
    McGOWAN v. DAVENPORT.
    (Filed March 29, 1904).
    1. HEARSAY EVIDENCE — Evidence—Mortgages.
    Where a feme covert gives a mortgage on her separate estate to secure the debt of her husband and the husband dies, in an action to foreclose the mortgage a statement of the husband that the debt had not been paid is not competent.
    2. WITNESSES — Evidence—The Code, see. 590 — Mortgages.
    In an action to foreclose a mortgage given by a feme covert to secure a debt of her husband, the mortgagee is not competent to testify that the debt has not been paid, the husband being dead.
    3. PARTIES — Mortgages—Foreclosure of Mortgages.
    
    The representative of a deceased mortgagor who joined with his wife in giving a mortgage on the wife’s separate property is a necessary party to a suit against the widow and trustee for foreclosure of the mortgage.
    ActioN by E. L. McGowan against J. R. Davenport and others, heard by Judge ^Frederick Moore and a jury, at November Term, 1903, of the Superior' Court of Pitt County.
    Erom a judgment for the plaintiff the defendants appealed.
    No counsel for the plaintiff.
    
      Skinner & Whedbee, for the defendants.
   WalkeR, J.

This action was brought for the purpose of recovering a' debt of $156 alleged to be due by G. A. McGowan to the plaintiff'by open account, and of foreclosing a deed of trust given by G. A. McGowan and his wife, the defendant L. A. McGowan, to secure the payment of the same, the defendant J. E. Davenport being named in the deed as trustee. The deed of trust had been cancelled on the margin of the registry by the trustee in accordance with the statute. The plaintiff demanded judgment against Mrs. L. A. McGowan for the amount of the debt, that the cancellation of the deed of trust be set aside, that a foreclosure of the trust be ordered and the property sold for the payment of the debt. The defendants pleaded that the debt had been fully paid and satisfied, and that therefore the cancellation had been properly entered, and they introduced evidence to establish their plea.

The jury, under the evidence and instructions of the Court, found (1) that the debt was contracted by G. A. McGowan and not by L. A. McGowan; (2) that it had not been paid; (3) that L. A. McGowan,' at the time of the execution of the deed, was the wife of G. A. McGowan, and (4) that the land conveyed by the deed was her separate property. The defendants moved for a new trial upon exceptions stated. The motion was overruled and the defendants excepted.

Upon the'verdict, the Court adjudged that G. A. McGowan owed the debt, and that the cancellation of the deed was wrongfully made and is not valid as against the plaintiff, and that the land be sold by a commissioner of the Court for the purpose of paying the debt. The Court further adjudged that the costs of the action be taxed against the defendants. To this judgment the defendants excepted and appealed.

In order to prove that the debt had not been paid, the plaintiffs introduced as a witness John C. McGowan, who was permitted, over the defendant’s objection, to testify that G. A. McGowan, who was then dead, had told him that he had not paid the debt. The testimony of the witness, to which exception was duly taken, was hearsay and nothing else, and its admission was error. Lawrence v. Hyman, 79 N. C., 209; Gidney v. Moore, 86 N. C., 491; Henry v. Willard, 73 N. C., 35. Tbis entitles the defendant to a new trial, but as the case goes back, and as the other questions discussed before us upon the exceptions may again be presented, we will consider and pass upon them.

