Hare v. . Hare.

ScheNcic, J. The exceptive assignments of error assail the admission of all of the evidence which tended to establish the parol agreement between the plaintiff B. C. Hare and the defendant D. R. Hare, to the effect that D. R. Hare would have the land conveyed by him to B. C. Hare released from a prior deed of trust when jiayment was made by B. C. Hare of the note now in the hands of John C. Badham as collateral security for a past-due note given to said Badham by D. R. Hare. In one group of assignments of error the appellant takes two positions to assail the admission of such evidence. The first position is that such a parol agreement would have been void under the statute of frauds, C. S., 988. This position, we think, is untenable. “The general rule appears to be that an oral agreement by a grantor or grantee to remove existing encumbrances is valid and enforceable, and is not required by the statute of frauds to be in writing.” 25 R. C. L., 556. While the *445 facts in Stevens v. Turlington, 186 N. C., 191, are not in all respects analogous, we tbink the reasoning therein, and in the cases there cited, is apposite to the case at bar. The parol agreement now under consideration was a contract between the grantor and the cestui que trust in a deed of trust (to all intents and purposes between mortgagor and mortgagee), and was made to terminate such relationship after it had been established between them, and is clearly distinguishable from a contract “to sell or convey any lands, ... or any interest in or concerning them,” required by C. S., 988, to be put in writing. Faw v. Whittington, 72 N. C., 321. The second position taken by the appellant to assail the competency of the evidence tending to establish the parol agreement alleged in the complaint is that such an agreement would he inconsistent and in conflict with the written agreement between the parties as contained in the deed and deed of trust executed by them respectively. We think this position is also untenable for the reason that such inconsistency and conflict does not appear. The deed from D. E. Hare and wife to B. C. Hare contains the following: “And the said first parties, for themselves, their executors and administrators, to and with the said second party, his heirs and assigns, covenant: That they are seized of said premises in fee; have the right to convey the same in fee simple; that the same is free from any and all encumbrances, except a deed of trust to the Southern Trust Company given by the said Hare and wife; and that they will forever warrant and defend the title to the same against the lawful claims of all persons whomsoever.” It will be noted that while the prior deed of trust to the Southern Trust Company is excepted in the covenant against encumbrances, such deed of trust is not excepted from the general warranty of title. So it appears that the alleged parol agreement, instead of being in conflict with, is in accord with the written agreement, the aforesaid deed. The other group of assignments of error, which assail the court’s holding that the appellant John C. Badham was bound by the parol agreement had between B. C. Hare and D. E. Hare, cannot be sustained, since Badham was not a holder of the note in due course. From all of the evidence it appears that the note of B. C. Hare to D. E. Hare which is held by John 0. Badham as collateral was past due when this action was instituted, and that said note has never been endorsed by the trans-ferrer (D. E. Hare) to the transferee (John 0. Badham). Therefore, by virtue of C. S., 3030, the appellant was not a holder in due course, but held said note subject to all the equities that existed in favor of the original payor against the original payee. The appellant contended, and requested the court to so hold, that since the failure to have the parol agreement included in the writing *446 was caused by tbe negligence of tbe plaintiff, be, tbe appellant, should not be made to suffer thereby. Tbe answer to this contention is that when one takes a note otherwise than in due course be should first investigate and ascertain if there are any equities existing1 against tbe bolder thereof. It has never been held to be tbe duty of those bolding equities against a note to put purchasers of such note on notice of such equities. Tbe fact that tbe appellant took tbe note in good faith and for a valuable consideration does not make him a purchaser in due course, or entitle him to tbe protection afforded such purchasers. When tbe appellant took and held tbe note without procuring tbe endorsement of tbe transferrer, be did so subject to all tbe equities existing in favor of P. C. Hare against D. R. Hare, tbe original payor and payee therein. C. S., 3030. Tbe judgment below is Affirmed.