Lockridge v. Smith

• Decision Date: 28 February 1934
• Docket Number: 251.
• Citation: 173 S.E. 36,206 N.C. 174
• Parties: LOCKRIDGE v. SMITH et al.
• Court: North Carolina Supreme Court

173 S.E. 36

206 N.C. 174

LOCKRIDGE v. SMITH et al.

No. 251.

Supreme Court of North Carolina

February 28, 1934

Appeal from Superior Court, Cleveland County; Warlick, Judge.

Action by A. A. Lockridge against B. A. Smith and others. From a judgment for defendants, plaintiff appeals.

Affirmed.

This is an action brought by plaintiff against defendants to set aside a sale under a deed of trust.

Plaintiff on March 10, 1928, executed to defendant, A. H. Patterson trustee, for the Home Building & Loan Association of King's Mountain, N. C., a deed in trust on certain land to secure the sum of $3,000. The same was duly recorded in the office of the register of deeds for Cleveland county, N C., in Book 142, p. 227.

The Commercial Bank of King's Mountain held a second mortgage for some $1,800 or $2,000.

The plaintiff defaulted in the payments of the indebtedness to the Building & Loan, and A. H. Patterson, trustee, offered the land for sale on April 6, 1931, and defendant B. A. Smith became the last and highest bidder for same at the sum of $2,325. This bid was raised and a resale was made on May 4 1931, and J. R. Davis became the last and highest bidder at the sum of $2,450. A. H. Patterson, trustee, executed a deed to J. R. Davis for the purchase price of $2,450. A report was made by A. H. Patterson, trustee, to the clerk, and a correct settlement was shown in the clerk's office. On the same day J. R. Davis made a deed for said property to defendants B. A. Smith and wife, Bessie T. Smith, for $2,500, who in turn on the same day executed a deed in trust to A. H Patterson, trustee, for the Home Building & Loan Association for $2,000.

The matter was referred to Joseph C. Whistnant, referee. The referee found among other facts: "That J. R. Davis acted as attorney and agent for A. H. Patterson, Trustee, and as such conducted the sale and re-sale of said property. That the sale and re-sale were made in regular form, and fair and open, and that there was no effort by the agent of the trustee to prevent fair competitive bidding. That B. A. Smith was present at the first sale and knew that J. R. Davis was acting as attorney and agent for A. H. Patterson, Trustee, in conducting the said sale, and the re-sale."

"14. That B. A. Smith and wife, Bessie T. Smith, in purchasing the said property had knowledge of the capacity in which J. R. Davis served in connection with the sale and re-sale, in that as previously found herein B. A. Smith bid at the first sale made by J. R. Davis, and the re-sale was merely a continuation of same, and the records which were necessary to form the chain of title show specifically that J. R. Davis, acting as attorney and agent of A. H. Patterson, Trustee, sold to himself."

The defendants B. A. Smith and wife, Bessie T. Smith, denied the material allegation of the complaint, and in answer said: "It is admitted that on or about the 15th day of May, 1931, J. R. Davis sold and conveyed the said lands described in the complaint to this defendant, B. A. Smith and Bessie T. Smith, for price of $2,500.00, which amount these defendants paid in good faith; and the other allegations are untrue and denied. That as to the allegations of paragraph eight these defendants have no knowledge or information sufficient to form a belief as to the truthfulness thereof, therefore deny the same--it being alleged in this connection that these defendants are innocent purchasers for value."

The referee's conclusions of law are as follows: "The conclusions of law as herein set out are somewhat contrary to the conception which had formerly been entertained by me as the law in a case of this kind, but after intensive search I have been unable to find a case which seems to alter the ruling in Gibson v. Barbour, 100 N.C. page 192, 6 S.E. 766, and I conclude that this must be the law to-day. In this connection I have studied the cases of Wood v. Trust Co., 200 N.C. 105, 156 S.E. 523, Phipps v. Wyatt, 199 N.C. 727, 155 S.E. 721, and many others which were believed by the defendant counsel to change the former ruling, but I believe that there is a distinction between the cases, and that the later cases would not have the effect of changing the doctrine in the former case, and consequently I find: First: That the sale by A. H. Patterson, Trustee, by J. R. Davis as attorney and agent to J. R. Davis is voidable in so far as it deprives the trustor, A. A. Lockridge, of the right of redemption, and since the trustor has elected to so treat same, as under the law he has the right to elect. Second: That the defendants, B. A. Smith and wife, Bessie T. Smith, having bought with notice are now the holders of the legal title to the said property, standing in the place of the Trustee, A. H. Patterson, and from the date of the purchase until the date of election to avoid the sale, said B. A. Smith and wife, Bessie T. Smith, were entitled to possession of said land and by the express terms of the deed of trust are still entitled to possession. Third: That A. A. Lockridge, on the payment to B. A. Smith of the secured indebtedness and money lawfully expended in connection with same, is entitled to said property, but if not done, then B. A. Smith is entitled to a sale of said property to clear title to the property of the right of redemption of A. A. Lockridge."

