Stevens v. Turlington
| Decision Date | 03 October 1923 |
| Docket Number | 96. |
| Parties | 186 N.C. 191, 32 A.L.R. 870 v. TURLINGTON. STEVENS |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Johnston County; Horton, Judge.
Action by A. F. Stevens against Rena Turlington. From an order containing a temporary restraining order, defendant appeals. Affirmed.
Civil action to remove cloud from title and to restrain the defendant, as mortgagee, from executing a deed to the purchaser at a certain mortgage sale, it being alleged that the defendant orally agreed with plaintiff to release the land in question from her mortgage. The temporary restraining order was continued to the hearing, and the defendant appealed.
As between the mortgagor and the mortgagee, the legal title is in the mortgagee, and the equitable title in the mortgagor until the land is redeemed or the mortgage is foreclosed.
Young Best & Young, of Dunn, for appellant.
The essential facts and allegations of this case are as follows:
On February 14, 1920, W. A. Stevens purchased a tract of land from his sister, Rena Turlington, executing and delivering to her his note and a mortgage on said land to secure the payment of the entire purchase price of the property. This mortgage was duly registered. Thereafter on March 23, 1920 the plaintiff, being desirous of purchasing a part of said land from his brother, W. A. Stevens, went to the defendant his sister, and secured from her a verbal agreement to release that portion of the land which he wished to buy from the operation of her mortgage, and it is alleged that she promised to accept in lieu thereof a mortgage on another tract of land owned by their minor brother, J. Almon Stevens. Relying upon this understanding and agreement, plaintiff has taken a deed from his brother and paid to him $400 of the purchase price. J. Almon Stevens has prepared and tendered to the defendant a mortgage on his land, as per agreement, but defendant has refused to accept same.
Defendant denies the making of any such verbal agreement, and, by way of answer, she pleads that, even if such promise were made, it is not in writing, and therefore it is not enforceable. Defendant contends that she is entitled to proceed with the foreclosure of her mortgage, and to execute to the purchaser a valid deed therefor, default having been made in the payment of the debt and the property having been sold on February 14, 1923, after due advertisement under the mortgage.
The appeal presents a single question of law: Does an unexecuted verbal agreement made by a mortgagee, for a valuable consideration, to release a real estate mortgage, come within the statute of frauds? If this be answered in the affirmative, the injunction should be dissolved; otherwise not. The question must be answered in the negative under authority of Hemmings v. Doss, 125 N.C. 400, 34 S.E. 511, and cases there cited. In Faw v. Whittington, 72 N.C. 321 (opinion by Bynum, J.), it is said:
"While the general rule is, that the same formalities are required by the act to create and transfer an interest in land, a distinction is made between contracts to 'sell or convey,' which are the words used in the act (Battle's Revisal, c. 50, § 10), and contracts or agreements made between vendor and vendee, mortgagor and mortgagee, after that relation between them is established, and which are intended to terminate that relation."
There seems to be a sharp conflict in the decisions of the different states on this subject, depending on whether, in the given jurisdiction, a real estate mortgage is regarded strictly as a conveyance of the land or as a mere incident to the debt. Browne on the Statute of Frauds (5th Ed.) § 267. In some of the states, notably Massachusetts and Maine, it is held that an oral promise made by a mortgagee to relinquish his claim to the mortgaged premises comes within the statute of frauds, and is void. Parker v. Barker, 2 Metc. (Mass.) 423; Leavitt v. Pratt, 53 Me. 147. On the other hand, this question has been decided differently in a number of jurisdictions, including North Carolina. Hemmings v. Doss, supra, and cases there cited; Wallis v. Long, 16 Ala. 738; Howard v. Gresham, 27 Ga. 347; Southerin v. Mendum, 5 N. H. 420. The principal considerations urged in support of this latter view, according to the general holdings, may be summarized as follows:
(1) In respect to the rights of all persons except the mortgagee, who holds the legal title to the mortgaged premises, it is well settled that the mortgagor is to be considered as the owner of the land with an estate therein which "may be devised, granted, or entailed with remainders" (Lord Hardwicke), and which is subject to dower and to sale under execution. Weathersbee v. Goodwin, 175 N C. 234, 95 S.E. 491; Willington v. Gale, 7 Mass. 138; Bispham's Equity, § 151; 27 Cyc. 1234.
