Brett v. . Davenport

Hoke, J., after stating the case: As we understand it, the demand of plaintiffs proceeds upon the theory that the defendant trustee, and the bank, as his aider and abettor, should be held responsible in damages for a breach of trust, in failing to collect or making any endeavor to collect the bids obtained at the first sale; but we are aware of no principle that would justify or sustain such a recovery. The trustee, in effect, offered for sale an unencumbered title, and the instrument under which he was acting, in itself, conferred upon him no such power. *59 Authority (certainly th$ decided weight of authority) is to the effect" that, except with the consent of the senior mortgagee and of the mortgagor, and perhaps subsequent encumbrances,- or by their ratification, a trustee in a deed of this character, a second mortgage with power of sale, can only sell the interest conveyed to him and which he is authorized to sell by the terms of the instrument under which he is acting. Dearnelly v. Chase, 136 Mass., 288; Donohue v. Clare, 130 Mass., 137; Jones on Mortgages (6th Ed.), sec. 1853. And even if the offer could be made good as to the prior encumbrancer by paying him off, the mortgagor and subsequent judgment creditors having interfered to prevent this by demanding the entire proceeds of the first sale over and above the amount required to pay the defendant’s debt, the trustee, on such objection, was not in a position to comply with the terms of his own proposition, and the bid made was no longer a binding and enforcible obligation. Jones on Mortgages, sec. 1903; Mayer v. Adrian, 77 N. C., 83. Again, it appears that at the time of the first sale, or attempted sale, the property had not been advertised “according to law or as required by the terms of the deed of trust under which he had sold”; and on such facts it is very generally held, uniformly, so far as we have examined, that a sale would have been invalid. In an instrument of this kind the law is that a statutory requirement or contract stipulation in regard to notice is of the substahce, and unless complied with a sale is ineffective as a foreclosure, and even when consummated by deed the conveyance only operates to pass the legal title, subject to certain equitable rights in the purchaser, as of subrogation, etc., in case he has paid the purchase money in good faith. Atkins v. Crumpler, 118 N. C., 532; Lunsford v. Speaks, 112 N. C., 608; Lamer v. McIntosh, 117 Mo., 508; Jones on Mortgages, sec. 1822. And where the defect is discovered, as in this case, before any money is paid or conveyance executed, it is the right, and ordinarily would be the duty of the trustee, unless the defect is waived or cured by the parties whose interests are affected, to re-advertise the property and proceed to foreclose in accordance with law and the stipulations of the instrument under which he was acting. Botineau v. Ins. Co., 31 Minn., 125 Jones on Mortgages, sec. 1851; 27 Cyc., p. 1511. This is all that was done in the present case, and we are of opinion that on the facts presented the defendants, in making the second sale, were in the proper performance of their duty and acting strictly within their rights, and that the judgment of the court below in their favor should be affirmed. Judgment affirmed.