Winborne v. . Guy

Barnhill, J. Does the agreement between the parties create an equitable lien upon the real property therein described ? If so, plaintiff’s remedy is by an action to foreclose. There is more than one method of creating an equitable lien. Here, however, we are interested only in the law relating to the creation of such liens by written contract. Therefore, we may confine ourselves to that particular phase of the subject. An equitable lien is not an estate or property in the thing itself, nor a right to recover the thing; that is, a right which may be the basis of a possessory action. It is neither a jus ad rem nor a jus in re. 17 R. C. L., 603, sec. 12; 1 Pomeroy, Eq. Jur., 219, sec. 165; Garrison v. Vermont Mills, 152 N. C., 643, 68 S. E., 142; Arnold v. Porter, 122 N. C., 242. Thus it is distinguished from a mortgage. “In equity, any agreement in writing, however informal, made by the owner of land, upon a valid consideration, by which an intention is shown that the land shall be security for the payment of money by him, creates an equitable lien upon the land. Such an informal instrument or contract, by which the owner of land agrees or undertakes to secure his creditor upon the land, is ordinarily referred to as an ‘equitable mortgage,’ an expression which originated in the consideration that a transaction of this character, while absolutely ineffective at law, as not involving a transfer of the legal title, was effective in equity for the purpose for which a legal mortgage was ordinarily utilized, to secure the payment of money.” 5 Tiffany, Eeal Property (3d), 659, sec. 1653; 4 Pomeroy, Eq. Jur., 696, sec. 1235. It is created by a written agreement to appropriate specific property to the discharge of a particular debt. 9 Thompson, Eeal Property, 197, sec. 4825. The doctrine may be stated in its most general form, that every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to make some particular property, real or personal, or fund, therein described or identified, a security for a debt *132 or other obligation, or whereby the party promises to convey or assign or -transfer the property as security, creates an equitable lien upon the property so indicated, which is enforceable against the property in the hands not only of the original contractor, but of his heirs, administrators, executors, voluntary assignees and purchasers or encumbrancers with notice. 4 Pomeroy, Eq. Jur. (5th), 696, sec. 1235; Cuppenheimer & Co. v. Mornin, 101 A. L. R., 75. It is well established that an agreement in writing to appropriate specific property to the discharge of a particular debt, or an instrument intended to be a mortgage, creates an equitable mortgage. The form of the instrument is not conclusive against either party. When the plain intent of the contract is shown by the instrument, aided by the surrounding facts and circumstances, equity will decree that the instrument is an equitable mortgage. Parry v. Reinertson, 63 A. L. R., 1051, 41 C. J., 293. Where there is an intention coupled with a power to create a charge on property, equity will enforce such charge against all except those having a superior claim. Such liens are simply a right of a special nature over the thing which constitutes a charge or encumbrance upon the thing itself. 4 Pomeroy, Eq. Jur. (5th), 692, sec. 1233; Ketchem v. St. Louis, 101 U. S., 306, 25 L. Ed., 999; Garrison v. Vermont Mills, supra. See also Fert. Works v. Newbern, 210 N. C., 9, 185 S. E., 471; and Godwin v. Bank, 145, N. C., 320. Applying these principles to the case in hand we are led to the conclusion that the agreement between the parties creates an equitable lien on the locus in quo. The contract is in writing. It sufficiently describes the home place, sets forth the debt and expresses the intent of the parties that the debt “shall be paid” out of the proceeds of the realty. Jackson v. Carswell, 34 Ga., 279. Thus it appears that the agreement effectively pledges the land as security for the payment of the debt. It was executed and delivered in compliance with and in furtherance of the wish expressed in the will of the defendants’ ancestor through whom they derive title. It creates an equitable lien upon the home place as security for the payment of the debt therein specified. 33 Am. Jur., 429. The will itself acknowledges the debt which is the consideration of the contract and directs its payment in language sufficient to create a charge thereon. To that end the remainder, was not devised but was left as an undevised asset for the discharge of this obligation. It is apparent on the face of the agreement that its very purpose was to avoid the sale of the remainder, with its attendant disadvantages, before the expiration of the life estate, except with the consent and joinder of the life tenant. Lapse of considerable time was contemplated. *133 To guard against this and to prevent a loss of the creditor’s right by reason thereof, defendants expressly agreed not to plead any statute of limitations. On this record it cannot be said that plaintiff has been guilty of such laches as would bar his right to proceed in equity. Defendants’ desire to hold the home place intact during the life of their mother to the end that she might have a home undisturbed by a sale to make assets was commendable. The creditor co-operated on the terms set out in the agreement. Now that the motivating purpose of the agreement has been accomplished, they are called upon to comply with their end of the bargain. This they must do. The obligation created by the agreement was substituted for the creditor’s remedy against the land under the will and the law covering estates. Plaintiff must now proceed against defendants individually in a civil action rather than in the probate court. He has no other adequate remedy. A suit in equity to foreclose is the proper remedy. “A charge of . . . some specific sum upon land is usually enforceable in equity alone. . . . And the mode of enforcement is ordinarily by means of a decree for the sale of the land, and payment of the amount of the charge from the proceeds of the sale.” 5 Tiffany, Real Property (3d), 657, sec. 1652; 4 Pomeroy, Eq. Jur. (5th), 692, sec. 1233; Ketchem v. St. Louis, supra; Garrison v. Vermont Mills, supra. It is settled beyond question that a court of equity is the appropriate tribunal for the enforcement of an equitable, as distinguished from a statutory or common law, lien. 17 R. C. L., 614. There was error in the judgment below sustaining the demurrer. It must be Reversed. 'WiNBORNE, J., took no part in the consideration or decision of this case.