King v. . Lewis

DeNNY, J. Tbe defendants insist tbat at tbe time tbe plaintiff and bis wife, Hettie Mae King, acquired tbe title to tbe property under consideration, tbe relationship of mortgagor and mortgagee existed between tbe plaintiff and the defendants; consequently, tbe plaintiff, A. S. King, is a trustee for bimself as mortgagee and tbe defendants as mortgagors. This position cannot be sustained. We are not inadvertent to tbe opinions of this Court, which hold tbat a mortgagor cannot buy a superior title or lien to tbat held by him; and bold it for bis own benefit, but tbe act inures to tbe benefit of him for whom he bolds as trustee. Tbe defendants are relying on Cauley v. Sutton, 150 N. C., 327, 64 S. E., 3, in which tbe Court said: “Tbe legal estate passes to the mortgagee, and be bolds it, not only in trust for bimself, but also for tbe mortgagor. McLeod v. Bullard, 86 N. C., 210-216; Capehart v. Dettrick, 91 N. C., 344. We have held tbat if be pays off an encumbrance or buys in an outstanding title superior to bis own be cannot bold it for bis own benefit, but tbe act inures to tbe benefit of him for whom be holds as trustee; and, further, ‘if be buys at a sale made under a prior mortgage be does not acquire tbe title for bis own personal benefit, but merely removes an encumbrance, and tbe charges of it as a prior lien, upon tbe property *318 itself; and this is so, because be cannot take advantage of his position to the injury of those whose interests are committed to his protection.’ Taylor v. Heggie, 83 N. C., 244. The taxes assessed were a lien upon the land, and when the mortgagee bought at the sheriff’s sale he purchased only an encumbrance, the cost of which he is entitled to have added to the debt secured by the mortgage, and it is therefore an additional lien upon the land. The mortgagee could have paid the taxes and acquired a lien upon the land to the extent of the amount so paid by him. The Code, sec. 3706 (Revisal, sec. 2858). He did not acquire the equitable estate of the mortgagor, which still exists, notwithstanding his purchase at the tax sale, and he cannot use his deed for the purpose of asserting any right in conflict with the mortgagor’s equity of redemption.” In the foregoing opinion, as well as in the cases cited therein, the Court was considering the rights of a mortgagor where the mortgagee had obtained a superior title by a tax deed or by the purchase of the interest of his mortgagor at a sale to satisfy a prior encumbrance. “It is very generally conceded that the holder of a mortgage is entitled for the protection of his interest to pay taxes assessed against the mortgaged premises in the event of failure by the mortgagor to discharge them, and that he has a right to add the sums so paid to the mortgage debt; however, all authorities agree that a mortgagee in possession cannot acquire a tax title which will prevail against the mortgagor or those claiming under him, and some courts hold that irrespective of possession a mortgagee cannot purchase the mortgaged property at a tax sale and thus acquire a title which will defeat the rights of the mortgagor, the act of purchasing at such a sale being deemed to be for the protection of the mortgage lien.” 19 R. C. L., sec. 174, p. 397. In the case of Jones v. Warren, 213 N. C., 730, 197 S. E., 599, a provision in a will, similar to that now under consideration, was construed. Prior to the exercise of the power in the will, Walter Warren, a beneficiary under the will, gave four deeds of trust on the real estate which the devisor had directed his executor to sell and to distribute the net balance to his children in accordance with the provisions of the will. After the deeds of trust had been executed and duly recorded, a judgment was docketed against the said Walter Warren. The opinion of the Court disposed of the questions involved in the following language: “We think the four deeds of trust before mentioned, which were duly recorded, from their language gave a lien on the real estate, and when sold and converted into money an equitable lien in their favor attached to same and the judgment purchased by the appellant Pollard was subject to the liens of said deeds of trust. . . . The judgment of the lower court should be sustained for the reason that the law, as interpreted by the courts of this *319 State and others, is to the effect that the deeds of trust given by Walter Warren constituted equitable assignments of his interest in the proceeds of the sale of the property described therein, and that the judgment creditors have no lien against the land.” The Court cited Ferebee v. Proctor, 19 N. C., 439, in which Ruffin, C. J., said: “If the will does not devise the land, but creates a power to sell it, then, upon the execution of the power, the purchaser is in under the will, as if his name had been inserted in it as a devisee. But, in the meantime, the land descends, and the estate is in the heir. The power is not the estate, but only an authority over it, and a legal capacity to convey it. These are elementary maxims. But it is supposed that the testator had disposed of this land by directing a sale of it absolutely, and a division of the proceeds, so as to turn it out and out, as it is called, into personalty; and that this defeated the descent. When sold, the estate of the heir will certainly be divested; but such a provision in the will is. only the creation of a power; it is a disposition of the proceeds of the land, but not a disposition of the land itself; and that consequently descends. The doctrine of conversion is purely equitable. The law knows nothing of it. A court of equity, by considering that as done which ought to he done, deals with land ordered to he sold as if it were sold. But a court of law always looks upon land as land, and has regard only to the legal title, which is unaffected by any power, whether it be a naked one, or coupled with an interest, or a trust until the power be executed.” Speed v. Perry, 167 N. C., 122, 83 S. E., 175. The defendants, by executing the mortgage deed to the plaintiff herein, did not convey any title or interest in the real estate described therein that could be sold or conveyed thereunder which would in any way affect the absolute power of sale in the will of Robert S. Atkinson. The bare legal title to the one-ninth undivided interest in said land was held by Eva King Lewis and her husband Ivy Lewis, subject to the provisions of the aforesaid will; and their interest in the real estate involved was divested upon the execution of the power in the will, and was transferred to the proceeds from the sale of the land. The mortgage deed executed by these defendants is effective as an equitable assignment of the interest of the defendants to the extent of the indebtedness secured thereby, which is in excess of the pro rata part of the proceeds to which these defendants would otherwise be entitled. Jones v. Warren, supra. The facts here are distinguishable from those in Cauley v. Sutton, supra; these defendants hold no title, legal or equitable, in the land involved which gives them the right of redemption. The judgment of the court below is Affirmed.