(February Term, 1893.)
Sale Under Power in Mortgage — Validity — Notice — Burden of Proof — Estoppel.
1. In an action to recover land by the purchaser thereof at a sale under the power contained in a mortgage given by the defendant, the deed executed by the mortgagee reciting the sale in pursuance of the power is prima facie evidence that all the terms of the power and all requirements as to notice have been complied with.
2. Even if a sale under the power in a mortgage should be invalid by reason of a failure on the part of the mortgagee to comply with the directions of the power, yet, as the mortgagee held the legal title, his deed would convey it to the purchaser, subject to the equities of the mortgage.
3. The acquiescence of a mortgagor in the conduct of a sale, and particularly in the terms of it, will cure any defect in this respect and give validity to it.
ACTION to recover land, tried before McIver, J., and a jury, at Fall Term, 1892, of WILKES.
W. W. Barber for plaintiff.
R. N. Hackett for appellee.
Plaintiff claimed title and possession under a deed executed to (609) him as purchaser of the land at a sale made under the power in the mortgage given by defendant.
The court told the jury that the burden was upon the plaintiff (611) to show that the power of sale contained in the mortgage had been complied with, and having failed to do so, he could not recover, and instructed the jury to find the first issue"No."
Plaintiff excepted. There was verdict and judgment for the (612) defendant, and plaintiff appealed, assigning as error the ruling of the court excepted to.
The principal question presented is whether in this case the burden is upon the plaintiff to show that the power of sale had been duly executed.
Upon examination we find no express authority on the subject in this State, and the authorities are conflicting elsewhere. All agree that the essential requisites of the power must be strictly complied with (2 Perry on Trusts, sec. 602, p. ...), and that courts will strictly scrutinize sales under powers in deed of mortgage.
It is said in the first edition of Jones on Mortgages (1878), at sec. 1830, under the question of burden of proof as to notice: "When the validity of a sale under a power is questioned by the debtor on the ground that the advertisement of the sale was not made in pursuance of the deed, the burden of proving a proper advertisement rests upon the purchaser or other party insisting upon the sale," and reference is made to Gibson v. Jones, 5 Leigh, 370.
The same proposition is laid down in 1 Devlin Deeds, sec. 447: "Compliance with the power where notice is required must be shown by parties relying upon the validity of the sale," and reference is made to Gibson v. Jones, supra, and Hahn v. Tindell, 1 Bush., 358. And in 2 Perry on Trusts, sec. 782, upon the same authorities, the text says: "If notice is required by the power, those persons relying upon the validity of the sale must show that the power was complied with." To the same effect is Wood v. Lake, 62 Ala. 489, citing (613) other authorities. Chancellor Kent, however, indicated a different opinion in Minuse v. Cox, 5 Johns., ch. 447: "That want of notice would not affect the title of the purchaser, but that the trustee would be liable for the deficiency in the price."
The question was carefully examined in Savings Society v. Deering, 66 Cal. 281, and the Court came to the conclusion that in an action of ejectment by the purchaser, evidence de hors the deed is not necessary to show title and right of possession in the plaintiff. And in the fourth edition of Jones on Mortgages, sec. 1830, it is said: "When the validity of a sale under a power is questioned on the ground that the advertisement of the sale was not made in pursuance of the deed, the better opinion is that in an action at law it will be presumed, after the execution of the deed under the power of sale to the purchaser, that all the terms of the power and all requirements as to notice have been complied with. Certainly, in an action of ejectment by the purchaser against the grantor or other person in possession, no evidence, aside from the deed to such purchaser and the recitals in it, is necessary to show title and right of possession in the plaintiff." And in the same connection it is said: "It would seem, moreover, that the defendant would not be permitted to show that notice of sale was not given under the power, because the deed would confer upon the purchaser the legal title to the land."
We refer to the note to Tyler v. Herring, 19 Am. St., 263, which sustains the conclusion that the title shown by plaintiffs was prima facie. It is based upon the general presumption in favor of meritorious parties as purchasers for value that the power has been properly exercised. As we have said, the authorities are all one way, that the power must be exercised in strict accordance with its terms, subject to (614) equitable relief in some cases of defective execution.
But even if the sale had been shown to be invalid by reason of a failure on the part of the mortgagee to comply with the direction of the power, yet the mortgagee held the legal title and his deed to plaintiff conveyed it subject to the equities of the mortgage. 1 Jones Mort., 787-812; 1 Lewin on Trusts, 603(4). It may be that the defendant would have been estopped from taking advantage of an irregularity in the sale, for "the acquiescence of the mortgagor in the conduct of the sale, and particularly in the terms of it, will cure any defect in this respect and give validity to it." 2 Jones Mort., sec. 1866; Olcutt v. Bynum, 17 Wall., 44.
But the defendant sets up a counterclaim for substantive relief and will be entitled to have the same passed upon and appropriate relief, if he should be found entitled thereto.
Cited: Norwood v. Lassiter, 132 N.C. 58; Brett v. Davenport, 151 N.C. 59; Eubanks v. Becton, 158 N.C. 237; Troxler v. Gant, 173 N.C. 425; Jenkins v. Griffin, 175 N.C. 186; Brewington v. Hargrove, 178 N.C. 145.