Boyd v. Bristol Typewriter Co.

ClakesoN, J. One of tbe most important acts ever enacted to quiet titles is known as tbe “Connor Act,” passed in 1885, C. S., 3309, in part, is as follows: “No conveyance of land, or contract to convey, or lease of land for more than three years shall be valid to pass any property, as against creditors or purchasers for a valuable consideration, from tbe donor, bargainor or lessor, but from tbe registration thereof within tbe county where tbe land lies,” etc. O. S., 3311, is as follows: “No deed of trust or mortgage for real or personal estate shall be valid at law to pass any property as against creditors or purchasers for a valuable consideration from tbe donor, bargainor or mortgagor, but from tbe registration of such deed of trust or mortgage in tbe county where tbe land lies; or in case of personal estate, where tbe donor, bargainor or mortgagor resides; or in case tbe donor, bargainor or mortgagor resides out of tbe State, then in tbe county where tbe said personal estate, or some part of tbe same, is situated; or in case of cboses in action, where tbe donee, bargainee or mortgagee resides. For tbe purposes mentioned in this section tbe principal place of business of a domestic corporation is its residence.” O. S., 614, in part, is as follows: “Upon filing a judgment roll upon a judgment affecting tbe title of real property, or directing in whole or in part tbe payment of money, it shall be docketed on the judgment docket of tbe Superior Court of tbe county where tbe judgment roll was filed, and may be docketed on tbe judgment docket of tbe Superior Court *798 of any other county upon the filing with the clerk thereof a transcript of the original docket, and is a lien on the real property in the county where the same is docketed of every person against whom any such judgment is rendered, and which he has at the time of the docketing thereof in the county in which such real property is situated, or which he acquires at any time thereafter, for ten years from the date of the rendition of the judgment,” etc. The statutes quoted are the ones that concern us in this controversy. W. S. Whiting owned 1766 acres of land in Watauga County of the average value of $25 an acre. On 12 October, 1918, W. S. Whiting and wife executed a deed of trust on this land to G-. M. Sudderth, trustee, to secure B. B. Dougherty and five others as accommodation endorsers on five notes for $5,000 each. The deed in trust was recorded in the register of deeds office for Watauga County, 13 November, 1918. W. S. Whiting and wife conveyed by deed to Florence E. Boyd, the plaintiff, on 13 September, 1919, at the price of $25 an acre, 260% acres of the 1766 acres of land that the above lien-was on. The deed to this land was recorded in Watauga County on 22 November, 1922. The defendant obtained a judgment against W. S. Whiting, which was docketed in the Superior Court of Watauga County, 13 November, 1922, for the sum of $328.85 and interest. Nothing else appearing, the judgment of defendant against W. S. Whiting having been docketed some nine days before the deed of Whiting to plaintiff would take priority over plaintiff’s deed. Eaton v. Doub, ante, 14. This priority is given by virtue of the statutes before mentioned. This Court has rigidly upheld the registration acts — a hard holding-in the Eaton case, but necessary to the safe conduct of business. It makes no difference how full and formal the notice is, actual or otherwise, it will not supply the place of registration. Trust Co. v. Sterchie, 169 N. C., 21; Davis v. Robinson, 189 N. C., 601; Saleeby v. Brown, ante, 138; Trust Co. v. Currie, ante, 260. The question now to be considered is whether those salutary cases can be differentiated from the present case. When W. S. Whiting and wife made the deed in trust to G-. M. Sudderth, trustee, .to secure Dougherty and others, the following provision was inserted in the trust deed: “Provided, that as said land is sold from time to.time, with the approval of said trustee, the proceeds shall be applied pro rata to the payment of said notes and the accrued interest thereon.” Whiting made a deed to plaintiff for 260% acres for $25 an acre, on 13 September, 1919, part of the 1766 acres. This deed was placed in escrow with G-. M. Sudderth, trustee. Sudderth was trustee in the deed in trust on the 1766 acres of land made by Whiting to secure Dougherty and the other endorsers. This *799 land, bad to be sold with the “approval” of Sudderth, the trustee. Sud-derth did not join in the deed to plaintiff and the same was not sold at public sale under the power contained in the trust. The money that was paid on the land by plaintiff was paid to Sudderth who paid it on the notes Dougherty and others were endorsers on. Plaintiff paid Sudderth $1,000 in cash, later $2,000 more before the Whiting deed to plaintiff was registered. The balance of the purchase money, $3,833.33, was paid since the deed was registered and since the docketing of the judgment of defendant against Whiting. Whiting was