Court Opinion

ID: 6697564
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:57:59.75262+00
Date Added: 2024-06-11T16:01:17.998848
License: Public Domain

Clarkson, J.
Tbe plaintiffs alleged in tbeir complaint three canses of action and set forth the questions involved on this appeal, which we abbreviate as follows: (1) Do bonds tainted with usury retain their taint in the hands of third parties? (2) Are the holders of bonds, secured by mortgage liable for not paying premium on fire-policy, when the mortgagors delivered them a sum of money accompanied by a list directing its application, which list contained an item for insurance premium which they thought the holders had paid as agreed, until the house burned six weeks later? (3) Are holders of bonds secured by deed of trust liable to mortgagors for taking immediate possession of property sold under foreclosure and bid in by them when appeal was taken to Supreme Court, bond given to stay execution, and Supreme Court reversed the court below?
At the close of plaintiffs’ evidence the defendants, N. M. Osborne and W. B. Newcomb, made motion for judgment as in case of nonsuit, C. S., 567, on plaintiffs’ first, second and third causes of action. The court below granted the motion. We think this was error, as to the second and third causes of action.
As to the first cause of action: We do not think plaintiffs’ contention on this record can be sustained. The present record and the record to this Court on the prior appeals, show that plaintiffs were fully cognizant of the consent judgment and of course was bound to know of the $900 deduction in the original loan. If not at the time of the consent judgment, long before this action was instituted. In fact when the $2,500 was paid, the $15,000 principal of the debt was past due from 5 November, 1929, with interest paid to 5 March, 1930. The plaintiffs were fully aware that the $2,500 payment reduced the principal of the indebtedness to $13,500. Of course this deduction of $900 from the $15,000, original loan does not appeal to a court of law or equity, yet plaintiffs were sui juris and compromised their differences. No fraud or mistake is alleged and they are bound by what was done and acquiesced in. We think the parties are estopped from the record and the principle as to the taint of usury extending to purchasers of' the bonds payable to bearer in due course does not arise on this record.
The law enunciated in Ward v. Sugg, 113 N. C., 489, and Bank v. Felton, 188 N. C., 384, are not applicable to the facts on this record.
It is said in Ector v. Osborne, 179 N. C., at p. 669: “A borrower is not, however, compelled to plead usury, and as the defense is personal to him it may be waived. . . . (p. 670) 'The statutes of usury being *486enacted for tbe benefit of the borrower, he is at liberty to waive his right to claim such benefit and pay his usurious debt, if he sees fit to do so. It is, therefore, held that when the debtor becomes a party to a general settlement of preceding usurious transactions, made fairly and without circumstances of imposition, his recognition and the amount agreed to be due as a new obligation will preclude his setting up the old usury in defense of the new debt. This rule is not held to apply, however, unless it is clear that the debtor has fully accepted the settlement as a just debt separate and distinct from the preceding usurious obligations.’ 39 Cyc., 1024. ‘The $600 thus paid to the plaintiffs became their money, and was in no way involved in the account. Its payment in final settlement of the usurious transaction simply purged it of the taint, or eliminated the usurious feature, and reduced the principal to $4,500. That was the new principal, and bore legal interest.’ If, as was held, a compromise and settlement followed by the execution of a release purges the transaction of usury, surely the same effect should be given to a compromise and settlement, in which the usury is eliminated, and which is approved by a judgment of the court.”
It will be noted that this settlement and compromise judgment was made by plaintiffs not with the Guaranty Title and Trust Company, from whom they borrowed the money, but with Osborne and Newcomb, purchasers, in due course. The bonds were made to bearer. See “Negotiable Instruments” C. S., 2982(4) ; C. S., 3010, 3033, 3038, and 3040. The usury statute 2306, should be strictly construed and has been by this Court. Ripple v. Mortgage Co., 193 N. C., 422; Pugh v. Scarboro, 200 N. C., 59; Trust Co. v. Redwine, ante, 125. Usury must be pleaded. Berger v. Stevens, 191 N. C., at p. 237.
There is nothing more obnoxious than usury, it has been disapproved by stringent statutory provisions, by the General Assembly of this State from early times. The Mosaic Law condemned it. In the Pugh case, supra, at p. 64: “The humanities of all civilized nations has condemned usury, a species of ingenious oppression, especially in this day.”