The plaintiff was permitted to testify that the debt had not been paid. It must be conceded that this testimony necessarily related to a personal' transaction with the deceased, who was principal in the note, as it involved the idea that the deceased had not paid the debt to the plaintiff (Simpson v. Simpson, 107 N. C., 552), but it is said that the representative of G. A. McGowan, who was the principal, is not a party to the action, and the other defendants do not derive any title or interest from, through or under him. While G. A. McGowan had no title to the land, the defendant Davenport, who is the trustee in the deed, could not have acquired any right, title or interest, unless G. A. McGowan had executed the deed with his wife. Ilis execution of the deed, in other words, was required in order to convey the title to Davenport. The latter therefore, within the spirit and meaning, if not within the letter, of section 590 of The Code, derived his interest from, through or under him. But this Court has decided that testimony like this is incompetent for another reason closely allied to the one we have just stated. The defendant L. A. McGowan, wife of G. A. McGowan, was but a surety for her husband (Shinn v. Smith, 79 N. C., 310), and, i-f a recovery is had against her, she will have her action over against her husband’s estate for exoneration. Lewis v. Fort, 75 N. C., 251. Any testimony therefore which makes against her, will, in a material respect and in the same degree, though indirectly, affect her husband’s estate. The plaintiff being a party and directly interested in the result, was incompetent to give this testimony. Tbis lias been expressly decided. In Bryant v. Morris, 69 N. C., 444, tbe plaintiff sued tbe surety of a deceased constable on bis official bond, and proposed himself to testify as to communications and transactions between bimself and/tbe constable, whose representative was not a party to tbe action, for tbe purpose of charging tbe defendant, tbe surety. He was held to be incompetent under section 343 of 0. C. P., now section 590 of Tbe Code, on account of tbe relation of tbe parties. Tbe Court said: “If tbe plaintiff bad sued the administrator of tbe dead constable, be could not have testified as to any transaction between him and tbe deceased so as to affect bis estate. G. C. P., section 343. But tbe defendant is not sued as administrator but as surety to tbe dead -constable, and tbe question is whether tbe plaintiff can testify as to transactions between bimself and tbe deceased which affect the defendant as bis surety. It is said that be ought not to be allowed to do tbis, because whatever be recovers of tbe defendant as surety, tbe defendant can recover of tbe estate of the deceased constable. Tbis would seem to be so, and therefore to allow tbe evidence against tbe surety is to allow it indirectly against tbe principal, which is tbe evil meant to be guarded against by tbe exception in tbe statute. So that while tbe objection to tbe evidence is not within tbe letter, it is within tbe spirit of the statute.” No two cases could be more alike in their essential features than tbe one we have cited and tbe case at bar. Tbe principle underlying tbe decision in Bryant v. Morris, supra, was recognized and applied in Lewis v. Fort, supra, where it is held that a judgment against tbe surety is, at least, evidence against tbe principal for tbe surety.

The rule to be deduced from these authorities is that the surety, who comes not within tbe letter but within tbe in-tendment of tbe law, stands in tbe same position and is entitled to tbe same protection under section 590 of Tbe Code as tbe representative of bis deceased principal when sued. Hawkins v. Carpenter, 85 N. C., 484.

Tbe case of Bryant v. Morris bad careful consideration by a court of exceptional ability, one of tbe justices having been a member of tbe commission wbicb prepared and framed Tbe Code of Civil Procedure. It was decided sometime after section 343 (now 590) became a law, and at a time when that section bad frequently been under consideration by this Court, and when it was, as we are inclined to think, quite as well understood as it is now. Tbe case bas never been overruled nor questioned as a precedent, but, on tbe contrary, bas been cited with approval, as we will presently show. Tbe principle it lays down being a just and reasonable one, we do not see wby tbe case should not continue to be accepted as an authority.

It is well settled, we are told, that a party to an action is a competent witness under section 590 of The Code as to a transaction or communication with a deceased person when tbe personal representative of tbe deceased, or any person who derives a title or an interest through or under him, is not a party to tbe action. This is true in some cases, but not in a case like tbe one at bar, and tbe authorities cited do not sustain tbe proposition as to such a case. In. Shields v. Smith, 79 N. C., 517, wbicb is much relied on, Hyman, tbe deceased, was not tbe principal of any of tbe defendants, and bis estate was not liable over to them or any of them. There was no such privity or connection between them and Hyman as would affect bis estate by tbe judgment in tbe action. . Besides, Mr. Justice Iieade wrote tbe opinion of tbe Court in Shields v. Smith and also in Bryant v. Morris, and we can hardly presume that be was inadvertent to the decision in tbe latter case and intended to-overrule it without even referring to it in Shields v. Smith.

In Hawkins v. Carpenter, 85 N. C., 482 (decided some time after Shields v. Smith) the Court expressly recognizes the decision in Bryant v. Morris as authority upon the facts therein disclosed, and distinguishes it from the case then under consideration by the fact that the transaction was not with the person since deceased but with an heir at law. Besides, the case of Hawkins v. Carpenter is clearly not in point for the purpose of sustaining the proposition, because the defendants had opened the door by proving a transaction with Durham, and the plaintiff was merely permitted to reply in regard to the same transaction. This came within the exception in the statute. The case is really an authority for the view we have taken of the testimony of the plaintiff McGowan, and has already been cited in this opinion as sustaining it. In Gidney v. Moore, 86 N. C., 484, the defendants proved a transaction, not with the person since deceased, but with his agent; and in Morgan v. Bunting, 86 N. C., 66, the defendant proved a transaction, not with the intestate of the plaintiff, but with her father, who was in no way connected with the action and had no interest near or remote therein. In Bunn v. Todd, 107 N. C., 266, the witness, by whom it was proposed to prove the transaction with the person since deceased, was not a party to the suit nor interested in the event of it, nor did she ever have any such interest. The facts of Ledbetter v. Graham, 122 N. C., 753, are substantially like those in this suit, but that case was disposed of by a per curiam order, without a written opinion, upon the authority of Shields v. Smith and Bunn v. Todd, neither of which, as we have seen, sustains the ruling, as the facts in the last two cases were materially different from those in Ledbetter v. Graham. We have never regarded a decision by per curiam order as a binding precedent. It merely declares the law of the particular case, and surely it should not have the effect of overruling a previous decision based on a well-considered opinion, and especially when the latter was not commented on or even cited by the Court.

