Trimble v. . Hunter

10 S.E. 291, 104 N.C. 129

• Court: Supreme Court of North Carolina
• Decided: September 5, 1889
• Status: Published

Opinion

Merrimon, C. J.

(after stating the case). There was a resulting trust in the deed of trust, to be interpreted in favor of the defendant Hunter, and he had, by virtue of it, an equitable estate, or interest, in all the land embraced by the deed. Sprinkle v. Martin, 66 N. C., 55. The docketed judgment of the plaintiffs was a lien upon that interest, but, for reasons clearly expressed in the case just cited, this lien could not be enforced by the ordinary process of execution. To do this, the plaintiffs were put to their action for that purpose, in which the trust provided by the deed could' be settled and discharged, and the interests of the defendant Hunter could be devoted to the satisfaction of the plaintiffs’ judgment, as far as they might be adequate for the purpose. The Code, § 435; Sprinkle v. Martin, supra; McKethan v. Walker, 66 N. C., 95; Hoppock v. Shober, 69 N. C., 153; Dixon v. Dixon, 81 N. C., 323.

This action has the nature of an equitable execution. Its purpose is to enforce the plaintiffs’ lien by first settling and discharging a prior lien upon the land, created by the deed of trust in favor of the creditor defendants, and, secondly, applying any surplus of the fund arising from a sale of the land, as far as the same may be adequate, to the discharge of the plaintiffs’ judgment. To do this, requires that an account shall be taken to ascertain the amount of the debt secured by the first lien, and a sale of the land, unless the debtor shall pay the dqbts without such sale. Plence, it becomes, necessary to interpret the deed of trust and settle the rights, and the extent of them, of the creditors having the first lien under it.

This deed, though clearly expressed in terms, is peculiar in some of its material provisions. Its true intent and meaning, as expressed in it, must prevail. The Court cannot go beyond it, as was contended it should do, and give effect to an intention of the maker, and the parties having benefit or it, not expressed in it, because, to .do so would be to render nugatory, in great part, the deed—a chief purpose of which, was to prevent and exclude merely verbal agreements and stipulations not expressed in it. These parties could not, by mere verbal agreement, have changed or modified its purpose; they could only have done so by deed, or other proper instrument in writing, executed and perfected before the lien of the plaintiffs attached. As soon as their lien took effect,, the trust could not be changed in any respect, to their prejudice, without their consent. By virtue of it, they at once came to have an interest in the land that could not be abridged or lessened in its extent or in its character by the defendants, by contract in writing or otherwise.

Then, what does the deed before us provide in favor of the creditor defendants? What of their debts are secured, and how are they secured, by' its provisions ? It appears from the recitals therein expressed in clear, explicit and unequivocal language and phraseology, that the debts of the defendant debtor due to the creditor defendants, as composing two business firms, were ascertained definite sums of money due to such firms respectively oh the day it was executed. Those debts were made up of, and embraced, “money advanced and lent by them (the creditor firms) to him (the debtor defendant) up to and including this date” (the date of the deed). There is no recital, or expression, or provision, in the body of the deed, that, in terms or by implication, suggests a debt, greater or smaller, so due and owing, than those so expressly and certainly expressed; nor does it appear from the deed that the debtor deféndant owed, or expected thereafter to owe, to the creditor defendants any debt or debts other than those mentioned; nor, as to these debts, was it agreed in writing that they should bear interest at the rate of eight per cent, per annum. There was no stipulation in the deed as to the rate of interest they should bear.

The debts thus specified with particularity were not, as a whole, the debts secured by the trust created by the deed. It is further recited in the deed that, at the time it was executed, the creditor defendant firms had in their possession certain cases of tobacco to be sold by them for the debtor defendant; that they should sell this tobacco and appl}r the proceeds thereof to the payment of the debts already mentioned, to the extent they might be sufficient for that purpose. It is manifest from the carefully and precisely expressed recitals, and, as well, all the provisions of the deed in perfect harmony with them, that the tobacco mentioned should be thus devoted and applied, and not otherwise. The deed is based upon the assumption and express agreement that the proceeds of the sales of the tobacco should be thus applied. That it should be, was made a substantial consid eration underlying, supporting and giving life and operative effect to the deed.

