In Re Sale of E. Hollowell Land Ex Rel. Southern Trust Co.

Adams, J. On 1 October, 1923, E. Hollowell and his wife executed and delivered to the Southern Trust Company, as trustee, a deed of trust on certain property to secure a note for $1,235.30, providing that after paying all expenses attending the execution of the trust, including a commission on the proceeds of the sale at the rate of 5 per cent, *223 the trustee should, pay the secured debt and should deliver the remainder of the proceeds, if any, to the grantors or their assigns. After due advertisement the trustee offered the property for sale on 30 December, 1926, and D. M. Warren became the last and highest bidder therefor at the price of $3,000. On 7 January, 1927, the bid was raised and a resale was ordered by the clerk. The second sale was made on 24 January, 1927, D. M. Warren again making the highest bid, which was $3,475. The clerk confirmed the sale on 5 February, 1927. The trustee thereafter made his deed to the purchaser and filed his account showing payment of the secured note ($1,235.30) and other disbursements, the retention of a commission of 5 per cent on the proceeds of the sale, and the payment to the clerk of $1,965.90. On 28 January, 1927, E. Hollo-well confessed judgment in favor of the Bank of Edenton for $345.69 and costs, waived all claims to exemptions, and requested the clerk to pay over to his creditors any part of the proceeds to which he was entitled. The judgment was docketed in the Superior Court. Certain judgments and mortgages which had priority were paid and the remainder was not sufficient to satisfy the amount due the Bank of. Eden-ton. The bank made a motion before the clerk to reform the trustee’s account by allowing a commission only on the amount secured by the deed of trust. The motion was denied, and on appeal the judge affirmed the judgment of the clerk and taxed the Bank of Edenton with payment of the cost. Whether there was error in allowing the commission is the point raised by the appeal. Among the cases in which the question is discussed is Howell v. Pool, 92 N. C., 450. Howell borrowed of the defendant $2,500, gave his bond therefor, to be due twelve months after date, bearing interest at 8 per cent, payable semi-annually, and executed a mortgage signed by his wife conveying to the defendant as security a lot in the city of Ealeigh and vesting in the mortgagee a power of sale in ease of default. Following stipulations for the mortgagor’s payment of taxes and for insurance against loss by fire was the following clause: “And out of the moneys arising from such sale to retain the principal and interest which shall then be due on said mortgage, together with all costs and charges, including a commission of 5 per cent for making such sale.” The debt was not paid at maturity and the mortgagee advertised the property. The plaintiff brought suit to enjoin the sale, setting up usury, defect in the notice of sale, together with other matters, and attacking the clause providing for the mortgagee’s compensation. In reference to this clause the Court said: “As the matter has now passed under the jurisdiction of the court, and the sale, if necessary, will be conducted by a commissioner under its supervision, the inquiry as to the effect of this clause *224 of tbe deed is immaterial, as tbe court will make sucb allowance as it deems reasonable and adequate for tbe service rendered. . . . There can be no litigation about tbe provision for compensation to tbe mortgagee for making tbe sale, since it will be made, if at all, under tbe direction of tbe court by one of its own appointees, for whose services allowance may be made by tbe court.” In Banking Co. v. Leach, 169 N. C., 706, it was held that in tbe absence of any sucb element as usury, fraud, undue influence, or oppression tbe courts have no jurisdiction to set aside tbe written agreement of tbe parties as to tbe trustee’s compensation when tbe sale is made under tbe power conferred in tbe deed of trust without any order or direction of tbe court. Tbe appellant cites Pringle v. Loan Asso., 182 N. C., 316, as an expression of this Court’s opinion that tbe statute (C. S., 2591) was intended to limit tbe compensation of tbe trustee to a commission on tbe amount collected and paid on tbe secured debt, in analogy to tbe sale by a sheriff under execution or by an administrator under a decree to make assets. Tbe question, however, was not presented for decision, and tbe dictum or suggestion referred to seems not to be in accord on this point either with Howell v. Pool, supra, or with Banking Co. v. Leach, supra. In tbe decision appear these two statements: (1) “In tbe present case tbe matter being before tbe clerk under C. S., 2591, by virtue of tbe order of sale made by him, we are of opinion that these charges can be assessed by tbe clerk, subject to review on appeal, or by tbe judge in this proceeding, as in Fry v. Graham, supra.” (2) “Tbe decisions upon tbe right of tbe commissioner to commissions on a sale under a decree of foreclosure is applicable in these cases,” i. e., to sales by a mortgagee or trustee under a power of sale on a raised bid. Tbe “charges” referred to in tbe first proposition were an allowance to tbe trustee for time; labor, services, and expenses, not including tbe stipulated commission, because upon tender of tbe amount due on tbe note and tbe cost of advertising, tbe sale bad been enjoined. Smith v. Frazier, 119 N. C., 157. In tbe case at bar tbe trustee, pursuant to an order of resale, sold tbe property and executed bis deed to tbe pur-' chaser. There was therefore no occasion for an allowance of “charges,” as if settlement between tbe parties bad been brought about pending tbe controversy and no sale of tbe property bad been made. But tbe statute provides that after final sale of tbe land and tbe trustee’s conveyance of title to tbe purchaser, tbe clerk shall make all sucb orders as may be just and necessary to safeguard tbe interest of all parties, and be shall keep a record which shall show in detail tbe amount of each bid, tbe purchase price, and tbe final settlement between tbe parties. C. S., *225 2591. In Pringle's case tbe Court, in an opinion written by Ciarle, C. J., construed tbis statute as importing tbat tbe condition of a mortgagor wbo bas executed a mortgage with a power of sale is assimilated to tbe condition of property sold under a decree of foreclosure so far as tbe clerk’s right to set aside tbe bid at tbe first sale and to order a resale is concerned, and as stated above tbat tbe right to commissions is to be determined in such instance by decisions regulating commissions on a sale by virtue of a decree of foreclosure. Under tbis interpretation tbe principle in Howell v. Pool, supra, applied, and tbe clerk bad jurisdiction to allow such commissions as were reasonable and adequate for tbe service rendered. In effect be allowed tbe trustee a commission of 5 per cent on tbe proceeds, and on appeal tbe judge found as a fact tbat tbis amount, less certain payments made by tbe trustee, was a reasonable compensation. For tbis reason tbe judgment should be affirmed. As to tbe appellant, tbe result would be tbe same if tbe transaction were treated as a sale under tbe express agreement of tbe parties as to tbe compensation to be given tbe trustee. Affirmed.