We are of the opinion that the witness John 0. McGowan was disqualified under section 590 to testify that the principal -in the debt (G. A. McGowan), then deceased, had admitted to him that the same had not been paid. The witness was a surety on the prosecution bond in this case, and was, by every authority upon the subject, interested in the event of the action. One who is a surety for the prosecution has a certain legal interest which might be affected by the event or result of the action, being liable for costs if the plaintiff fails to recover, and this interest renders him incompetent to testify as to any transaction or communication with the party deceased, the same as if he were himself a party to the action. This principle was settled in Mason v. McCormick, 75 N. C., 263, which has repeatedly been affirmed. Peebles v. Stanley, 77 N. C., 243; Mason v. McCormick, 80 N. C., 244. In Peebles v. Stanley, the witness was a co-obligor and testified against his own interest. It is suggested that the witness was not incompetent because, as surety on the prosecution bond, he could in no event be liable to the estate of the deceased for the costs of the action. This is a misconception of the true reason for the disqualification of the witness. The question is not whether he is liable to the representative of the deceased, who is not a party, or to any particular person, but whether the suit may so eventuate as to make him liable for the costs to anybody who is a party and against whose interests he testifies. If the plaintiff fails, the witness will be liable as surety to the defendant for the costs, and is for that reason interested, and he testifies against the defendant and consequently in favor of his own interest. It is further suggested that the defendant L. A'. McGowan was permitted to testify as to tbe payment, and it would be unfair not to let tbe plaintiff do likewise. But tbe question must be decided according to tbe law and without regard to any principle of fairness, and, in tbe statute, it is plainly and explicitly provided that when one party testifies to a transaction or communication with tbe deceased, tbe other party may also testify, but only concerning tbe same transaction or communication. To permit tbe witness to go beyond this would be a distinct violation of tbe statute. Kesler v. Mauney, 89 N. C., 369; Sumner v. Candler, 92 N. C., 634; Burnell v. Savage, 92 N. C., 10; Bunn v. Todd, 107 N. C., 266; Clark’s Code (3 Ed.), section 590, p. 850 and cases cited.

It may be well to refer to the other question mentioned in tbe case, namely, whether tbe representative of a deceased mortgagor or trustor is a necessary party to a suit for foreclosure. It would seem on reason and principle, if not on authority, that be is. In Avirett v. Ward, 45 N. C., 192, it was held that be was a proper but not a necessary party. A case precisely like this in its facts is Mebane v. Mebane, 80 N. C., 34, in which it appeared that tbe wife bad joined with her husband in conveying her land in trust to pay bis debt. Tbe husband died and a suit to foreclose the mortgage was brought by tbe creditor against tbe widow. Tbe Court referred to and criticised the case of Avirett v. Ward and practically overruled it by holding that tbe representative of tbe deceased husband was a necessary party. In the later case of Fraser v. Bean, 96 N. C., 327, it is said that tbe administrator of the mortgagor is not a necessary party, but tbe Court simply refers to Avirett v. Ward without noticing tbe case of Mebane v. Mebane. In tbe face of tbe decision in Fraser v. Bean, tbe case of Mebane v. Mebane may yet be sustained upon its peculiar facts, namely, that tbe wife, as in our case, was but a surety for tbe husband, and, if her property should be taken to pay bis debt she would be entitled to recover over against Ms estate and to have bis property first subjected to its payment, and upon these facts the Court laid much stress in Mebane v. Mebane, though it also stated broadly and as a general principle that the representative of the mortgagor is a necessary party. The facts in Avirett v. Ward and Fraser v. Bean were not the same as in Mebane v. Mebane and the case at bar. There was error in the rulings of the Court as herein stated, for which there must be another trial.

New Trial.

Clare, O. I.,

concurring in result. G. A. McGowan and wife L. A. McGowan, October 6, 18 9 Y, executed a deed in trust to J. R. Davenport upon the land in question, the property of L. A. McGowan, to secure certain indebtedness therein recited to be owing by G. A. McGowan and L. A. McGowan, among them this indebtedness to the plaintiff by open account for $156.60 for borrowed money, as stated in said deed and trust. G. A. McGowan has died and all the other indebtedness secured in the trust deed has been paid. This is an action alleging non-payment of this debt, that the trustee has refused to foreclose the said trust but has cancelled the deed in trust on the margin of the registration thereof, and asks for a judgment against L. A. McGowan and to set aside the attempted cancellation, and for foreclosure and payment of the debt out of the proceeds. The jury having found that the indebtedness was owing by G. A. McGowan and that it had not been paid, the Court gave no personal judgment against L. A. McGowan, but ordered a foreclosure of the trust deed and payment of the sum therein secured to the plaintiff out of the proceeds of sale.

