Skinner v. . Coward

Adams, J. It is important to note that the plaintiff seeks relief against all the respondents by a motion made before the clerk, presumably because the judgment recovered before a justice of the peace had been entered on the judgment docket of the Superior Court. The only parties to the judgment were N. R. Skinner as plaintiff and C. C. Coward as defendant. When the plaintiff made his motion he issued a notice to J. K. Worthington, and to Worthington’s two sons who had purchased the land at the foreclosure sale, to show cause why the land should not be sold to satisfy the judgment. This notice did not make them parties to the original action. Afterward he issued a notice to N. W. Clark, mortgagee, to show cause why the plaintiff’s judgment against Coward should not be paid out of the excess remaining after liquidation of the-mortgage debt. The question raised by the appeal is whether the plaintiff is entitled to relief against the respondents or any of them in this proceeding. *469 First, then, as to Clark: As Coward’s mortgagee be was also a trustee for the two-fold purpose of securing payment of the mortgage debt and of accounting for the excess to the mortgagor. Kornegay v. Spicer, 76 N. C., 95; Vick v. Smith, 83 N. C., 80; Bobbitt v. Stanton, 120 N. C., 253. But he assigned and transferred the note and mortgage to the Bank of Craven and the bank thereby became the owner. It became also a trustee. When the sale was made under the terms of the mortgage the deed was executed by Clark and by the bank. There is no finding that the purchase money was paid to Clark. We cannot assume that payment was made to him, because after the assignment he had no pecuniary interest in the proceeds. In the absence of a finding or admission that the money was paid to him we do not perceive how he can be liable to the plaintiff for the excess. But suppose he received the money; he would not be liable to the plaintiff for nonpayment of the excess for the reason that he had neither actual nor constructive knowledge of the plaintiff’s judgment. He was under no obligation as mortgagee to examine the records for subsequent encumbrances before paying the surplus to the mortgagor in accordance with the terms of the mortgage. Norman v. Hallsey, 132 N. C., 6; Barrett v. Barnes, 186 N. C., 154; Jones on Mortgages (7 ed.), sec. 1930. The notice was served on Clark more than seven years after the sale had been made and the deed had been executed to the purchasers; meantime if he received the money he is presumed to have discharged his obligation to pay the surplus to the mortgagor or to the owner of the equity of redemption. 22 C. J., 146, sec. 82. It is therefore contended that the plaintiff’s claim against Clark is without merit. As to the purchasers it is apparent that they were strangers to the plaintiff’s judgment; that between him and them no contractual relation existed; and that J. K. Worthington’s assumption of the mortgage debt, or his failure to pay it, did not make him liable to the plaintiff as a subsequent judgment creditor. The sale under the first mortgage conveyed title to the purchasers, leaving the plaintiff to seek relief by an appropriate method for subjecting the surplus to the payment of his claim. But the plaintiff has not chosen the appropriate remedy; he should have sought relief, not by a motion before the clerk, but by an action brought in the Superior Court in which all who were interested in the fund could have been made parties and given an opportunity to be heard. This procedure is discussed and clearly determined and approved in Norman v. Hallsey, supra. It is only by an independent action that the points raised in the appellant’s brief could finally be settled. The judgment dismissing the proceeding is Affirmed.