Cable v. HARDIN OIL COMPANY

179 S.E.2d 829 (1971) 10 N.C. App. 569

H. W. CABLE, Individually and H. W. Cable, Administrator of the Estate of Lizzie W. Cable
v.
HARDIN OIL COMPANY et al.

No. 7119SC150.

Court of Appeals of North Carolina.

March 31, 1971. Certiorari Denied May 12, 1971.

H. Wade Yates, Asheboro, for defendant appellants Edgar Cable, William Cable, Mildred Holiday, Adell Caudill, Nellie Williams, Maude Landreth, Lacy Cable, Robert Cable, Dillard Williams and Paul Williams.

McLeod & Campbell by W. F. McLeod, Reidsville, for defendant appellees, T. Garland Smothers and Tom B. Smothers.

Coltrane & Gavin, by T. Worth Coltrane, Asheboro, for petitioner appellee Harvey W. Cable, individually, and Harvey W. Cable, administrator of the estate of Lizzie W. Cable, and defendant appellee Ruby Cable Lane.

Certiorari Denied by Supreme Court May 12, 1971.

GRAHAM, Judge.

We note at the outset that the deed of trust in the amount of $7,868.84, filed for registration 3 January 1964, was determined to be a lien only on those surplus funds derived from the sale of the tract of land devised by Mrs. Cable to her son Harvey. The order contemplates that this deed of trust is to be paid out of these particular funds. Thus, unless appellants have some interest in these funds, they have no standing to attack the portion of the order having to do with this deed of trust.

Appellants argue that as heirs they have an interest in the funds derived from the sale of that tract, contending that Mrs. Cable's devise to her son Harvey (and also the devise to Ruby) was adeemed when the Federal Land Bank deed of trust was foreclosed and the land sold. This argument is without merit. The doctrine of ademption operates only during the lifetime of the testator. King v. Sellers, 194 N.C. 533, 140 S.E. 91; Starbuck v. Starbuck, 93 N.C. 183. Consequently, the foreclosure and sale, which did not take place until almost two years after the will was probated, could not have constituted an ademption.

Appellants argue further that the execution of the deeds of trust on the property devised, and in particular the execution of the deed of trust which described both tracts as a single tract, constituted an ademption. We disagree. As stated in 57 Am.Jur., Wills, § 1579, p. 1081, "an ademption of a legacy or devise may result from a variety of causes or circumstances, among which may be mentioned, in the case of gifts of specific property, the nonexistence of the property at the death of the testator, or its consumption, loss, disposal by sale, gift, or other alienation, or change in form, during the lifetime of the testator. * * *" (Emphasis added). (For a collection of the North Carolina cases dealing with the subject of ademption and an analysis of whether ademption by extinguishment of alienation depends upon the intention of the testator or simply operates as a matter of law, see Grant v. Banks, 270 N.C. 473, 155 S.E.2d 87.)

Mrs. Cable did not dispose of the property during her lifetime and at her death it remained in specie. The only change that occurred subsequent to the execution of Mrs. Cable's will was that the property was subjected to the liens of the various deeds of trust. Certainly these added encumbrances did not prevent the equity of redemption, which was retained by Mrs. Cable, from passing under the will. To hold otherwise would be to require a testator to make a new will on every occasion that a mortgage was placed on any property that he had previously devised. Furthermore, describing the two separate tracts by metes and bounds as a single tract is of no significance. The boundaries of the two tracts, each of which had been conveyed to testatrix and her late husband by separate deeds, remained easily ascertainable.

The property devised to Harvey and to Ruby vested, subject to the liens of the various deeds of trust, at the time the will was probated. G.S. § 31-39; Hargrave v. Gardner, 264 N.C. 117, 141 S.E.2d 36; Morris v. Morris, 245 N.C. 30, 95 S.E.2d 110. Hence, Harvey owned the equity of redemption in the 73-acre tract at the time the property was foreclosed. Appellants had no interest in that tract and therefore can make no complaint with respect to the $7,868.84 deed of trust that has been held to be a lien against the surplus funds resulting from its sale.

Appellants, of course, do have an interest in the proceeds resulting from the sale of the Emory Bullard tract as only 25 acres of that tract were devised to Ruby. We therefore examine appellants' contentions with respect to the $1,500 deed of trust, filed for registration 28 March 1962, which the court held to be a lien upon the proceeds remaining from the sale of that tract.