It is well said in the opinion of Mr. Justice Walicer, “the question must be decided according to the law and without regard to any principle of fairness,” or as Judge Daniel said, long ago, “We can not be wiser than tbe law.” Tbe law is explicit. It provides, Tbe Code, section 589, “No person offered as a witness, shall be excluded by reason of bis interest in the event of the actionSection 590, excludes a party, etc., to tbe action, in bis own bebalf, etc., only when testifying as to a personal transaction with a person deceased, and then only “against tbe personal representative of tbe deceased person” or against tbe person succeeding to tbe title of tbe deceased.

Here tbe personal representative of the deceased is not a party to tbe action nor does tbe defendant succeed to bis title. Q. B. D. Tbe deceased never bad any title to be conveyed. Had be survived bis wife be might have been tenant by tbe curtesy if she bad not devised tbe property away. It was barely a possibility, certainly not a vested interest. Tbe deceased was expressly inhibited by tbe Constitution from having ex jure mariti any interest in tbe property of bis wife, which “shall be and remain tbe sole and separate estate and property of such female * * * as if she were unmarried.” The joinder of tbe husband was not to convey bis title and estate, for be bad none, but was merely tbe “written assent” required to authorize tbe wife’s conveyance. In Bryant v. Morris it is stated that tbe Court read into tbe statute what was not there, for it says that it was “not within tbe letter” of tbe law. Accordingly that opinion has been distinguished and never cited and affirmed as a precedent, and tbe law for tbe last twenty-six years has been uniformly held in accordance with tbe plain letter of the statute. Shields v. Smith, 79 N. C., 517, affirmed since in Ledbetter v. Graham, 122 N. C., 754, which is “on all-fours” with this case, and Bunn v. Todd, 107 N. C., 266, which last analyses the statute and points out that no person is disqualified unless be is a party to tbe action, and then only as to a personal transaction with the deceased, and in suck eases only when the other party is a personal representative of the deceased or holds his title — neither of which is the case here. Shields v. Smith, 79 N. C., 517, is also cited with approval on this point in Morgan v. Bunting, 86 N. C., at p. 69, citing several cases; Gidney v. Moore, 86 N. C., at p. 491, also citing numerous cases. Hawkins v. Carpenter, 85 N. C., 484. No point in section 590 has been better settled. Morris v. Bryant was a decision, made when the Code was new, and which stated therein that it was contrary “to the letter of the law.” As above stated, it has not been directly affirmed since in any case, but has been disregarded and effectually overruled by above decisions.

If, however, the express provision of the law is not to govern us, but our own conceptions of fairness, we must remember that the defendant L. A. McGowan testified at length as to the whole matter and there is no provision of law disqualifying her. The burden was upon her to prove payment, and it would be manifestly unfair were she to be competent and the plaintiff incompetent against her, the real defendant, and against Davenport, her co-defendant, when the plaintiff is seeking no relief against the estate of the deceased, and the estate is not a party to the action.

What effect the judgment may have against the estate of the deceased in any future action against it by the defendant is not before us. The plaintiff has no interest in that matter which can be served by his testimony here, and it is his interest only in this action which can disqualify him, and then only in the cases prescribed by the statute. The execution of the deed in trust and its registration are admitted in the answer and, besides, those acts were not a “personal transaction” between the plaintiff and the deceased. McCall v. Wilson, 101 N. C., 598; Thompson v. Onley, 96 N. C., 9.

John 0. McGowan, surety on the prosecution bond, was' a competent witness for the same reasons above given as to the plaintiff. There was error, however, in permitting him to prove the declaration of G. A. McGowan, for the very reason that his personal représentative not being a party, such declarations were mere hearsay. For this reason there should be a new trial.

There was no offer to make the personal representative of G. A. McGowan a party, and no exception that he was not a necessary party to this action, and that point is not before 'its. In Fraser v. Bean, 96 N. C., 327, it was held that the administrator is not a necessary party, even when the land on which the mortgage is to be foreclosed belonged to the intestate, affirming Avirett v. Ward, 45 N. C., 192. Here the intestate had never had any interest in it, but merely gave his marital assent to the mortgage by his wife, as above stated. It would seem, however,, that as a surety may be sued without joining the principal, the property put up as security may be subjected without such joinder, especially when, as here, the surety does not ask that the principal be made a party.  