{ "id": 790254, "name": "JACK L. ADAMS v. LARRY D. COOPER, WILLIAM A. GRIFFIN, WILLIAM M. HOOPER, JIMMY R. JENKINS", "name_abbreviation": "Adams v. Cooper", "decision_date": "1995-05-05", "docket_number": "No. 194A94", "first_page": "242", "last_page": "247", "citations": [ { "type": "official", "cite": "340 N.C. 242" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "442 S.E.2d 141", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "opinion_index": -1 }, { "cite": "114 N.C. App. 459", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527700 ], "year": 1994, "opinion_index": -1, "case_paths": [ "/nc-app/114/0459-01" ] }, { "cite": "49 ALR3d 554", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "opinion_index": -1 }, { "cite": "357 S.E.2d 674", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "pin_cites": [ { "page": "678" } ], "opinion_index": 0 }, { "cite": "320 N.C. 38", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4728643 ], "year": 1987, "pin_cites": [ { "page": "43-44" } ], "opinion_index": 0, "case_paths": [ "/nc/320/0038-01" ] }, { "cite": "20 S.E. 173", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1894, "pin_cites": [ { "page": "174", "parenthetical": "\"Upon general principles of equity a surety, paying the debt of his principal, [is] entitled to be substituted to all the rights of the creditor . . . .\"" } ], "opinion_index": 0 }, { "cite": "115 N.C. 38", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8651197 ], "year": 1894, "pin_cites": [ { "page": "40", "parenthetical": "\"Upon general principles of equity a surety, paying the debt of his principal, [is] entitled to be substituted to all the rights of the creditor . . . .\"" } ], "opinion_index": 0, "case_paths": [ "/nc/115/0038-01" ] }, { "cite": "49 A.L.R.3d 554", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "year": 1973, "opinion_index": 0 }, { "cite": "294 N.W.2d 640", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 10683214 ], "year": 1980, "pin_cites": [ { "page": "643", "parenthetical": "action against guarantors \"is not based on obligations imposed by the notes or mortgages given to secure the notes, but on a separate and distinct contract of guaranty\"" } ], "opinion_index": 0, "case_paths": [ "/nw2d/294/0640-01" ] }, { "cite": "503 N.W.2d 568", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 10626449 ], "year": 1993, "pin_cites": [ { "page": "573", "parenthetical": "\"a guarantor of another's debt or default is not protected by the anti-deficiency statutes\"" } ], "opinion_index": 0, "case_paths": [ "/nw2d/503/0568-01" ] }, { "cite": "413 N.W.2d 194", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 10662936 ], "year": 1987, "pin_cites": [ { "page": "196", "parenthetical": "\"[anti-deficiency] statute clearly does not apply to a guarantor\"" } ], "opinion_index": 0, "case_paths": [ "/nw2d/413/0194-01" ] }, { "cite": "959 F.2d 1463", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10524276 ], "year": 1992, "pin_cites": [ { "page": "1466", "parenthetical": "anti-deficiency statute \"does not apply to guaranties of [purchase money] obligations\"" } ], "opinion_index": 0, "case_paths": [ "/f2d/959/1463-01" ] }, { "cite": "280 S.E.2d 736", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "741" } ], "opinion_index": 0 }, { "cite": "53 N.C. App. 252", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520689 ], "year": 1981, "pin_cites": [ { "page": "258-59" } ], "opinion_index": 0, "case_paths": [ "/nc-app/53/0252-01" ] }, { "cite": "295 S.E.2d 770", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "770-71" } ], "opinion_index": 0 }, { "cite": "59 N.C. App. 90", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525795 ], "year": 1982, "pin_cites": [ { "page": "91-92" } ], "opinion_index": 0, "case_paths": [ "/nc-app/59/0090-01" ] }, { "cite": "188 S.E.2d 342", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1972, "pin_cites": [ { "page": "345" } ], "opinion_index": 0 }, { "cite": "281 N.C. 191", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574517 ], "year": 1972, "pin_cites": [ { "page": "195" } ], "opinion_index": 0, "case_paths": [ "/nc/281/0191-01" ] }, { "cite": "432 S.E.2d 855", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "opinion_index": 0 }, { "cite": "334 N.C. 369", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2530097 ], "year": 1993, "opinion_index": 0, "case_paths": [ "/nc/334/0369-01" ] }, { "cite": "372 S.E.2d 559", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1988, "pin_cites": [ { "page": "562", "parenthetical": "emphasis added" }, { "page": "562" }, { "page": "564", "parenthetical": "Whichard, J., dissenting" }, { "page": "562" } ], "opinion_index": 0 }, { "cite": "323 N.C. 330", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2564955 ], "weight": 5, "year": 1988, "pin_cites": [ { "page": "335" }, { "page": "338" }, { "page": "335" } ], "opinion_index": 0, "case_paths": [ "/nc/323/0330-01" ] }, { "cite": "330 S.E.2d 600", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1985, "pin_cites": [ { "page": "604" } ], "opinion_index": 0 }, { "cite": "313 N.C. 565", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4722362 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc/313/0565-01" ] }, { "cite": "250 S.E.2d 271", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1979, "pin_cites": [ { "page": "370" }, { "page": "273" }, { "page": "371" }, { "page": "274" }, { "page": "273" } ], "opinion_index": 0 }, { "cite": "296 N.C. 366", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8566139 ], "weight": 2, "year": 1979, "pin_cites": [ { "page": "370" } ], "opinion_index": 0, "case_paths": [ "/nc/296/0366-01" ] } ], "analysis": { "cardinality": 609, "char_count": 12446, "ocr_confidence": 0.753, "pagerank": { "raw": 9.98676811461391e-08, "percentile": 0.5382504925962865 }, "sha256": "e79cf236fa082bce864a892edc8dd48d77e09550bb75f514df65ec7aec2cd360", "simhash": "1:a7e966437767b0de", "word_count": 2029 }, "last_updated": "2023-07-14T17:34:40.112900+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Justice Whichard concurring.", "Justices Lake and Orr join in this concurring opinion.", "Justice Whichard concurring.", "Justices LAKE and ORR join in this concurring opinion." ], "parties": [ "JACK L. ADAMS v. LARRY D. COOPER, WILLIAM A. GRIFFIN, WILLIAM M. HOOPER, JIMMY R. JENKINS" ], "opinions": [ { "text": "MITCHELL, Chief Justice.\nOn or about 3 January 1989, One December Enterprises, Inc. (\u201cOne December\u201d), purchased a restaurant located in Dare County from the plaintiff. One December made a cash down payment, assumed two notes which were secured by a first and second deed of trust, and executed a promissory note for the balance of the purchase price \u2014 in the principal amount of $156,330.71 \u2014 which was secured by a third deed of trust. Defendants signed the purchase money note, secured by the third deed of trust, as guarantors.\nOne December defaulted on its indebtedness to plaintiff, and the second deed of trust was foreclosed. The foreclosure of the second deed of trust had the effect of destroying the security for the third deed of trust.\nPlaintiff filed this action to recover the amount owed on the purchase money note secured by the third deed of trust from defendants as guarantors of the note. Defendants moved, pursuant to N.C.G.S. \u00a7 1A-1, Rule 12(b)(6), to dismiss the action, contending that it was barred by the anti-deficiency statute. The trial court allowed defendants\u2019 motion and plaintiff appealed. The Court of Appeals, with Judge McCrodden dissenting, reversed the decision of the trial court. The defendants then appealed to this Court.\nThe sole issue presented on this appeal is whether North Carolina\u2019s anti-deficiency statute, N.C.G.S. \u00a7 45-21.38 (1991), bars an action against the guarantors of a purchase money note to recover the debt for the balance of the purchase price represented by the note. We conclude that such action is barred by the statute and reverse the decision of the Court of Appeals.\nNorth Carolina\u2019s anti-deficiency statute provides in pertinent part:\nIn all sales of real property by mortgagees and/or trustees under powers of sale contained in any mortgage or deed of trust ... to secure to the seller the payment of the balance of the purchase price of real property, the mortgagee or trustee or holder of the notes secured by such mortgage or deed of trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trust or obligation secured by the same ....\nN.C.G.S. \u00a7 45-21.38. Because the defendants\u2019 obligation to the plaintiff arises out of a purchase money obligation for a part of the purchase price of real estate, the defendants are afforded the protection of the anti-deficiency statute. Our cases interpreting and applying the anti-deficiency statute have consistently held that the 1933 General Assembly intended it to prevent any suit on such a purchase money obligation other than one to foreclose upon the real property securing the obligation.\nThis Court has stated that the anti-deficiency statute is to be read broadly in order to give effect to its legislative intent and to prevent evasions of the statute. Realty Co. v. Trust Co., 296 N.C. 366, 250 S.E.2d 271 (1979). In construing the meaning of the anti-deficiency statute, we have said:\n[T]he manifest intention of the Legislature was to limit the creditor to the property conveyed when the note and mortgage or deed of trust are executed to the seller of the real estate and the securing instruments state that they are for the purpose of securing the balance of the purchase price.