Owens v. Branning Manufacturing Co.

Hoee, J., after stating the case: The right of foreclosure of a mortgage by sale under the provisions of the instrument and without the interposition of the court has long been recognized in this State and is, to some extent, regulated with us by our statute law. Averitt v. Elliott, 109 N. C., 560: Joyner v. Farmer, 78 N. C., 196; Revisal 1905, secs. 1040-1042 et seq. In exercising such a right, however, the utmost degree of good faith is required, the mortgagee being looked upon as a trustee for the owner as well as the creditor, and, in applying the principle, it is very generally held that such a mortgagee is not allowed, either directly or indirectly, to become the purchaser at his own sale, and where this is made to appear the transaction, as between the jtarties and at the election of the mortgagor, is ineffective as a foreclosure, and the relationship of mortgagor and mortgagee will continue to exist. Pritchard v. Smith, 160 N. C., 79; Jones v. Pullen, 115 N. C., 465; Gibson v. Barbour, 100 N. C., 192. Under well considered decisions here and elsewhere, the position extends to the case of assignees of the mortgage or the debt secured by it when it is shown that such an assignee, by himself, his agent or attorney, was in control and charge of the sale; the mortgagee only participating by allowing the use of his name for the purpose. Whitehead v. Hellen, 76 N. C., 99; Kornegay v. Spicer, 76 N. C., 95; Dyer v. Shurtleff, 112 Mass., 165; Gaines v: Allen, 58 Mo., 537; 27 Cyc., p. 1485. In the present ease and on perusal of the facts in evidence, we concur in the view of his Honor that, in any aspect of the testimony, the sale, in this instance, was in the entire control of the defendant Melson, as-signee of the mortgage debt, and he having bought and taken the conveyance under such circumstances, and plaintiff having elected to disregard it, we must hold that, as between plaintiff and Said defendant, there has been no valid foreclosure of the mortgage. It is not necessary, in cases *400 of this character, that actual fraud or imposition should be established. The agent and attorney of defendant in this matter is known to be an upright man and an honorable practitioner, and we are well assured that neither existed; but the principle prevails by reason of the position of advantage held by the mortgage creditor and of the temptation and opportunity to exercise it to the debtor’s prejudice if a purchase by the trustee or vendor, at his own sale, should be upheld. Having held that there has been no foreclosure, and it appearing that defendant Melson has acquired the property under circumstances stated by conveyance of the mortgagee, and for which he has heretofore paid nothing, so far as appears, it follows that said defendant has taken over and holds the property as mortgagee, the plaintiff having so elected to treat him, and, as such, he must account to the mortgagor for spoil and waste done upon the land which he committed or intentionally authorized. Green v. Rodman, 150 N. C., 176; Morrison v. McLeod, 37 N. C., 108 ; Jones on Mortgages (6 Ed.), sec. 1123. And the principle has been applied to the case where one, knowingly and wrongfully, sells the timber on a tract of land to a lumber company with a view and purpose of having same cut and removed. Locklear v. Paul, 163 N. C., 338, citing Dreyer v. Ming, 23 Mo., 434. The subsequent reconveyance of the land to the mortgagor by the-defendant Melson may or may not have been in accord and satisfaction of said mortgagor’s claims and demands, according to the agreement between them, and this, under a charge to which there is no exception, has been resolved by the jury against the defendant. There is no error, and the mortgage debt having been very properly deducted from the amount awarded, the judgment against the defendant is affirmed. No error.