Whitehead v. Morrill

• Decision Date: 24 February 1891
• Citation: 108 N.C. 65,12 S.E. 894
• Court: North Carolina Supreme Court
• Parties: Whitehead v. Morrill et al.

12 S.E. 894

108 N.C. 65)

Whitehead

v.Morrill et al.

Supreme Court of North Carolina.

Feb. 24, 1891.

Mortgages—Foreclosure—Application op Proceeds.

Where the payee has assigned all the bonds secured by a mortgage, which provides that on default in the payment of any of them the whole debt shall become due, and the proceeds of the sale under the mortgage be applied to the entire indebtedness, all the bonds, whether matured or not, will share pro rata in the proceeds.

Appeal from superior court, Pitt county.

T. J. Jarvis and T. F. Davidson, for appellants.

Batchelor & Devereux, for appellee.

Clark, J. By the terms of the mortgage from It. J. Morrill to William Whitehead, it was provided that, upon default in the payment of any of the bonds at maturity, the property therein conveyed could be sold by the mortgagee after advertisement at the court-house door, for cash or credit, and that theproceeds should beap-plied—" First, to the costs and charges of drawing and executing this instrument; and, second, to the payment of the entire indebtedness of the Bald L. V. Morrill to the said William Whitehead, with the interest thereon, whether the whole thereof be due or not." The three bonds first falling due were assigned to the appellants; the other nine, to the appellees. The assignees are bound by the terms of the mortgage, and in this contest between them, by reason of the failure of the property to produce enough to pay all the bonds in full, it is hard to see how the court could apply the proceeds otherwise than "to the entire indebtedness, whether the whole thereof be due or not;" that is, pro rata to all the bonds. The validity of a provision in a mortgage that, upon default in the payment of any one bond at maturity, all the bonds shall become due and payable, was sustained by this court in Capehart v. Dettrick, 91 N. 0. 344, citing Howell v. Railroad Co., 94 U. S. 463. And the very point nowin issue was presented in Kitch-in v. Grandy, 101 N. C. 86, 7 S. E. Rep. 663, in which it was held by Smith, C. j., that, upon a sale under a mortgage containing a similar provision, the proceeds should be applied pro rata to all the bonds, whether matured or not. In the absence of such provision in the mortgage, a very different case might be presented, though the courts of different states differ as to this. 2 Jones, Mortg. § 1701. But it was competent for the parties to insert the stipulation, and the assignees of the bond are bound by it. If the payee held the later...