\nId. at 370, 250 S.E.2d at 273. The anti-deficiency statute prevents an action for personal judgment on the note and limits the creditor to the property conveyed in the deed of trust. Id. at 371, 250 S.E.2d at 274.\nBarnaby v. Boardman, 313 N.C. 565, 330 S.E.2d 600 (1985), is another case involving the application of N.C.G.S. \u00a7 45-21.38. In Bamaby, we reemphasized that our anti-deficiency statute bars any suit on the note, whether before or after foreclosure, and strictly limits the creditor \u201c \u2018to the property conveyed.\u2019 \u201d Id. at 571, 330 S.E.2d at 604 (quoting Realty Co. v. Trust Co., 296 N.C. at 370, 250 S.E.2d at 273) (alteration in original).\nIn Merritt v. Edwards Ridge, 323 N.C. 330, 372 S.E.2d 559 (1988), the purchase money creditor sought recovery of back taxes, expenses of the foreclosure sale, and attorneys\u2019 fees. This Court concluded that the anti-deficiency statute precludes such recovery, stating that in our earlier cases we had not limited its protection to situations\nin which the purchase money creditor was suing on the note or was seeking only to recover the unpaid balance of the purchase price. Given our prior construction of our anti-deficiency statute in Realty Co., and more recently in Bamaby, we now hold that when the purchase money debtor defaults, the purchase money creditor is limited strictly to the property conveyed in all cases in which the note and mortgage or deed of trust are executed to the seller of the real estate and the securing instruments state that they are for the purpose of securing the balance of the purchase price.\nId. at 335, 372 S.E.2d at 562 (emphasis added).\nIn the recent case of In re Foreclosure of Goforth Properties, Inc., 334 N.C. 369, 432 S.E.2d 855 (1993), the property sold and deeded to Goforth was secured by his purchase money note and deed of trust. Subsequent to the execution of the purchase money note and deed of trust, Goforth executed a document entitled \u201cSupplemental Deed of Trust\u201d conveying certain other real property to the trustee for the benefit of the beneficiaries in the original purchase money deed of trust. Goforth defaulted on the purchase money note and deed of trust, and the property was foreclosed upon and sold; however, the proceeds of that foreclosure sale did not satisfy the debts secured by the purchase money note and deed of trust. The trustee then attempted to foreclose upon and sell the other property subject to the supplemental deed of trust in order to satisfy the deficiency. This Court concluded that it would violate the anti-deficiency statute to satisfy the deficiency by foreclosing on the additional property provided as collateral in the \u201cSupplemental Deed of Trust\u201d because a purchase money creditor is limited to the property conveyed.\nLikewise, in the present case, the signature of the guarantors was given as additional security for the debt of One December. We again emphasize that in all cases interpreting the anti-deficiency statute, the overriding principle to be followed is that \u201cwhen the purchase money debtor defaults, the purchase money creditor is limited strictly to the property conveyed\u201d and nothing else. Merritt v. Edwards Ridge, 323 N.C. at 335, 372 S.E.2d at 562.\nFor the foregoing reasons, the decision of the Court of Appeals is reversed. This case is remanded to the Court of Appeals to reinstate the order of the trial court dismissing the plaintiffs action.\nREVERSED.\nJustice Whichard concurring.\nIn Merritt v. Edwards Ridge, 323 N.C. 330, 372 S.E.2d 559 (1988), one of the cases relied upon in the opinion for the Court, I stated in dissent: \u201cBy a pure judicial gloss on the anti-deficiency judgment statute, N.C.G.S. \u00a7 45-21.38 (1984), the majority today deprives the plaintiffs of the benefits of a bargain, fairly and properly entered, which violates no established policy. Neither the express terms of the statute nor its underlying policy requires this result.\u201d Merritt, 323 N.C. at 338, 372 S.E.2d at 564 (Whichard, J., dissenting). This proposition applies equally here. The obligation of the guaranty \u201cis separate and independent of the obligation of the principal debtor.