Rowland Hardware & Supply Co. v. Lewis
| Decision Date | 11 April 1917 |
| Docket Number | 282. |
| Citation | 92 S.E. 13,173 N.C. 290 |
| Parties | ROWLAND HARDWARE & SUPPLY CO. ET AL. v. LEWIS ET AL. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Robeson County; Winston, Judge.
Action by Rowland Hardware & Supply Company and others against R. E Lewis and others. Judgment for plaintiffs, who except and appeal. No error.
A chattel mortgagee, bidding in the equity of redemption at an execution sale, is not estopped to deny the validity of such sale.
The action was brought by plaintiff against R. E. Lewis, sheriff of Robeson county, C. T. Pate & Co., and C. T. Pate, to recover the $725, the amount bid by C. T. Pate, acting for the firm of C. T. Pate & Co., of which he was a member, at a sale under the executor hereinafter described. The material and undisputed facts are as follows:
"(1) Plaintiff obtained a judgment against one R. T. Gaitley, who was and is insolvent, for $1,302.
(2) Execution was issued upon this judgment and levied upon personal property, on nearly all of which defendants, C. T Pate & Co., and the International Harvester Company held chattel mortgages for more than $3,000, these mortgages having been taken and registered before the rendition of plaintiff's judgment, and nothing having been paid thereon. The mortgage of the International Harvester Company has since been sold and assigned to the Pates. The small part of the property levied upon, which was not embraced in these mortgages, was valued by the jury at $86.
(3) The property levied upon was worth, in all, $1,000 less than one-third the amount due upon the mortgages, which mortgages constituted liens upon the property superior to the lien of plaintiff's judgment.
(4) The property levied upon was offered for sale by the sheriff 'subject to liens and mortgages,' and he so announced publicly to the bystanders before the sale. Defendant Pate became the purchaser at $725. Pate's bid, as he alleges was based upon a misconception of the sheriff's announcement, he thinking that it meant that the proceeds of sale would be first applied to his mortgage, and, knowing that his mortgage debt was far more in amount than the property was worth, he bid for it under the belief that his bid would be credited upon his mortgage, and he would not have bid but for this understanding.
(5) After the sale, when defendant Pate found out that he had misunderstood the terms of sale, he tendered the property to the sheriff, and requested him to resell it. This the sheriff was willing to do, but the plaintiffs would not consent saying that, 'Pate is a responsible man, and leave it as it is,' or words to that effect.
(6) The property bid in by Pate at the sale was delivered to him.
(7) Some weeks after the sale the mules sold were burned to death, without any apparent negligence on the part of any one.
(8) This suit was brought to compel defendant Pate to pay his bid.
(9) The mortgagor was in possession of the property when the levy was made by the sheriff. The court held that plaintiff was not entitled to recover anything, except the value of such property as was sold by the sheriff, and was not embraced within the mortgages of defendant C. T. Pate & Co., and, the jury having found this value to be $86, judgment for that amount was entered in favor of plaintiff, who excepted and appealed."
McLean, Varser & McLean, of Lumberton, for appellants.
H. E. Stacy and McIntyre, Lawrence & Proctor, all of Lumberton, for appellees.
WALKER, J. (after stating the facts as above).
At common law no property but that to which the debtor has a legal title is liable to be taken under execution against him and where this rule has not been changed by statute, an equity of redemption in chattels subject to a mortgage cannot be levied upon and sold by creditors of the mortgagor under execution. This is the prevailing rule, and is applied rigorously where the debt secured by the mortgage is past due, and the mortgagee has the right of possession which is the case here. 17 Cyc. 961, and Freeman on Executions, §§ 116, 117, where the question is fully discussed and the various views collated, but all culminating in this statement of the law: The mortgagee being entitled to the possession as against the mortgagor, no creditor of the latter can acquire any right which his debtor has not; and no right of possession can be acquired by levying a writ against one who is without such right; and, finally, that it would very seriously impair the rights of the mortgagee if the property could be taken from his hands for an indefinite period, in order to subject to execution an equity of redemption which might be of no value whatsoever. Freeman on Executions, § 117. Several reasons have been assigned for the rule. One which applies in this state grows out of the common-law principle that a mortgage conveys the legal title and is not to be regarded as merely a security for the debt with the right of possession in the mortgagor. 17 Cyc. 961. "It was a principle of the common law, steadily maintained, that an equitable interest in chattels could not be sold under execution." Yeldell & Barnes v. Stemmons, 15 Mo. 443. An able judge has said:
Hendricks v. Robinson, 2 Johns, Ch. (N. Y.) 312.
And a text-writer says:
Hermon on Executions, p. 150, § 118.
In some of the states the common-law rule has been abrogated, but even where this has been done, it is held that where the debt has not been paid and the right of possession, as here, is in the mortgagee, the levy cannot be made. In a few cases, decided in other jurisdictions, it is held that while a mere equity of redemption is not, of itself, subject to execution, when such equity is joined with the right to remain for a definite time in possession of the property mortgaged, the mortgagor has an interest, which may be seized and sold under an execution at law. Freeman on Executions, p. 482. But the rule sems to be well settled that after default by the mortgagor, no levy can be made, as then the mortgagee's right to the possession has fully accrued, and it cannot be taken from him under process against the mortgagor.
But, however the law may be elsewhere upon this important subject, it has long since been settled in this state, and uniformly to this date, by our decisions, that such an equity of redemption is not subject to levy, and in the classification of the courts upon the question, we are assigned to the large class which holds that a levy of an execution upon an equity of redemption, under a chattel mortgage, cannot be made, and we should, of course, follow our own rulings. The following cases will show the decided trend of our decisions:
And 17 Cyc. p. 957, says:
"The general rule was well established that in the absence of statute a debtor's equitable estate in real or personal property, although accompanied with possession, could not be seized and sold under a fieri facias, and it was necessary for the judgment creditor to go into equity to subject such interest" (citing Sprinkle v. Martin, 66 N.C. 55; McKeithan v. Walker, 66 N.C. 95, among many other cases).
See, also, Burgin v. Burgin, 23 N.C. 160; Allison v. Gregory, 5 N. C. 333. Justice Barbour for the court, in Van Ness v. Hyatt, 13 Pet. 294, 10 L.Ed. 170, said:
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