Smith v. Bell
| Decision Date | 04 March 1947 |
| Docket Number | CC719. |
| Citation | 41 S.E.2d 695,129 W.Va. 749 |
| Parties | SMITH v. BELL. |
| Court | West Virginia Supreme Court |
Syllabus by the Court.
1. The provision of Section 7, Chapter 72, Code 1923, now embodied in Section 4, Article 1, Chapter 38, Code 1931, that in all cases, whether the notice of sale be published or not a copy of the notice shall be served on the grantor in a deed of trust, or his agent or personal representative, if he or they be within the county, at least twenty days prior to the sale, confers a particular right upon such grantor for his benefit in addition to the rights in general secured to him and all other grantors by other provisions of the statute and such particular right of such grantor may be waived by him by the insertion of a provision to that effect in a deed of trust.
2. The waiver by a grantor, by the terms of a deed of trust, of a particular right, for his benefit, conferred upon him by statute which does not secure the same right to every grantor in a deed of trust, does not violate any principle of public policy, is valid, and operates to satisfy or dispense with the provision of the statute which confers such right.
James A. McWhorter, of Charleston, for plaintiff.
Mohler Peters & Snyder and Robert L. Merricks, all of Charleston, for defendant.
Hill, Thomas, Neff & Morris, of Charleston, amicus curiae.
This suit was instituted in the Circuit Court of Kanawha County by the plaintiff, Luther J. Smith, to require specific performance by the defendant, Clarence J. Bell, of a written contract, entered into between them on July 12, 1946, by which the plaintiff agreed to sell, and the defendant agreed to purchase from the plaintiff, certain improved real estate in Kanawha County, West Virginia.
The plaintiff agreed to convey good title, but the defendant refused to accept a conveyance solely because of an alleged defective sale under a prior deed of trust through which the plaintiff claims his ownership of the property. The plaintiff then brought this suit and filed his bill of complaint in which he seeks specific performance of the contract. No demurrer to the bill of complaint was filed. The defendant filed his answer in which he states, as his defense to the asserted right of the plaintiff to specific performance, the claim that the title is not marketable for the reason that a deed of a trustee, in the chain of title, was fatally defective because of the failure of the trustee, in making sale of the property under the deed of trust, to cause notice of such sale to be served upon the grantors, who were residents of the county in which the property was located, at least twenty days prior to the sale, as provided in Section 7, Chapter 72, Code 1923, which section, as subsequently amended, is now known and designated as Section 4, Article 1, Chapter 38, Code 1931. The plaintiff demurred to the answer on the ground that the deed of trust, which was filed as an exhibit, contained an express waiver by the grantors of the service of such notice, which waiver rendered compliance with that provision of the statute unnecessary. The circuit court considered the answer sufficient in that the alleged defect in the title was a complete defense to the claim of the plaintiff, overruled the demurrer of the plaintiff, and, on its own motion, certified its ruling to this Court.
The single point of law made and certified is whether a provision in a deed of trust waiving the requirement of Chapter 72, Section 7, Code 1923, now contained in Section 4, Article 1, Chapter 38, Code 1931, relating to personal service of notice of sale upon the grantors, in the event of foreclosure, is legally effective.
The statute, Chapter 72, Section 7, Code 1923, relating to notice in connection with sales under deeds of trust, in effect when the deed of trust was made, employs this language:
The deed of trust, dated March 14, 1929, was made by Herbet Young and Laura Young, his wife, as grantors, to named trustees, and was duly recorded. Default having occurred in the payment of the debt, after publication of a notice of sale in a newspaper published in Kanawha County, once a week for four successive weeks and posting of the notice for a like period at the front door of the court house of that county, the real estate described in the instrument was sold at public auction on January 5, 1935, and a deed for the property was made to the purchaser by one of the trustees. The deed of trust contained a waiver, by the grantors who were in the county at the time of the sale, which, if valid, is conceded to be sufficient in its scope to apply to the requirement of the statute that a copy of the notice of sale be served upon them at least twenty days prior to the sale, which waiver is expressed in these terms:
'Any sale made under and by virtue of this deed of trust shall be for cash, and and shall be on notice given by advertisement published once a week for four consecutive weeks beginning four weeks previous thereto in some newspaper published in Kanawha County, West Virginia, and no other notice shall be required, and the parties of the first part hereby waive, the right to any other notice, and also waive the right to notice of sale after sale is made.'
The report of sale by the trustee shows a compliance with the terms of the deed of trust and with the provisions of the statute except the foregoing requirement that a copy of the notice be served upon the grantors at least twenty days prior to the sale, which is not stated to have been observed by the trustee who evidently relied upon the waiver and did not cause a copy of the notice to be served upon the grantors in the deed of trust. His failure so to do is the sole ground on which the validity of the sale is attacked.
The grantors in the deed of trust have raised no objection to the sale or the deed made by the trustee to the purchaser, and none of these persons is a party to this suit.
The plaintiff insists that the waiver is valid and operates to eliminate that requirement of the statute. The defendant, though conceding the sufficiency of the terms of, and the willingness and the good faith of the grantors in consenting to, the waiver, asserts that, for reasons of public policy, it is of no legal force or effect, and that the provision of the statute, being mandatory, can not, as a matter of law, be waived or dispensed with by the grantors in the deed of trust.
The argument is advanced by the defendant that, for reasons of public policy, the waiver of the provision of the statute should not be permitted because of the inequality in the positions of the lender and the borrower, who, if allowed to waive the requirements of the service of the notice, would necessarily be placed in a position of hardship and disadvantage as compared to that of the lender. This argument proves too much. It would tend to defeat the rights of creditors in instances in which a large amount of security is demanded or unusually favorable terms in connection with a loan are insisted upon, which the borrower is reluctant to meet, but which, because of his then pressing financial needs, he is compelled, in order to obtain the loan, to furnish or concede. In dealings of that nature, however, when no fraud or illegal practice occurs, the binding effect of transactions and agreements, entered into between the parties, is universally recognized and sustained. In recognizing such agreements, the laws furnishes adequate safeguards to each party, by limiting the right of the creditor to the use or the disposition of the security to the extent necessary to enable him to be repaid the amount of the loan and in requiring him to return the excess, if any, to the debtor, and by imposing no obligation upon the debtor other than the duty, which he has voluntarily assumed, to pay his debt or lose his security.
To depart from this established course of dealing would impair the existing commercial system and limit the source of financial credit, for the lender is not required to grant the loan and he will, in no case, do so, unless he is afforded sufficient protection by law to enable him, despite the usual and inevitable element of risk, to recover the loan. It is true that the financial position of the lender is stronger than that of the borrower as to the particular transaction, but if that disparity were not...
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