Martha E. GREGG
v.
Mildred B. WILLIAMSON, B. W. Williamson and John Samuel Williamson.
No. 455.
Supreme Court of North Carolina.
June 7, 1957.*482 *484 Sanford, Phillips, McCoy & Weaver, Fayetteville, for plaintiff-appellant.
A. A. Reaves, Hamlet, and Jones & Jones, Rockingham, for defendant-appellees.
RODMAN, Justice.
No exceptions are taken to the findings of fact. Indeed, they substantially conform with the allegations of the complaint. Do these findings suffice to support the judgment? Plaintiff insists that to apply G.S. § 45-37(5), as amended in 1945, would impair the obligation of the Pate mortgage given in 1921, in violation of Art. I, sec. 10, cl. 1 of the Constitution of the United States. This assertion necessitates an understanding of the rights which plaintiff could assert without regard to the statute, what the statute does, and its effect, if any, on plaintiff's rights.
When Minnie Mae Pate executed her mortgage in August 1921 to W. H. H. Bagwell, J. R. Gordon, and E. L. Sanford to secure the payment of her note, the legal title to the land vested in the mortgagees, but this title vested in them only as security for the payment of the debt. Bank of Onslow v. Rowland Lumber Co., 193 N.C. 757, 138 S.E. 125; Stevens v. Turlington, 186 N.C. 191, 119 S.E. 210, 32 A.L.R. 870; Killebrew v. Hines, 104 N.C. 182, 10 S.E. 159, 251; Fraser v. Bean, 96 N.C. 327, 2 S.E. 159.
A mortgagee after default is entitled to possession of the mortgaged premises, and, to secure possession, may maintain an action against the mortgagor. Federal Land Bank of Columbia v. Jones, 211 N.C. 317, 190 S.E. 479; Stevens v. Turlington, supra; Wittkowski v. Watkins, 84 N.C. 456; Hemphill v. Ross, 66 N.C. 477; Fuller v. Wadsworth, 24 N.C. 263; 37 Am. Jur. 211. But mortgagee's right to possession is only for the better security of the debt owing to him. When he takes possession he becomes liable "to keep such premises in usual repair and to account for the rents and profits received, in a settlement of the mortgage debts." Hemphill v. Ross, supra; Anderson v. Moore, 233 N.C. 299, 63 S.E.2d 641; Morrison v. McLeod, 37 N.C. 108. The rents with which a mortgagee or trustee in possession is chargeable are applicable as credits on the debt secured by the mortgage. Mills v. Mutual Building & Loan Ass'n, 216 N.C. 664, 6 S.E.2d 549; Fleming v. North Carolina Joint Stock Land Bank, 215 N.C. 414, 2 S.E.2d 3. A mortgagee has no right to possession except to assure payment of the debt or performance of other conditions of the mortgage.
The estate of a mortgagee is a determinable fee terminating the instant the debt is paid or other condition of the mortgage is performed. Barbee v. Edwards, 238 N.C. 215, 77 S.E.2d 646; Liberty Mfg. Co. v. Malloy, 217 N.C. 666, 9 S.E.2d 403; Blake v. Broughton, 107 N.C. 220, 12 S.E. 127.
*485 Upon the death of the mortgagee the right to exercise the power and convey the land does not descend to his heirs but passes to his personal representative. G.S. § 45-4. Transfer of a note secured by a mortgage does not pass title to the land nor the power of sale nor the right to cancel or release the mortgage. The assignment by Bagwell and Sanford to Gordon sufficed to transfer the debt only. It did not pass any title to the land. First Nat. Bank of Kinston v. Sauls, 183 N.C. 165, 110 S.E. 865; Williams v. Teachey, 85 N.C. 402.
The mortgage from Pate to Bagwell, Gordon, and Sanford created a joint tenancy. Burton v. Cahill, 192 N.C. 505, 135 S.E. 332; 48 C.J.S. Joint Tenancy § 3, p. 914; 59 C.J.S. Mortgages § 195, p. 255; 14 Am.Jur. 79; G.S. § 45-8. The power of sale given by the mortgage could only be exercised by all of the surviving mortgagees. Combs v. Porter, 231 N.C. 585, 58 S.E.2d 100; Cawfield v. Owens, 129 N.C. 286, 40 S.E. 62. It is not alleged and there is no finding that any of the mortgagees are dead. Hence the deed from Gordon, one of the mortgagees, to plaintiff cannot have any validity as a foreclosure deed even if it purported to be such. We need not now determine if one of several mortgagees holding as joint tenants may terminate the joint estate and create a tenancy in common. Conceding that one of the joint tenants had the right to convey his interest in the land which was held merely as security for the debt, his grantee becomes a mere trustee chargeable with a duty and responsibility to both the owner of the equity of redemption and the owner of the debt secured by the instrument.
