Richmond Guano Co. v. Walston

122 S.E. 663, 187 N.C. 667, 1924 N.C. LEXIS 370

• Court: Supreme Court of North Carolina
• Decided: May 7, 1924
• Status: Published

Opinion

Adams, J.,

after stating the ease: The plaintiff contends that it is an innocent purchaser for value of the original note executed by Walston and secured by the deed of trust, and that its title and interest should be protected against the cancellation of the registered security, which, it is alleged, was fraudulently procured. The defendants contend that, even if the cancellation of the deed of trust was procured by the false representation of Walston and Tomlinson & Company, the register of deeds had no knowledge of the fraud, and wrote upon his records the entry of satisfaction in good faith and in conformity with the provisions of the statute; that prior encumbrances were on record'against Wal-ston’s property, and that the Prudential Company, who made.Walston the loan of $9,500, and the other defendants financially interested in the loan, having no knowledge or notice of any alleged irregularity or defect in the cancellation of the deed of trust, had the legal right, as innocent parties, to accept the record as true, and to act upon it in the examination of Walston’s title.

The appeal, then, presents these two questions: (1) Were the appel-lees warranted in relying upon the register’s cancellation of the deed of trust in the records of his office? (2) If not, may the Prudential Company and the other claimants be subrogated to the rights of prior creditors whose securities they have paid? If the first question be answered in the affirmative, the second need not be determined.

The plaintiff argues that the entry made by the register of deeds did . not discharge or release the deed of trust executed by Walston to Hill on 22 February, 1921, and, in support of its position, lays down what it denominates four fundamental propositions. In considering these propositions we may remark incidentally that this action was instituted before the amendments of 1923 went into effect. Private Laws 1923, cc. 192, 195.

It is first insisted on behalf of the appellant that a register of deeds is not authorized to cancel a deed of trust under any circumstances. As the register’s official duties are prescribed by the General Assembly, it becomes necessary to refer to the statute. Section 2594 of the Oonsoli- dated Statutes provides, in part, that any deed of trust or mortgage which is registered as required by law may be discharged and released in the following manner: “Upon the exhibition of any mortgage, deed of trust, or other instrument intended to secure the payment of money, accompanied with the bond or note, to the register of deeds or his deputy, where the same is registered, with the endorsement of payment and satisfaction appearing thereon by the payee, mortgagee, trustee, or assignee of the same, or by any chartered active banking institution in the State of North Carolina, when so endorsed in the name of the bank by an officer thereof, the register or his deputy shall cancel the mortgage or other instrument by entry of ‘satisfaction’ on the margin of the record; and the'person so claiming to have satisfied the debt may retain possession of the bond or mortgage or other instrument. But if the register or his deputy requires it, he shall file a receipt to him showing by whose authority the mortgage or other instrument was canceled.”

The plaintiff says that a deed of trust is not embraced in the term “other instruments,” and that the use of the words “mortgage, deed of 'trust, or other instrument,” in the first line of this subsection, and the omission of the words “deed of trust” in the seventh line, conclusively show that the register is not given power to cancel a deed of trust. We do not assent to this proposition. In the construction and interpretation of a statute, elementary principles demand that its purpose and spirit be considered and the obvious intention of the Legislature ascertained and respected; and, in accordance with these principles, the language used should be given such meaning as will make it harmonious with the legislative intent. In order to ascertain such intent, effect must be given to all clauses and provisions, unless they are irreconcilably conflicting or antagonistic to the fundamental law. Modern authorities generally favor the interpretation of statutes according to the natural and obvious signification of the wording, without resort to subtle and refined construction, for the purpose of either limiting or extending their operation. McLeod v. Comrs., 148 N. C., 77; Pullen v. Corporation Commission, 152 N. C., 548; Kearney v. Vann, 154 N. C., 311; Tripp v. Comrs., 158 N. C., 180; Manly v. Abernathy, 167 N. C., 220; 25 R. C. L., 962; Black on Interpretation of Laws, 56. It will be noted, moreover, that section 2595 directs the register of deeds, or his deputy, to enter upon the aljohabetical indexes, on a line with the names of the grantor and the grantee, the words “satisfied deed of trust,” when it appears that the satisfaction of such instrument has been acknowledged. Considering the statute as a whole, we are of opinion that the natural and reasonable interpretation of the language must refer the words “mortgage or other instrument” to the first line of the section— “mortgage, deed of trust, or other instrument”; that the clauses must be construed together, and that “other instrument” essentially includes “deed of trust.”

The plaintiff further contends that the note and the deed of trust did not bear the endorsement of payment and satisfaction by the payee or assignee, and that' the statute makes no provision for cancellation by the cestui que trust.

Walston conveyed the legal title to Hill in trust for the holder of the note. It is true that neither Hill, the trustee, nor the plaintiff, as endorsee of the note, acknowledged its payment and satisfaction; but the payee in the original note was Tomlinson & Company, not the trustee. .The substituted note was a reproduction of the original, without the endorsement. The trustee, who is an attorney, drafted the original note and the deed of trust, and these papers were subsequently delivered to Tomlinson & Company. Retween that time and the date of the trial, the trustee never saw them. 'When the note was endorsed, the deed of trust was retained by the payee. It did not go into the hands of the plaintiff at any time. If, then, it be conceded that the endorsement of the original note carried the security with it (Williams v. Teachey, 85 N. C., 402, 404) and conferred upon the plaintiff the equitable right to subject to sale the property described in the deed of tru’st, still the deed of trust and a duplicate note answering to dhe one therein described and purporting to be the original, bore the acknowledgment of payment and satisfaction, duly. endorsed by' Tomlinson & Company, the payee in the note. There is no evidence that the register of deeds knew that the note exhibited to him was a duplicate instead of the original, and the exhibition of these papers, with the endorsement thereon, conformed to the terms of the statute, and authorized the register, nothing else appearing to him, to cancel the deed of trust by the entry of “satisfaction” on the margin of the record. C. S., 2594 (2). Bank v. Sauls, 183 N. C., 165, 169. It was the payee in the note who authorized the exhibition of the papers to the register and consented to their cancellation.

