Parsons v. Leak

BbogdeN, J. If a husband and wife execute a note or notes, securing the same by a mortgage on the land of the husband, who receives the proceeds, and thereafter the property is sold by foreclosure under a subsequent deed of trust for a sum in excess of the amount due upon the first lien, is the wife thereby released from personal liability upon the first note or notes? The Title Guaranty and Insurance Company appeals from the judgment upon the ground that a priority was given therein to certain other claims involved in another branch of this litigation. The insurance company requested permission of the referee to be made a party to the suit. The referee made an order permitting it to become a party, but therein expressly provided that such intervention “shall be heard and determined without affecting or delaying the matters heretofore heard . . . and unaffected by the hearing and determination of issues and questions presented by the said complaint of said movants and the answers and replies thereto.” Consequently, when the Insurance Company pursued its rights before the referee it cannot now be permitted to repudiate the limitations imposed in the order. Therefore, the issuable question of law arises upon the liability of Mary L. Leak, the widow, upon the balance of the Steele note, aggregating $7,285.42. When a married woman joins with her husband in the execution of a note, securing the same with a mortgage or deed of trust upon the hus [97] band’s land, and be receives tbe entire proceeds, sbe thereby becomes a surety for bis debt. Weil v. Thomas, 114 N. C., 197, 19 S. E., 103; Kennedy v. Trust Co., 180 N. C., 225, 104 S. E., 464; Barnes v. Crawford, 201 N. C., 434. Tbe execution of tbe mortgage was in itself an application of all tbe property embraced in tbe mortgage to tbe payment of tbe debt secured therein. Harvey v. Knitting Co., 197 N. C., 177, 148 S. E., 45. Tbe balance due on the Steele note upon which Mary L. Leak was surety was $7,285.42. Tbe referee finds that tbe property securing the note was worth in excess of $57,000. At tbe foreclosure under tbe second mortgage or deed of trust tbe property actually brought $30,000 and tbe Land Bank became tbe purchaser at that sum. Thus, it is obvious that tbe security of tbe principal debtor, T. O. Leak, was worth much more than enough to discharge tbe debt, and when tbe Land Bank purchased tbe property at the sale tbe surety, Mary L. Leak, was thereby released. Manifestly, tbe Insurance Company, upon tbe principle of subrogation, could have no claim against tbe surety, Mary L. Leak, superior to that of tbe Land Bank. Hence, that portion of tbe judgment imposing a personal liability upon Mary L. Leak as surety is erroneous. In all other respects tbe judgment is approved. Affirmed. Adams, J., took no part in tbe decision of this case.