American Foods, Inc. v. Goodson Farms, Inc.

275 S.E.2d 184, 50 N.C. App. 591, 1981 N.C. App. LEXIS 2171
CourtCourt of Appeals of North Carolina
DecidedFebruary 17, 1981
Docket805SC638
StatusPublished
Cited by5 cases

This text of 275 S.E.2d 184 (American Foods, Inc. v. Goodson Farms, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Foods, Inc. v. Goodson Farms, Inc., 275 S.E.2d 184, 50 N.C. App. 591, 1981 N.C. App. LEXIS 2171 (N.C. Ct. App. 1981).

Opinions

HILL, Judge.

Defendants contend the trial judge erred in denying their [595]*595motion for summary judgment and in striking their Third Defense. Defendants cite as support for their contention G. S. 45-21.38, which reads, in pertinent part, as follows,

In all sales of real property by mortgagees ... under powers of sale, contained in any mortgage or deed of trust executed after February 6,1933,... to secure to the seller the payment of the balance of the purchase price of real property, the mortgagee... or holder of the notes secured by such mortgage or deed of.trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trustor obligation secured by the same: Provided, said evidence of indebtedness shows upon the face that it is for balance of purchase money for real estate:

The defendants contend this statute must be read in conjunction with Realty Co. v. Trust Co., 296 N.C. 366, 250 S.E.2d 271 (1979).

In Realty, the defendant purchased certain real estate from the plaintiff. As a part of the purchase price the defendant purchaser delivered to the plaintiff seller a purchase money note and deed of trust covering the property conveyed. Upon default, instead of foreclosing on the deed of trust, plaintiff instituted an action against the defendant upon the promissory note. The Supreme Court held that the defendant purchaser was entitled to the protection of G. S. 45-21.38 because the defendant was a purchase money mortgagor and that plaintiff seller could not avoid the provisions of the statute by abandoning its security in the real property and substituting a suit on the underlying note.

Justice Britt, speaking for the Court, at page 373, said:

Having in mind the purpose for which G. S. 45-21.38 was adopted, the perceived problem which the statute seeks to remedy and the effect which a literal construction of the statute produces, we are compelled to construe the statute more broadly and to conclude that the Legislature intended to take away from creditors the option of suing on the note in a purchase money mortgage transaction. This construction of the statute not only prevents its evasion, but also gives effect to the Legislature’s intent.

The case subjudice is distinguishable from Realty. In that case, the collateral consisted of real estate only. In Realty the note and [596]*596deed of trust each indicated on its face that it was a purchase money instrument. No such indication appears on the note in the instant case. In the case subjudice, title to the real estate was taken in the name of Lewis Nursery, Inc. only, and foreclosed in an action against the Nursery. Unlike the defendants in Realty, defendants in the case subjudice had no record title interest in the land acquired by foreclosure. (No trust relationship is alleged or in evidence.) The endorsements by the defendants were nothing more than additional collateral which were required by the plaintiff. We conclude that the trial judge did not err in denying defendants’ motion for summary judgment and by striking defendants’ Third Defense.

Defendants next contend the trial judge erred in striking their Fourth Defense. Defendants rely upon G. S. 45-21.36, which provides, in pertinent part, as follows:

When any sale of real estate has been made by a mortgagee, ... at which the mortgagee, . . . becomes the purchaser and takes title either directly or indirectly, and thereafter such mortgagee, .. . shall sue for and undertake to recover a deficiency judgment against the mortgagor, trustor or other maker of any such obligation whose property has been so purchased, it shall be competent and lawful for the defendant against whom such deficiency judgment is sought to allege and show as matter of defense and offset, but not by way of counterclaim, that the property sold was fairly worth the amount of the debt secured by it at the time and place of sale or that the amount bid was substantially less than its true value, and, upon such showing, to defeat or offset any deficiency judgment against him, either in whole or in part: (Emphasis added.).

The record in this case reveals that American Foods began a foreclosure suit under the deed of trust and became the last and highest bidder. The net proceeds from the sale were applied toward payment of the note, leaving a balance due. Defendants contend they were comakers under the note and as such are entitled to the protection against deficiency judgments provided by G. S. 45-21.36.

In Trust Co. v. Martin, 44 N.C. App. 261, 264, 261 S.E. 2d 145 (1979), Judge Wells, speaking for this Court, points out that in passing G. S. 45-21.36,

[597]*597[T]he General Assembly intended to limit protection to those persons who held a property interest in the mortgaged property, and that such protection was not applicable to other parties liable on the underlying debt. (Emphasis added.)

By contending they are comakers and as such are entitled to the defense established by G. S. 45-21.36, defendants are in effect asking this Court to pierce the corporate veil in a unique way. Defendant Goodson is asking us to wrap the corporate cloak of Lewis Nursery, Inc., around him, since he financed the corporation, and conclude that he and Goodson Farms had an equitable interest in the lands, title to which was recorded in the name of Lewis Nursery, Inc.Thiswe cannotdo. Defendants did not hold a property interest in Lewis Nursery, Inc. The trial judge did not err by striking defendants’ Fourth Defense.

Defendants next assert that the trial court erred in allowing plaintiff’s motion for summary judgment in the amount set forth in the court’s order. Defendants contend that the award is not supported by the evidence.

Upon examination of the record, it becomes clear that there is a difference of $3,692.00 between the relief requested in plaintiff’s complaint and the amount set forth as owing in plaintiff’s vice-president’s affidavit. Clearly, such a trivial variance—less than one-half of a percentage point of the amount awarded—is not crucial, particularly when, as in this case, the variance favors defendant. Furthermore,

So long as some demand for relief is made, it apparently is not crucial that the wrong relief has been demanded. Rule 54(c) provides in part that ‘every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled even if the party has not demanded such relief in his pleadings.’

Shuford, N. C. Civil Practice and Procedure, § 8-5, p. 69 (1975).

Defendants go on to question whether plaintiff was granted the relief to which it is entitled. Defendants contend that the only evidence to support the judgment is the testimony of plaintiff’s vice-president, Mr. Wilson. An examination of the record shows, however, that Wilson also filed three affidavits which, together with his [598]*598testimony, show that he was familiar with plaintiffs records concerning the amount owed on the note at issue.

We can find no error with the trial court’s order allowing plaintiff’s motion for summary judgment in the amount set forth.

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389 S.E.2d 429 (Court of Appeals of North Carolina, 1990)
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American Foods, Inc. v. Goodson Farms, Inc.
275 S.E.2d 184 (Court of Appeals of North Carolina, 1981)
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247 S.E.2d 800 (Court of Appeals of North Carolina, 1978)

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Bluebook (online)
275 S.E.2d 184, 50 N.C. App. 591, 1981 N.C. App. LEXIS 2171, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-foods-inc-v-goodson-farms-inc-ncctapp-1981.