Huggins v. Dement

Annotate this Case

187 S.E.2d 412 (1972)

13 N.C. App. 673

Harry Lee HUGGINS and wife, Elizabeth Huggins v. Russell W. DEMENT, Jr., Substituted Trustee, Central Finance Company, and Betty Lou Britt.

No. 7210SC180.

Court of Appeals of North Carolina.

March 29, 1972.

Appeal Dismissed May 24, 1972.

*414 Jacob W. Todd, Raleigh, for plaintiffs appellants.

James R. Rogers, III, Raleigh, for Central Finance Co., defendant appellee.

Hatch, Little, Bunn, Jones & Few, by E. Richard Jones, Jr., Raleigh, for Betty Lou Britt, defendant appellee.

Philip O. Redwine, for Russell W. Dement, Jr., Raleigh, defendant appellee.

Appeal Dismissed by Supreme Court May 24, 1972.

MORRIS, Judge.

Plaintiffs contend that the trial court erred in ruling the complaint failed to state a claim upon which relief can be granted.

". . . [S]tatutory provisions are, by operation of law incorporated in all mortgages and deeds of trust and control any sale under such instruments." In re Register, 5 N.C.App. 29, 35, 167 S.E.2d 802, 807 (1969).

G.S. § 45-21.17(a) provides that "When the instrument pursuant to which a sale of real property is to be held contains provisions with respect to posting or publishing notice of sale of the real property, such provisions shall be complied with, and compliance therewith is sufficient notice."

The deed of trust executed by these parties provided for a power of sale in the trustee to become effective upon demand of the creditor if the debtor was in default. The parties agreed, as explicitly set forth in the instrument, that upon foreclosure "it shall be lawful for and the duty of the Trustee to advertise at the County Courthouse door in Wake County aforesaid, for a time not less than 30 days, and in a newspaper published in Wake County once a week for four consecutive weeks . . ."

*415 [We note in passing that the notice provision included in the deed of trust is almost identical to the provisions of G.S. § 45-21.17(b) which applies when the parties make no provision for notice in the instrument.] According to G.S. § 45-21.17 (a), compliance with the above quoted notice procedure as agreed upon by the parties, if strictly complied with, is sufficient to give notice of the original foreclosure by sale. Foust v. Gate City Savings & Loan Asso., 233 N.C. 35, 62 S.E.2d 521 (1950). Plaintiffs allege in their complaint that foreclosure procedures were instituted "pursuant to the provisions of said deed of trust". "The law presumes regularity in the execution of the power of sale in a deed of trust duly executed and regular upon its face; and if there is any failure to advertise properly, the burden is on the attacking party to show it. (Citations omitted.)" Biggs v. Oxendine, 207 N.C. 601, 603, 178 S.E. 216, 217 (1935).

G.S. § 45-21.29(b) provides that:

"Notice of any resale to be held because of an upset bid shall (1) Be posted, at the courthouse door in the county in which the property is situated, for fifteen days immediately preceding the sale. (2) And in addition thereto, a. If a newspaper qualified for legal advertising is published in the county, the notice shall be published in such a newspaper once a week for at least two successive weeks; . . ."

The plaintiffs made no allegation in the complaint of a failure to observe the notice provisions either of the deed of trust at the original sale or of the statutory requirements of G.S. § 45-21.29(b) upon resale. Instead plaintiffs allege that they were entitled, as debtors in default, to personal notice of a foreclosure by sale. The North Carolina Supreme Court said in Woodell v. Davis, 261 N.C. 160, 134 S.E.2d 160 (1964), that there is no requirement of personal notice absent a valid contract to give personal notice to the debtor who is in default, and this Court has espoused that proposition more recently in Hodges v. Wellons, 9 N.C.App. 152, 175 S.E.2d 690 (1970), cert. denied 277 N.C. 251 (1970).

"It may well be appropriate, desirable, and courteous in many instances for a trustee to give actual notice to the debtor, the representative of his estate, or his heirs, of an intention to advertise and sell under a power of sale, nevertheless, such actual notice is not required as a matter of law. (Citation omitted.)" Hodges v. Wellons, supra, at p. 156, 175 S.E.2d at p. 693.

Plaintiffs would distinguish those cases in that no constitutional issue was raised nor considered in either of them. Plaintiffs assert that they were deprived of their property without due process of law because the notice given was not reasonably calculated to afford them an opportunity to be heard, citing Mullane v. Central Hanover Bank and Trust Company, 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950), and Harrison v. Hanvey, 265 N.C. 243, 143 S.E.2d 593 (1965).

