Opinion
(August Term, 1849.)
It is a principle in equity that when land is sold by a clerk and master under a decree of a court of equity, and the legal title is retained until the purchase money is paid, if the principal becomes insolvent before so doing, the sureties have an immediate equity, either before paying the money or after, to subject the land.
CAUSE removed from the Court of Equity of RUTHERFORD, at Spring Term, 1848.
B. S. Gaither for plaintiff.
W. P. Bynum, G. W. Baxter, and J. McD. Carson for defendants.
The case made by the bill and answers is as follows: In 1836 the defendants James Miller and his wife, Frances, James Foster and his wife, Martha, and Susan Booker, were tenants in common of a tract of land lying in the county of Rutherford, and, in the same year, procured a decree of the court of equity directing its sale. Under this decree the land was sold by the clerk and master, and the defendant John H. Alley became the purchaser at the price of $1,107, and to secure the payment gave his bond with the plaintiff Ransom Egerton and James Erwin, the intestate of John W. Erwin, the other plaintiff, his sureties. Alley made several payments, but failing to discharge the bond, an action was brought upon it against him and his sureties, and judgment having been obtained, the whole amount remaining due was collected out of the sureties by an execution, Alley being entirely destitute of property. This judgment was obtained at January Term, 1847, of Rutherford Superior Court. In July, 1842, John H. Alley, being largely (189) indebted, conveyed or attempted to convey the land so purchased by him to John W. Hampton and Samuel S. Hampton, in trust to secure the debts mentioned in the deed, and on 14 September, 1846, they conveyed the land, by deed, to the defendant John S. Jackson. The legal title to the land is still in the tenants in common, the clerk and master never having made any conveyance to Alley or to any other person. The plaintiffs pray that the land may be resold and the money paid by them be repaid, with interest from the time they paid it.
The equity of the plaintiffs is a very plain one, and they are entitled to the relief they seek. The question presented by the case is indeed not an open one. Green v. Crockett, 37 N.C. 390, and Polk v. Gallant, ib., 395, entirely cover the ground occupied by this. In each of these cases a sale had been made by a clerk and master, under a decree of their respective courts, and title retained until the purchase money should be paid, and in each the plaintiffs were the sureties of the purchasers on their purchase bonds. The bills were filed against the purchasers and their assignees. In the first case the sureties had paid the purchase money, and in the other they were liable to pay it, the principals being insolvent. In each the bill was filed to subject the land to a resale to indemnify the sureties, and in each case the relief sought was granted. The principle established by those cases, and which fully governs this, is that when land is sold by a clerk and master under a recree of a court of equity, and the legal title is retained until the purchase money is paid, if the principal becomes insolvent before so doing, the sureties have an immediate equity, either before paying the money or after, to subject the land, because that has then (190) become the only fund to which they can apply, and in truth the only debtor, as between it and the surety. There is here no assignee, from the purchaser, Alley, contesting the right of the plaintiffs to the substitution they seek. Jackson, the purchaser from the alleged trustees of Alley, admits their right to relief, and, if their right were contested, we have seen above that his purchase would not avail him against the plaintiffs. It must be referred to the master to inquire what is due for principal and interest of the debt, which the plaintiffs have paid as stated in the pleadings, and it must be declared that the land mentioned in the pleadings is liable for the sum that may thereupon be found due, and for the costs of this suit; and if the defendant Alley should not pay such principal, interest, and costs within some reasonable time, it must be ordered that the clerk and master of Rutherford County sell the land, and out of the proceeds pay in the first place the principal money and interest due on said debt, and in the next place the costs, if sufficient therefor.
PER CURIAM. Decree accordingly.
Cited: Freeman v. Mebane, 55 N.C. 47; Pettillo, ex parte, 80 N.C. 52; Mast v. Raper, 81 N.C. 334; Stenhouse v. Davis, 82 N.C. 434; Dawkins v. Dawkins, 93 N.C. 291.