B. Blanton & Co. v. Bostic

Clark, J. D. I). Suttle, on January 4, 1890, executed his promissory note with three' sureties. On tire same day •he executed his deed in trust to' secure two of said sureties, and his acknowledgment of the deed and privy examination of his wife were taken before a Justice of the Peace who was the other surety and who was not named in the deed. The notes Avere renewed in 1892, and by successive assignments have become the property of the present substituted plaintiff. The deed in trust was released by the two sureties,beneficiaries named therein, and the grantor then made the conveyance under which defendants claim. This is an action by the payees of the notes to' subject the land under the deed of trust. It needs no’ discussion to say that it was correctly held by the referee and approved by the Judge: .1. That the renewal of the notes did not relinquish the lien in the absence of evidence to show such intent. Hyman v. Devereux, 63 N. C., 627; Vick v. Smith, 83 N. C., 82; Matthews v. Joyce, 85 N. C., 266; Bank v. Manufacturing Company, 96 N. C., 298; Bank v. Ireland, 122 N. C., 574. 2. The referee had power to permit amendments to the pleadings. Code, sec. 422. The note having been again assigned, since this action begun, it was also proper to make the assignee a substituted party plaintiff. *421 It was also correctly beld that the surety, omitted in the deed in trust, was entitled to' be subrogated to the rights of his co-sureties pro tanto, if he had paid the debts, and the payees in the notes had a superior equitable right of subrogation to the benefit of any security given by the principal debtor to his sureties. Ijames v. Gaither, 93 N. C., 362; Sherrod v. Dixon, 120 N. C., 63; Harrison v. Styres, 74 N. C., 290; Wiswall v. Potts, 58 N. C., 189; whether they knew of it or not. Matthews v. Joyce, supra; Brandt on Suretyship, sec. 282. It is also true that if the payees in the note acquired a valid right to subrogation to tire security given the sureties, this right could not be released by the sureties to the detriment of the principal creditor. Matthews v. Joyce and Ijames v. Gaither, supra; Ingram v. Kirkpatrick, 41 N. C., 475; Southerland v. Fremont, 107 N. C., 571; Bizzell v. McKinnon, 121 N. C., 189; Brandt, supra, secs. 282, 283. The effect of the acknowledgment of the trust deed before the third surety, who is not named therein, was earnestly presented. The principle that the probate of a deed taken by one who is disqualified for any cause is void (White v. Connelly, 105 N. C., 65), applies equally to invalidate the deed when the officer taking an acknowledgment and privy examination is disqualified. Long v. Crews, 113 N. C., 256, and cases cited on page 258; McAllister v. Purcell, 124 N. C., 262; 1 Devlin on Deeds, 476; 1 Am. and Eng. Enc. (2nd Ed.), 493, and cases cited by both. If the disqualification of either the probating or acknowledging officer appears upon the face of the record, the registration is a nullity as to subsequent purchasers and incum-brancers. Quinnerly v. Quinnerly, 114 N. C., 145. But when the incapacity of tire acknowledging or probating officer is latent, i. e., does not appear upon the record, one who takes *422 •under the grantee in such instrument gets a good title. Bank v. Hove, 55 Minn., 40; Heilbroun v. Hammond, 13 Hun. (N. Y.), 474; Bancks v. Ollerton, 26 Eng. L. and E., 508, unless, as is said in Groesbeck v. Steely, 13 Mich., 329, by Campbell, C. J. (Judge Cooley concurring), the party claiming the benefit of the defective acknowledgment or probate is “cognizant of the facts.’’ Here, the invalidity is not' in the execution of the trust deed, bur in its registration upon an invalid acknowledgment ; and it is valid between the parties without registration. The acknowledgment is valid on its face, but the payees in the note knew who the sureties thereto were, knew the acknowledging officer, though not named in the trust deed, was a beneficiary thereunder, and hence that the registration thereunder was void. If the plaintiffs had proceeded to obtain judgment and execution upon their debt, they could have set the deed in trust for the sureties aside, but they chose to rely upon 'their rights 1x> subrogation to the rights of the sureties under a registration they knew to be invalid. If the grantor had merely made a subsequent conveyance to the defendants, it would háve been valid as against the unregistered deed to the sureties, for such it was upon the defective acknowledgment; for though the defect was not upon the face of the papers, 'x" * * the payees were cognizant of the latent defect. It makes nothing either way that the sureties attempted to release the security. Had it been valid, they could not have released it as against the principal creditor, and the deed being invalid (as to' third parties) by the defective registration the defendants acquired & good title, not by virtue of the release but by the deed of the grantor to them, irrespective of it. If the defendants had claimed title under a conveyance from the trustee and cestuis que trusient (instead of from the *423 grantor in the trust de'ed), while they would not have been affected by the latent defect in the acknowledgment, and consequently in the registration of the trust deed, they would have been fixed with notice that, by its terms, it was to secure the sureties, and therefore that the principal creditors had acquired rights which the sureties and trustee could not impair.' But, here, the defendants rely -upon the subsequent deed from the grantor, and it is the principal creditors who set up the trust deed and rights acquired thereunder, and, when they do so, they are barred by the fact that the registration of the trust deed was not valid, because they knew of its defectiveness. In holding that the land was subject to the payment of the plaintiff’s debt, there was error. It is unnecessary to consider the plaintiff’s appeal. In defendant’s appeal Error. In plaintiff’s appeal No error.