Exceptions and assignments of error were duly made to the report of the referee by the defendants.

The court below rendered the following judgment:

"This cause coming on to be heard before his Honor, Wilson Warlick, Judge presiding, upon the report of Joseph C. Whistnant, Referee, and the exceptions duly filed thereto, and being heard, and the parties having waived trial by jury:

And it further appearing to the Court, upon the hearing of the matter, that B. A. Smith and wife, Bessie T. Smith, the present owners of said property, offered in open court to convey this property to the plaintiff, A. A. Lockridge, or to whomsoever he might direct, for the exact amount at which it was bid off at the last sale made of same by A. H. Patterson, Trustee, and that the said B. A. Smith and wife, Bessie T. Smith, had previously offered to convey said property upon said terms and that said proposition was also renewed upon the hearing of this matter before the referee, and that the said A. A. Lockridge declined to re-purchase;

And the Court being of the opinion that the referee has correctly found that the sale of said property, made by A. H. Patterson, Trustee, on May 4, 1931, at which sale J. R. Davis became the last and highest bidder at the sum of $2,450.00, was fair and open and that said sale was made in regular form, and that there was no effort to prevent fair, competitive bidding, and that the plaintiff had knowledge of the date of both of said sales and had full opportunity to bid and that he declined to do so, and that the referee has further found as a fact that the price of $2,450.00 represented the market value of the property at the time of said sale and that the plaintiff failed to show by any evidence offered that he had been damaged by said sale, and that the plaintiff failed to either bid at said sale or to raise said bid thereafter within the time prescribed by law, although he had the opportunity to do so, the Court upon a hearing of this matter, affirms the findings of the referee touching all of the foregoing matters and, in addition thereto, finds as a fact that B. A. Smith and wife, Bessie T. Smith, are innocent purchasers for value and without notice and are entitled to hold said property free and clear from any claim or demand for re-sale on the part of A. A. Lockridge, overruling the finding of the referee as to this fact and, upon the foregoings of fact.

It is ordered, adjudged and decreed that the sale made by A. H. Patterson, Trustee, on May 4, 1931, at which J. R. Davis became the last and highest bidder, was fair and open and that said real estate brought a full and fair price, and that the plaintiff had full opportunity to bid at said sale or to raise said bid during the intervening ten days thereafter.

And it is further ordered, adjudged and decreed that B. A. Smith and wife, Bessie T. Smith, are innocent purchasers for value and without notice, and that they are entitled to hold the said property free and clear from any claim or demand for re-sale on the part of the plaintiff, A. A. Lockridge.

It is further ordered that the plaintiff, A. A. Lockridge, take nothing by his action.

It is further ordered that an allowance of $75.00 be paid to Joseph C. Whistant, Referee, and that one-half be paid by the plaintiff and one-half by the defendants, and that the plaintiff be taxed with all the other costs of this action."

The plaintiff made several exceptions and assignments of error, and appealed to the Supreme Court. The material ones will be considered in the opinion.

On exceptions to referee's report, trial court could affirm part of referee's findings, overrule part of findings and make additional findings.

E. A. Harrill, of Kings Mountain, for appellant.

B. T. Falls and Ryburn & Hoey, all of Shelby, for appellees.

CLARKSON Justice.

The first question involved as stated by plaintiff is as follows: "If the attorney and agent who acts for the Trustee to sell property sells to himself, as the record in this case discloses was done, does the deed of the Trustee conveying the property to his attorney and agent pass the equitable interest of the Mortgagor?" We think not, if nothing else appeared.

We think the principle of law relied on by the referee sound in principle and the law of this jurisdiction as set forth in Gibson v. Barbour, 100 N.C. 192, 197, 198, 6 S.E. 766, 768:

"'It is an inflexible rule,' are the words of the late chief justice (an

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