Smith v. Greensboro Joint Stock Land Bank
| Decision Date | 13 April 1938 |
| Docket Number | 233. |
| Parties | SMITH v. GREENSBORO JOINT STOCK LAND BANK et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Johnston County; Marshall T. Spears Judge.
Action by Myrtle I. Smith against the Greensboro Joint Stock Land Bank and others to set aside deeds under foreclosure sale and for other relief. Judgment for plaintiff, and defendants appeal.
Reversed.
Civil action to set aside deeds under foreclosure sale made to mortgagee through its agent, and subsequent deeds allegedly taken by grantees with notice, to recover the lands and for an accounting for rents and benefits; and, in the event it should be decided by the court that the subsequent grantees are innocent purchasers for value, to recover of the mortgagee and its agent, the bidder at the sale, the value of the land less the mortgage indebtedness.
For a first cause of action, the complaint alleges that: In 1926 to secure the payment of a loan obtained from the Greensboro Joint Stock Land Bank, plaintiff executed and delivered to the said bank a mortgage deed, which is duly registered conveying 394.01 acres of land situated in Johnston county. This mortgage deed was foreclosed by the exercise of the power of sale therein contained, and the lands were sold at the courthouse door in said county on February 19, 1934. The defendant S. B. Foster was declared to be the highest bidder at $12,000. On March 2, 1934, pursuant to such sale, said Land Bank conveyed the lands to said Foster by deed which was duly registered on March 12, 1934. On the date last named Foster, for recited consideration of $10, conveyed the lands to said Land Bank, by deed, which was duly registered on March 14, 1934. On December 18, 1934, said Land Bank, for recited consideration of $10 and other valuable considerations, alleged to be approximately $12,000, conveyed the lands to the defendant, Home Insurance & Realty Company, by deed which is duly registered. In January, 1935, said Home Insurance & Realty Company conveyed all of the lands in three separate portions to defendants (1) H. A. Johnson and wife for consideration of $6,000; (2) J. Hubert Dickinson and wife, Willie Albritton Dickinson, for $6,000; and (3) Walton W. Smith and wife for $5,000, by respective deeds which are duly registered.
The plaintiff in said first cause further alleges that the foreclosure sale is void, in that the mortgage deed contained no power of sale sufficient to warrant the foreclosure for that it failed to designate the place of sale; and, further, that the purchaser, S. B. Foster, at the time of the sale, occupied a fiduciary relationship with the defendant Land Bank and was acting as its agent in purchasing the property; that in effect the Land Bank purchased the property at its own sale indirectly through its agent; that the defendant Home Insurance & Realty Company and its said grantees, respectively, took title to the said lands with notice of the alleged defects in the mortgage and in the foreclosure sale, of the circumstances under which the Land Bank "pretended to sell and convey the property to S. B. Foster, its agent, and the record title which rendered said sale illegal and void"; that all said grantees took title subject to plaintiff's equity of redemption; "that the said lands are now worth more than the sum of $27,500"; and that the annual rental value is $1,500.
In the second cause of action the plaintiff alleges that in the event it should be decided by the court that the defendant Home Insurance & Realty Company and its grantees are innocent purchasers for value, then the plaintiff has been damaged and is entitled to recover of the defendants Greensboro Joint Stock Land Bank and S. B. Foster the sum of $12,500.
Defendants Greensboro Joint Stock Land Bank and S. B. Foster demur to the complaint for that there is misjoinder of causes of action. The defendants H. A. Johnson and wife, J. Hubert Dickinson and wife, and Walton W. Smith and wife, demur to the complaint for that there is misjoinder both of causes of action and of parties.
The court below entered judgment overruling demurrer, from which defendants appealed to the Supreme Court and assigned error.
Where there is a misjoinder of both of parties and of causes of action, and a demurrer is interposed on such grounds, the demurrer should be sustained and the action dismissed.
Arch T. Allen, of Raleigh, and McLean & Stacy, of Lumberton, for appellants Greensboro Joint Stock Land Bank and S. B. Foster.
Wellons & Poole, of Smithfield, for appellants H. A. Johnson, Mrs. H. A. Johnson, J. Hubert Dickinson, Willie Albritton Dickinson, Walton W. Smith, and Mrs. Walton W. Smith.
W. J. Hooks, of Smithfield, for appellee.
The demurrers presented on this record raise this question: Can a mortgagor unite in a complaint both a cause of action against the mortgagee and its subsequent grantees to set aside foreclosure sale under the mortgage at which the mortgagee becomes the purchaser, and deeds subsequently executed to purchasers with notice, and a cause of action against the mortgagee for damages resulting from such foreclosure sale? The decisions of this court say "No."
The uniform decisions of this court hold that, "Where a mortgagee of land purchases at his own sale directly or by an agent, though he may convey to the agent and have the latter reconvey to him, the effect is to vest the legal estate in the mortgagee in the same plight and condition as he held it under the mortgage, subject to the right of the mortgagor to redeem," Averitt v. Elliot, 109 N.C. 560, 13 S.E. 785, unless in some way he releases or loses that equity. The sale by the mortgagee is not void, but only voidable, and, ordinarily, can be avoided only by the mortgagor or his heirs and assigns. Joyner v. Farmer, 78 N.C. 196; Whitehead v. Whitehurst, 108 N.C. 458, 459, 13 S.E. 166; Averitt v. Elliot, supra; Shuford v. Greensboro Bank, 207 N.C. 428, 177 S.E. 408; Davis v. Doggett, 212 N.C. 589, 194 S.E. 288.
If the facts be true as alleged, it is open to plaintiff, mortgagor (1) "to ratify the sale and accept the proceeds, or settle on that basis"; or (2) to pursue one of two remedies: (a) She "may treat the sale as a nullity and have it set aside." This...
To continue reading
Request your trial