Appellants contend the indebtedness secured by this deed of trust was paid. Evidence with respect to this deed of trust tended to show the following: Garland Smothers and Tom B. Smothers (Smothers) are engaged as partners in the operation of Smothers Warehouse. Money for farm use was loaned to Harvey Cable from time to time by the First National Bank of Reidsville and various notes were given evidencing the indebtedness. The first note, in the amount of $1,500, was signed by Harvey and Mrs. Cable as makers and was endorsed by Smothers. On 9 March 1962, Mrs. Cable executed the $1,500 deed of trust in question as security for Smothers endorsement. On 24 December 1963, the $1,500 indebtedness to the bank was consolidated with other Cable accounts and evidenced by a single note in the amount of $9,368.84. This note was signed by Harvey and his son as makers and endorsed by Smothers. On 26 December 1963, Mrs. Cable executed the deed of trust in the amount of $7,868.84 to a trustee for Smothers as further security for their endorsement of that note. The principal of this deed of trust, when added to that of the $1,500 deed of trust executed in March 1962, totaled $9,368.84, which was the total amount of Smothers' contingent liability as endorsers on the note executed to the bank 24 December 1963.

On 13 October 1965, the $9,368.84 note to the bank was renewed by the execution and delivery of a note in the amount of $10,465.78, which amount included accrued interest and insurance. This note was signed by Harvey Cable and his son and was also endorsed by Smothers. On 18 November 1966, Smothers were called upon to pay this note and they did pay it in full.

Mrs. Cable never signed any note given to the bank, except for the first note in the amount of $1,500. When that note was replaced by another note on which her signature did not appear, she was obviously released from any liability to the bank. However, the deed of trust in question did not secure the obligation to the bank, but secured Smothers against loss by their endorsement of the note given to secure the original $1,500 debt of Mrs. Cable's son. Watkins v. Simonds, 202 N.C. 746, 164 S.E. 363. A new note, where not given in payment, but merely in renewal does not change the original debt. 10 C.J.S. Bills and Notes § 279, p. 770. Under the evidence in the record, the $1,500 indebtedness which Smothers secured with their endorsement was not paid until they were called upon to pay it on 18 November 1966. It was this contingent liability which was secured by Mrs. Cable's deed of trust, and this contingent liability continued uninterrupted until it became absolute on 18 November 1966. It is true that "[a]s a general rule, an extension to the principal of the time of payment or performance of the principal obligation by the creditor or obligee, without the consent of the surety, will discharge the surety." 72 C.J.S. Principal and Surety § 162, p. 647. However, no contention is made that the security of Mrs. Cable's deed of trust was discharged because Smothers, by endorsing renewal notes, acquiesced in an extension of time for the payment of the obligation to the bank. Moreover, while a renewal note ordinarily extends the time for payment, there is absolutely no evidence in the record before us as to when payment was due under the original $1,500 note. An inference arises that the renewal notes were for the purpose of consolidating debts rather than extending time for payment.

It is our opinion, and we so hold, that the trial court correctly held the $1,500 deed of trust in question to constitute a lien upon the surplus proceeds from the sale of the tract of land which it covered.

Appellants contend that the "mingling of funds", which has resulted from the sale of the two tracts of property, has made it impossible to trace the funds to the individual tracts and therefore the devises must fail. The devises, however, had taken effect and were vested at the time the sale occurred. Consequently, they could not be affected by the conversion of the devises' interest to cash.

Appellants also point to the special problem created by the devise to Ruby of 25 acres to be selected by her out of the larger Emory Bullard tract. They say that this devise is void for vagueness and uncertainty. In the case of Hodges v. Stewart, 218 N.C. 290, 10 S.E.2d 723, a devise of 25 acres out of an 82-acre tract was held void for vagueness and uncertainty. However, there no power of selection had been given to the devisee or to anyone else. Where, as here, the power of selection is expressly granted to the devisee, such devises are uniformly upheld. See Freeman's Heirs at Law v. Ramsey, 189 N.C. 790, 128 S.E. 404; Garrison v. Eborn, 56 N.C. (3 Jones Eq.) 228; Harris v. Philpot, 40 N.C. (5 Ired.Eq.) 324; Annot., 157 A.L.R. 1129. Compare, Redd v. Taylor, 270 N.C. 14, 153 S.E.2d 761.

We note that this cause has been properly retained by the Superior Court for further findings concerning the value of the respective tracts of land from which the surplus funds were derived.

Appellants have brought forward numerous other assignments of error which we deem it unnecessary to discuss. Suffice to say we have carefully reviewed and overruled all assignments of error properly presented.

Affirmed.

MALLARD, C. J., and PARKER, J., concur.