In the next place, the plaintiff urges the proposition that the note exhibited to the register of deeds was not the note which was endorsed to the plaintiff, and that the cancellation of the deed of trust was either forged or procured by fraud, and should be declared void and stricken out. In this connection it may be well to recur to one or two familiar principles. Whether or not the essence of forgery consists in the making of a false wilting with intent to utter it as the act of one other than the party signing it, or whether the maker of the original note and the payee named therein fraudulently conspired to deceive the register and thereby compass the cancellation of the deed of trust, we need not con sider. ¥e are not dealing with the'right of the plaintiff to have the cancellation declared void on the ground that the register was deceived, because none of the contesting defendants had knowledge of the alleged fraud of the maker and the payee of the note, and the present action was brought after the Prudential Company had made the loan without notice. The paramount and dominant question is whether the defendants were warranted in relying on the register’s entry of satisfaction as a record which imported verity, and as to this any doubt formerly existing has been resolved against the plaintiff’s contention. The statute provides that every such entry shall operate and have the same effect to release and discharge all the interest of such trustee, mortgagee, or representative in such deed or mortgage as if a deed of release or recon-veyance thereof had been duly executed. C. S., 2594 (4). Our decisions are to the same effect. ' “It has been repeatedly declared to be sound public policy to remove every obstacle to the ready sale of real estate upon the market, in order to benefit commerce and thereby promote general prosperity. It was in furtherance of this object that our General Assembly, but a few years since, so altered our registration laws that persons proposing to purchase land could be well advised as to the title by a careful inspection of the public records.” Avery, J., in Hughes v. Hodges, 102 N. C., 237, 240. “An existing, uncanceled mortgage, properly admitted to registration, is constructive notice to subsequent purchasers of the mortgaged premises of the rights of the mortgagee; but a' mortgage or deed of trust, properly canceled by a person authorized to cancel it, is notice to no one; it continues no lien upon the property. On the contrary, the entry of satisfaction by the proper person is conclusive of the fact of its discharge and satisfaction. . . . Upon what principle can a subsequent purchaser df property, once covered by a mortgage, but which, long before he deals with it, has been properly canceled and the entry of satisfaction properly entered on the records, be held to a notice of it in his examination of the records to ascertain the then condition of the title of the property he is negotiating to purchase? If at that time it is not an existing charge upon the property (and the entry of satisfaction by the proper person is to him conclusive that it is not), he has absolutely no concern with it; and no statute and no adjudication of any court that we have discovered requires him to observe it, or affects him with constructive notice of its presence on the books, and assuredly none of any equities dehors the deed growing out of a relation once 'existing, but by the entry of satisfaction, properly made, conclusively determined as to him. It was never contemplated that such a burden should be imposed upon a person negotiating for the purchase of real property that he should examine not only the record of cancellation of all recorded mortgages, but should read them and be affected with notice of the relationship of mortgagor and mortgagee created by them, and to inquire as to the facts and circumstances and conditions of such relationship.” Manning, J., in Smith v. Fuller, 152 N. C., 13. In the recent case of Banh v. Sauls, supra, th’e Chief Justice said: “The second section of C. S., 2594, requiring cancellation, expressly provides that, if not canceled by the mortgagee or trustee, the mortgage or deed of trust, with the note secured, may be produced, and if marked satisfied, the register of deeds shall mark the instrument canceled. . . . The statute is plain, and in the absence of fraud, participated in.by the creditor or purchaser, if the statute is followed, the creditor is protected by the entry of cancellation of the mortgage, which, if made in the manner provided by the statute, is conclusive.” See, also, Lumber Co. v. Hudson, 153 N. C., 96; Wood v. Tinsley, 138 N. C., 508.

We must conclude, therefore, that the Prudential Life Insurance Company and the other contesting defendants are protected by the entry of satisfaction on the margin of the book in the office'of the register of deeds as it appeared when the title to the encumbered property was examined, and that they were not required to go behind the record and inquire into the facts, circumstances and conditions under which the entry was made. Smith v. Fuller, supra.

The plaintiff takes the additional position that in no event is the non-suit permissible, because the plaintiff is entitled to a judgment against Walston and Tomlinson for the amount due on the endorsed note, and to a sale of the personal property described in the deed of trust. We think not. The motion for nonsuit was made by the Prudential Company, the Chickamauga Company, P. L. Woodard, S. W. Anderson, H. G. Connor, Jr., trustee, S. J. Calvert, and the Armour Fertilizer Works. We have held that the nonsuit as to these parties was proper, and, upon his Honor’s intimation to the same effect at the conclusion of the evidence, the plaintiff submitted to a voluntary nonsuit as to all the defendants. As the ruling of his Honor was correct, the plaintiff is concluded by its voluntary nonsuit as to the defendants, against whom it now claims the right to proceed.

Our disposition of the several questions herein considered makes it unnecessary to discuss the alleged right of some of the defendants to equitable subrogation.

The judgment is

Affirmed.