State v. Brown

• Decision Date: 21 October 1970
• Docket Number: No. 7010SC577,7010SC577
• Citation: 176 S.E.2d 881,9 N.C.App. 498
• Parties: STATE v. North Carolina v. James Henry BROWN.
• Court: North Carolina Court of Appeals

Page 881

176 S.E.2d 881

9 N.C.App. 498

STATE v. North Carolina v. James Henry BROWN.

No. 7010SC577.

Court of Appeals of North Carolina.

Oct. 21, 1970.

Robert Morgan, Atty. Gen., by William Lewis Sauls, Staff Atty., Raleigh, for the State.

Tharrington & Smith, by Roger W. Smith, Raleigh, for defendant appellant.

GRAHAM, Judge.

Defendant's sole assignment of error is to the court's denial of his motion for nonsuit as to the forgery count.

The common law definition of forgery obtains in this State since the statutes relating to forgery do not define it. Peoples Bank & Trust Co. v. Fidelity & Casualty Co., 231 N.C. 510, 57 S.E.2d 809. Three elements are necessary to constitute the offense: (1) There must be a false making or other alteration of some instrument in writing; (2) there must be a fraudulent intent; and (3) the instrument must be apparently capable of effecting a fraud. State v. Greenlee, 272 N.C. 651, 159 S.E.2d 22; State v. Keller, 268 N.C. 522, 151 S.E.2d 56; State v. Phillips, 256 N.C. 445, 124 S.E.2d 146; State v. Diggs, 6 N.C.App. 732, 171 S.E.2d 230. Defendant does not challenge the sufficiency of the State's evidence to establish the first two necessary elements. He contends, however, that the third element is lacking because the subordination agreement could not affect the rights or liability of any party.

The subordination agreement is unquestionably a genuine document, save for the falseness of the signatures of Mr. and Mrs. Helms. Defendant's argument that it could not affect the rights or liabilities of anyone is based, not upon the terms of the instrument itself, but upon the terms of the original deed of trust from Mr. and Mrs. Helms to Raleigh Savings. The language relied upon is as follows:

'(A)nd provided further that the note hereinbefore described and all such subsequent loans and advances, costs and expenses shall mature and become due and payable not later than twenty years from the date hereof, it being understood and agreed that if any note, loan, advance or other obligation secured hereby, whether representing the inital indebtedness or additional advances, is reduced by partial payments, Further loans or advances may be made by the Association, at its election, to the parties of the first part upon request by them within the maximum amount and within the time limit above set forth, and such further obligations or advances shall be secured hereby to the same extent as the original indebtedness hereunder. * * *' (Emphasis added).

Defendant reasons that the above language gives Raleigh Savings the right to make advances up to the original amount of the loan, and that when made, the future advances relate back under the original deed of trust, and take priority over any intervening encumbrances. Simply stated, defendants contend that the instrument in question, if genuine, would have given Raleigh Savings no rights in addition to those which it already had under its original deed of trust; nor would it have operated to the prejudice of the holders of the intervening deeds of trust since their security was already subordinate to future advances made by Raleigh Savings under the terms of its first deed of trust.

The State argues the case solely on the grounds of defendant's contention. It contends that any future advances made under Raleigh Savings' first deed of trust would not have related back and taken priority over the intervening deeds of trust, unless subordinated by a genuine instrument such as the one allegedly forged by defendant. The State cites G.S. § 45--70(b) in support of its position. Defendant counters saying that the provisions of that statute are inapplicable to the situation here; and further, that G.S. § 45--70(b) became effective on 1 October 1969 and cannot affect the rights and liabilities established by deeds of trust which were recorded prior to that date.

Thus, the parties have presented us with a question of real estate law, presumably of first impression in this jurisdiction, as determinative of the issue raised on this appeal. We do not, however, view the question presented as essential to a determination of whether the instrument here in question could be the subject of forgery.

In 36 Am.Jur.2d, Forgery, § 24, p. 693, it is stated:

'A writing or instrument in order to constitute a forgery must possess some apparent legal efficacy. It is sufficient, however, to constitute a forgery if there is a reasonable possibility that the false writing or instrument may operate to cause injury, although no actual injury therefrom is necessary.'

In accord: State v. Cross and White, 101 N.C. 770, 7 S.E. 715, aff'd, Cross v. N.C., 132 U.S. 131, 10 S.Ct. 47, 33 L.Ed. 287.

It is common knowledge that before advancing funds to be secured by a mortgage on real estate, parties often insist on supplementary instruments which clarify title to the property or specifically establish the priority of the mortgage. This is true even where the rights and priorities of the parties could be established without the assistance of any supplementary instrument. This wide practice should be encouraged. A quit claim deed or a clarifying agreement can often prevent an expensive and time consuming lawsuit. This case is an illustration. If Raleigh Savings had made advances solely relying on the language of their first deed of trust, it would have been inviting a future dispute as to the priority of the advances. That this is so is illustrated by the uncertainty which surrounds the question of the priority of mortgages to secure future advances. (See generally Note, Mortgages to Secure Future Advances, 31 N.C.L.Rev. 504; Note, Registry of Subsequent Encumbrance as Notice to Prior Mortgagee in Mortgage to Secure Future Advances, 6 Va.L.Rev. 280; Osborne, Mortgages, §§ 116, 118, 119). It is also illustrated by the testimony of the attorney for Mr. and Mrs. Monday. He clearly interpreted the instrument in question as necessary in order to establish the legal priority of any advances made by Raleigh Savings subsequent to the recordation of its first deed of trust. The Attorney General strenuously advances the same interpretation. Under these circumstances we cannot hold that there was no reasonable possibility that the instrument in question, if genuine, could operate to cause injury.

In People v. Munroe, 100 Cal. 664, 35 P. 326, the instrument alleged to have been forged was an assignment of the unearned salary of a school teacher. It was conceded that such an assignment was void and unenforceable in court. The court held that the writing could nevertheless be the basis of a charge of forgery. The court observed: 'For the purposes of the case, we conceded at the outset that this instrument would be declared void by a...