{
  "id": 11919154,
  "name": "In the Matter of: The Foreclosure of a Deed of Trust executed by Ferrell Brothers Farms, Inc.",
  "name_abbreviation": "In re The Foreclosure of a Deed of Trust Executed by Ferrell Bros. Farms",
  "decision_date": "1995-04-04",
  "docket_number": "No. 941SC674",
  "first_page": "458",
  "last_page": "461",
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    "id": 14983,
    "name": "North Carolina Court of Appeals"
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  "last_updated": "2023-07-14T20:04:31.897721+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
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  "casebody": {
    "judges": [
      "Judges COZORT and LEWIS concur."
    ],
    "parties": [
      "In the Matter of: The Foreclosure of a Deed of Trust executed by Ferrell Brothers Farms, Inc."
    ],
    "opinions": [
      {
        "text": "GREENE, Judge.\nEssex Mortgage Corporation (Essex) appeals from the trial court\u2019s order granting the trustee in a foreclosure proceeding a trustee\u2019s commission and permitting the payment of attorneys\u2019 fees.\nThis case arises out of a foreclosure proceeding instituted by East Carolina Farm Credit, ACA, who held the first mortgage (the instrument) on property owned by Ferrell Brothers Farms, Inc. Essex had the rights of a second mortgagee on the same property. After the sale, Essex filed notice with the Currituck County Superior Court claiming ownership of any surplus funds available from the sale. After learning that Essex would challenge the amount of their commission and fees, the trustee and attorneys filed motions with the superior court for the allowance of their respective commission and fees. Essex then filed motions \u201cto limit\u201d the attorneys\u2019 fees and the trustee\u2019s commissions, on the grounds that those payments reduced the amount of surplus that Essex would eventually recover.\nAt a hearing before a superior court judge on 3 March 1994 to determine whether the trustee\u2019s commission and attorneys\u2019 fees should be paid, Essex was not allowed to present evidence challenging the reasonableness of the commission or fees. Because a motion was pending, the trial judge determined that the requested commission and fees were reasonable and held the trustee was entitled to five percent of the gross sale proceeds as his commission and the attorneys were entitled to fifteen percent of the outstanding balance at the time the foreclosure action was instituted as their fees.\nThe dispositive issue is whether a trustee conducting a sale of real property pursuant to an express power of sale contained in a mortgage or deed of trust is required to receive court approval of the amount of the disbursements made pursuant to N.C. Gen. Stat. \u00a7 46-21.31(a).\nThere is no dispute in this case that Essex is entitled to any surplus remaining after the trustee makes the disbursements as required by N.C. Gen. Stat. \u00a7 45-21.31(a). The only question is whether the legislature has provided or whether the instrument provides any means for Essex to contest the amount of disbursements made by the trustee. The answer is no..\nUpon default and after notice and hearing as required by Chapter 45, Article 2A, a person so designated in a mortgage or deed of trust is authorized to conduct a sale of the property described in the instrument. The sale must be conducted consistent with Chapter 45, Article 2A. The proceeds from the sale\nshall be applied by the person making the sale, in the following order, to the payment of\u2014\n(1) Costs and expenses of the sale, including the trustee\u2019s commission, if any, and a reasonable auctioneer\u2019s fee if such expense has been incurred;\n(2) Taxes due and unpaid on the property sold, as provided by G.S. 105-385, unless the notice of sale provided that the property be sold subject to taxes thereon and the property was so sold;\n(3) Special assessments, or any installments thereof, against the property sold, which are due and unpaid, as provided by G.S. 105-385, unless the notice of sale provided that the property be sold subject to special assessment thereon and the property was so sold;\n(4) The obligation secured by the mortgage, deed of trust or conditional sale contract.