Oliver v. Stovall.

• Decision Date: 06 February 1923
• Docket Number: No. 4738.,4738.
• Citation: 93 W.Va. 88
• Parties: E. T. Oliver v. C. P. Stovall et al.
• Court: West Virginia Supreme Court

93 W.Va. 88

E. T. Oliver

v.C. P. Stovall et al.

No. 4738.

Supreme Court of Appeals of West Virginia.

Submitted January 31, 1923.

Decided February 6, 1923.

1. Mortgages Error to Decree Sale of Lands Under Trust Deed Lien, Where Owner of Beneficial Interest Offers to Redeem Without Adjudicating Su m Necessary and Fixing Date of Payment.

Where the court has taken jurisdiction of the enforcement of a trust deed lien upon land, and the owner of a beneficial interest in the land, who has the right to redeem by paying off and discharging the trust lien debt, and by proper pleading, asks that the amount of the lien be ascertained and avers that he is ready, able and willing to do so when the proper amount is fixed by the court, it is error to decree a sale by the trustee without adjudicating the sum necessary to redeem, and without giving a day for its payment. (p. 94).

2. Same Acceleration of Maturity Clause Held Valid.

Generally, a provision in a deed of trust giving the cestui que trust the right to declare and treat the entire amount secured as immediately due and payable upon default in the payment of any of the installments or of interest or taxes due, is a valid and enforceable contract, and is enforceable in a proceeding to sell under the terms of the trust. (p. 94).

3. Judicial Sales Court Taking Jurisdiction of Administration of Trust to Secure Creditors Should Fix Equitable Liens' in Favor of Parties Before Sale Decreed.

When a court of equity takes jurisdiction of the administration of a trust to secure creditors, the claims and priorities of all parties interested should be ascertained and fixed including any equitable liens in favor of any of the parties, before a sale should be decreed, unless good reason be specially shown, in order that all parties may intelligently protect their interests at the sale. (p. 94).

4. Marshaling Assets and Securities Doctrine of Marshaling Held. Applicable to Protect Creditors Having Lien Upon One of Two Pieces of Property, Both of Which are About to be Sold, by a Prior Lienor.

The equitable doctrine that, "If one creditor, by virtue of a lien or interest, can resort to two funds, and another to one of them only, as, for example, where a mortgagee holds a prior mortgage on two pieces of land, and a subsequent mortgage on but one of the parcels is given to another, the former must seek satisfaction out of that fund which the latter cannot touch," applies for the protection of a creditor who has an equitable lien upon one of two pieces of property both of which are about to be sold by a prior lienor. (p. 94).

(McGinnIs, Judge, absent).

Appeal from Circuit Court, Mercer County.

Suit by E. T. Oliver against G. P. Stovall and others. From a decree for defendants, plaintiff appeals.

Reversed and remanded.

Sanders, Crockett Fox, for appellant.

Luther G. Scott, Sexton & Roberts, and McClaugherty & Richardson, for appellees.

Lively, Judge:

This appeal and supersedeas is prosecuted for the purpose of correcting an alleged error in a decree of the circuit court of Mercer county entered on August 24, 1922, and which directed a sale of the real estate and personal property over which the litigation was pending, directed to the trustee to pay to his cestui que trust the amount secured by the trust deed and retain the remainder, if any, for future distribution under the direction of the court; and referred the cause to a commissioner for a report on other matters hereinafter mentioned.