The trustee must be impartial in the performance of his duties. He cannot exercise the power given to him to sell nor the title he holds in such manner as to give an unfair advantage to one to the detriment of the other. Hatcher v. Williams, 225 N.C. 112, 33 S.E.2d 617; Mills v. Mutual Building & Loan Association, supra; Council v. Greensboro Joint Stock Land Bank, 213 N.C. 329, 196 S.E. 483. If default exists, he has no authority sua sponte to sell or demand possession or otherwise proceed to collect the debt. He can only act when authorized by the creditor. Monteith v. Welch, 244 N.C. 415, 94 S.E.2d 345; Wynn v. Grant, 166 N.C. 39, 81 S.E. 949.
Subject to the right of the creditor to have the mortgaged property used for the payment of the debt owing to him, the mortgagor is "considered as the owner of the land with an estate therein which `may be devised, granted, or entailed with remainders' (Lord Hardwicke), and which is subject to * * * sale under execution." Stevens v. Turlington, supra [186 N.C. 191, 119 S.E. 211]; McKinney v. Sutphin, 196 N.C. 318, 145 S.E. 621; Fraser v. Bean, supra. He is not a mere tenant of the mortgagee who can be dispossessed after default by a summary proceeding in ejectment. Culbreth v. Hall, 159 N.C. 588, 75 S.E. 1096. Even after default a mortgagee who has not taken possession is not entitled to the rents and profits. Kistler v. Wilmington Development Co., 205 N.C. 755, 172 S.E. 413; Parker Co. v. Commercial Bank, 204 N.C. 432, 168 S.E. 681; Collins v. Bass, 198 N.C. 99, 150 S.E. 706.
We now inquire as to what the statute does.
The cloud created by paid but not released mortgages has called for repeated legislative action to facilitate the marketability of land so beclouded. Prior to 1870 a release executed by the mortgagee and duly recorded was necessary to clear the record. The Legislature of 1870-71, by the enactment of c. 217, now in substance G.S. § 45-37(1), permitted the mortgagee to enter satisfaction of the mortgage on the recorded instrument. That of course necessitated a trip to the courthouse by the mortgagee or his representative. Twenty years elapsed before authority was given to the register of deeds to cancel upon presentation *486 of the mortgage and notes. What is now G.S. § 45-37(2) is in substance the provisions of c. 180, P.L.1891. G.S. § 45-37(3) is in substance the provision of c. 50, P.L.1917.
The Legislature of 1923 deemed it necessary to make further provision with respect to old and uncancelled mortgages and to protect those who purchased long after the debt had matured. C. 192, P.L. 1923, furnished the basic provision of G.S. § 45-37(5), by creating in favor of creditors and purchasers for value from a mortgagor a presumption of payment if the purchase was made more than fifteen years after the last installment of the debt was due, unless the person secured by the mortgage filed the affidavit or made the marginal entry showing that the debt was alive.
The Act was first construed in Hicks v. Kearney, 189 N.C. 316, 127 S.E. 205. Defendant sought to apply the Act not only to a mortgage given prior to the enactment but to a purchase made prior thereto. It was there held that the statute was prospective in its operation and had no application to the facts of that case. The interpretation given to the Act, that it did not to apply to mortgages antedating the ratification of that Act has been adhered to. Humphrey v. Stephens, 191 N.C. 101, 131 S.E. 383; Roberson v. Matthews, 200 N.C. 241, 156 S.E. 496; Dixie Grocery Co. v. Hoyle, 204 N.C. 109, 167 S.E. 469; Thomas v. Myers, 229 N.C. 234, 49 S.E.2d 478. Likewise it has been held that that statute was not intended to and did not protect those who purchased within fifteen years from the maturity of the debt. Smith v. Davis, 228 N.C. 172, 45 S.E.2d 51, 174 A.L.R. 643.
