Davis, J.,
(after stating the case). 1. There is with the record sent to this "Court a voluminous transcript of certain proceedings, commenced by a summons regularly issued on the 12th day of April, 1886, by the Clerk of the Superior Court of Nash, at the instance of A. Branch and T. J. Hadley (who are the plaintiffs in this action)
v.
W. H. Griffin and others, (naming them, who are the defendants in this action,) returnable, to Spring Term, 1886, to restore and perpetuate certain records alleged to have been lost or destroyed. That proceeding was by petition and seems to have been prosecuted in compliance with §§ 60
et seq.
of
The Code.
It was heard before Shepherd, Judge, at Fall Term, 1886, of Nash Superior Court, when judgment was rendered as stated in the case on appeal.
The defendants insist that that proceeding was by a petition in this action, and that the ruling of Judge Shepherd, to which exception was taken, but from which there was no appeal, is now the subject of our review, and that His Honor, Judge Merrimon, erred in the intimation of the opinion “that the matter' of impeaching .the proceedings, under which the land was sold, could not be effected in this action, but that the defendants should have brought a separate action for that purpose.” We think that the proceeding to restore and perpetuate the alleged lost records could not be injected into this action, and that the judgment therein was final, and the transcript thereof has no proper place in this appeal. It was collateral, and while it may sometimes be just and right to continue a pending action until some collateral fact or issue, material to its just determination and requiring a separate action, can be tried, it cannot be that controverted questions of law or fact involved in the collateral issue and determinable in a separate proceeding, can be incorporated in and become a part of the record of the pending, action. This would be to make “ confusion worse confounded.” We cannot try in this action any controversy as
to the existence or non-existence of the alleged lost records. That was settled in the proceeding instituted to determine it, and we think the first exception of the defendants cannot be sustained.
2. But the defendants insist that the facts of record were sufficient to put the plaintiffs on inquiry and that they were not purchasers for value without notice. They say that the will of James Sullivant, showing the character in which the property was held, the equity proceedings by which Jacob Strickland was removed as trustee, and Presley Griffin appointed in his stead, the grossly inadequate price, and the deed from Griffin, trustee, to Morgan, and the deed from Morgan reconveying to Griffin, all of which were of record, were sufficient to put them on inquiry, and the inquiry, if prosecuted, would have disclosed the fraud; and that therefore they were affected with notice.
It is true that without actual knowledge or information a party may be “affected with notice by information of any fact or instrument relating to the subject matter of his contract, which if properly inquired into, would have lead to its ascertainment.” Adams Eq., 158;
Ijames
v.
Gaither,
93 N. C., 358;
Johnson
v.
Prairie,
91 N. C., 159;
Hulhert
v.
Douglas,
94 N. C., 122. But is there anything in the facts relied on to put the purchasers from Griffin and his wife on inquiry, as to whether he had not acquired title by a fraud upon his wife,who signed the deed with him, and his children?
Certainly there was nothing in the will of James Sullivant that could create any suspicion of fraud, and the equity proceeding and the decree under which Jacob Strickland was removed (and the regularity and validity of that proceeding are in no way impeached) disclose the fact that Jacob Strickland was removed for a failure to discharge his duty to the beneficiaries under the will, and that upon the appointment of Griffin a bond of $5,000 for the faithful discharge of
his duties was required and given, and surely there could be nothing in that to“put him on inquiry.
Inadequacy of price may have been a good cause for refusing to confirm a sale, but after confirmation of the sale it could furnish no ground for setting it aside and annulling the sale made under it.
Sumner
v.
Sessoms,
94 N. C., 371.
That a trustee cannot buy at his own sale is too well settled to need the citation of authority. If he buys directly, or indirectly through another, he holds the property at the election of the
cestui qui trust,
to take the price or demand a resale of the property, but a sale by a trustee to another (though made with a fraudulent intent) passes the legal title to the purchaser, and a
bona fide
purchaser from such a fraudulent vendee, for value and without notice, acquires a good title.
Young
v.
Lathrop,
67 N. C., 63.
Plowever fraudulent the transaction may have been as between the original parties to the sale, a purchaser who acquires the legal title for value and in good faith, without notice, is not affected by it, and is protected. Such a purchaser, as was the case in
Young
v.
Lathrop,
acquires a good title by purchase at private sale, and the Courts are equally and perhaps more careful in protecting
bona fide
purchasers who derive title through judicial sales, and even where the proceedings under which such sales have been made have been annulled and vacated the purchaser has been protected.
This protection of purchasers,
bona fide
and for value at judicial sales, is illustrated in
Fowler
v.