\nN.C.G.S. \u00a7 45-21.31(a) (1991). \u201cAny surplus remaining after the application of the proceeds of the sale as set out in subsection (a) shall be paid to the person or persons entitled thereto . . . .\u201d N.C.G.S. \u00a7 45-21.31(b). After the sale is completed and the disbursements made, the trustee is required to file a final report \u201cwith the clerk of the superior court of the county where the sale is held.\u201d N.C.G.S. \u00a7 45-21.33(a) (Supp. 1994). The clerk is required to \u201caudit the account and record it.\u201d N.C.G.S. \u00a7 45-21.33(b).\nThe trustee is entitled to compensation \u201cas is stipulated in the instrument,\u201d N.C.G.S. \u00a7 45-21.15(a) (Supp. 1994), and the trustee\u2019s commission is specifically listed as an expense which is properly deducted from the proceeds of the sale. N.C.G.S. \u00a7 45-21.31(a)(l). Although N.C. Gen. Stat. \u00a7 45-21.31(a) does not have specific reference to attorneys\u2019 fees, to the extent the instrument provides for the payment of such fees, they become an \u201cobligation secured by\u201d the instrument. N.C.G.S. \u00a7 45-21.31(a)(4). Thus, any entitlement to and the amount of attorneys\u2019 fees required for the conduct of the sale is also controlled by the instrument and subject to deduction from the sale proceeds.\nChapter 45, Article 2A contains no language that suggests the trustee must seek or obtain approval from either the clerk of the superior court or the court prior to making the disbursements permitted in N.C. Gen. Stat. \u00a7 45-21.31(a). Additionally, neither party to this appeal suggests that the instrument giving rise to this foreclosure grants anyone the right to contest the disbursements permitted in N.C. Gen. Stat. \u00a7 45-21.31(a). Thus, in this case, the disbursements made pursuant to N.C. Gen. Stat. \u00a7 45-21.31(a) are within the sole province of the trustee. The trustee is required to file a final report and that report must be audited by the clerk of the superior court. In conducting the \u201caudit,\u201d however, the clerk is merely authorized to determine whether the entries in the report reflect the actual receipts and disbursements made by the trustee.\nAccordingly, the trial court did not err in refusing to allow Essex to present evidence on the reasonableness of the trustee\u2019s commission and attorneys\u2019 fees. Indeed, the reasonableness of these expenses was not an issue properly before the trial court.\nAffirmed.\nJudges COZORT and LEWIS concur.",
        "type": "majority",
        "author": "GREENE, Judge."
      }
    ],
    "attorneys": [
      "Trimpi & Nash, by John G. Trimpi, for appellant Essex Mortgage Corporation.",
      "Pritchett, Cooke & Burch, by Lars P. Simonsen and Stephen R. Burch, for appellee substitute trustee.",
      "Everett, Everett, Warren & Harper, by Edward J. Harper, II, for appellee East Carolina Farm Credit, ACA, and in its own behalf as Attorneys for ACA."
    ],
    "corrections": "",
    "head_matter": "In the Matter of: The Foreclosure of a Deed of Trust executed by Ferrell Brothers Farms, Inc.\nNo. 941SC674\n(Filed 4 April 1995)\nMortgages and Deeds of Trust \u00a7 120 (NCX4th)\u2014 foreclosure sale \u2014 trustee\u2019s commission and attorney\u2019s fees \u2014 court approval of amount not required\nA trustee conducting a sale of real property pursuant to an express power of sale contained in a mortgage or deed of trust is not required to receive court approval of the amount of the disbursements made pursuant to N.C.G.S. \u00a7 45-21.31(a), including the trustee\u2019s commission and attorney\u2019s fees.\nAm Jur 2d, Mortgages \u00a7\u00a7 978 et seq.\nAppeal by Essex Mortgage Corporation from order entered 17 March 1994 in Currituck County Superior Court by Judge Thomas S. Watts. Heard in the Court of Appeals 1 March 1995.\nTrimpi & Nash, by John G. Trimpi, for appellant Essex Mortgage Corporation.\nPritchett, Cooke & Burch, by Lars P. Simonsen and Stephen R. Burch, for appellee substitute trustee.\nEverett, Everett, Warren & Harper, by Edward J. Harper, II, for appellee East Carolina Farm Credit, ACA, and in its own behalf as Attorneys for ACA."
  },
  "file_name": "0458-01",
  "first_page_order": 490,
  "last_page_order": 493
}