Filed 2 February, 1951.
1. Payment 8 — Where a mortgage is given to secure two debts, nothing else appearing, the law does not perforce prefer one over the other in foreclosure.
2. Trial 30 — In passing upon whether defendant is entitled to a directed verdict, plaintiff's evidence should not only be taken as true, but also should be considered in its most favorable light to plaintiff, giving plaintiff every reasonable intendment and legitimate inference fairly deducible therefrom.
3. Limitation of Actions 12a: Payment 8 — Whether creditor was entitled to remit interest on one note to make part payment on others held for jury. Plaintiff's testimony was to the effect that the chattel mortgage executed by defendants was given as security for money loaned and as additional security for notes secured by a deed of trust theretofore executed by defendants. In plaintiff's action to foreclose the chattel mortgage, defendants paid a certain sum under a compromise agreement. Plaintiff deducted from the sum recovered the amount actually loaned on the chattel mortgage, without interest, and applied the balance pro rata to the notes secured by the deed of trust. Held: The prayer for relief in the action to foreclose the chattel mortgage is not controlling, and whether plaintiff was entitled to make the credits in this manner so as to constitute a part payment on the notes secured by the deed of trust and thus prevent the bar of the statute of limitations should have been submitted to the jury, and a directed verdict for defendant is error.
4. Mortgages 38 — In a suit to recover on purchase money notes and to foreclose deed of trust given as security therefor, defendants may not set up as a counterclaim embarrassment resulting from foreclosure of a prior mortgage executed by plaintiffs before their conveyance of the land to defendants, since defendants could have paid the prior lien and avoided the suit to foreclose.
APPEALS by plaintiff and defendants from Godwin, Special Judge, July Term, 1950, of PENDER.
John C. Best and J. C. Sedberry for plaintiff, appellant.
Moore Corbett and Isaac C. Wright for defendants, appellants, appellees.
BARNHILL, J., dissenting.
Ervin, J., concurs in dissent.
Civil action to recover on six promissory notes and to foreclose deed of trust on land given as security for the payment of the notes.
The notes in suit, each for the sum of $500.00, were executed 24 December, 1926, and matured serially thereafter on 1 November, 1927, '28, '29, '30, '31, '32, respectively.
Thereafter, on 5 February, 1927, the defendants executed and delivered to plaintiff another note in the sum of $400.00 due and payable 1 November, 1927, secured by chattel mortgage, $114.85 of which was for money loaned and the balance of $285.15 "was to better secure these real estate notes," according to plaintiff's unchallenged testimony.
In October, 1937, plaintiff brought an action to foreclose this chattel mortgage, and resulted in a compromise settlement of $162.50, which defendants paid to plaintiff's attorney on 12 January, 1938. Plaintiff's attorney retained $12.50 as his fee and remitted the balance of $150.00 to plaintiff. The plaintiff credited the chattel mortgage note with $114.85, the loan represented therein, and the balance of $35.15 was credited ratably on the six real estate notes involved herein. (Plaintiff concedes that defendants are entitled to a further credit of $12.50 which his counsel retained as his fee.) Plaintiff testified, without objection, "I did not charge, receive or collect any interest on the $114.85." This present action was instituted 8 January, 1948.
The defendants set up in bar of plaintiff's right to recover the ten-year statute of limitations and also allege that they have been damaged in the sum of $1,000.00 over and above plaintiff's claim, by reason of a suit brought by a prior lienholder to foreclose prior mortgage on the land here involved.
The plaintiff demurred ore tenus to the allegation of damages in the defendants' answer.
The court held as a matter of law that the notes in suit were barred by the ten-year statute of limitations and so instructed the jury. Exception by plaintiff.
The court also sustained the plaintiff's demurrer to the allegation of damage in the defendants' answer. Exception by defendants.
From the judgment entered dismissing the action, both sides appeal, assigning errors.
The correctness of the ruling on the statute of limitations turns on the validity of the credits entered by plaintiff on the notes in suit 12 January, 1938. This was a matter for the jury under proper instructions from the court. Lee v. Manley, 154 N.C. 244, 70 S.E. 385; Miller v. Womble, 122 N.C. 135, 29 S.E. 102; Young v. Alford, 118 N.C. 215, 23 S.E. 973.
The contention that the whole of the compromise settlement should first be used to repay the money loaned with interest before any part of the settlement could be applied to the real estate notes would seem to overlook the testimony of the plaintiff that he neither charged nor received any interest on the money loaned, and the further circumstance that the chattel mortgage was also given "to better secure these real estate notes," which were then unbarred by the 10-year statute of limitations. Where a mortgage is given to secure two debts, nothing else appearing, the law would not perforce prefer one over the other in foreclosure, since ordinarily there can be but one foreclosure of a security lien. Layden v. Layden, 228 N.C. 5, 44 S.E.2d 340. Moreover, on motion to nonsuit or for directed verdict the plaintiff is not only entitled to have the evidence making for his cause taken as true, but also to have it considered in its most favorable light, together with every reasonable intendment and legitimate inference fairly deducible therefrom, the ultimate weight and credibility of the evidence, of course, including any reconciliation of discrepancies or contradictions in plaintiff's own testimony, being for the jury. Brafford v. Cook, 232 N.C. 699; Williams v. Kirkman, 232 N.C. 609, 61 S.E.2d 706. It is true the jury may reject the favorable intimations of plaintiff's testimony and accept the unfavorable ones, still this is a matter for them and it is not for the court to determine. Journigan v. Ice Co., post, 180.
Nor is the prayer of a complaint necessarily controlling in the disposition of a recovery where the plaintiff recovers not according to his prayer, but by compromise, or by agreement dehors the prayer. Recovery is usually determined by evidence, or agreement and not by the plaintiff's demand.
The plaintiff admits that the first note the one that matured 1 November, 1927 — was already barred at the time of the credit of 12 January, 1938, hence under the decision in Bond v. Wilson, 129 N.C. 387, 40 S.E. 182, he abandons any further right to recover on this note.
No error has been made to appear on defendants' appeal. They could have avoided any embarrassment by paying the prior encumbrance rather than allowing suit to be brought to enforce it. Moreover, it may be doubted whether the allegations of the answer are sufficient to state a counterclaim. Smith v. McGregor, 96 N.C. 101, 1 S.E. 695.
On plaintiff's appeal, New trial.
On defendants' appeal, Affirmed.