Montsinger v. White

DenNY, J. The question to be determined on this appeal is simply this: Did the plaintiff, who neither assumed nor agreed to pay the note secured by the deed of trust on the property held by her and her deceased husband, as tenants by the entirety, but whose deceased husband did assume and *443 agree to pay the note, have the right to pay the balance due thereon at his death and to file a claim against his estate for the amount paid ? The fact that the plaintiff became the owner of the property as the surviving tenant in an estate by the entirety, did not thereby release the estate of her husband from liability for the debt. In re Kershaw’s Estate, 352 Pa. 205, 42 A. 2d 538; Black’s Estate, 341 Pa. 264, 19 A. 2d 130; Pieretti v. Seigling, 134 N. J. Eq. 105, 34 A. 2d 286. Moreover, the character of the estate held by the plaintiff and her husband prior to his death, had no significance in respect to the liability of the parties on the note secured by the deed of trust thereon. Trust Co. v. Black, 198 N.C. 219, 151 S.E. 269. But in this jurisdiction when husband and wife execute a note jointly and severally, promising to pay for money loaned to them, or for the purchase of property, and such indebtedness is secured by property held by them as tenants by the entirety, each is primarily liable, jointly and severally, and upon the death of either, his or her estate becomes liable for one-half of the unpaid balance of the secured debt at the time of his or her death even though the decedent’s estate gets no part of the property pledged for the debt. Underwood v. Ward, 239 N.C. 513, 80 S.E. 2d 267; Trust Co. v. Black, supra; In re Dowler’s Estate, 368 Pa. 519, 84 A. 2d 209; In re Kershaw’s Estate, supra. Furthermore, in receiverships and assignments for the benefit of creditors, a secured creditor may prove his claim for the whole amount before exhausting his collateral security. Rierson v. Hanson, 211 N.C. 203, 189 S.E. 502; Corporation Commission v. Trust Co., 200 N.C. 808, 158 S.E. 925; Bank v. Jarrett, 195 N.C. 798, 143 S.E. 827; Milling Co. v. Stevenson, 161 N.C. 510, 77 S.E. 676; Winston v. Biggs, 117 N.C. 206, 23 S.E. 316; Merrill v. Bank, 173 U.S. 131, 43 L. Ed. 640. Cf. Guaranty Co. v. Hood, Com’r. of Banks, 206 N.C. 639, 175 S.E. 135. The foregoing decisions, however, do not apply generally to secured claims held at the time of the death of a debtor. When a debtor dies, the administration laws, G.S. 28-105, step in and determine the settlement of his estate. In such case, the holder of a note executed or assumed by the deceased, and secured by a deed of trust or mortgage, must first exhaust the security and apply the same on the debt, and may then file a claim against the estate for the balance due, if any. But the holder of such note may not file claim and receive pro rata dividend on the basis of the full claim. Rierson v. Hanson, supra; Chemical Co. v. Walston, 187 N.C. 817, 123 S.E. 196; Moore v. Dunn, 92 N.C. 63; Creecy v. Pearce, 69 N.C. 67. Therefore, in the instant ease, the Home Building and Loan Association would not have been permitted, under our decisions, to prove a claim against the estate of Homer E. Montsinger, Jr., until it first exhausted its security, and then only for the balance that might have remained *444 unpaid after applying as a credit on tbe indebtedness tbe net proceeds realized from tbe foreclosure sale. Tbe plaintiff was under no legal obligation to pay tbe note beld by tbe Home Building and Loan Association, and it could not bave obtained a personal judgment against ber on tbe note. But wben sbe paid off tbe note for tbe purpose of exonerating ber own estate from tbe outstanding lien, sbe obtained no better position in relation to tbe debt as against tbe estate of ber busband, tban tbe Building and Loan Association bad prior thereto. Even so, by making sucb payment sbe became subrogated to its rights. Tbe applicable law governing subrogation in respect to mortgage liens, is succinctly stated in 50 Am. Jur., Subrogation, section 124, page 763, as follows: “A subrogee to a mortgage lien, like other subrogees, is generally entitled to be placed in tbe precise position of tbe one to whose rights be is subrogated, and is entitled to all tbe rights and securities and to tbe benefit of all tbe remedies which were available to sucb person for payment of tbe debt. But one subrogated to a mortgage lien has no right and no claim beyond those possessed by tbe creditor. If tbe creditor acquires by tbe mortgage only tbe right to look to tbe mortgaged property for payment, such right only is acquired or transmitted by subrogation, and tbe subrogee cannot assert a personal claim or recover a personal judgment against tbe original mortgagor.” Dowdy v. R. R. and Burns v. R. R., 237 N.C. 519, 75 S.E. 2d 639; Parsons v. Leak, 204 N.C. 92, 167 S.E. 567; Martin v. Hickenlooper, 90 Utah 150, 59 P. 2d 1139, 107 A.L.E. 762, and cited cases. See also Anno. — Subrogation—Extent, 107 A.L.E. 785, et seq. Consequently, since there is no contention that tbe property now beld by tbe plaintiff, exonerated from tbe lien, is worth less tban tbe amount sbe paid to discharge tbe lien, sbe has no claim sbe can assert against ber husband’s estate. Tbe note was not paid for tbe benefit of bis estate, but to release her own property from tbe lien which was primarily liable for tbe payment of tbe debt secured thereby. Hence, tbe judgment of tbe court below is Beversed. EeviN, Joi-INson, and Bobbitt, JJ., dissent.