Register v. Griffin

178 S.E.2d 95 (1970)

10 N.C. App. 191

Ray G. REGISTER and wife, Elizabeth B. Register v. Joseph M. GRIFFIN, Trustee, and Piedmont Production Credit Association.

No. 7026SC440.

Court of Appeals of North Carolina.

December 30, 1970.

*99 H. Parks Helms, Charlotte, for plaintiffs.

Joseph M. Griffin, Charlotte, for defendants.

*100 BROCK, Judge.

The evidence by each side dwells at length upon dollar figures, i. e. the face amounts of notes, the interest accrued on the various notes, and the payments and applications thereof to interest and principal due. Obviously a summary of the evidence would be difficult to follow, and, in our opinion, would serve no useful purpose.

All of plaintiffs' assignments of error are directed to two contentions asserted by plaintiffs. First, plaintiffs contend that the 21 November 1963 deed of trust secures only the note which was executed contemporaneously therewith, and specifically that the said deed of trust does not secure the four additional notes executed in 1964 and 1965. And it is their contention that they were not in default in payments on the 21 November 1963 note; therefore, they assert the trustee had no authority to foreclose. Second, plaintiffs contend that, even if it should be determined that the trustee was correct in instituting foreclosure proceedings, defendants are not entitled to recover attorney fees from plaintiffs under the provisions contained in the several notes.

The deed of trust executed by plaintiffs, as set out in the foregoing statement of facts, contains the following provision: "THEREFORE, in consideration of said advances and One Dollar ($1.00) paid to Undersigned, receipt acknowledged, and for better securing said indebtedness, and any additional advances (not exceeding an equivalent amount) that may subsequently be made by Borrower to Lender, and all renewals and extensions thereof, and all other indebtedness now due or hereafter to be contracted, * *" (emphasis added). By this provision the parties contemplated that additional loans not exceeding $12,200.00 made by defendants to plaintiffs would be secured by the deed of trust. Also, each of the four additional notes executed by plaintiffs in 1964 and 1965 contains the following provision: "The maker hereof, by executing this note, amends his application for loan heretofore submitted, and requests an increase equal to the amount of this note * * *" Although the provisions of the deed of trust, and the provisions of the notes are not models to be followed, they are a sufficient agreement as between the contracting parties, and, we hold that as between the original parties the deed of trust secures the four additional notes. We are not called upon to decide, and specifically do not decide, the effect of the provisions upon an innocent third party.

There was sufficient evidence to sustain the finding that the notes are in default. Therefore, it follows that the conclusion that the trustee has the right to proceed with foreclosure of the deed of trust is correct and it is hereby affirmed.

After the dismissal of plaintiffs' first action defendant charged plaintiffs' account with $691.20. In his conclusions of law, Judge Froneberger concluded "[t]hat the defendant Piedmont Production Credit Association rightfully charged the plaintiffs $691.20 for attorney fees previously incurred * * *" Plaintiffs' except and assign this conclusion as error. Also, Judge Froneberger concluded "[t]hat the firm of Griffin and Gerdes [defendants' attorneys] is rightfully due compensation for defending and trying this action, and said compensation in the amount of $500.00 should be charged to the plaintiffs herein." Plaintiffs except and assign this conclusion as error. These assignments of error are sustained.

Each of the notes executed by plaintiffs contained the following provision: "We also promise to pay all costs of collection including a reasonable attorney's fee of not less than ten per *101 centum of the total amount due hereon, unless contrary to the laws of the state where this note is executed." At the time of the execution of the notes in 1963, 1964, and 1965, such a provision for attorney fees in a note was contrary to the laws of North Carolina. G.S. § 25-8 provided in part that "* * * a provision incorporated in the instrument to pay counsel fees for collection is not enforceable * * *" This statutory provision became a part of the contracts between the parties and the repeal of G.S. § 25-8 in 1965 and the enactment of G.S. § 6-21.2 in 1967, which permits such a provision, did not vary the terms of the original contracts between the parties. Article I, § 10 [1], Constitution of the United States. Therefore, as between the parties, the terms of the notes relative to attorney fees is inapplicable and contrary to law.

This holding does not affect any rights defendants may have to make a motion in the cause under G.S. § 1A-1, Rule 65(e).

The $691.20 attorney fees which defendant charged to plaintiffs' account is included in the figure of $5,358.69 denominated as "interest" in the judgment; therefore this interest figure must be modified.

The judgment entered by Judge Froneberger is modified to read as follows:

It is therefore ordered, adjudged and decreed:

1. That the defendant Piedmont Production Credit Association is owed by the plaintiffs the sum of $14,065.00 principal plus $4,667.49 interest up to February 24, 1970, plus interest at a daily rate thereafter at the rate of $2.312 per day.

2. (Deleted)

3. That the cost of this action be taxed against the plaintiffs.

4. That the defendant Piedmont Production Credit Association is entitled to have the deed of trust, as security for the five notes, foreclosed through its trustee, the defendant Joseph M. Griffin, after due advertisement according to law.

5. That the court retains jurisdiction of this matter pending foreclosure and full settlement thereof.

Except as modified as above, the judgment appealed from is affirmed.

Modified and Affirmed.

MORRIS and GRAHAM, JJ., concur.