It appears that G. P. Stovall and E. K. Bailey, by deed dated December 22, 1920, conveyed to W. H. Allen, by metes and bounds, a lot of land in the city of Bluefield for a consideration of $8,000, to be paid. Two thousand dollars of the purchase money, as evidenced by a negotiable note, was executed by Allen at four months from date, and the residue of $6,000 was evidenced by interest bearing notes for the sum of $50 each, the first note becoming due and payable one month after the date of the deed, and one note each successive month thereafter, covering a period of 120 months. At the same time Allen executed a deed of trust to James S. Kahle, a trustee, to secure the payment of the notes above described, in which it was stipulated that the $2,000 note might be renewed by the maker for four successive periods on a curtailment of at least 15% of the face of the note at each renewal. It was also stipulated that if Allen made default in the payment of any one of the notes secured or in the payment of taxes, then, at the option of the holder of the notes, the entire amount, as evidenced thereby, should become due and payable without reference to their due date, and the trustee, upon request to do so, should proceed to execute the trust and sell the property for the debt secured. On the same date Allen executed a deed of trust of Kahle, trustee, conveying to him certain personal property located in the city of Bluefield, therein fully described, and consisting of a dry cleaning system or plant, to secure the payment of the $2,000 purchase money note above described and any renewal thereof. On September 1, 1921, Allen entered into a contract with E. T. Oliver, the plaintiff, by which he leased this lot to him for a term of twelve years in consideration of certain small sums each month as rent and the erection thereon by Oliver at his own cost and expense a two-story brick building; and it was agreed that if Allen should fail to pay off and satisfy any and all liens against the lot he would reimburse Oliver for any loss which he might sustain by reason of such failure. It appears that Oliver erected the two-story brick building on the lot at a cost, as he alleges, of $7,000. In the meantime the $2,000 note, secured by the deed of trust on the lot and on the personal property, had been renewed by Allen, with the consent of Stovall and Bailey, without payment of 15% of the face thereof. All that he had paid on this note was about the sum of $100, and at the expiration of the third renewal the holders refused to give a further extension, declared that all of the notes had become due under the accelerating clause of the trust deed and directed the trustee to advertise and sell the lot. When the lot was advertised Oliver instituted this suit against Stovall, Bailey, Kahle, trustee, and Allen, setting out the above facts, exhibiting therewith the deed, deeds of trust and his lease contract, and setting up further that he had obtained a judgment against Allen for $300 on the 16th day of December, 1921, on which execution had been returned, "No property found" and which, he charged, was a lien upon the lot advertised for sale; alleged upon information that Allen had defaulted in the payment of the $2,000 note and that the personal property pledged to secure the payment of the same is insufficient to pay off and discharge the note; that by virtue of his judgment and contract he has rights and equities in the property advertised for sale and that Stovall and Bailey should be required to satisfy their claim first out of the personal property on which they had a lien, and that a sale of the lot with his two-story brick house thereon would work grievous and irreparable injury to him and that before a sale under the deed of trust he should have an opportunity to have his rights and interest in the property adjudicated; and he prayed for a reference to ascertain the value of the personal property and to ascertain his rights and equities in the house and lot; that the personal property first be exhausted before proceeding against the real estate and that the trustee be restrained from making a sale until the further order of the court. Defendants, with the exception of Allen, demurred and answered, and upon the hearing of the motion for injunction tendered and paid into court $318.95, the amount of the judgment in favor of Oliver set up in his bill, and thereupon the court refused to grant the injunction. Upon application to the judges of this court, the injunction was awarded. A motion was made to dissolve, on the 12th of June, 1922, when the plaintiff, by amended and supplemented bill, alleged that numerous defaults in the payment of the money secured by the deed of trust had been made by Allen, and no advertisement of the property or claim that all the money represented by the notes had been declared due and payable until after he had erected his building on the lot and that subsequent to the advertisement he had offered to Stovall and Bailey $2,000 and the costs of advertising the property for sale, and all other costs, which they refused to accept, and averred that he was ready and willing to pay them the total amount which might be dne them, together with the costs and expenses incurred by the trustee as soon as the total amount due them by reason of the default of Allen had been determined by the court. It was also alleged that Allen was insolvent, and fraud and collusion was charged between Allen and the other defendants to bring about a sale of the property in order to defeat Oliver of his rights and equities in the improvement placed on the land. It was also charged that there was in existence a prior deed of trust given by Bailey and Stovall on the property before it was sold to Allen, which constituted a valid and subsisting first lien against the property. The defendants, except Allen, answered the amended and supplemented bill, and averred that the said first deed of trust executed by Bailey and Stovall had been paid off and released since the institution of this suit. They denied that the personal property should be first sold in order to protect any right that Oliver might have, and alleged that the personal property would not pay the $2,000 note because it would not bring more than $400 or $600, and averred that all of the notes had become due and payable; denied that Allen was insolvent; refused to accept full payment of all of the notes which they claimed had then matured. They also set out in the answer...