Sloop v. London

HEDRICK, Judge. Plaintiffs assign as error the granting of defendants’ motion for a directed verdict at the close of plaintiffs’ evidence. In granting the directed verdict the court found, as defendants argued in their motion, “[t]hat the record contains no evidence . . . that would constitute a wrongful foreclosure in contemplation of law or. evidence which would entitle the plaintiffs to recover money damage from the defendants or either of them.” As to evidence of damages, in a wrongful foreclosure action, it is not necessary to prove damages to withstand a directed verdict, since, regardless of proof of any actual damages, plaintiffs would be entitled to at least nominal damages should the jury find there was a wrongful foreclosure. Bowen v; Fidelity Bank, 209 N.C. 140, 183 S.E. 266 (1936) ; 5 Strong, N. C. Index 2d, Mortgages and Deeds of Trust, § 39, pp. 594-595. . In ruling on a motion for directed verdict, the plaintiffs’ evidence along with any reasonable inference that can be drawn [519] from the evidence, must be considered in the light most favorable to plaintiffs, Bowen v. Gardner, 275 N.C. 363, 168 S.E. 2d 47 (1969), and only when it is clear as a matter of law that plaintiffs have shown no right to relief should the judge grant defendants’ motion for a directed verdict. Roberts v. Reynolds Memorial Park, 281 N.C. 48, 187 S.E. 2d 721 (1972) ; Cutts v. Casey, 278 N.C. 390, 180 S.E. 2d 297 (1971). The language of the deed of trust imposed a duty on the Trustee, London, to hold the property in trust for DAC and upon demand of DAC to sell the property at public auction. The deed of trust also imposed a duty on London to receive and to disburse the proceeds of the sale in accordance with the priorities enumerated in the deed of trust. The clear language of the deed of trust as well as North Carolina law, imposes upon the trustee a fiduciary duty to use diligence and fairness in conducting the sale and to receive and disburse the proceeds of the sale. Mills v. Mutual Building and Loan Assn., 216 N.C. 664, 6 S.E. 2d 549 (1940) ; Hinton v. Pritchard, 120 N.C. 1, 26 S.E. 627 (1897) ; Huggins v. Dement, 13 N.C. App. 673, 187 S.E. 2d 412 (1972), app. dismissed 281 N.C. 314, 188 S.E. 2d 898 (1972). With these standards in mind, the evidence shows that London was the trustee under the deed of trust but that Charles J. Smith as agent of DAC conducted the foreclosure sale. The evidence further shows that London was not at the sale nor was he represented at the sale by McCubbins; that only one bid was made at the sale; and that McCubbins, as agent for London, signed the preliminary “report” of the sale before the sale was ever conducted. The check for the purchase price was given directly to DAC. In addition, London later ratified the sale in his “final report.” The deed of trust itself imposes upon London the duty to conduct the sa’e. Clearly, the fact that London took no part in the sale yet ratified the sale conducted by Smith, the agent of the beneficiary, shows a breach of duty and of the terms of the deed of trust sufficient to withstand a motion for a directed verdict. As to whether the directed verdict was proper as regards DAC and its agent Charles J. Smith, “[a] creditor can exercise no power over his debtor with respect to . . . property [subject to the deed of trust] because of its conveyance to the trustee with power to sell upon default of the debtor.” Mills v. Building [520] & Loan Assn., supra at 669. “The power [to sell under a deed of trust] cannot be exercised by the holder of the obligation secured, if he is not the trustee . . . since his control over the security consists in his right to call on the trustee, when default occurs, to advertise and sell and to require him to comply . 59 C.J.S., Mortgages, § 555, p. 913. Since the trustee, London, had the sole authority and duty to conduct the sale, Charles J. Smith, as agent for the creditor DAC, was wholly without such authority under the deed of trust. The legal title to the property rested with the trustee. Under the deed of trust DAC, as creditor and holder of the note, could only demand that the trustee sell the property; it could not conduct the sale itself through one of its agents. Plaintiffs have charged London with a breach of his fiduciary duty. It seems no less than right to hold responsible those who have knowingly participated in that dereliction of duty. Erickson v, Starling, 233 N.C. 539, 542, 64S.E. 2d 832, 834 (1951). For the reasons stated, the judgment directing a verdict for the defendants London, Smith and DAC is reversed and the cause is remanded to the Superior Court for further proceedings: Reversed and remanded. Judges Morris and Arnold concur.