\u201d Investment Properties v. Norburn, 281 N.C. 191, 195, 188 S.E.2d 342, 345 (1972); see also Exxon Chemical Americas v. Kennedy, 59 N.C. App. 90, 91-92, 295 S.E.2d 770, 770-71 (1982); Gillespie v. DeWitt, 53 N.C. App. 252, 258-59, 280 S.E.2d 736, 741 (1981). As such, it is not proscribed by any limitation, express or implied, contained in N.C.G.S. \u00a7 45-21.38. Other courts interpreting similar statutes have so held. See, e.g., Paradise Land & Cattle Co. v. McWilliams Enters., 959 F.2d 1463, 1466 (9th Cir. 1992) (anti-deficiency statute \u201cdoes not apply to guaranties of [purchase money] obligations\u201d); Miller & Schroder, Inc. v. Gearman, 413 N.W.2d 194, 196 (Minn. Ct. App. 1987) (\u201c[anti-deficiency] statute clearly does not apply to a guarantor\u201d); First Nat\u2019l Bank & Trust Co. v. Anseth, 503 N.W.2d 568, 573 (N.D. 1993) (\u201ca guarantor of another\u2019s debt or default is not protected by the anti-deficiency statutes\u201d); Bank of Kirkwood Plaza v. Mueller, 294 N.W.2d 640, 643 (N.D. 1980) (action against guarantors \u201cis not based on obligations imposed by the notes or mortgages given to secure the notes, but on a separate and distinct contract of guaranty\u201d). For a general discussion of this topic, see J.A. Bryant, Jr., Annotation, Mortgages: Effect Upon Obligation of Guarantor or Surety of Statute Forbidding or Restricting Deficiency Judgments, 49 A.L.R.3d 554 (1973).\nI believe the foregoing cases represent the better-reasoned view. I perceive from N.C.G.S. \u00a7 45-21.38 no compelling public-policy reason, express or implied, to deny a plaintiff-creditor the benefit of a bargain with a defendant-guarantor. The guarantor is subrogated to the rights of the creditor. N.C.G.S. \u00a7 26-3.1 (1986) (surety, including guarantor, has benefit of \u201cany action or . . . any remedy which the creditor himself might have had against the principal debtor\u201d); Peebles v. Gay, 115 N.C. 38, 40, 20 S.E. 173, 174 (1894) (\u201cUpon general principles of equity a surety, paying the debt of his principal, [is] entitled to be substituted to all the rights of the creditor . . . .\u201d). Because N.C.G.S. \u00a7 45-21.38 limits a creditor to recovery of the property that is the subject of the purchase money instrument, the guarantor, too, is thus limited. Therefore, the policy motivating the statute, namely, protecting a debtor against loss beyond the property, is not violated by allowing a creditor to proceed against a guarantor.\nIf writing on a clean slate, I would so hold. I agree with the opinion for the Court, however, that this Court, over my dissent, has clearly held that\nwhen the purchase money debtor defaults, the purchase money creditor is limited strictly to the property conveyed in all cases in which the note and mortgage or deed of trust are executed to the seller of the real estate and the securing instruments state that they are for the purpose of securing the balance of the purchase price.\nMerritt, 323 N.C. at 335, 372 S.E.2d at 562. That interpretation has now become an integral part of the statute. Gupton v. Builders Transport, 320 N.C. 38, 43-44, 357 S.E.2d 674, 678 (1987). Therefore, restitution of the freedom to bargain that our jurisprudence normally accords, absent express legislative proscription, is a matter for the General Assembly, not this Court. I am bound in this case by the Court\u2019s prior interpretation of the statute limiting the purchase money creditor strictly to the property conveyed, and I thus reluctantly concur in the opinion for the Court.\nJustices LAKE and ORR join in this concurring opinion.", "type": "majority", "author": "MITCHELL, Chief Justice." } ], "attorneys": [ "Trimpi & Nash, by John G. Trimpi, for plaintiff-appellee.", "Twiford, Morrison, O\u2019Neal & Vincent, by Edward A. O\u2019Neal, for defendant-appellants." ], "corrections": "", "head_matter": "JACK L. ADAMS v. LARRY D. COOPER, WILLIAM A. GRIFFIN, WILLIAM M. HOOPER, JIMMY R. JENKINS\nNo. 194A94\n(Filed 5 May 1995)\nMortgages and Deeds of Trust \u00a7 119 (NCI4th)\u2014 purchase of restaurant \u2014 action against guarantors of purchase money note \u2014 anti-deficiency statute\nThe trial court did not err by dismissing plaintiffs action against the guarantors of a purchase money note used in the purchase of a restaurant. Defendants are afforded the protection of the anti-deficiency statute, N.C.G.S. \u00a7 45-21.38, because their obligation to plaintiff arises out of a purchase money obligation for a part of the purchase price of real estate. In all cases interpreting the anti-deficiency statute, the overriding principle is that when the purchase money debtor defaults, the purchase money creditor is limited strictly to the property conveyed and nothing else.\nAm Jur 2d, Mortgages \u00a7 920.\nMortgages: effect upon obligation of guarantor or surety of statute forbidding or restricting deficiency judgments. 49 ALR3d 554.\nJustice Whichard concurring.\nJustices Lake and Orr join in this concurring opinion.\nAppeal by defendants pursuant to N.C.G.S. \u00a7 7A-30(2) from the decision of a divided panel of the Court of Appeals, 114 N.C. App. 459, 442 S.E.2d 141 (1994), reversing a judgment for defendants entered by Trawick, J., on 11 May 1993 in Superior Court, Dare County. Heard in the Supreme Court 13 March 1995.\nTrimpi & Nash, by John G. Trimpi, for plaintiff-appellee.\nTwiford, Morrison, O\u2019Neal & Vincent, by Edward A. O\u2019Neal, for defendant-appellants." }, "file_name": "0242-01", "first_page_order": 274, "last_page_order": 279 }