Investors Title Ins. Co. v. Montague

• Decision Date: 03 April 2001
• Docket Number: No. COA00-120.,COA00-120.
• Citation: 543 S.E.2d 527,142 NC App. 696
• Court: North Carolina Court of Appeals
• Parties: INVESTORS TITLE INSURANCE COMPANY, Plaintiff, v. Helen Beal MONTAGUE f/k/a Helen R. Beal, Defendant.

543 S.E.2d 527

142 NC App. 696

INVESTORS TITLE INSURANCE COMPANY, Plaintiff, v. Helen Beal MONTAGUE f/k/a Helen R. Beal, Defendant.

No. COA00-120.

Court of Appeals of North Carolina.

April 3, 2001.

Horack, Talley, Pharr & Lowndes, P.A., by Robert B. McNeill, Charlotte, for plaintiff-appellant.

Kennedy Covington Lobdell & Hickman, by Roy H. Michaux, Jr., Charlotte, for defendant-appellee.

GREENE, Judge.

Investors Title Insurance Company (Plaintiff) appeals a 17 November 1999 order granting summary judgment in favor of Helen Beal Montague f/k/a Helen R. Beal (Defendant) and denying Plaintiff's motion for summary judgment.

On 27 May 1982, Defendant executed a Deed of Trust (the Deed) to secure a Deed of Trust Note (the Note) on a loan made by the City of Charlotte to Defendant in the amount of $65,200.00. Defendant used the loan to purchase "Unit # 8" in the Churchill Condominium (the Condo). On 12 June 1984, Defendant sold the Condo to Edna V. Johnson (Johnson). As part of the purchase price for the Condo, Johnson entered into an assumption agreement with Banker's Mortgage Corporation to assume the balance owing on Defendant's loan (the assumption agreement). The assumption agreement provided Defendant would "not be released of liability unless stated otherwise." From the record, it appears the assumption agreement did not provide for the release of Defendant from liability.

Johnson died intestate in Mecklenburg County on 28 November 1993. Donald S. Gillespie, Jr. (Gillespie) was appointed as commissioner for the sale of Johnson's real property. On 7 March 1995, Gillespie sold the Condo to Norman A. Holmes (Holmes) for $64,000.00 and the Mecklenburg County Superior Court fixed 17 March 1995 as the last date for an upset bid. No upset bids were filed and on 21 March 1995, the superior court confirmed the sale of the Condo.

In 1996, the City of Charlotte instituted foreclosure proceedings on the Condo. Plaintiff provided title insurance to Holmes on the Condo, and pursuant to Plaintiff's insurance policy with Holmes, Plaintiff was required to pay off the Note.¹ Foreclosure proceedings were never completed and Plaintiff was assigned the Deed and the Note in August 1997. On 30 October 1997, Plaintiff informed Defendant by letter that it had "received an [a]ssignment of the Note and [the] Deed" and demanded Defendant pay "$64,907.26 excluding interest from June 11, 1996." On 9 September 1998, Plaintiff again contacted Defendant by letter and requested Defendant pay the balance of the Note. Plaintiff further informed Defendant that if the balance of the Note was not paid in full within five days, Plaintiff had the option of recovering attorney's fees in the event Plaintiff brought suit to enforce the Note.

Defendant made no payments on the Note and Plaintiff instituted suit against Defendant on 30 September 1998. Defendant's answer alleged: Defendant never received demand for payment on the Note, other than a demand from Plaintiff; Defendant was not a party to the foreclosure proceedings and did not have actual notice to such proceedings; and Plaintiff has not offered to assign the Deed and the Note to Defendant upon payment. Defendant moved for summary judgment on 14 October 1999 and Plaintiff moved for summary judgment on 5 November 1999. On 16 November 1999, at a hearing on the parties' motions for summary judgment, the trial court denied Plaintiff's motion for summary judgment and allowed Defendant's motion for summary judgment.

The dispositive issue is whether an assignee of a note and deed of trust, who seeks to collect from the mortgagor, is required to assign the deed of trust to the mortgagor as a condition of collecting on the note.

Defendant argues Plaintiff must assign Defendant the Deed in order to collect payment on the Note. Plaintiff, however, contends that it is under no obligation to assign the Deed to Defendant upon payment of the Note. We agree with Defendant.

A person who assumes a mortgage becomes the principal debtor and the mortgagor becomes the surety on the debt, Wachovia Realty Investments v. Housing, Inc., 292 N.C. 93, 105, 232 S.E.2d 667, 674 (1977), and, thus, the mortgagor "remains liable to the mortgagee as the debtor to whom the credit was directly extended," Brown v. Turner, 202 N.C. 227, 229, 162 S.E. 608, 609 (1932). In the event of a default, the mortgagee, or the holder of the promissory note, has the right...