Brown v. . Turner

162 S.E. 608, 202 N.C. 227, 1932 N.C. LEXIS 466

• Court: Supreme Court of North Carolina
• Decided: February 17, 1932
• Status: Published

Opinion

Adams, J.

An agreement by tbe purchaser of an equity of redemption with bis vendor that be will assume and pay tbe mortgage debt will render him personally liable, not only to bis grantor but also to tbe bolder of tbe mortgage. As between themselves tbe purchaser is regarded as tbe principal debtor and tbe grantor as surety, and tbe mortgagee’s right to' maintain an action upon this agreement rests upon tbe ground that tbe contract of tbe purchaser is a collateral stipulation obtained by tbe mortgagor, which by equitable subrogation inures to tbe benefit of tbe mortgagee. Tbe mortgagee is entitled to appropriate for bis debt any security held by bis debtor for its payment, but be has no rights against tbe purchaser which could not under tbe contract of purchase have been claimed by tbe original debtor; and in tbe application of this equitable doctrine tbe mortgagee has been allowed to enforce tbe personal liability of tbe purchaser only to tbe extent of a deficiency upon a foreclosure sale of tbe mortgaged premises and only if tbe party to whom tbe purchaser’s agreement was given was himself personally liable for tbe payment of tbe mortgage debt. Tbe mortgagor of course remains liable to tbe mortgagee as tbe debtor to whom tbe credit was directly extended. This is tbe principle set forth in Baber v. Hanie, 163 N. C., 588. On tbe principle that one for whose benefit a promise is made may maintain an action upon tbe promise, it is held in a later ease that tbe mortgagee may sue tbe mortgagor’s grantee who has assumed tbe payment of tbe debt without foreclosing tbe mortgage or joining tbe mortgagor in tbe action. Rector v. Lyda, 180 N. C., 577. See Keller v. Parrish, 196 N. C., 733, and Parlier v. Miller, 186 N. C., 500.

We have restated these principles for tbe reason that tbe defendant cites Baber v. Hanie and Parlier v. Miller as authority for tbe position that tbe mortgagor and tbe person assuming tbe payment of tbe mortgage debt sustained tbe relation of surety and principal not only as between themselves, but as between themselves and tbe mortgagee. We do not concur in this statement. Tbe only parties to tbe present action are tbe bolder of one of tbe notes and tbe administratrix of Frank Turner, tbe mortgagor. Neither of tbe vendees who assumed tbe debt is a party.’ Tbe object of tbe action is to procure'a judgment on tbe mortgagor’s note, not to foreclose tbe mortgage or to adjudicate tbe rights of all persons who were connected with tbe several transactions. Tbe only asserted counterclaim set up in tbe answer consists simply of averments upon, which it is sought to dismiss tbe suit and to bar tbe plaintiff’s recovery of a judgment. Tbe only point in issue is whether tbe defendant is indebted to tbe plaintiff on tbe note.

Tbe doctrine that tbe purchaser of an equity of redemption assuming tbe payment of tbe mortgage debt is tbe principal and bis grantor tbe surety, obtains as between themselves and does not preclude tbe mortgagee from proceeding against tbe mortgagor as bis principal debtor, at least wben be does not assent to tbe agreement. So far as tbe mortgagee is. interested tbe mortgagor is not a mere surety. Tbe mortgagee is not required' first to foreclose bis mortgage; be may bring suit only on tbe note. Tbe fact tbat tbe mortgagor bas sold tbe equity of redemption to a purchaser who assumes tbe mortgage debt does not change tbe right of tbe bolder of tbe note to pursue tbe personal remedy. He may bring an action in personam or an action in rem, or be may pursue both remedies in one action. Tbe debt is tbe primary obligation between tbe parties and tbe note is tbe primary evidence of tbe debt. Tbe execution of tbe mortgage does not merge tbe mortgagor’s personal liability. 2 Jones on Mortgages (7th ed.), sec. 1220; 41 C. J., 733, sec. 783; Ellis v. Hussey, 66 N. C., 501; Silvey v. Axley, 118 N. C., 959; McCaskill v. Graham, 121 N. C., 190. His Honor was therefore correct in bolding tbat tbe release of tbe lien on one of tbe lots did not discharge tbe primary liability of tbe mortgagor. As between tbe original parties tbe release of a part of tbe mortgaged xoremises does not affect tbe mortgagee’s lien upon tbe residue; this is bound for tbe whole debt. 2 Jones, supra, secs. 722, 981.

Upon tbe facts found by tbe trial court tbe action is not barred by section 100 of tbe Consolidated Statutes. Judgment

Affirmed.