Foust v. Gate City Savings & Loan Ass'n

Annotate this Case

62 S.E.2d 521 (1950)

233 N.C. 35

FOUST v. GATE CITY SAVINGS & LOAN ASS'N et al.

No. 679.

Supreme Court of North Carolina.

December 13, 1950.

*522 Harry Rockwell, Thomas Turner, and Cooke & Cooke, all of Greensboro, for plaintiff appellant.

Stedman H. Hines and Chas. A. Hines, Greensboro, for defendants Gate City Savings and Loan Association and Norman A. Boren, Trustee, appellees.

Frazier & Frazier, Greensboro, for defendants Ernest Stadiem and wife, Bernice L. Stadiem and Ida B. Stadiem, appellees.

*523 BARNHILL, Justice.

The material facts are not controverted. The property, having a market value of from $5,500 to $6,000, was actually sold for $825. The trustee erroneously reported that it was bid in for the sum of $6,400. His report to that effect was on record in the clerk's office from the day of sale until the confirmation of the sale. Anyone seeking information concerning the sale would have asertained that the property sold for more than its reasonable market value.

These facts raise the single question of law: Was the irregularity in the report of such substantial nature as to require the Court to vacate the order of confirmation and the deed executed pursuant thereto? We must answer in the affirmative.

The provisions of G.S. § 45-28 are, by operation of law, incorporated in all morgages and deeds of trust and enter into and control any sale under such instruments. In re Sermon's Land, 182 N.C. 122, 108 S.E. 497, 17 A.L.R. 965. The jurisdiction of the clerk vests at the moment an upset bid is filed with him. Thereafter he has supervisory power over the sale which continues until after the final sale and confirmation thereof. Lawrence v. Beck, 185 N.C. 196, 116 S.E. 424.

He is authorized to make all such orders as may be just and necessary to safeguard the interest of all parties, and "he shall keep a record which will show in detail the amount of each bid, the purchase price, and the final settlement between parties." G.S. § 45-28 Note: This and related sections were repealed by Chap. 720, Sess.L.1949, effective January 1, 1950, and a more strict and detailed law controlling foreclosures was enacted.

The record the clerk must keep is a public record for the information of interested parties and affords a ready means for ascertaining details respecting both pending and completed sales. The keeping of this record constitutes an essential part of the foreclosure proceeding after the clerk acquires jurisdiction thereof.

Mere inadequacy of the purchase price realized at a foreclosure sale, standing alone, is not sufficient to upset a sale, duly and regularly made in strict conformity with the power of sale. Weir v. Weir, 196 N.C. 268, 145 S.E. 281; Roberson v. Matthews, 200 N.C. 241, 156 S.E. 496; Hill v. Albemarle Fertilizer Co., 210 N.C. 417, 187 S.E. 577.

Even so, where there is an irregularity in the sale, gross inadequacy of purchase price may be considered on the question of the materiality of the irregularity. Hill v. Albemarle Fertilizer Co., supra, and cases cited.

Speaking to the subject in Weir v. Weir, supra, [196 N.C. 268, 145 S.E. 282], Stacy, C. J., says: "But gross inadequacy of consideration, when coupled with any other inequitable element, even though neither, standing alone, may be sufficient for the purpose, will induce a court of equity to interpose and do justice between the parties. Worthy v. Caddell, 76 N.C. 82; 17 A. & E. (2d Ed.) 1003; note, 42 L.R.A.,N.S., 1198"; Bundy v. Sutton, 209 N.C. 571, 183 S.E. 725; Roberson v. Matthews, supra.

This principle, in our opinion, is controlling here. It is generally held that where the amount due is grossly overstated or so excessive that it might deter and discourage bidders, it will render the sale invalid. Peterson v. Johnson, 46 Wyo. 473, 28 P.2d 487, 91 A.L.R. 723, annotation p. 733.

The irregularity here is of a kindred nature. There is no contention that the error in the report was deliberate, or was prompted by an evil purpose, or was other than the result of an honest mistake. It appears to have been one of those slips which may occur in business transactions. None the less, it was highly deceptive and its natural and probable effect was to chill any desire on the part of interested parties to engage in further competitive bidding. Thus it tended to prevent any upset bid.

Actuality of injury is not a prerequisite of relief. The potentialities of the error, considered in connection with the grossly inadequate price, compel the conclusion that the irregularity in the sale was material and prejudicialsufficient in nature to justify the interposition of a court of equity.

*524 The defendants Stadiem insist that they are innocent purchasers for value and that, therefore, the judgment of nonsuit as to them should be affirmed. But the burden of proof on their affirmative defense rests upon them. Williams v. Philadelphia Life Insurance Co., 212 N.C. 516, 193 S.E. 728; MacClure v. Accident & Casualty Ins. Co., 229 N.C. 305, 49 S.E.2d 742. A nonsuit may not be granted in favor of one who has the burden of proof. MacClure v. Accident & Ins. Casualty Co., supra; Barnes v. Security Life & Trust Co., 229 N.C. 409, 50 S.E.2d 2. Furthermore, the fatal irregularity appears on the face of the record. Whether they can overcome this fact is for the court below to decide at the final hearing.

The judgment below is reversed.