Court Opinion

ID: 3667334
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:16:58.711272+00
Date Added: 2024-06-11T13:40:14.109643
License: Public Domain

In February, 1847, the plaintiff bought of the defendant, Gaither, a tract of land, for which he gave his note payable twelve months after date, for $173.50. In July 1847, Gaither, by an instrument in writing, transferred the note to the other defendant, Turner, as security for the amount which Gaither then owed Turner, and for the amount that Turner was liable for, as the security of Gaither.
In October 1847, Gaither regularly assigned the note to Turner in satisfaction of the amounts then due. After the maturity of the note, Turner as endorsee, took a judgment against the plaintiff.
The bill is filed, to enjoin the collection of this judgment, upon the allegation that at the time of the execution of the note, there was an agreement between the plaintiff and Gaither, that the plaintiff should pay off such debts of Gaither as he might find it convenient to discharge, and "take up" before the note fell due, for which he was to be allowed a credit upon the note; that the plaintiff, in pursuance of this agreement, paid off several debts due by Gaither, which, added to the amount due to the plaintiff, for articles sold and delivered, equalled the amount of the note, and that the defendant, Turner at the time he took the note in pledge, and at the date of the endorsement, had full notice.
Gaither denies that there was any such agreement at the time the note was executed, but admits that sometime afterwards he did agree to allow the plaintiff credit on his note for any debts that he might "take up," or for any articles that he might furnish over       (81) and above what Gaither should be entitled to as hire for his work, and for boarding the hands of plaintiff, which was estimated at $30 per month. Turner alleges that when Gaither pledged the note to him, Gaither owed him a large amount; and besides, he was liable as Gaither's security, and to induce him to make the pledge and enter into the instrument of writing, transferring the note for that purpose, he then advanced for him the additional sum of $50. He avers that at this time, he had no notice of any claim upon the note on the part of the plaintiff: he admits that he afterwards heard that the plaintiff set up a claim to be allowed certain amounts by way of set-off to the note, and that he then took an endorsement of the note for his protection, having agreed with Gaither, to take it in satisfaction of what was due to him, which, upon settlement, exceeded the amount of the note, by some five dollars. Upon the pleadings and proofs, it is left doubtful whether the agreement between the plaintiff and Gaither was mutually binding, so that the plaintiff was under any legal obligation to take up debts of Gaither, unless he might see proper to do so. If there was this want of mutuality, *Page 70 
very clearly the plaintiff had no equity which attached to the note until he actually paid off the several debts, which he did, for the greater part, after the note was pledged to the defendant, Turner. The absense [absence] of an endorsement to this effect, tends strongly to show that the arrangement was one of which the plaintiff was at liberty to avail himself, or not as he saw proper. We are not, however, called upon to decide this question, because it is clearly proven that besides what was then due to Turner by Gaither, and the amount for which he went Gaither's security, Turner did, at the time, make an advancement of the additional sum of $50, as a consideration to induce Gaither to pledge the note. The evidence does not sustain the allegation that Turner had notice of the plaintiff equity, so as to weigh down the positive denial of the answer: consequently, Turner, when he took the note in pledge, acquired an equity equal to the supposed equity of the plaintiff, it is familiar learning that one who has, without notice acquired (82)  an equity, may afterwards protect it by acquiring the legal title. The latter purchaser or encumbrancer in payment of his money, becomes an honest claimant in equity, and is entitled, if he can, to protect his claim; he is not bound to look for protection until he has ascertained that danger exists. Adams 330, (162).
The payment of the $50 makes it unnecessary to enter into the questions, how far a security, taken for an existing debt, is entitled to the protection given in Equity to conveyances for valuable considerations.Holderby v. Blum, 22 N.C. 51, was relied on in the argument for the plaintiff. Reddick v. Jones, 28 N.C. 109. Ingram v. Kirkpatrick,41 N.C. 463, have been called to our attention as seemingly contra.
Bill dismissed.
Cited: Carroll v. Johnston, post, 122.