Burnett v. Dunn Commission & Supply Co.

104 S.E. 137, 180 N.C. 117, 1920 N.C. LEXIS 45

• Court: Supreme Court of North Carolina
• Decided: October 6, 1920
• Status: Published

Opinion

Hoke, J.

Under the charge of his Honor, the jury have necessarily found that, prior to the sale, the mortgage had been satisfied, and, this being true, the attempted sale thereunder was invalid. Blake v. Broughton, 107 N. C., 220; 27 Cyc., 1396. In such case it was open to plaintiff to ratify the sale and accept the proceeds, or settle on that basis; or he could maintain an action to set the sale aside, assuredly so as against defendant, and one purchasing with notice; or, acting in repudiation of the sale, he could sue the trustee or mortgagee for the wrong done in making such á sale, and hold him liable for the true worth of the property. The latter course has been pursued by plaintiff in the present action, and both sound principle and approved precedent are in support of bis Honor’s ruling on tbe question presented. Nance v. King, 178 N. C., 574; Poe v. Bright, 172 N. C., 838; Warren and Wife v. Susman, 168 N. C., 457; Rodgers v. Barnes, 169 Mass., 179; Froneberger v. Lewis, 79 N. C., 426; S. c., 70 N. C., 456; 19 R. C. L., 616, title, “Mortgages,” sec. 432; Perry on Trusts (6 ed.), sec. 843; Jones on Mortgages (6 ed.), sec. 1907.

In 19 R. C. L. it is said: “And a mortgagor may elect to recover full damages on account of tbe unlawful sale of tbe land under a power of sale in tbe mortgage, wben there was no default, and tbus ratify tbe title of tbe purchaser.”

And, in tbe well considered case of Warren v. Susman, supra, where a trustee bad purchased at bis own sale, Associate Justice Walicer tbus refers to tbe principle applicable: “Tbe plaintiff could elect to have tbe sale set aside and tbe property returned to tbe trust fund, or recover of tbe defendant, who bad sold and bought at tbe same time in breach of bis trust, tbe value of tbe land where tbe trustee insists on tbe validity of tbe sale, and bis right to retain tbe property, and has conveyed it to a third person, whose title be also insists is unassailable; otherwise, tbe trustee would be allowed to speculate upon bis trust and make an unfair profit out of it, which will not be tolerated in a court of equity.”

Defendant cites and relies upon tbe case of Austin v. Stewart, 126 N. C., 525, as a decisive authority in support of tbe position that plaintiff, on tbe present adjustment, is restricted to tbe amount for which tbe property sold at tbe mortgage sale. In that case, the Court held that an order of reference over defendant’s objection could not be maintained wben there was an undetermined plea in bar appearing in tbe record, and in sending back tbe case for further proceeding, tbe Court adverting to an allegation in plaintiff’s complaint, “that be elected to affirm tbe sale,” laid down tbe principle, undoubtedly true as a general proposition, that, wben plaintiff has elected to affirm tbe sale, be must settle on tbe basis of tbe sale price, but Austin v. Stewart may not be recognized as authority for defendant on tbe facts of this record, where plaintiff, in repudiation of tbe sale, seeks to recover of tbe mortgagee tbe damages for wrongful transfer of bis property to a third person under color of a mortgage which bad been, in fact, paid in full.

It is urged for defendant that, as plaintiff was present at tbe sale and made'no open protest, be is concluded as to its validity. There is a wholesome principle in our law to tbe effect that one who stands by and witnesses in silence a wrongful sale of bis property, under circumstances that call on him to speak, will not afterwards be beard to impugn tbe validity of tbe sale in so far as tbe title .of tbe purchaser is concerned. Tbe position depends on tbe doctrine of equitable estoppel, that under certain conditions will not allow an owner to impeach, tbe purchaser’s title when the latter has been misled to his hurt, but, on the facts of this record, the principle has no place as between the plaintiff .and the defendant company, the evidence showing that plaintiff, an ignorant colored man, merely attended a sale of his property, made over his protest; that he said or did nothing at the sale to mislead any one; has insisted throughput to the company and its agents that the mortgage debt has been fully paid, and has established his claim at the trial. In such case, we are clearly of opinion that the plaintiff, as against the defendant, is entitled to a settlement on the basis of the actual value of the property, and the verdict and judgment to that effect should be upheld.

We find no error to defendant’s prejudice, and the judgment for plaintiff is affirmed.

No error.