Case ID: nc_187/html/0625-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Clarkson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. A. LEAK, Jr., and R. E. LITTLE, Jr., Partners under the firm name and style of LEAK & LITTLE, v. J. L. ARMFIELD and Wife, DION G. ARMFIELD, and CHASE BOREN.
    (Filed 23 April, 1924.)
    Mortgages — Power of Sal© — Deeds and Conveyances — Fraud—Equity— Injunction — Tender—Payment.
    Tlie unsecured creditors of the mortgagor, who seek to set aside his deed for fraud, must first make tender to the mortgagee or pay off the mortgage, when by its terms the power of sale therein may be exercised, before they are entitled to the equitable relief of enjoining the sale upon the ground stated, for otherwise they can obtain no equitable right against the mortgagee for the relief sought, without which the courts cannot interfere under the rules of equity applying in such instances.
    Appeal by Chase Boren from Shaw, J., at October Term, 1923, of Guileokd.
    Civil action. On 1 April, 1920, the defendant J. L. Armfield and wife, Dion G. Armfield, executed to Chase Boren, the defendant (now Mrs. D. M. Stafford), for balance purchase price of land, a mortgage on a certain piece of land'in the city of Greensboro, N. 0. The condition of said mortgage is as follows:
    
      “Provided always, and these presents are upon the express condition-that if the said parties of the first part pay, or cause to be paid, to the said party of tbe second part tbe full sum of $30,000 on or before 1 April, 1923, witb interest tbereon, payable annually at tbe rate of 6 per cent per annum till paid, according to tbe terms of five certain bonds as follows: Two notes of $5,900 eacb due 1 April, 1921, one note of $8,400 due 1 April, 1922, one note of $5,900 due 1 April, 1923, and one note of $3,900 due on 1 April, 1923, bearing even date herewith, executed by tbe said J. L. Armfield, tben these presents and tbe said bond shall determine and be void. But in case of tbe nonpayment of tbe said sum of $30,000, or any part thereof, together witb its interest at tbe time above limited, tben in such case it shall be lawful for tbe said party of tbe second part, her heirs, executors, administrators or assigns, and they are hereby so empowered to sell and convey tbe above described premises, or any part thereof, at public auction to tbe highest bidder, for cash, after advertising tbe same for thirty days at least, and on such sale to execute to tbe purchaser sufficient deeds therefor, apply tbe proceeds of such sale to tbe discharge of said debt and interest, rendering tbe overplus moneys, if any, to tbe said parties of tbe first part, or legal representatives, after deducting tbe cost of such sale and registration of this deed.”
    Tbe notes secured by tbe mortgage are now owned by tbe following persons:
    
      W. 0. Boren, Jr.$5,900.00
    Miss Chase Boren (now Mrs. D. M. Stafford). 5,039.00
    Mrs. Clara Peebles. 5,039.00
    Mrs. Louise Andrews. 5,900.00
    Mrs. Mamie Spence. 8,400.00
    Tbe interest on all of said notes is due and unpaid from 1 April, 1922, subject to a payment of $1,400 to W. C. Boren, Jr., on bis note made some time since 1 April, 1923. Mrs. Clara Peebles’ note is $5,900, but $861 has been paid on tbe principal; all of said indebtedness is due and tbe holders of said notes have called upon Chase Boren to sell tbe land described in tbe mortgage.
    On 22 April, 1920, J. L. Armfield executed a deed to bis wife, Dion G. Armfield, for tbe equity of redemption in said land.
    Tbe plaintiffs obtained a judgment against J. L. Armfield and brought this action to set aside tbe deed made by J. L. Armfield to bis wife, Dion G. Armfield, on tbe ground of fraud. Tbe prayer of plaintiffs is that tbe conveyance “be declared void and set aside in so far as tbe same affects tbe rights of plaintiffs, and that it be decreed that tbe property therein described be subjected to the payment'of the judgment hereinabove set out, subject to the rights of the defendant Qhase Boren,” etc.
    During- the pendency of the case, Chase Boren gave notice to plaintiffs as follows:
    “And whereas all of said notes have become due and the holders of said notes have applied to Miss Chase Boren for her to sell real estate to pay the indebtedness due thereon, as default has been made in payment of the same; and whereas it is the duty under the trust deed of the said Miss Chase Boren to make sale of said property to pay said indebtedness when called upon to do so; and whereas the plaintiff in this action and the defendants, other than Miss Chase Boren, have threatened to restrain in the sale under the power contained in said trust deed, but the said Miss Chase Boren is going to sell under the said power of sale on 8 October, 1923, at the courthouse door in Greensboro, N. C., unless she is restrained or enjoined from doing so: Now, therefore, take notice that you are required to appear before his Honor, T. J. Shaw, on 8 September, 1923, at the courthouse in Greensboro, N. C., and show cause, if any you have, why the said Chase Boren should be restrained from making the aforesaid sale.”
    The hearing was continued until October term of court.
    There was another case pending in the Superior Court of Guilford County against the same defendants as in this case, entitled "T. J. Finch, Receiver of the Banlc of Thomasville and the Bank of Beaufort, v. J. L. Armfield, Dion G. Armfield, and Miss Chase Boren,” setting up that the plaintiffs in said action were creditors of the said J. L. Arm-field, and asking for the same relief as the plaintiffs ask in this action, the purpose of both actions being to set aside the deed from J. L. Arm-field to his wife, Dion G. Armfield, as a fraud upon the creditors. Both cases were calendared for trial on the first day of court, 1 October, 1923, and were consolidated for the purpose of trial, and a trial was had, consuming the first three days of court. But a juror was run over by an automobile and was unable to serve further, and his Honor withdrew a juror and made a mistrial, and the court then heard the motion to restrain the sale under the mortgage deed.
    At the hearing the court made an order restraining the defendant Chase Boren from selling the property and appointed a receiver. From the order made, Chase Boren excepted, assigned error, and appealed to the Supreme Court.
    