We are cognizant of the rule that: "`the principal object in publishing notice of sale of mortgaged property in the exercise of a power of sale is not so much to notify the grantor or mortgagor as it is to inform the public generally, so that bidders may be present at the sale and a fair price obtained; . . .' 59 C.J.S. Mortgages § 563." Woodell v. Davis, supra, 261 N.C. at p. 163, 134 S.E.2d at p. 163. We hold that the notice of foreclosure by sale is provided for in the deed of trust and as required under the statute was sufficient to meet the minimum due process requirements. See D. H. Overmyer Co., Inc. v. Frick Company, 405 U.S. 174, 92 S. Ct. 775, 31 L. Ed. 2d 124 (1972) and Swarb v. Lennox, 405 U.S. 191, 92 S. Ct. 767, 31 L. Ed. 2d 138 (1972).

Overmyer (decided February 24, 1972) came up from Ohio and presented the question of the constitutionality under the Due *416 Process Clause of the Fourteenth Amendment of a cognovit note authorized by an Ohio statute. The note contained the maker's consent in advance to the holder's obtaining a judgment without notice or hearing if the maker were in default in the payment thereof. Plaintiff's position was that it is unconstitutional to waive in advance the right to present a defense in an action on the note. Plaintiffs take a similar position here in a closely analogous situation. In Overmyer there was no allegation of unequal bargaining power or overreaching, nor is there here. In Overmyer, Mr. Justice Blackmun, writing for the Court, said:

"The due process rights to notice and hearing prior to a civil judgment are subject to waiver. In National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S. Ct. 411, 11 L. Ed. 2d 354 (1964), the Court observed: `[I]t is settled . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether.' 375 U.S., at 315-316, 84 S. Ct. at 414. And in Bobbie v. Connecticut, 401 U.S. 371, 91 S. Ct. 780, 28 L. Ed. 2d 113, supra, the Court acknowledged that `the hearing required by due process is subject to waiver.' 401 U.S., at 378-379, 91 S. Ct. at 786."

Swarb (decided the same day) came up from Pennsylvania, and was also concerned with the issue of the due process validity of cognovit provisions. This was a class action and attempted to have the Court declare the Pennsylvania statutes leading up to confessed judgments unconstitutional on their face as violative of due process. The Court refused to do so and affirmed the District Court's holding that the Pennsylvania system leading to confessed judgment and execution does comply with due process standards provided there has been an understanding and voluntary consent of the debtor in signing the document.

In this action, the allegations of failure to give notice fail to state a claim upon which relief can be granted.

Plaintiffs contend that their complaint states a claim against the defendant trustee (Dement) for his failure to abide by the duties imposed on him as a fiduciary, and that the court erred in dismissing their claim for relief.

"A gross inadequacy of purchase price, when coupled with any other inequitable element, will induce the court to interpose and do justice between the parties. Weir v. Weir, 196 N.C. 268, 145 S.E. 281. However, no irregularity in the foreclosure sale is alleged here. The only obligation of the trustee to the heirs and estate of the debtor was to conduct and consummate the foreclosure sale in accordance with law. There is no suggestion that the trustee did otherwise." Hodges v. Wellons, supra, 9 N.C.App. at p. 157, 175 S.E.2d at p. 693.

A trustee is bound to use good faith and diligence in apprising both the creditor and debtor of the intention of selling.

"He is charged with the duty of fidelity as well as of impartiality, of good faith and every requisite degree of diligence, of making due advertisement and giving due notice. (Citations omitted.)" (Emphasis added.) Mills v. Mutual Building & Loan Assn., 216 N.C. 664, 669, 6 S.E.2d 549, 552 (1940).

Plaintiffs' complaint does not allege that the defendant trustee did anything other than adhere to every requirement of the deed of trust and of the applicable General Statutes. Plaintiffs' complaint does not allege that the trustee was negligent or imprudent [Davenport v. Vaughn, 193 N.C. 646, 137 S.E. 714 (1927)]; nor does it contend that the trustee did not strictly comply with the power of sale [Jessup v. Nixon, 199 N.C. 122, 154 S.E. 18 (1930)]; nor does it allege that the trustee represented both buyer and seller at the foreclosure sale *417 [Davis v. Doggett, 212 N.C. 589, 194 S.E. 288 (1937); Mills v. Mutual Building & Loan Assn., supra].

The court properly granted a motion to dismiss filed under Rule 12(b) (6) for failure to state a claim upon which relief could be granted. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1970).

No error.

MALLARD, C. J., and PARKER, J., concur.