendant's immediate grantor, before suit brought, for valuable consideration and in good faith, had released the defendant from such assumption of payment; and the decree under review held that the appellant was not entitled to recover either against the appellee Thacker, or Hethorn; that, it appearing that Portlock had been adjudged a bankrupt, the court would not proceed further against him; and the court dismissed the bill.

J. G. Martin, of Norfolk, for appellant.

R. B. Spindle, Jr., and T. D. Savage, both of Norfolk, for appellees.

SIMS, J., after making the foregoing statement, delivered the following opinion of the court:

This case is now before this court for the second time. The former appeal is reported as Thacker v. Hubard, 122 Va. 379, 94 S. E. 929. That appeal involved an action at law brought by Hubard & Appleby, Inc., against the same Thacker, who is the appellee in the present appeal, based on the same facts which appear in the record now before us, perhaps somewhat more elaborated in detail in the present record. On the former appeal it was held that the action at law, based upon such a cause of action, did not lie; that the remedy of the complainant, if any, was by suit in equity, in accordance with the doctrine of Crowell v. St. Barnabas Hospital, 27 N. J. Eq. 650, 655, 656; Keller v. Ashford, 133 U. S. 610,...