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27 N.C. App. 516

Sloop v. London

Court of Appeals of North Carolina

Decided November 19, 1975

Court of Appeals of North Carolina · decided 1975-11-19

Key passage — most relied on by later courts

“The relaxation of the strict rules equity imposes upon the mortgagor in relation to deeds of trust is predicated upon the theory that the trustee is a disinterested third party acting as agent both of the debtor and of the creditor, thus removing any opportunity for oppression by the creditor and assuring fair treatment to the debtor. He is trustee for both debtor and creditor with respect to the property conveyed. A creditor can exercise no power over his debtor with respect to such property because of its conveyance to the trustee with power to sell upon default of the debtor. The trustee for sale is bound by his office to bring the estate to a sale under every possible advantage to the debtor as well as to the creditor and he is bound to use not only good faith but also every requisite degree of diligence in conducting the sale and to attend equally to the interest of the debtor and the creditor alike, apprising both of the intention of selling, that each may take the means to procure an advantageous sale. He is charged with the duty of fidelity as well as impartiality, of good faith and every requisite degree of diligence, of making due advertisement and giving due notice. Upon default his duties are rendered responsible, critical and active and he is required to act discreetly, as well as judiciously, in making the best use of the security for the protection of the beneficiaries.”

quoted by 1 later decision, including 208 N.C. App. 212 - In Re the Foreclosure of the Deed of Trust of Vogler Realty, Inc.

Relies on Cutts v. Casey · Roberts v. William N. & Kate B. Reynolds Mem. Park · Bowen v. Gardner

Good law ✅— No negative treatment on recordhow we know

Decided 1975-11-19

How this case has been cited

Cited by 11 later decisions — most recently March 2012

9 state decisions

6019751980199020002010decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

HEDRICK, Judge.

¶1Plaintiffs assign as error the granting of defendants’ motion for a directed verdict at the close of plaintiffs’ evidence. In granting the directed verdict the court found, as defendants argued in their motion, “[t]hat the record contains no evidence . . . that would constitute a wrongful foreclosure in contemplation of law or. evidence which would entitle the plaintiffs to recover money damage from the defendants or either of them.”

¶2As to evidence of damages, in a wrongful foreclosure action, it is not necessary to prove damages to withstand a directed verdict, since, regardless of proof of any actual damages, plaintiffs would be entitled to at least nominal damages should the jury find there was a wrongful foreclosure. Bowen v; Fidelity Bank, 209 N.C. 140, 183 S.E. 266 (1936) ; 5 Strong, N. C. Index 2d, Mortgages and Deeds of Trust, § 39, pp. 594-595.

¶3. In ruling on a motion for directed verdict, the plaintiffs’ evidence along with any reasonable inference that can be drawn *519from the evidence, must be considered in the light most favorable to plaintiffs, Bowen v. Gardner, 275 N.C. 363, 168 S.E. 2d 47 (1969), and only when it is clear as a matter of law that plaintiffs have shown no right to relief should the judge grant defendants’ motion for a directed verdict. Roberts v. Reynolds Memorial Park, 281 N.C. 48, 187 S.E. 2d 721 (1972) ; Cutts v. Casey, 278 N.C. 390, 180 S.E. 2d 297 (1971).

¶4The language of the deed of trust imposed a duty on the Trustee, London, to hold the property in trust for DAC and upon demand of DAC to sell the property at public auction. The deed of trust also imposed a duty on London to receive and to disburse the proceeds of the sale in accordance with the priorities enumerated in the deed of trust.

¶5The clear language of the deed of trust as well as North Carolina law, imposes upon the trustee a fiduciary duty to use diligence and fairness in conducting the sale and to receive and disburse the proceeds of the sale. Mills v. Mutual Building and Loan Assn., 216 N.C. 664, 6 S.E. 2d 549 (1940) ; Hinton v. Pritchard, 120 N.C. 1, 26 S.E. 627 (1897) ; Huggins v. Dement, 13 N.C. App. 673, 187 S.E. 2d 412 (1972), app. dismissed 281 N.C. 314, 188 S.E. 2d 898 (1972).

¶6With these standards in mind, the evidence shows that London was the trustee under the deed of trust but that Charles J. Smith as agent of DAC conducted the foreclosure sale. The evidence further shows that London was not at the sale nor was he represented at the sale by McCubbins; that only one bid was made at the sale; and that McCubbins, as agent for London, signed the preliminary “report” of the sale before the sale was ever conducted. The check for the purchase price was given directly to DAC. In addition, London later ratified the sale in his “final report.” The deed of trust itself imposes upon London the duty to conduct the sa’e. Clearly, the fact that London took no part in the sale yet ratified the sale conducted by Smith, the agent of the beneficiary, shows a breach of duty and of the terms of the deed of trust sufficient to withstand a motion for a directed verdict.

¶7As to whether the directed verdict was proper as regards DAC and its agent Charles J. Smith, “[a] creditor can exercise no power over his debtor with respect to . . . property [subject to the deed of trust] because of its conveyance to the trustee with power to sell upon default of the debtor.” Mills v. Building *520& Loan Assn., supra at 669. “The power [to sell under a deed of trust] cannot be exercised by the holder of the obligation secured, if he is not the trustee . . . since his control over the security consists in his right to call on the trustee, when default occurs, to advertise and sell and to require him to comply . 59 C.J.S., Mortgages, § 555, p. 913. Since the trustee, London, had the sole authority and duty to conduct the sale, Charles J. Smith, as agent for the creditor DAC, was wholly without such authority under the deed of trust. The legal title to the property rested with the trustee. Under the deed of trust DAC, as creditor and holder of the note, could only demand that the trustee sell the property; it could not conduct the sale itself through one of its agents. Plaintiffs have charged London with a breach of his fiduciary duty. It seems no less than right to hold responsible those who have knowingly participated in that dereliction of duty. Erickson v, Starling, 233 N.C. 539, 542, 64S.E. 2d 832, 834 (1951).

¶8For the reasons stated, the judgment directing a verdict for the defendants London, Smith and DAC is reversed and the cause is remanded to the Superior Court for further proceedings:

¶9Reversed and remanded.

Judges Morris and Arnold concur.
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