Poor,
93 N. C., 466;
England
v.
Garner,
90 N. C., 197;
Sutton
v.
Schonwald,
86 N. C., 198, and the many cases cited in them.
Following the rulings of the Court in these cases, we think the second exception of the defendants cannot be sustained.
3. The third exception rests upon the denial of the power of the Court of Equity to order a sale of the interest and estate of the defendants under the will of James Sullivant. The property is given for the use of Margaret f<>r life, and
then “ for the use and benefit of the children of the said Margaret.”
The children take as a class, and some of them were
in esse
at the time of the sale, and this distinguishes it from the cases cited by the learned counsel for the defendants. R is more like
ex parte Dodd,
Phillips’ Equity, 97. In that case it is said:
“
It is certain if land be devised to a person for life, with an executory devise in fee to his children, the Court cannot order a sale of the land before the birth of any child, because not being
in esse
there can be no one before the Court to represent its interests. * * * But if there be any children
in esse
Free access — add to your briefcase to read the full text and ask questions with AI
Davis, J.,
(after stating the case). 1. There is with the record sent to this "Court a voluminous transcript of certain proceedings, commenced by a summons regularly issued on the 12th day of April, 1886, by the Clerk of the Superior Court of Nash, at the instance of A. Branch and T. J. Hadley (who are the plaintiffs in this action)
v.
W. H. Griffin and others, (naming them, who are the defendants in this action,) returnable, to Spring Term, 1886, to restore and perpetuate certain records alleged to have been lost or destroyed. That proceeding was by petition and seems to have been prosecuted in compliance with §§ 60
et seq.
of
The Code.
It was heard before Shepherd, Judge, at Fall Term, 1886, of Nash Superior Court, when judgment was rendered as stated in the case on appeal.
The defendants insist that that proceeding was by a petition in this action, and that the ruling of Judge Shepherd, to which exception was taken, but from which there was no appeal, is now the subject of our review, and that His Honor, Judge Merrimon, erred in the intimation of the opinion “that the matter' of impeaching .the proceedings, under which the land was sold, could not be effected in this action, but that the defendants should have brought a separate action for that purpose.” We think that the proceeding to restore and perpetuate the alleged lost records could not be injected into this action, and that the judgment therein was final, and the transcript thereof has no proper place in this appeal. It was collateral, and while it may sometimes be just and right to continue a pending action until some collateral fact or issue, material to its just determination and requiring a separate action, can be tried, it cannot be that controverted questions of law or fact involved in the collateral issue and determinable in a separate proceeding, can be incorporated in and become a part of the record of the pending, action. This would be to make “ confusion worse confounded.” We cannot try in this action any controversy as
to the existence or non-existence of the alleged lost records. That was settled in the proceeding instituted to determine it, and we think the first exception of the defendants cannot be sustained.
2. But the defendants insist that the facts of record were sufficient to put the plaintiffs on inquiry and that they were not purchasers for value without notice. They say that the will of James Sullivant, showing the character in which the property was held, the equity proceedings by which Jacob Strickland was removed as trustee, and Presley Griffin appointed in his stead, the grossly inadequate price, and the deed from Griffin, trustee, to Morgan, and the deed from Morgan reconveying to Griffin, all of which were of record, were sufficient to put them on inquiry, and the inquiry, if prosecuted, would have disclosed the fraud; and that therefore they were affected with notice.
It is true that without actual knowledge or information a party may be “affected with notice by information of any fact or instrument relating to the subject matter of his contract, which if properly inquired into, would have lead to its ascertainment.” Adams Eq., 158;
Ijames
v.
Gaither,
93 N. C., 358;
Johnson
v.
Prairie,
91 N. C., 159;
Hulhert
v.
Douglas,
94 N. C., 122. But is there anything in the facts relied on to put the purchasers from Griffin and his wife on inquiry, as to whether he had not acquired title by a fraud upon his wife,who signed the deed with him, and his children?
Certainly there was nothing in the will of James Sullivant that could create any suspicion of fraud, and the equity proceeding and the decree under which Jacob Strickland was removed (and the regularity and validity of that proceeding are in no way impeached) disclose the fact that Jacob Strickland was removed for a failure to discharge his duty to the beneficiaries under the will, and that upon the appointment of Griffin a bond of $5,000 for the faithful discharge of
his duties was required and given, and surely there could be nothing in that to“put him on inquiry.
Inadequacy of price may have been a good cause for refusing to confirm a sale, but after confirmation of the sale it could furnish no ground for setting it aside and annulling the sale made under it.
Sumner
v.
