Ayers v. Makely.

In July, 1893, W. H. Wahab and George Credle, being then the owners of a certain tract of land in Hyde County, known as the "Donnell farm," entered into a written contract and agreement to sell and convey the same to Stephen B. Ayers for the price of $40,000; $5,000 of the purchase money was to be paid in November, 1894, and $5,000 on 1 November in each subsequent year, with interest on all unpaid sums, payable annually, until the whole purchase money should be paid. Makely, the defendant in this action, was a party to the contract. At the time of its execution he held a mortgage on the tract of land, and agreed to purchase another encumbrance on the same held by James A. Bryan, trustee of Miss Donnell, both encumbrances aggregating about $25,000. It was further agreed in the contract that the payments to be made by Ayers were to be applied to the payment of the encumbrances until the principal of the encumbrances and interest thereon should be (61) reduced to $10,000. When that should be done then Wahab and Credle and their respective wives were to execute and deliver to Ayers a good deed in fee to the land, and Ayers at the same time was to execute and deliver his notes to Makely, secured by a mortgage upon the premises for the $10,000, in two payments of $5,000 each, to be a first lien on the land. Ayers was also to execute his notes to Wahab and Credle for the balance of the purchase money, to be secured by a mortgage on the premises. It was also agreed that in case of default in any of the payments then, at the option of Ayers and Credle and Makely, the contract should be null and void, and the total amounts unpaid should be considered due and payable at once. Also Ayers was to furnish to Makely, at the time of the execution and delivery of the contract, a bond satisfactory to Makely in the sum of $10,000, guaranteeing the first two payments provided for by this contract. Under the said contract Ayers went into possession and control of the land on 1 November, 1893, the rents and profits for that year, however, to belong to Wahab and Credle. Differences and controversies having arisen between Ayers and Wahab and Credle the last two, with Makely, instituted an action of ejectment in the Superior Court of Hyde County against Ayers, and demanded possession of the land. Ayers filed his answer in that suit, and gave the bond as required by law in the sum of $200, with sureties. Under an order of the Superior Court made in the cause Ayers was required to give an additional bond in the sum of $5,000 to secure the rents, costs and damages that might be sustained by the plaintiff. The bond was given with sureties.

While the action of ejectment was pending against Ayers the plaintiffs in the action, Makely, Wahab and Credle, entered into an agreement among themselves whereby Makely (62) instituted an independent action against Wahab and Credle in the Superior Court of Hyde County for the foreclosure of the mortgage held by Makely upon the land, and the part of the notes or bonds owned by Makely and secured by the deed of trust to James A. Bryan. Ayers was not a party to the agreement, and was not a party to the action of foreclosure. By the terms of the agreement between Makely on the one part and Wahab and Credle on the other it was stipulated and provided that at any sale under the foreclosure decree in the cause Makely would bid for the land, or cause to be bid therefor, such sum as would discharge the indebtedness due him as aforesaid by Wahab and Credle, or if he failed to do so and bought the land himself at any less price, that he would cancel and satisfy the balance of his judgment upon his debts aforesaid. Under his contract and agreement with Wahab and Credle as aforesaid the land was sold by Makely through a commissioner appointed by the court on 11 May, 1896, and was purchased by him for $15,500, and the residue of said judgment due Makely, after crediting the amount bought by the sale of the land, was canceled by him under his agreement aforesaid. Ayers, notwithstanding the foreclosure and sale, continued to remain in possession of the premises. Pending the said action of ejectment Henry W. Wahab died intestate, and his personal representative and heirs at law were made parties plaintiff with Makely and Credle therein. A judgment was recovered in said action of ejectment against Ayers and his sureties and in favor of George Credle, as surviving partner of Wahab and Credle, for the penal sums of the aforesaid bonds, to be discharged upon the payment of $3,200 with interest thereon from 1 January, 1896, being for the rents and profits of said land for the year 1895, and for the further sum of $464.65 costs. A large amount has been paid by some of the sureties of Ayers on the judgment recovered against them in the suit of ejectment. The defendant appealed from the judgment rendered. The plaintiffs in this action are Ayers and the sureties on his bond in the ejectment suit. In the complaint they allege that during the pendency of the action of ejectment Ayers was not ejected by process of law but that he voluntarily surrendered possession of the premises to Makely on Makely's express promise to Ayers and his sureties that they should not be held responsible for the rents and profits growing out of the land while Ayers was in the possession thereof, and that he would hold Ayers and his sureties harmless against any demand that might be made on them for the rents and profits by Wahab and Credle. And this action is brought to recover from Makely the amount which the sureties have had to pay and will have to pay because of the recovery against them on the bonds in the ejectment suit.

The defendant in his answer denied the cause of action alleged in the complaint. At the Fall Term, 1901, of Hyde Superior Court, he moved to amend his answer and to plead counterclaims and set-off. The counterclaim which the defendant desired to plead was in substance that Ayers was the principal in the bonds filed in the ejectment suit, and that the other plaintiffs were sureties, and that Ayers owed him $5,359.44, that amount being the difference between the amount of Makely's encumbrance on the land and the amount at which he bought the land at the commissioner's sale, and that Ayers had assumed the payment of the encumbrances.

The motion to amend the answer and set up the counterclaim was denied, the order being silent as to the ground of refusal. The plaintiff contends that there can be no appeal at any time from the refusal to allow the answer to be filed, for the (64) reason that such matter was entirely discretionary with the court, and the order being silent as to the ground of refusal, the conclusion is that it was denied as a matter of discretion. But in making up the case on appeal his Honor stated that he did not refuse to allow the amendment as a matter of discretion, but on the ground that the offered counterclaim did not amount to a counterclaim in law. The presumption in law that the order was made in the discretion of the court was rebutted by the statement of his Honor to the contrary in the case made up for this Court.

The appeal was premature, but as the whole matter in dispute came out on the argument here it may be best for all (the Court included) to pass upon the ruling made by his Honor that the claim of the defendant did not amount to a counterclaim in law. We see no error in the ruling. It was argued here by the counsel of the defendant that the legal effect of the contract of sale was to make Ayers the principal debtor, as between himself and Wahab and Credle, as to the debts due by Wahab and Credle to Makely, and that that position was brought about by the assumption by Ayers to pay those debts for Wahab and Credle. On that proposition it was insisted that the release of Wahab and Credle from their indebtedness to Makely was only a release of the sureties, and not a release of Ayers, the principal. But from our reading of the contract we do not find that there was any assumption on the part of Ayers of the debts of Wahab and Credle to Makely. The relations of the parties to that contract were not changed by its execution. The most that could be said is that Ayers bound himself to see that particular payments on the purchase money should be applied to the claims of Makely. The language of that part of the contract is as follows: "It is understood by and between the parties hereto that the payments above mentioned to be made by said third party (Ayers) shall be applied to the payment of those encumbrances held by said second party (Makely) until the (65) principal of said encumbrances and interest thereon has been reduced to the sum of ten thousand dollars."

We are of the opinion, therefore, that when, at the time of his purchase of the land at the commissioner's sale, Makely released and discharged Wahab and Credle, the principal debtors, from the payment of the encumbrances, Ayers was also released. The appeal, however, was erroneously granted, because it was premature. Exception should have been noted and the case proceeded with. Milling Co. v. Finlay, 110 N.C. 411; Walker v.Scott, 106 N.C. 56.

Appeal dismissed.