Merchants Bank & Trust Co. of Winston-Salem v. Watson

Clarkson, J. On all the evidence, Thomas Maslin, the agent of plaintiff, when he had calculated the entire indebtedness of E. E. Matthews, which was a lien on the property, bid at the sale $4,035, the amount of the indebtedness, and he in good faith thought that he was getting a clear title. If he at the time of the sale had had an understanding and agreement, and it was so announced at the sale by T. W. Watson, trustee, that the highest bidder was to get a clear title, free from encumbrances, and he bid -$4,035 with that understanding and agreement with the defendant Watson, then there would be no doubt that Watson, the trustee, would'have to pay off the liens, including the street assessment. Mr. Maslin, president of the plaintiff bank, in his testimony says: “I paid Mr. Watson $4,035. In paying ‘that amount, I intended it to be applied according to the way I. had figured up, which included building and loan debt, State and county taxes, bitulithic assessment, trustee’s commissions, advertising, auctioneer’s fees, and all those incidentals that go in to make a sale.” Then again he said: “When we paid the money representing the amount of our bid to Mr. Watson, trustee, I did not say anything to him about how we expected it to be used; and while I say I paid it to him with that intention and purpose of having it used in a certain way, I did not disclose to him that intention or purpose.” From the evidence, the minds of Mr. Maslin and Mr. Watson did not meet, and there was no contract. Overall Co. v. Holmes, 186 N. C., p. 428. Under the statute (chapter 56, section 9, Public Laws 1915) the street assessment, “From, the time of such confirmation, the assessment embraced in the assignment roll shall be a lien on the real property against which the same are assessed, superior to all other liens and encumbrances." Kinston v. R. R., 183 N. C., 14. The statute says that the street assessment “shall be a lien on the real property.” T. W. Watson, trustee for the Winston-Salem Building and *112 Loan Association, sold the land that R. E. Matthews had an equity of redemption in, under the terms of the deed in trust. It was purchased by Mr. Maslin, agent for plaintiff, for $4,035. When sold, no agreement was made to pay out of the purchase money the street assessment, a superior first lien and statutory charge on the land. Under the law, nothing else appearing, the land was sold subject to the street assessment. The trustee, after paying the building and loan debt and other legal expenses and encumbrances, paid the surplus into the office of the clerk of the Superior Court for Forsyth County. (C. S., 2892.) In Barrett v. Barnes, 186 N. C., p. 154, it was said: “ ‘A mortgagee who sells under the mortgage is not liable to a subsequent mortgagee or judgment creditor for the surplus unless he has actual notice thereof.’ (Italics ours.) Norman v. Hallsey, 132 N. C., 6. ‘A sale of land' under an execution on a junior judgment passes the title to the purchaser encumbered with the lien of prior docketed judgments; but where the sale is made upon execution on the senior judgment the title passes to the purchaser unencumbered; and the lien of any junior docketed judgments is transferred to the fund arising from the sale; and it is the duty of the officer making the sale to apply it to the satisfaction of the several judgments in the order of their priority, whether he has executions in his hands or not.’ Gambrill v. Wilcox, 111 N. C., 42. Clark, C. J., in Gammon v. Johnson, 126 N. C., 64, says: ‘In general, all encumbrances, whether prior or subsequent encumbrances, as well as the mortgagor, should be parties to a proceeding for foreclosure, and judgment creditors as well as mortgagees/ (Italics ours.) Jones v. Williams, 155 N. C., 179, is not in conflict, under the facts in this case.” “Where the sale is made on foreclosure of a junior mortgage or trust deed, the purchaser does not acquire an absolute title, but only the mortgagor’s equity of redemption — that is, he takes subject to the elder lien. But, on the other hand, the foreclosure of a senior mortgage will cut off junior liens or encumbrances.” 27 Cyc., p. 1491; Bobbitt v. Stanton, 120 N. C., 253. We think that the assumption of the street assessment — statutory lien on the land — by R. E. Matthews, a subsequent purchaser of the land, created an obligation on the part of Matthews to pay it. He agreed to pay it, and it was a valid claim against him. Baber v. Hanie, 163 N. C., 588; Parlier v. Miller, 186 N. C., p. 501. This principle does not apply in this case. The property in question was sold subject to the street assessment. It was not sold otherwise. The city’s lien still attaches to the property and not to the funds derived from a sale under the deed of trust. Hence the purchaser of the property should pay the city’s claim, and not the estate of R. E. Matthews, deceased. *113 True, Matthews agreed with bis grantor to assume and to pay off this street assessment. But tbe specific property upon wbicb tbe city still bas a lien was sold subject to tbe city’s claim. Tbe purchaser, therefore, is liable for tbe assessment, or rather tbe property in tbe bands of tbe purchaser. Tbe obligation of Matthews to pay tbe assessment was passed on to tbe purchaser when tbe property was sold subject to tbe lien. Tbe judgment of nonsuit is Affirmed.