Hardy v. . Abdallah

Stacy, C. J. The parties to the present proceeding, having a question in difference which might properly become the subject of a civil action, have submitted the same for determination without action, upon an agreed statement of facts as authorized by C. S., 626. The question to be determined is whether a purchase-money deed of trust, covering real estate presently acquired by grant, signed by a married woman who is living with her husband, and in which the husband does not join, and the privy examination of the feme covert is not taken, is superior to the lien of a subsequent deed of trust on the same property, duly executed by the married woman and her husband, and in' which .it is recited in the warranty clause that the said land “is free and clear of all encumbrances, except one note for purchase money due 1922.” His Honor was of the opinion, and so held, that the purchase-money deed of trust is void and that the lien created by the duly executed deed of trust, though registered after the first paper-writing, is superior thereto. In this, we think his judgment is supported by the decisions in Stallings v. Walker, 176 N. C., 321, and Piano Co. v. Spruill, 150 N. C., 168. The facts are that on 21 November, 1919, Mrs. Ludie S. Huggins, a married woman living with her husband, purchased a tract of land from one J. T. Taylor, and, upon receipt of deed, immediately delivered back to her grantor a paper-writing purporting to be a deed of trust, made to the Rouse Banking Company, trustee, and given'to secure the payment of two notes, due two and three years thereafter respectively, and representing the balance of the purchase price of said land. This paper-writing, purporting to be a deed of trust, was signed and acknowledged by Mrs. Huggins, but without any privy examination on her part and without the written assent of her husband. The instrument was filed for registration in the office of the register of deeds for Lenoir County on 29 November, 1919. Thereafter, on 21 May, 1921, Mrs. Huggins and her husband, being-indebted to J. A. Jones in the sum of $367.30, as evidenced by their promissory note, duly executed and delivered to H. E. Shaw, trustee, a *47 deed of trust on the same property to secure tbe payment of said note at maturity. In tbe warranty clause of tbis instrument it is stated that tbe land “is free and clear of all encumbrances, except one note for purchase money due 1922.” Tbe plaintiff, H. F. Hardy, is tbe bolder, by assignment, of tbe notes given by Mrs. Ludie S. Huggins to J. T. Taylor; while tbe defendant is tbe bolder, by assignment, of tbe note given by Mrs. Ludie S. Huggins and her husband to J. A. Jones. Tbe property has been sold under tbe second deed of trust, or tbe one given to secure tbe payment of tbe Jones note of $367.30, and tbe funds arising therefrom are insufficient to pay tbe notes held by plaintiff and tbe one held by tbe defendant. Who is entitled to priority of payment out of tbe funds, tbe plaintiff or tbe defendant? This is the question to be decided. Tbe first paper-writing, signed and acknowledged by Mrs. Huggins, purporting to be a deed of trust charging her real estate for tbe security of a debt, is void, it appearing that she was living with her husband at tbe time who did not join her in tbe deed as required by Art. X, sec. 6, of tbe Constitution and C. S., 997, nor was her privy examination taken as required by tbe statute just mentioned. Foster v. Williams, 182 N. C., 632; Smith v. Ingram, 130 N. C., 100; Scott v. Battle, 85 N. C., 184. True, it has been held that where a mortgage or deed of trust is invalid, by reason of some defect in its execution, still tbe same may be recognized by a subsequent.mortgage or deed of trust, duly executed in manner and form as required by law, when it appears that tbe latter agreement was made subject to tbe former, and sufficient reference is made therein to amount to a ratification and adoption of tbe prior agreement. Bank v. Smith, 186 N. C., 635; Brasfield v. Powell, 117 N. C., 140; Ward v. Anderson, 111 N. C., 115; Hinton v. Leigh, 102 N. C., 28. Tbis upon tbe principle that tbe binding force and effect of tbe defective or void instrument is derived from tbe subsequent agreement, made subject thereto and in recognition and adoption of it as a valid contract, thus meeting tbe requirements of tbe statute of frauds, and that tbe parties claiming under tbe second instrument are estopped to deny tbe validity of tbe first as their title vested subject to it. Fort v. Allen, 110 N. C., 183; Gibson v. Lyon, 115 U. S., 439; Price v. Hart, 29 Mo., 171; Crooks v. Douglass, 56 Pa. St., 51. See, also, Sills v. Bethea, 178 N. C., 315. It has also been held that a mere reference to a prior encumbrance, not amounting to a ratification or adoption of it, and where tbe second is not made .subject to the first, except as it may comply with tbe *48 requirements of tbe registration laws, tbe defective or void instrument is not thereby given any binding force and effect. Blacknall v. Hancock, 182 N. C., 369; Piano Co. v. Spruill, 150 N. C., 168. Tbe present case comes squarely witbin tbe meaning and purpose of these early named decisions, and tbe judgment must be upheld on authority of Piano Co. v. Spruill, supra. Affirmed.