In the Ripple case, supra, at p. 428, the following charge of the court below was sustained: “Now, gentlemen of the jury, if the place of payment was specified as in the State of Maryland, for the purpose of avoiding the usury laws of North Carolina, and if it were a scheme or method to avoid the usury laws of North Carolina, and that was the reason for the place of payment being provided in Maryland, then your answer to the second issue would be No’; that they were not to be performed in Maryland, because if providing the place of payment as Maryland was a scheme to evade and whip around the usury laws of North Carolina, and was not done in good faith, then the place of payment, so far as the law is concerned, would not be in Maryland.’ ”
*4874s to the second cause of action: The evidence of plaintiffs was to the effect that insurance had been taken out on the property (the brick house) and the premium paid for by plaintiffs. It may be inferred to protect the bondholders with usual loss clause, otherwise in case of fire the insurance could not be collected. The insurance agents notified plaintiffs that another premium was due. The plaintiff J. W. Dixon had an agreement with defendants Osborne and Newcomb that they would advance the premium. They lulled plaintiffs into security by the promise and did not pay the premium. Then again, when $2,500 was paid directions were specifically made by plaintiffs that out of the amount, the insurance premium was to be paid. The exception in the record as to this question in relation to this matter cannot be sustained. If the agent or agents of Osborne and Newcomb could compromise in the action the claim against plaintiffs and which was ratified by Osborne and Newcomb, we see no good reason why the agent or agents did not have authority to accept the money, part of which was to pay the premium as designated by plaintiffs. The defendants Osborne and New-comb, on the facts and circumstances of this case, cannot plead nudum pactum nor lack of authority on the part of their agent or agents.
The latter matter has been fully set forth in Maxwell v. Distributing Co., ante, 309, and need not be further discussed. It is well settled that the debtor has the right to direct the application of payment when he owes more than one debt. Stone v. Rich, 160 N. C., 161; Supply Co. v. Plumbing Co., 195 N. C., at p. 633.
Without going further into the evidence as there will be a new trial, it is sufficient to say that the competent evidence on this aspect was plenary to have been submitted to a jury.
4s to the third cause of action: If the evidence of plaintiffs did not show that they gave bond to stay execution we do not think that plaintiffs’ contention could be sustained. No increased bid was placed on the land. The very question was decided in Parker v. Dickinson, 196 N. C., at p. 243: “Does confirmation of a sale or of an actual partition take effect upon the date of confirmation or at the date of the sale ? Until a judicial sale has been confirmed the purchaser is a mere preferred proposer. Confirmation is an act of consent and approval which the court gives to the sale, and, for all practical purposes the court is the vendor in such cases, and within the limitation prescribed by law, may give or withhold its consent in its discretion. Harrell v. Blythe, 140 N. C., 415, 53 S. E., 232. However, when the transaction is completed by confirmation, and thereupon title is conveyed to the purchaser, confirmation relates back to the day of the sale and the purchaser receives his title as of that time. Farmer v. Daniel, 82 N. C., 152; Mc-*488Artan v. McLaughlin, 88 N. C., 391; Vass v. Arrington, 89 N. C., 10; Joyner v. Futrell, 136 N. C., 301, 48 S. E., 649.”
Vass v. Arrington, supra, was an action brought to foreclose a mortgage as in the present, the Court said, at id. 14: “Where land is sold under decree of court, the purchaser acquires no independent right. He is regarded as a mere proposer until confirmation. Attorney-General v. Roanoke Navigation Co., supra (86 N. C., 408). But when confirmation is made, the bargain is then complete, and it relates back to the day of sale. Rorer on Jud. Sales, sec. 122.”
The position here taken in no' way conflicts with what was said in Collins v. Bass, 198 N. C., 99, where it was held that a purchaser at a foreclosure sale was entitled to possession as against a tenant of the mortgagor holding under a lease executed after the maturity of the mortgage indebtedness (see change — Public Laws, 1931, chap. 173), nor with the holding in Mercer v. Bullock, 191 N. C., 216, to the effect that the mortgagor is entitled to collect all rents due at the time of foreclosure, and the purchaser such as fall due thereafter.
The plaintiff J. W. Dixon testified “We gave a bond to stay the execution pending appeal to the Supreme Court.” The court below sustained defendants’ motion for judgment as in case of nonsuit on this third cause of action, and in this we think there was error. An appeal bond can be given to stay execution in matters of this kind. From plaintiffs’ testimony it would indicate that plaintiffs gave bond in accordance with the statute. C. S., 653, 654, 655. See, also, C. S., 657. Pruelt v. Power Co., 167 N. C., 598. The case was ably argued by Dean N. Y. Gulley, the Gamaliel of the law.
Plaintiffs’ testimony was to the effect that Osborne and Newcomb “notified all tenants to vacate and notified me too. . . . We did not
collect any rent from them after that.”
On the first cause of action, the judgment is affirmed, on the second and third causes of action it is reversed.
Affirmed in part and reversed in part.