Pearce v. Gay

139 S.E.2d 567 (1965) 263 N.C. 449

Marshall E. PEARCE and wife, Hilda P. Pearce, Plaintiffs,
v.
Broadus GAY and Litchford Gay, Original Defendants, and H. K. Perry, Additional Defendant, and W. H. Perry, Executor of H. K. Perry, Additional Defendant.

No. 389.

Supreme Court of North Carolina.

January 15, 1965.

John F. Matthews, Louisburg, for plaintiffs.

Gaither M. Beam, Louisburg, for defendants.

RODMAN, Justice.

A conveyance of land, which is subject to a valid and continuing lease, passes to the purchaser the right to collect the rents thereafter accruing. Rents theretofore accrued are mere choses in action. Purchaser of the land acquires no title to the past due rents. Mixon v. Coffield, 24 N.C. 301; Kornegay v. Collier, 65 N.C. 69; Rogers v. McKenzie, 65 N.C. 218; Bullard v. Johnson, 65 N.C. 436; Lancashire v. Mason, 75 N.C. 455; Jennings v. Shannon, 200 N.C. 1, 156 S.E. 89; Perkins v. Langdon, 231 N.C. 386, 57 S.E.2d 407; Four-G Corp. v. Ruta, 25 N.J. 503, 138 A.2d 18; Boteler v. Leber, 112 N.J.Eq. 441, 164 A. 572; Notes, Ann.Cas.1912B, 398: "Right of Purchaser of Leased Land at Judicial Sale with Respect to Rents"; Ann. Cas.1916D, 192: "Persons to Whom Rent is Payable in Absence of Governing Statute, in Case of Sale, Mortgage or Other Grant of Reversion"; 32 Am.Jur. 104-5; 30A Am.Jur. 998; 50 C.J.S. Judicial Sales § 44, p. 662.

When title passes, lessee ceases to hold under the grantor. He then becomes a tenant of grantee, and his possession is grantee's possession. Attornment is unnecessary, G.S. § 42-2. If the grantor is to collect rents accruing subsequent to the effective date of the conveyance, he must, by reservation in his deed, provide that grantee shall not be entitled to possession prior to the expiration of the term fixed in the lease, or otherwise expressly reserve his right to collect subsequently accruing rents.

Appellant contends the property was conveyed subject to the rights of H. K. Perry to collect rents accruing subsequent to the confirmation of the sale, payment of the purchase price, and delivery of the deed. To support this contention, appellant relies on the statement in the deed: "This conveyance is made subject to the rental contract for the above described land for the year 1963."

We concur in the trial court's ruling that the language on which appellant relies is not sufficient to constitute a reservation of the owner's right to possession of the farm for 1963, or a reservation of the rents accruing from the use of the farm for that year. To construe it as appellant contends, would require us to insert words which do not appear in the deed. It is apparent from the deed itself, and from the proceedings leading up to the sale, that the parties and attorneys understood how to reserve an interest in land. In the deed, pleading, and order there is proper language to assure a reservation of a life estate in the dwelling.

In the original petition filed by H. K. Perry, he sought authority to sell the property for $45,000. The sale he proposed would vest immediate possession, or right of possession, in the purchaser to the entire property; he proposed no exception or reservation. The guardian of the wife opposed the sale proposed by the husband. In the guardian's amended answer, he alleged that plaintiffs would purchase the property for $45,000, which the husband wished to accept, but would purchase subject to a reservation for the life of the husband and wife, and the survivor, in the dwelling and curtilage. The guardian further explained the offer which plaintiffs made in this language: "That according to this defendant's information and belief the plaintiff has rented the above mentioned lands for the year 1963 to Broadus Gay and Litchford Gay for the price of $3,000.00, and that the sale of said lands should be made subject to the rental contract to said Broadus Gay and Litchford Gay, and that the purchasers of said lands should receive said $3,000.00 rent when the same is paid."

The commissioners reported the plaintiffs' bid of $45,000 for the property, subject to a reservation of an estate for the life of the owner in the dwelling, and "further subject to the rental contract for the year 1963." This report was confirmed. It is, we think, apparent that the phrase on which appellant relies does nothing more than bind the grantee to honor the provisions of the lease. It is nothing more than a statement of the rights guaranteed to the purchaser and the lessees by G.S. § 42-8.

It is quite true, as appellant asserts, that if lessee pays the rent before a sale, or executes a note or bond for the rent in substitution of his contract to pay the rent, and such note or bond is accepted by the then owner in discharge of lessee's obligation to pay rent, such substitution relieves the lessee of his obligation to pay rent. Since he has no obligation to pay rent, he is not obligated to pay the purchaser; his obligation is to the holder of the note or bond. Holly v. Holly, 94 N.C. 670; Four-G Corp. v. Ruta, supra; 92 C.J.S. Vendor and Purchaser § 288, p. 162. The difficulty confronting appellant is not the law but the facts. There is nothing in the record to show Gay substituted his note, bond, or other security for his obligation to pay the rent. Section 3 of the lease says: "The Lessee shall pay as rent (emphasis supplied) for the use of the premises." Plaintiffs bottom their action against Gay on the provision in the lease to pay rent. When sued, the Gays did not deny that they owed rent; to the contrary, they admitted their obligation to pay rent. They only asked that they be permitted to pay the rent into court in order that the court might determine who was entitled to the rent.

No error.