The Legislature of 1945 deemed it wise to make G.S. § 45-37(5) apply to mortgages given prior to the 1923 statute. That the Legislature regarded the 1923 statute as in effect a statute of limitation is, we think, clear from the language of the 1945 statute. It provides that the 1923 Act shall apply to pre-existing mortgages but allows mortgagees one year from the ratification of that statute in which to exercise their rights. No violence is done to a contractual right by prescribing a period of time in which the right must be exercised, if a reasonable time is provided in which the right may be exercised. It is not suggested that a period of one year is unreasonably short. The 1945 statute in effect said to the owners of debts secured by subsisting mortgages or deeds of trust: (1) You may within one year proceed to collect your debt by foreclosing by judicial process or under power of sale, or (2) you may make marginal entry that your debt is alive and thus avoid the effect of the statute; if you fail to do either of these things in the time prescribed, any purchaser for value from the mortgagor can assert the presumption created against your right to proceed to his detriment. The power of the Legislature to prescribe a reasonable time in which a creditor may exercise his rights has been repeatedly recognized in our decisions. Graves v. Howard, 159 N.C. 594, 75 S.E. 998; Orange County Building & Loan Ass'n v. Jones, 214 N.C. 30, 197 S.E. 618; Strickland v. Draughan, 91 N.C. 103.
The power of the Legislature to require recordation or rerecordation of mortgages to protect the mortgagor's right against claim of purchasers for value has been consistently recognized. Vance v. Vance, 108 U.S. 514, 2 S. Ct. 854, 857, 27 L. Ed. 808 upheld the constitutionality of a Louisiana statute which required the registration of a mortgage in order to have validity as against creditors or purchasers from the mortgagor. Existing mortgagees were given less than a year in which to record their mortgages. The owner of a mortgage antedating the enactment asserted that as to him the application of the statute was unconstitutional as impairing the obligation of the contract. The Supreme Court of Louisiana, 32 La.Ann. 186, rejected the contention. The Supreme Court of the United States affirmed. We think the language of Mr. Justice Miller appropriate to this case. He said: "We *487 think that the law, in requiring of the owner of this tacit mortgage, for the protection of innocent persons dealing with the obligor, to do this much to secure his own right, and protect those in ignorance of those rights, did not impair the obligation of the contract, since it gave ample time and opportunity to do what was required, and what was eminently just to everybody. The authorities in support of this view are ample." Conley v. Barton, 260 U.S. 677, 43 S. Ct. 238, 67 L. Ed. 456; Turner v. People of State of New York, 168 U.S. 90, 18 S. Ct. 38, 42 L. Ed. 392; Evans v. Finley, 166 Or. 227, 111 P.2d 833, 133 A.L.R. 1318; H. K. L. Realty Corp. v. Kirtley, Fla., 74 So. 2d 876; Shanks v. Blaine's Heirs, 201 Okl. 350, 206 P.2d 978; Hill v. Gregory, 64 Ark. 317, 42 S.W. 408; Rombotis v. Fink, 89 Cal. App. 2d 378, 201 P.2d 588; Annotation 121 A.L.R. 909; Annotation 158 A.L.R. 1043; 45 Am.Jur. 437; 16A C.J.S. Constitutional Law § 385, p. 63 et seq.
G.S. § 45-37(5), as originally enacted and as amended in 1945, is of no moment or concern to the plaintiff. The statute applies only to the holder of the debt evidenced by the notes given by Mrs. Pate in 1921. Plaintiff does not claim to be the owner of those notes or assert any right thereto; at least no such claim is disclosed by this record. Plaintiff's right, as we have noted, to demand possession accrues only when the owner of the debt so directs. Having no interest in the debt and being without authority to act until requested so to do by a party secured, plaintiff is not a party aggrieved. The right to appeal is given only to a party aggrieved, G.S. § 1-271. The appeal is
Dismissed.
JOHNSON, Justice (concurring).
I concur in the result on the ground that the dismissal of plaintiff's appeal leaves the judgment below in force precisely as entered.
The findings and judgment below effectively and correctly dispose of all the issues raised by the pleadings. My vote is to uphold the proceedings below and affirm the judgment.