In like explicit'terms it is declared in the deed, and all and every of its provisions are to the same effect, that its purpose was to secure not the debts specified, but the balance thereof that the proceeds of the tobacco might not be sufficient to pay. It is declared that there may be such unpaid balance, and it recites that, “ whereas, the said parties of the first part (the debtor and his wife) desire to secure the payment of any such balance as may remain, by a deed of. trust upon real and personal estate,” &c., the property is conveyed, “ in trust, nevertheless, and for the purpose in this deed declared.” It is then provided that, “ if after the sale of the said leaf tobacco as aforesaid, consigned and delivered as aforesaid,” &c., there shall remain a “ balance ” of the debts mentioned unpaid, &c., and the debtor shall pay this balance, “ with interest on said balance at the rate of eight per cent, per annum, on or before the'first day of December, 1886, then this indenture to be void and of no effect. If, however, after the said sales of the said leaf tobacco by the said,” &c, * * * “ and the application of the net proceeds aforesaid of the sales toward the said accounts against the said Claude Hunter, any balance or balances on same shall remain unpaid, &c.,” then the property shall be sold, &c., as directed, and the proceeds thereof applied as may be necessarj’- to the payment of such “ balance.” It is too plain to admit of serious question that it was intended by the deed to secure only such “ balance ” of the debts mentioned, after applying to their payment the proceeds of the tobacco mentioned.

The deed conveyed a growing crop of tobacco. It is provided therein that this shall be sold when gathered, and the proceeds thereof applied to the payment of such “balance;” and if there shall not be sufficient for such purpose, then and then only shall the land be sold to pay the same.

All the provisions of the deed — its terms and phraseology— all go to show and make manifest that its sole purpose was to secure such “ balance ” of the indebtedness specified, and that it should be operative and have effect onty for that purpose.

No doubt the defendants debtor and creditors could agree to apply the proceeds of the tobacco, as it appears they did do in part, to the payment of debts other than those specified in the deed, or to other purposes, but the creditors could avail themselves of the trust only to secure so much of the indebtedness'specified as the net proceeds of the tobacco were inadequate to discharge; and this is so, because the sole purpose of the trust was to secure such “ balance” as indicated above.

In ascertaining the “ balance ” — the debt of the defendant and creditors secured by the deed — they can be allowed to charge interest only at the rate of six per centum per annum, because there was no agreement in writing that they should have a greater rate, not exceeding eight per centum per annum, as allowed by the statute (The Code, §.3835). As to any ascertained “ balance,” they will be entitled to interest at the rate of eight per centum per annum, because it is so provided in the deed signed by the debtor. They will also be entitled to have commissions for selling the tobacco, including the crop gathered and sold, as agreed upon between themselves and the defendant debtor; and, also, to ordinary, reasonable charges and expenses incident to selling the tobacco in the regular course of business.

The plaintiffs are not parties to the deed of trust, and are not bound by its recitals as to the amount of indebtedness of the debtor defendant to the creditor defendants. They have the right, therefore, if they can, to show that such indebtedness was less as to each firm than was stated in the deed. When such “balance ” due the defendant creditors shall be ascertained and paid out of the proceeds of the sales of the land, any surplus thereof shall be applied to the payment of the plaintiffs’ judgment to the extent the same may be sufficient for that purpose.

We do not deem it necessary to -advert directly to the numerous exceptions to the report of the referee. In view of what we have said, it is clear that the account was not properly taken and stated. We deem it expedient and better to direct that the account as stated be set aside, and that it be re-referred to the referee to retake and state the same in accordance with this opinion, and to this end he will be at liberty to hear and consider further evidence, if need be. Grant v. Bell, 90 N. C., 558.

Error.