Court Opinion

ID: 6698394
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:01:32.62862+00
Date Added: 2024-06-11T16:01:19.656825
License: Public Domain

"WiNBORNE, J.
In their brief filed on this appeal plaintiffs contend that the judge below erred in dissolving the temporary restraining order for these reasons: (1) That the trustees have no authority to foreclose the deed of trust upon demand of defendant Katzis. (2) That there is nothing due by the plaintiffs on the indebtedness secured by the deed of trust sought to be foreclosed.
While the findings of fact by the judge of Superior Court are not conclusive on appeal in injunction cases “in which we look into and review the evidence, . . . still there is a presumption always that the judgment and proceedings below are correct and the burden is upon appellant to assign and show error.” Hyatt v. DeHart, 140 N. C., 270, *43952 S. E., 781; Plott v. Comrs., 187 N. C., 125, 121 S. E., 190.
Upon consideration of the pleadings and evidence in the present case as shown in the record and case on appeal, we are of opinion, and hold, that appellant fails to show error in the judgment below.
The notes, secured by the deed of trust here involved, are the same notes as those involved in the former action. There the plaintiffs contended that by reason of the breach by Nick J. Katzis of his noncompetitive agreement there was failure of consideration for the notes. But there the jury found that plaintiffs are indebted on those notes in the sum of $10,900, and interest. Upon that verdict the court adjudged that W. P. Sineath and A. G. Hearon are indebted to Nick J. Katzis in the sum of $10,900, with interest, subject to the assignment to R. L. McDou-gald, Trustee. The judgment was affirmed on appeal to this Court. 218 N. C., 740, 12 S. E. (2d), 671. The opinion there concludes with these two sentences: “Having held that there is no error with respect to the issue of damages, we deem it unnecessary to enter into a discussion of failure of consideration proffered by plaintiffs. It is sufficient to say that, on the facts presented, plaintiffs’ remedy is properly based on claim for damage.”
The question of failure of consideration for those notes, therefore, may not again be raised by W. P. Sineath and A. G. Hearon, and those standing in privity to them, as do plaintiffs in the present action. Plaintiffs assert no other equity for challenging the validity of the notes. Hence, the notes stand as valid obligations of the makers secured by the deed of trust in question.
Now, with regard to the right of defendant Katzis to request the trustees to foreclose the deed of trust: The judgment in the former action recognizes that said Katzis has an equity in and to the notes in question. Recurring to the factual situation, bear in mind that the notes were executed by W. P. Sineath and A. G. Hearon and payable to Golds-boro Dry Cleaners & Hatters, Inc., and by it assigned absolutely to Nick J. Katzis, who in turn assigned them to R. L. McDougald, Trustee for Mechanics and Farmers Bank of Durham, as collateral security for an indebtedness less in amount than the face value of the notes. While the court adjudged that said trustee and bank are the owners and entitled to the possession of the notes “for the purposes set forth in the deed of trust,” it is provided that this is to “the end that the proceeds from the collection of said notes shall be applied, first, in the payment of the indebtedness due said Mechanics and Farmers Bank by Nick J. Katzis, and the balance to be paid over to Nick J. Katzis, or his order,” that is, that W. P. Sineath and A. G. Hearon are indebted to Katzis for the face amount of their notes, $10,900, with interest, subject to the payment to the bank of the amount of his note, $2,463.07, to which as collateral *440security be assigned the Sineatb and Hearon notes. By sucb assignment of these notes as collateral security for bis own debt of less amount than the face value of the notes, Katzis does not lose bis interest in the deed of trust by which the notes are secured. 41 C. J., 681 and 882. Hughes v. Johnson, 38 Ark., 285. While it may be true that Katzis does not have physical possession of the notes, he had the right, unless otherwise agreed, to call upon the trustees to foreclose the deed of trust. He is interested in the payment of the whole amount, not only that which is due to him but that to which the bank is entitled, as represented by his note. The record contains no restriction upon his right to request foreclosure.
The court has the power to restrain the exercise of the power of sale under a mortgage or deed of trust where a sale thereunder would work an injustice to the rights of the mortgagor or trustor or others interested in the property; but there should be some equitable element involved, as fraud, mistake, or the like. For example, the sale will be restrained when there is serious controversy as to the amount actually due on the indebtedness secured by the mortgage or deed of trust, so that the debtor or those claiming under him may know the proper amount and pay without a sacrifice of property. McIntosh, N. C. P. & P., 980; Bridgers v. Morris, 90 N. C., 32; Broadhurst v. Brooks, 184 N. C., 123, 113 S. E., 576.
In the present state of the instant case there can be no controversy as to the validity, and there is none as to the amount of the notes in question. Furthermore, where the answer denies the equity of the bill, the general rule is that the injunction will be dissolved. When, however, the injunctive relief sought is not merely ancillary to the principal relief demanded in the action, but is of itself the main relief, the court will not dissolve the injunction, but will continue it to the hearing. Cobb v. Clegg, 137 N. C., 153, 49 S. E., 80; Hyatt v. DeHart, supra; Boone v. Boone, 217 N. C., 722, 9 S. E. (2d), 383.
In the present case, when stripped of the allegations of failure of consideration for the notes, the main relief sought is recovery of alleged damages for alleged breach of contract, to which injunction against foreclosure of the deed of trust is merely ancillary.
Upon careful consideration, the record fails to show cause for disturbing the ruling of the judge of Superior Court.
Hence, the judgment below is
Affirmed.