Case Name: E. A. HOLLAND et al. v. H. L. DULIN et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1934-03-21
Citations: 206 N.C. 211
Docket Number: 
Parties: E. A. HOLLAND et al. v. H. L. DULIN et al.
Judges: 
Reporter: North Carolina Reports
Volume: 206
Pages: 211–214

Head Matter:
E. A. HOLLAND et al. v. H. L. DULIN et al.
(Filed 21 March, 1934.)
1. Bills and Notes O a — Pledgee of note after maturity held not a holder in due course.
The beneficiary in a deed of trust was indebted to a corporation and executed his note for the sum to the corporation and gave as collateral security the deed of trust and the note secured by same. Upon being pressed for payment by the corporation he borrowed a sum of money from an officer of the corporation and paid the debt to the corporation, and received his canceled note from the corporation, and executed a new note to the officer of the corporation for the amount borrowed and gave the officer of the corporation certain collateral security including the note secured by the deed of trust, which at the time it was pledged anew to the officer of the corporation was past due. Thereafter the officer of the corporation, acting in behalf of the corporation, wrote the borrower congratulating him upon full payment of the sum owed the corporation: Held,, the note to the corporation was paid and discharged and the officer of the corporation cannot successfully maintain that he was a holder in due course of the note secured by the deed of trust, he having acquired same after maturity.
2. Contracts B a—
The construction given a contract by the parties thereto before differences arise as to its meaning will be considered by the courts in interpreting the contract.
3. Appeal and Error Bl): K f—
The appellant will not be allowed to change the theory of trial upon appeal from that upon which the case was tried in the lower court, nor will such change be allowed upon a petition to rehear.
PetitioN by defendants to rehear this case, reported in 205 N. C., 202, 170 S. E., 784.
The facts are these:
1. On 16 August, 1921, S. M. Holland purchased from ~W. B. Fisher and wife two tracts of land in Cherokee County, giving notes due one, two and three years after date for part of the purchase price and securing said notes by deeds of trust to T. J. Hill, trustee, on the lands purchased.
2. These purchase-money notes were hypothecated with the Anderson-Dulin-Varnell Company of Knoxville, Tenn., to secure a large indebtedness which Fisher owed to said company.
3. Thereafter, on 5 December, 1923, S. M. Holland and wife re-conveyed the two tracts of land above mentioned to W. B. Fisher and wife in full settlement of the purchase indebtedness then outstanding against said lands. This deed was registered 23 March, 1925.
4. The original notes and deeds of trust were not delivered up and surrendered to S. M. Holland and wife for the reason that they were then held by Anderson-Dulin-Varnell Company as collateral security.
5. On 29 December, 1925, Fisher’s indebtedness to Anderson-Dulin-Varnell Company had been reduced to $2,518.28, and they were pressing for payment. On that date, W. B. Fisher borrowed from H. L. Dulin enough money to pay his indebtedness to the Anderson-Dulin-Varnell Company, executing his note to H. L. Dulin in the sum of $2,766.70, and securing the same by collateral and taking from Dulin receipt for said collateral which included the notes and deeds of trust executed by S. M. Holland and wife mentioned in paragraph 1 above and other collateral not held by the corporation. In a letter to Fisher, dated 31 December, 1925, Dulin, writing on behalf of the corporation, said: “It has been very gratifying to us and we know it must be gratifying to you, that when you were here this week you were in a position to settle everything owing to Anderson-Dulin-Varnell Company with interest on all past due business and your account was closed up in full and in a very, very satisfactory way.”
6. Thereafter, the lands in question were divided into lots, and, beginning in 1927, various conveyances were executed by ~W. B. Fisher and wife to the plaintiffs in this action for different portions of the tracts covered by the deeds of trust of S. M. Holland and wife. Moneys have been borrowed on other portions and secured by deeds of trust to some of the plaintiffs.
7. In 1932, Dulin caused T. J. Hill, trustee, to advertise the lands for sale under the powers contained in the Holland deeds of trust, and this action was instituted to enjoin the sales and to have the said deeds of trust removed as clouds on plaintiffs’ titles.
The jury found, upon issue submitted, that the Holland notes were paid and extinguished by the reconveyance mentioned in paragraph 3 above, and, upon peremptory instruction, answered that H. L. Dulin was not a holder in due course of the Holland notes.
Judgment on the verdict, from which the defendants appeal,-assigning-errors.
Harkins, Van Winkle & Walton and Gray & Christopher for plaintiffs.