adjudged a bankrupt in 1924. Dougherty and others paid nothing by reason of their endorsement, but the indebtedness the notes secured by deed in trust to Sudderth, trustee, have been fully paid and satisfied. The deed in trust by Whiting and wife to Sudderth, trustee, was at the date of the institution of this action and now is uncaneeled of record. The sale of the land was with the approval of Sudderth, trustee. In Ijames v. Gaither, 93 N. C., 361, it is held: “When a mortgage or deed of trust is registered upon a proper probate, it is held to have the effect of notice to all the world and attaches itself to the legal estate, and is notice to a subsequent purchaser from the mortgagor. Flemming v. Burgin, 2 Ired. Eq., 584; Leggett v. Bullock, Busb., 283; Robinson v. Willoughby, 70 N. C., 358.” Collins v. Davis, 132 N. C., 106; Dill v. Reynolds, 186 N. C., 293; Bank v. Smith, 186 N. C., 642. This brings us to construe the rights of the plaintiff under the proviso in the deed in trust from Whiting to Sudderth, trustee, to secure Dougherty and others. We think the clear language and intention was that when Whiting sold any of the land from time to time as expressed in the proviso, the money was to be applied on the Dougherty and others note, and this sale must be made with the approval of Sudderth, trustee. This approval, the clear intent, accepted and customary business methods in such eases, was for the trustee to join in the conveyance with Whiting to plaintiff, so she could obtain a good title free from the lien of the deed in trust — frequently the cestui que trust. Dougherty, the other endorsers, and any that hold the notes join in. In the present case, the power is given Sudderth, the trustee — his approval. A conveyance of an interest in land must be in writing. Sudderth, trustee, received the purchase price, applied it in accordance with the proviso in the deed in trust, but has failed to carry out the further trust to join in the Whiting deed to plaintiff and convey the land for which he received the purchase money. Defendant had record notice that this deed in trust, with the proviso in it, was uncanceled of record. In a court of equity — a court of conscience, where justice is administered— Sudderth, trustee, had plaintiff’s money under the terms of the trust— $3,000 purchase money — before defendant’s judgment was taken. *800 In the present case, the real transaction — -the purchase of the land— was through Sudderth, trustee. He received the purchase money and, under the proviso, applied it on the Dougherty and others notes, but has failed to make title to plaintiff. The defendant, under the proviso, and the facts and circumstances of this case, had the mere naked title. The transaction was all in good faith. In Johnston v. Lemond, 109 N. C., p. 651, under similar facts, Merri-mon, O. J., said: “He did not, and could not under the circumstances, buy it from the mortgagor — he could only buy it effectually from the mortgagee, and that he did, because the latter gave his assent and his consent to the arrangement as effectually as if he had originated it. If the title had revested in the mortgagor under misapprehension, it might be that the lien of the docketed judgment would have attached, as contended by the plaintiff. But there was no evidence to prove that it did revest for an instant, or at all.” We do not think the case of Tarboro v. Micks, 118 N. C., 162, applicable here. In that case the mortgage was canceled of record. The proviso in the deed of trust in the present case made the trustee practically the vendor. The money was paid by plaintiff, not to the debtor Whiting, but to the trustee, Sudderth. Plaintiff could not get a title except through Sudderth. Nor are the other cases cited by defendant applicable under the facts here: Bostic v. Young, 116 N. C., 766; Journal Publishing Co. v. Barber, 165 N. C., 478; Realty Co. v. Carter, 170 N. C., 5; Joyner v. Reflector Co., 176 N. C., 274. Sudderth, trustee, under the proviso, in consideration of having received the $3,000 purchase money must convey and release the'title he has to plaintiff and her heirs and assigns. We cannot see how the subsequent payments, balance of purchase money paid on the land, under the findings of fact, enures to the benefit of defendant. After the trustee conveys to plaintiff, as his trust will then be completed, the deed in trust should be canceled. Defendant’s judgment being a cloud on plaintiff’s title, should be canceled so far as plaintiff is concerned. It appears from the record that the findings of fact by the judge below are taken from certain judgments that show that Sudderth, the trustee, is a party to the action. In conformity to this opinion, he is required to make title as herein set forth, and defendant is ordered to cancel its judgment so far as plaintiff’s title is involved — same being a cloud on the title. It may be noted that a material finding of fact by consent was added after the learned judge in the court below rendered his decision. The judgment below is Reversed.