      Jas. A. Lockhart and King, Sapp & King for plaintiffs.
    
    
      Brooks, Parker & Smith for Dion G. Armfield.
    
    
      J. A. Spence for Chase Boren.
    
   Clarkson, J.

Tbe sole question presented is, Did tbe court below commit error in restraining tbe sale?

In Lea v. Johnson, 31 N. C., 19, Pearson, J., said: “ ‘Hard cases are tbe quicksands of tbe law.’ In other words, a judge sometimes looks so mucb at tbe apparent hardship of tbe case as to overlook tbe law.”

In Cureton v. Moore, 55 N. C., 207, it was said: “A court of equity ean no more relieve against ‘bard cases/ unless there be some ground of equity jurisdiction, than a court of law, for both courts act upon general principles. Equity, as well -as law, is a science, and does not depend upon the discretion of tbe court entrusted with equity jurisdiction, or tbe vague ideas that may be entertained as to ‘bard eases.’ ”

In tbe instant case, tbe learned and conscientious judge who beard this casé and granted tbe injunction found as a fact “that tbe props erty sought to be sold under said mortgage is now in controversy, and tbe conveyance of said property from J. L. Armfield to Dion Gr. Arm-field is being attacked by creditors of tbe said J. L. Armfield, and that tbe mortgage indebtedness of Miss Chase Boren is not controverted, and that a sale of said property as advertised on 8 October, 1923, by tbe said mortgagee would be prejudicial to tbe interests of all parties-to tbe action, except Miss Chase Boren, and that tbe security held by her is amply sufficient to cover her debt.”

It nowhere appears in tbe record that Chase Boren consented -to tbe procedure in which she was made a party or waived any right. This being so, from tbe facts found by tbe court below as a matter of law, we think that tbe restraining order ought not to have been granted.

If subsequent judgment creditors or litigants over tbe equity of redemption could “tie up” a first mortgage and effect its terms, it would seriously impair a legal contract. It may be “bard measure” to sell,, but this is universally so. Tbe mortgagee has a right to have her contract enforced under tbe plain terms of tbe mortgage. To bold otherwise would practically nullify tbe present system of mortgages and deeds in trust on land, so generally used to secure indebtedness and seriously hamper business. Those interested in tbe equity of redemption have tbe right of paying off the first lien when due. We can see no equitable ingredient in tbe facts of this case. Tbe mortgage is not a “scrap of paper.” It is a legal contract that tbe parties are bound by. Tbe courts, under their equitable jurisdiction, where tbe amount is due and ascertained — no fraud or mistake, etc., alleged — have no power to impair tbe solemn instrument directly or indirectly by nullifying tbe plain provisions by restraining tbe sale, to be made under tbe terms of tbe mortgage.

Allen, J., in Bonner v. Rodman, 163 N. C., 2, says: “Tbe plaintiff admitted that be owed tbe defendant $436, and it was therefore within tbe power of tbe court, upon tbe facts appearing in this record, to require the payment of this sum within a reasonable time before granting equitable relief, upon the familiar principle that he who seeks equity-must do equity, although a case might arise in which the court could refuse to impose such a condition. An order similar to the one appealed from was approved in Pritchard v. Sanderson, 84 N. C., 299.” Story’s Eq. Jurisprudence (14 ed.), sec. 1369.

In Smith v. Connor, 65 Ala., 371, it was said: “When subsequent purchasers or encumbrancers file a bill in equity against the first mortgagee, asking an account and redemption, and not denying that there is a balance due on the mortgage debt, it follows that they ought to make a tender in the bill or offer to pay whatever may be found due.”

The prayer in the plaintiffs’ complaint, recognizes the mortgagee’s rights and the prayer is made “subject to the rights of the defendant Ohase Boren,” etc.

For the reasons given there was

Error.