Cheek v. . Squires

CoNNOR, J. The failure of the clerk of the Superior Court of Ala-mance County to make and enter on the records in his office an order directed to the Alamance Insurance and Real Estate Company, trustee, requiring said trustee to execute and deliver to the defendant, Gr. C. Somers, the purchaser at the final sale of the land described in the deed of trust from the defendants, J. C. Squires and his wife, Lula N. Squires, to said trustee, upon his compliance with his bid at said sale, was admittedly an irregularity appearing on the public records of Ala-mance County and affecting the title to the land described in the complaint. C. S., 2591. The order required by the statute is, however, merely ministerial in its nature, and its omission, when in fact the trustee has, after the expiration of ten days from the date of the sale, and after complying with all the terms of .the power of sale contained in the deed of trust, made title to the purchaser, does not invalidate the foreclosure, or render the title acquired by the purchaser as grantee in the deed of the trustee void, solely for that reason. Lawrence v. Beck, 185 N. C., 196, 116 S. E., 424. It is required by statute in this State that a trustee who has foreclosed a deed of trust by the exercise of the power of sale contained therein, shall enter on the margin of the record of the deed of trust in *669 tbe office of the register of deeds, the fact of such foreclosure, and the date when, and the person to whom a conveyance was made of the land sold by the trustee by reason of the foreclosure. 0. S., 2594(a). The trustee is also required by statute to file an account with the clerk of thje Superior Court of the county in which the land lies, showing his receipt and disbursement of all funds which have come into his hands by reason of the sale of the land made by him under the power of sale. C. S., 2594(b). The failure of the trustee to comply with either of these statutes is an irregularity, but as there can be no compliance, until after the sale has been completed, and the purchase money paid to the trustee by the purchaser, such irregularity cannot ordinarily be held to affect the validity of the foreclosure, or to render the title acquired by the deed of the trustee void. The title of a subsequent purchaser of the land, claiming under a deed from the trustee to the purchaser at the foreclosure sale, who has paid value for the land, and who was without actual knowledge of any fraud on the part of the trustee, which would have invalidated the foreclosure, is not void, because such purchaser had constructive notice from the records that the clerk of the Superior Court had failed to perform a merely ministerial duty required by 0. S., 2591, or that the trustee had failed to comply with the requirements of 0. S., 2594(a) or of C. S., 2594(b). The irregularities in the instant case, as shown by the record, did not prejudice the plaintiff. Wise v. Short, 181 N. C., 320, 107 S. E., 134. The fact found by the referee that-neither Frank A. Hayes, nor his wife, Blanche D. Hayes, nor the defendant, Alamance Home Builders Association, had actual knowledge that the trustee had failed to pay the bonds owned by plaintiff out of the proceeds of the sale, was also found by the judge. Indeed there was no evidence to the contrary. The judge concluded as a matter of law that by reason of the relation of the defendant, ~W. E. Sharpe, to both the Alamance Insurance and Real Estate Company and the Alamance Home Builders Association, the knowledge of the said defendant, which he had acquired as an officer of the Alamance Insurance and Real Estate Company, was imputed to the Alamance Home Builders Association. No facts, however, were found upon which such knowledge was imputed either to Frank A. Hayes or to Blanche D. Hayes. The finding by the referee that both these defendants were purchasers for value, without notice that the trustee had failed to pay the bonds owned by plaintiff, was approved by the judge. It is, therefore, immaterial whether or not the Alamance Home Builders Association had notice, actual or constructive, of the fact that the bonds had not been paid. In Phillips v. Lumber Co., 151 N. C., 519, 66 S. E., 603, it is said: “Besides, a purchaser for value from one whose deed was procured by fraud gets a good title if he has *670 no notice of the fraud. Odom v. Riddick, 104 N. C., 515, 10 S. E., 609, and cases there cited. Even a purchaser with notice of the fraud from an innocent purchaser without notice gets a good title. Glenn v. Bank, 70 N. C., 205; Fowler v. Poor, 93 N. C., 466.” This statement of the law by Clark, C. J., is quoted and approved by Clarkson., J., in Duncan v. Gulley, 199 N. C., 552, 155 S. E., 244. The knowledge which the defendant, W. E. Sharpe, had of the fact that the Alamance Insurance and Real Estate Company, as trustee, had failed to pay the bonds secured by the deed of trust from J. C. Squires and his wife, Lula N. Squires, and owned by the plaintiff, was acquired by him while acting as an officer of said trustee. It was not acquired by him while acting as an officer of the Alamance Home Builders Association. This knowledge was therefore not imputed to the latter, corporation. There was no finding of fact in the instant case by the referee or by the judge that the defendant, W. E. Sharpe, acted for or represented the latter corporation in considering the application for or in making the loan of $5,000 to the defendant, Blanche D. Hayes. As it was to the interest of the Alamance Insurance and Real Estate Company that the loan should be made, it is not to be presumed that W. E. Sharpe, acting for and representing said corporation, informed the Alamance Home Builders Association of any facts within his knowledge, which affected adversely the title of Blanche D. Hayes. The law applicable to this phase of the case has been stated as follows: “When there are dealings between two corporations, or between a corporation and an individual through the intervention of a common officer or agent, the question whether the corporation is to be charged with notice of what is known to the agent by virtue of his relation to the other corporation, or to the other party, depends upon the circumstances of each case; if under the circumstances it is his duty to communicate such knowledge, the corporation to which he owes such duty will be chargeable with his knowledge; but, of course, this does not apply to knowledge which he is under no duty to disclose, or which is in the nature of a confidential communication which he is not at liberty to disclose to the corporation; or where the common agent, while so acting, commits a fraud on one of the parties, in which case a knowledge of the fraud will not he imputed to the defrauded party, since it would be contrary to experience to presume that the defrauding agent would communicate it, although it may be imputed to the party who obtains the benefit of the fraud.” 14a C. J., 491, sec. 2359(2). As said by Brown, J., in Brite v. Penny, 157 N. C., 110, 72 S. E., 964, this Court recognizes the doctrine held by all courts, that a corporation is not bound by the action or chargeable with the knowledge of its officers, with respect to a transaction, in which such officer is acting *671 in bis own bebalf or in tbe bebalf of another corporation of wbieb be is also an officer. Only that knowledge which its officer acquires while acting in its bebalf, and wbieb it is bis duty to communicate to it, is imputed by tbe law to a corporation. The judgment in tbe instant case in so far as it is adjudged and decreed therein that plaintiff has a first lien on tbe land described in tbe complaint, to be first satisfied and- discharged out of tbe proceeds of tbe sale of tbe land by tbe commissioner appointed therein, is reversed. The action is remanded to tbe Superior Court of Alamance County that judgment may be entered in accordance with tbe report of tbe referee and with this opinion. Reversed.