Sessoms,
94 N. C., 371.
That a trustee cannot buy at his own sale is too well settled to need the citation of authority. If he buys directly, or indirectly through another, he holds the property at the election of the
cestui qui trust,
to take the price or demand a resale of the property, but a sale by a trustee to another (though made with a fraudulent intent) passes the legal title to the purchaser, and a
bona fide
purchaser from such a fraudulent vendee, for value and without notice, acquires a good title.
Young
v.
Lathrop,
67 N. C., 63.
Plowever fraudulent the transaction may have been as between the original parties to the sale, a purchaser who acquires the legal title for value and in good faith, without notice, is not affected by it, and is protected. Such a purchaser, as was the case in
Young
v.
Lathrop,
acquires a good title by purchase at private sale, and the Courts are equally and perhaps more careful in protecting
bona fide
purchasers who derive title through judicial sales, and even where the proceedings under which such sales have been made have been annulled and vacated the purchaser has been protected.
This protection of purchasers,
bona fide
and for value at judicial sales, is illustrated in
Fowler
v.
Poor,
93 N. C., 466;
England
v.
Garner,
90 N. C., 197;
Sutton
v.
Schonwald,
86 N. C., 198, and the many cases cited in them.
Following the rulings of the Court in these cases, we think the second exception of the defendants cannot be sustained.
3. The third exception rests upon the denial of the power of the Court of Equity to order a sale of the interest and estate of the defendants under the will of James Sullivant. The property is given for the use of Margaret f<>r life, and
then “ for the use and benefit of the children of the said Margaret.”
The children take as a class, and some of them were
in esse
at the time of the sale, and this distinguishes it from the cases cited by the learned counsel for the defendants. R is more like
ex parte Dodd,
Phillips’ Equity, 97. In that case it is said:
“
It is certain if land be devised to a person for life, with an executory devise in fee to his children, the Court cannot order a sale of the land before the birth of any child, because not being
in esse
there can be no one before the Court to represent its interests. * * * But if there be any children
in esse
in whom the estate in fee can vest, a sale may be ordered, because, if their interests require it, they may be represented by guardian; and this may be done though all of the children of the class may not yet have been born.” Such is the case before us. As was said in
ex parte Dodd,
this distinguishes it from
Watson
v.
Watson,
3 Jones Eq., 400, as it also does from
Williams
v.
Hassell,
73 N. C., 174;
Young
v.
Young,
97 N. C., 132;
Ex parte Miller,
90 N. C., 625, and similar cases.
There was no error in the ruling of the Court below in the matters excepted by the defendants.
No error.
plaintiffs’ appeal.
The facts are the same as those set out in the defendants’ appeal.
The jury' having found that the sale by which Presley Griffin acquired title was fraudulent, and that the plaintiffs were
bona fide
purchasers for value without notice, and having also found that $500 of the note executed to the plaintiffs was for money loaned, his Honor held that the plaintiffs were purchasers for value and without notice only to the extent of the amount ($500) loaned, and from this the plaintiffs appealed.
It is admitted that the mortgage of February 12th, 1884, was in renewal of the mortgage of February 9th, 1883, and it appears from the record that the credit or time of payment was extended. A mortgage deed executed to and accepted by a creditor without notice and in renewal of a prior mortgage, certainly cannot place the creditor in a worse condition than he occupied under the first mortgage. The greater and substantial part of the consideration of the first mortgage was the money then loaned, and doubtless the inducement and consideration for the loan then made was the security given by the execution of the mortgage. It was not a mortgage simply to secure a pre-existing debt. It was executed for a present and valid consideration moving from the plaintiffs — the advantage to them being the security of their debt, and the advantage to the mortgagor being the use of the money loaned, and the extension of time to pay, and whether the mooted question as to the difference between a mortgage executed to secure a pre-existing debt and one executed to secure a present loan, or upon a present consideration, has been settled or not, there seems to be no question that a mortgage executed upon a valid cotemporaneous consideration, and accepted by the mortgagee in good faith, and without notice of any invalidating equity in others, will be upheld.
Potts
v.
Blackwell,
4 Jones Eq., 58, and
Brem
v.
Lockhart,
93 N. C., 191;
Bank
v.
Bridgers,
98 N. C., 67, and the cases cited.
We think that both upon authority and reason the plaintiffs are entitled to have the property conveyed in the mortgage declared a security for their debt named therein to its full amount, and that there was error in limiting it to the amount of the money loaned at.the time of the execution of the mortgage.
The judgment of the Court below must be reformed in this respect.
Reformed and Affirmed.