(2) It is further held that a mortgagee has no interest in the mortgaged premises which can be taken at law under attachment or execution, until the right to redeem is foreclosed. C. S. §§ 677, 807; Bowen v. King, 146 N.C. 385, 59 S.E. 1044; Johnson v. Whilden, 166 N.C. 104, 81 S.E. 1057, Ann. Cas. 1916C, 783, Id., 171 N.C. 153, 88 S.E. 223, 225; Jones on Mortgages (6th Ed.) § 701; 2 Freeman on Executions (3d Ed.) § 184.
(3) According to the rule now generally prevailing, if a mortgagee attempt to convey the land to any person other than the mortgagor, unless he at the same time transfer the debt secured by the mortgage, no estate will pass by his deed, though in some cases it may operate as an assignment of the mortgage. Aymar v. Bill, 5 Johns. Ch. (N. Y.) 570; Greve v. Coffin, 14 Minn. 345 (Gil. 263), 100 Am. Dec. 229; Johnson v. Cornett, 29 Ind. 59; Hubbard v. Harrison, 38 Ind. 341; Hill's Lessee v. West, 8 Ohio, 222, 31 Am. Dec. 442; Kent's Com. 194; 19 R. C. L. 345.
(4) Where a testator, who holds lands in mortgage, by will devises all his real estate, the lands held in mortgage do not pass under such devise. Martin v. Smith, 124 Mass. 111. Nor would a surviving widow be entitled to dower in such lands. Nash v. Preston, 79 Eng. Rep. 767; Powell on Mortgages, § 733.
(5) When a mortgagee transfers to another person the debt which is secured by the mortgage, this carries with it the mortgage security, unless the parties agree otherwise. Jones v. Ashford, 79 N.C. 172; Hyman v. Devereux, 63 N.C. 624; Williams v. Teachey, 85 N.C. 402; Baber v. Hanie, 163 N.C. 588, 80 S.E. 57, 12 A. L. R. 1518; Weil v. Davis, 168 N.C. 298, 84 S.E. 395.
(6) Where a mortgagee dies, his interest in the mortgaged premises goes, not to his heirs, but to his personal representatives. C. S. § 2578. They may discharge and release the same as provided by C. S. § 2596.
(7) And, finally, when the debt is paid, the title of the mortgagee is thereby extinguished, and all his interests in the land revert immediately to the mortgagor by operation of law. Porter v. Millet, 9 Mass. 101.
The decisions in this state are to the effect that, as between the mortgagor and the mortgagee, the legal title to the mortgaged premises is vested in the mortgagee, while the mortgagor is looked upon as the equitable owner of the land. This relative position continues until the land is redeemed or until the mortgage is foreclosed. Prior to the day of redemption, or condition broken, the mortgagor may pay the money according to the terms of his contract and thus avoid the conveyance at law. This is termed his legal right of redemption. After the special day of payment has passed, or default suffered, the mortgagor still has the right to redeem at any time prior to foreclosure. This is called his equity of redemption; and such right is regarded as a continuance, and not a change, of his old estate. Hemphill v. Ross, 66 N.C. 477; Parker v. Beasley, 116 N.C. 1, 21 S.E. 955, 33 L. R. A. 231; Adams, Equity, § 114. Where there is no agreement to the contrary, certainly after default the mortgagee is entitled to enter and to hold the land until redeemed; and he may maintain an action in ejectment therefor, even against the mortgagor himself. Weathersbee v. Goodwin, supra; Coor v. Smith, 101 N.C. 261, 7 S.E. 669; Kiser v. Combs, 114 N.C. 640, 19 S.E. 664; Capehart v. Dettrick, 91 N.C. 344; Whittkowski v. Watkins, 84 N.C. 457; Bruner v. Threadgill, 88 N.C. 361; Cunningham v. Davis, 42 N.C. 5. Such rights are given to the mortgagee to enable him to protect his security, prevent waste, and keep the land from being lessened in value in any unlawful manner. In so far as it is necessary to accomplish these purposes, the mortgagee is considered and treated in law as the holder of the legal title; but otherwise his interests are viewed from a different standpoint. Lackey v. Martin, 120 N.C. 391, 27 S.E. 35.
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