Merchants' Bank & Trust Co. of Winston-Salem v. Watson

• Decision Date: 22 January 1924
• Docket Number: 354.
• Citation: 121 S.E. 181,187 N.C. 107
• Parties: MERCHANTS' BANK & TRUST CO. OF WINSTON-SALEM v. WATSON ET AL.
• Court: North Carolina Supreme Court

121 S.E. 181

187 N.C. 107

MERCHANTS' BANK & TRUST CO. OF WINSTON-SALEM v. WATSON ET AL.

No. 354.

Supreme Court of North Carolina

January 22, 1924

Appeal from Superior Court, Forsyth County; Shaw, Judge.

Action by Merchants' Bank & Trust Company of Winston-Salem against T. W Watson, trustee, and another. From a judgment of nonsuit, plaintiff appeals. Affirmed.

Evidence held to show that a purchaser of property sold under a trust deed and the trustee did not agree that the purchase price should be applied in satisfaction of incumbrances, including street-paving assessments.

This was an action brought by the plaintiff against the defendants to recover $747.72 and interest. B. C. Patton owned a piece of land in Winston-Salem, on East Fifth street and Woodland avenue. The city of Winston-Salem acted by virtue of chapter 56, § 9, of the Public Laws of 1915, known as "An act relating to local improvements in municipalities," which, among other things, provides as follows:

"Whenever the governing body shall confirm an assessment for a local improvement the clerk of the municipality shall enter on the minutes of the governing body the date, hour, and minutes of such confirmation, and from the time of such confirmation the assessments embraced in the assessment roll shall be a lien on the real property against which the same are assessed, superior to all other liens and incumbrances."

Under said act, the city of Winston-Salem paved the streets contiguous to Patton's property. The pavement for which the assessment was levied was laid in December, 1919, and was due and payable in ten equal installments, beginning January 1, 1921; the amount of the assessment on East Fifth street was $444.15, and that on Woodland avenue $251.77. At the time of the foreclosure sale, hereinafter mentioned, only one of these annual installments was due and payable. Patton sold the property to John Gregory; he sold the property to S.W Kagor, who sold the property to R. E. Mathews. Each purchaser assumed the assessments in his deed, the amount due the city of Winston-Salem for the street improvement. B. C. Patton executed a deed in trust to the defendant T. W. Watson to secure the Winston-Salem Building & Loan Association. When Mathews bought the property, the deed in trust to T. W Watson, trustee for the Building & Loan Association, was on the property.

R. E Mathews resided on the property in question, at the corner of East Fifth street and Woodland avenue; the plaintiff became interested in the property, by reason of the fact that it had loaned Mathews some money, and finding that he was in failing circumstances, it took a judgment against him on the 13th day of September, 1920, for $2,916.11, with interest on $2,863.13 from September 13, 1920, and court cost $7.30, which judgment was duly docketed on said date in Book 26, page 118, office of the clerk of the superior court of Forsyth county, and became a lien upon said property from said date. At the time the judgment was taken, the lien of the city of Winston-Salem was on said property for bitulithic assessments amounting to $781.62 and interest, and the deed of trust to T. W. Watson trustee, for the Building & Loan Association, for $________. On the 14th day of October, 1920, the said R. E. Mathews died, and on the 1st day of December, 1920, the Wachovia Bank & Trust Company qualified as his administrator. On the 3d day of December, 1920, the plaintiff filed his proof of debt of judgment lien as aforesaid, with said administrator. Thereafter the defendant trustee advertised the property for sale on the 19th day of May, 1921. The plaintiff appeared at the sale and bid on the property $4,035, thinking that was all it was worth, and which would be the approximate sum necessary to pay the bitulithic assessment and the mortgage debt and cost of sale. The plaintiff paid to the trustee, in all good faith, the sum of $4,035. T. W. Watson, the trustee, went to the city tax collector's office and inquired for assessment against R. E. Mathews, and was told there was none. This was an error on the part of the city tax collector, or in the way in which the book of bitulithic assessments is kept, showing only the name of the owner at the time the assessment was levied, which was the name of B. C. Patton. The said defendant trustee kept the money for some days, and finally paid the same into the office of the clerk of the superior court; that is, the balance, after paying mortgage debt, cost, and taxes, which balance was $747.72. In a few days, however, the said trustee discovered that there was a lien against the property, and went over and informed the clerk to this effect, and tried to get the money back; but the clerk thought that, inasmuch as the amount had been entered on the books, it ought to go to the administrator. The clerk paid the money in his hands to the defendant the Wachovia Bank & Trust Company, administrator of R. E. Mathews. The plaintiff prayed judgment directing a return of this money to the trustee, and its payments to the city of Winston-Salem, for cost, and for such other and further relief as may be just and proper.

T. W. Watson, trustee, in his answer admits the advertisement and the sale of the property as alleged, but denies that there was any agreement that the purchase money paid to him was to be used to discharge the lien of the bitulithic assessment, and he likewise denies any knowledge of any such purpose on the part of the plaintiff. He admits that inquiry was made of the city tax collector with respect to said assessment, but that such inquiry was made after the sale and after the payment of the money. He denies that he told the administrator that the money ought to be applied on the bitulithic assessment and should not be in the hands of the administrator.

The Wachovia Bank & Trust Company, in its answer, says: (1) It admits the allegations with respect to the death of Mathews and its qualification as administrator, and that plaintiff filed his proof of debt with said administrator at the time alleged. It is admitted that the sum of $747.72 was paid to it by the clerk of the court. It is denied that T. W. Watson, trustee, told it that the money ought not to be in its hands as administrator, but should be applied on the bitulithic assessment.

The indebtedness of R. E. Mathews' estate was about $25,000, but a large part has been eliminated by foreclosure proceedings. The amount of unsecured claims will be about $12,000 to $15,000. The administrator has in hand funds of the estate amounting to $1,191.32. The estate is insolvent.

In the county court, Thos. W. Maslin, president of the plaintiff bank, testified, in part:

"I attended the sale of this property by Mr. Watson, trustee for Building & Loan, and I bid up to $4,035, and Mr. Mathews bid $4,050, and it was knocked off to him. That night Mr. Watson stated to me that he had accepted my bid, instead of Mathews'; I being the next highest bidder, to Mathews, and the highest bidder having fallen out, and subsequently I paid Mr. Watson $4,035. In paying that amount I intended it to be applied according to the way I had figured up, which included Building & Loan debt, state and county taxes, bitulithic assessment, trustee's commissions, advertising, auctioneer's fees, and all those incidentals that go in to make a sale, in order that the bank could get a clear title. Some time after that the city tax collector sent us a bill for the bitulithic assessment on this property, which bill has not to this date been paid, and then I began investigating to ascertain what had been done with the money which the bank paid for the purpose of applying it to the payment of the bitulithic assessment, as well as other debts, and I found that the trustee had paid the money into the office of the clerk of the superior court, and the clerk had turned it over to the Wachovia Bank & Trust

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