Montsinger v. White

• Decision Date: 04 June 1954
• Docket Number: No. 749,749
• Citation: 240 N.C. 441,82 S.E.2d 362
• Parties: MONTSINGER, v. WHITE
• Court: North Carolina Supreme Court

Page 362

82 S.E.2d 362

240 N.C. 441

MONTSINGER, v. WHITE

No. 749

Supreme Court of North Carolina.

June 4, 1954

Albert W. Kennon, Durham, for plaintiff appellee.

White & White, Daniel M. Williams, Jr., Durham, for defendant appellant.

DENNY, Justice.

The question to be determined on this appeal is simply this: Did the plaintiff, who neither assumed nor agreed to pay the note secured by the deed of trust on the property held by her and her deceased husband, as tenants by the entirety, but whose deceased husband did assume and agree to pay the note, have the right to pay the balance due thereon at his death and to file a claim against his estate for the amount paid?

The fact that the plaintiff became the owner of the property as the surviving tenant in an estate by the entirety, did not thereby release the estate of her husband from liability for the debt. In re Kershaw's Estate, 352 Pa. 205, 42 A.2d 538; In re Black's Estate, 341 Pa. 264, 19 A.2d 130; Pieretti v. Seigling, 134 N.J.Eq. 105, 34 A.2d 286. Moreover, the character of the estate held by the plaintiff and her husband prior to his death, had no significance in respect to the liability of the parties on the note secured by the deed of trust thereon. Wachovia Bank & Trust Co. v. Black, 198 N.C. 219, 151 S.E. 269. But in this jurisdiction when husband and wife execute a note jointly and severally, promising to pay for money loaned to them, or for the purchase of property, and such indebtedness is secured by property held by them as tenants by the entirety, each is primarily liable, jointly and severally, and upon the death of either, his or her estate becomes liable for one-half of the unpaid balance of the secured debt at the time of his or her death even though the decedent's estate gets no part of the property pledged for the debt. Underwood v. Ward, 239 N.C. 513, 80 S.E.2d 267; Wachovia Bank & Trust Co. v. Black, supra; In re Dowler's Estate, 368 Pa. 519, 84 A.2d 209: In re Kershaw's Estate, supra.

Furthermore, in receiverships and assignments for the benefit of creditors, a secured creditor may prove his claim for the whole amount before exhausting his collateral security. Rierson v. Hanson, 211 N.C. 203, 189 S.E. 502; North Carolina Corporation Commission v. Central Bank & Trust Co., 200 N.C. 808, 158 S.E. 925; Central Bank & Trust Co. v. Jarrett, 195 N.C. 798, 143 S.E. 827; Boney & Harper Milling Co. v. J. C. Stevenson Co., 161 N.C. 510, 77 S.E. 676; Winston v. Biggs, 117 N.C. 206, 23 S.E. 316; Merrill v. National Bank, 173 U.S. 131, 19 S.Ct. 360, 43 L.Ed. 640. Cf. United States Fidelity & Guaranty Co. v. Hood, 206 N.C. 639, 175 S.E. 135. The foregoing decisions, however, do not apply generally to secured claims held at the time of the death of a debtor. When a debtor dies, the administration laws, G.S. § 28-105, step in and determine the settlement of his estate. In such case, the holder of a note executed or assumed by the deceased, and secured by a deed of trust or mortgage, must first exhaust the security and apply the same on the debt, and may then file a claim against the estate for the balance due, if any. But the holder of such note may not file claim and receive pro rata dividend on the basis of the full claim. Rierson v. Hanson, supra; Virginia-Carolina Chemical Co. v. Walston, 187 N.C. 817, 123 S.E. 196; Moore v. Dunn, 92 N.C. 63; Creecy v. Pearce, 69 N.C. 67.

Therefore, in the instant case, the Home Building and Loan Association would not have been permitted, under our decisions, to prove a claim against the estate of Homer E. Montsinger, Jr., until it first exhausted its security, and then only for the balance that might have remained unpaid after applying as a credit on the indebtedness the net proceeds realized from the foreclosure sale.

The plaintiff was under no legal obligation to pay the note held by the Home Building and...