H. A. Tapp and Alfred S. Barnard for defendants.

Opinion:
Stacy, C. J.
It is tbe contention of H. L. Dulin that be stands in tbe shoes of Anderson-Dulin-Yarnell Company with respect to tbe Holland notes and deeds of trust, because tbe money loaned by him to Fisber on 29 December, 1925, was advanced to take up tbe note beld by tbe corporation; that tbe collateral transferred to bim was a continuing-security for tbe original indebtedness; and that tbe note executed to bim was but an evidence of tbe original debt.
But tbe note beld by Anderson-Dulin-Yarnell Company was not transferred or assigned to Dulin. Tbis obligation was canceled, and Fisher executed a new note direct to Dulin for an amount in excess of tbe corporation's debt. Dulin in turn gave Fisber a written receipt for tbe collateral "received of W. B. Fisber," which was more than that originally, beld by tbe corporation, additional collateral having been demanded and put up. "Mr. Degroat brought tbe collateral (beld by tbe corporation) there and banded it to me (Fisber testifying) and I banded it to Mr. Dulin after a receipt was given." Tbe Holland notes were past due and paid at tbis time. In no view of tbe written evidence in tbe case can Dulin maintain tbe position of a bolder in due course of tbe Holland notes. He took them after'maturity, and, therefore, subject to tbe equities of tbe plaintiffs. Barnes v. Crawford, 201 N. C., 434, 160 S. E., 464; Sykes v. Everett, 167 N. C., 600, 83 S. E., 585; Bank v. Loughran, 126 N. C., 814, 36 S. E., 281.
Tbe case turns on what took place between Dulin and Fisber on 29 December, 1925. It nowhere ajipears from tbe record that Anderson-Dulin-Yarnell Company was a party to tbe agreement of tbis date. Fisher's indebtedness to the corporation was paid, bis note canceled and delivered up, together with tbe collateral beld as security; tbe corporation bad no further interest in tbe matter. Fisber pledged tbe collateral anew to Dulin, with other security not beld by tbe corporation, to secure tbe payment of tbe note given to bim. Two days later, Dulin wrote Fisber on behalf of tbe corporation and expressed gratification over tbe fact "that when you were here tbis week you were in position to settle everything owing to Anderson-Dulin-Yarnell Company with interest on all past due business and your account was closed up in full and in a very, very satisfactory way." Tbis was Dulin's understanding of tbe transaction at tbe time. It accords with Fisher's understanding now. Cole v. Fibre Co., 200 N. C., 484, 157 S. E., 857.
"Parties are far less liable to have been mistaken as to tbe meaning of their contract during tbe period while harmonious and practical construction reflects that intention, than they are when subsequent differ- enees have impelled them to resort to law, and one of them then seeks a construction at variance with the practical construction they have placed upon it of what was intended by its provisions." 6 R. C. L., 853.
The case of Smith v. Godwin, 145 N. C., 242, 58 S. E., 1089, cited and relied upon by petitioners, is easily distinguishable. It is not an authority for the position urged.
In the petition to rehear, the defendants for the first time suggest that under the equitable doctrine of subrogation, they are entitled to succeed to the rights of the creditor corporation in the securities held by it, as the money advanced by Dulin was used to pay Fisher's debt, and cite in support thereof Liles v. Rogers, 113 N. C., 197, 18 S. E., 104, Bank v. Bank, 158 N. C., 238, 73 S. E., 157, Grantham v. Nunn, 187 N. C., 394, 121 S. E., 662. This is an afterthought and a shift in position. In the original brief, Dulin contended "that he was a holder in due course of the Holland notes by reason of a tri-lateral contract between himself, Anderson-Dulin-Yarnell Company and W. B. Fisher, under the terms of which, and to which all parties assented at the time, the notes were delivered to him by Anderson-Dulin-Yarnell Company, who held the same as a purchaser in due course." On this theory the case was heard and determined in the court below and on appeal.
A party is not permitted to try his case in the Superior Court and then ask the Supreme Court to hear it on another and different theory. Shipp v. Stage Lines, 192 N. C., 475, 135 S. E., 339; Walker v. Burt, 182 N. C., 325, 109 S. E., 43. A fortiori, the change will not be permitted between the decision here and a petition to rehear. Jolley v. Telegraph Co., 205 N. C., 108, 170 S. E., 145; Rule 44, Rules of Practice in the Supreme Court, 200 N. C., 838. The case was correctly decided on the record as presented.
Petition dismissed.