Dameron v. . Carpenter

Varser, J. In addition to tbe facts in this judgment it appears from tbe affidavit and complaint of tbe plaintiffs and tbe answer thereto by defendants, Carpenter and Fuller, that Carpenter does not deny, and Fuller admits, that 28 June, 1924, and prior to bis assignment of the" McLean mortgage to Carpenter, that plaintiffs offered to pay tbe mortgage indebtedness to Fuller by offering to credit oh tbe Fuller note held by plaintiffs tbe amount of tbe McLean note, and Fuller refused to accept this obligation in payment. Tbe alleged reason for such refusal is that tbe McLean note was in fact tbe property of a bank. For the purpose of discharging tbe lands described in tbe mortgage, now owned by plaintiffs, upon these facts, tbe plaintiffs are entitled to have tbe McLean note and mortgage canceled. There is a mutuality of indebtedness quoad tbe land mortgaged. Tbe plaintiffs, purchasers, are entitled to all tbe rights, titles and equities of their grantor, McLean, including tbe right to pay off tbe indebtedness according to tbe terms of tbe mortgage, and thereby clear their title. Baker v. Bishop Hill Colony, 45 Ill., 264; Schoffner v. Fogleman, 60 N. C., 564. Equity sub-rogates tbe purchaser of tbe equity redemption to tbe rights of tbe mortgagor to. clear tbe title and procure tbe legal estate only as to tbe mortgaged premises, and no further. This is sufficient to permit him to set off debts due him by tbe mortgagee against tbe mortgage debt. Harrison v. Bray, 92 N. C., 488. There is no practical pertinency in tbe distinction between legal and equitable set-offs in tbe case at bar, since *598 both law and equity are administered in tbe same Court. Shoffner v. Fogleman, supra. A set-off is in tbe nature of a payment or credit wben tbe debts are mutual. Battle v. Thompson, 65 N. C., 406; Lindsay v. King, 23 N. C., 401; Worth v. Fentress, 12 N. C., 419. Set-off exists in mutual debts, independent of tbe statute of set-off. Its flexible character is used in equity to prevent injustice. Bank v. Armstrong, 15 N. C., 519; Jones v. Gilreath, 28 N. C., 339; Walton v. McKesson, 64 N. C., 154; Hodgin v. Bank, 124 N. C., 542; Hodgin v. Bank, 125 N. C., 508; Fertilizer Co. v. Lane, 173 N. C., 184; Moore v. Trust Co., 178 N. C., 128. In Cavendish v. Geaves, 24 Beav., 163, 53 English Rep., 319, Sir John Bomilly sets out tbe doctrine of set-off in assignable cboses in action, with always tbe requirement of notice to tbe debtor in tbe chose assigned so as to complete tbe right of set-off. That exists in tbe case at bar. The assignment to Carpenter followed on tbe heels of tbe demand by plaintiffs to set off and cancel tbe McLean note. Carpenter knew nothing of this demand, and bad no actual knowledge of plaintiffs’ equity, but be took, after the demand, a past-due note, and, therefore, bis taking is subject to all tbe equities in favor of plaintiffs. Tbe fact that tbe Fuller-McLean note is secured, makes no difference. When tbe debt is paid tbe security fails. Tbe security lives no longer than tbe debt which gives it life. Poston v. Rose, 87 N. C., 279; Lumber Co. v. McPherson, 133 N. C., 290; Stephens v. Turlington, 186 N. C., 191; Porter v. Millett, 9 Mass., 101. Tbe record contains what purports to be a verdict in tbe case of Dameron and Ormond v. Fuller, finding that tbe defendant is indebted to tbe plaintiffs in tbe sum of $734.40 with interest from 15 August, 1917, and that tbe plaintiffs did not have tbe right to pay off tbe mortgage on these lots by crediting same on tbe Fuller unsecured note, and that tbe assignee of tbe McLean note acquired title to tbe mortgage and note under tbe assignment 28 June, 1924. This verdict is recited to be in tbe one case against Fuller, while tbe judgment appealed from is in tbe consolidated cause. ¥e cannot reconcile tbe verdict with tbe findings by consent in tbe judgment rendered by Stack, J. Evidently tbe parties superseded tbe findings of tbe jury in the- one case with tbe consolidation and tbe findings of facts by Stack, J. Tbe record is not satisfactory, and we have interpreted tbe record in tbe only way appearing to us. In vacating tbe injunction against a sale under tbe McLean mortgage and in a denial of plaintiffs’ right to credit tbe McLean note on tbe Fuller note and thereby pay off tbe same there was Error.