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In re Foreclosure of A Deed of Trust Executed

Filed: December 1, 1981.

IN THE MATTER OF FORECLOSURE OF A DEED OF TRUST EXECUTED BY WARREN HELMS AND WIFE, JONNIE T. HELMS, TO W. O. MCGIBONY, TRUSTEE AND THE FEDERAL LAND BANK OF COLUMBIA, DATED JUNE 24, 1969, AND RECORDED IN BOOK A-182 PAGE 196, UNION COUNTY REGISTRY, BY C. FRANK GRIFFIN, SUBSTITUTE TRUSTEE


Appeal by respondents from Freeman, Judge. Judgment entered 11 December 1980 in Superior Court, Union County. Heard in the Court of Appeals 17 November 1981.

Vaughn, Judge. Judges Webb and Hill concur.

Vaughn

Respondent-mortgagors make several assignments of error. They first contend the trial court erred in admitting into evidence photocopies of the promissory note and deed of trust. They argue that under the "best evidence" rule, the originals should have been required. We disagree.

The rationale behind the "best evidence" rule is that the original instrument best identifies its own contents. 2 Stansbury, N.C. Evidence ยง 190 (Brandis rev. 1973). When the opposing party, however, admits that the documents shown him are correct copies of the original, the original need not be produced. Beard v. R.R., 143 N.C. 137, 55 S.E. 505 (1906); Cleary v. Cleary, 37 N.C. App. 272, 276, 245 S.E.2d 824, 827 (1978).

In the present cause, both mortgagors examined the documents in question. They testified that the documents appeared to be photocopies of the note and deed of trust they had signed and that the photocopies of their signatures appeared to be copies of their actual signatures. The only question the respondents raised was that Mr. Helms did not recall the presence of an eight percent interest rate in the note. The amount outstanding of a debt, however, is not relevant to a foreclosing proceeding. In re Foreclosure of Burgess, 47 N.C. App. 599, 603, 267 S.E.2d 915, 918 (1980). We conclude that the photocopies of the note and deed of trust were properly admitted.

Respondents' next three assignments of error argue the lack of sufficient evidence to support the court's findings of fact. Since the note and deed of trust were properly admitted, however, there is ample evidence to support the court's findings that respondents had executed a deed of trust, that the deed of trust secured a valid debt evidenced by a note payable to The Federal Land Bank of Columbia, and that there had been default in the payment of indebtedness. Because the deed of trust specified a fixed time when nonpayment of taxes became a default, the court also correctly found that nonpayment gave the substitute trustee the right to foreclose. In re Foreclosure of Deed of Trust, 41 N.C. App. 563, 255 S.E.2d 260, cert. denied, 298 N.C. 297, 259 S.E.2d 914 (1979). Respondents' assignments of error are overruled.

Respondents' final assignment of error is that the court erred in failing to conclude that The Federal Land Bank of Columbia had waived its right to foreclosure. We hold that the court properly excluded consideration of any equitable defense raised at the hearing de novo.

Respondents testified that after receiving the bank's letter of 21 August 1980, they contacted Mr. Shoffner on the 25th of August. He told them they would have a few weeks to "catch up the note." Relying on the delay, respondents arranged to sell another tract of land to a third party. One week later, when Mrs. Helms called Mr. Shoffner to learn how much money they would need to reimburse the bank for the tax payment, she was told that reimbursement would not be acceptable. Foreclosure proceedings had begun. Respondents argue that if the court had made findings consistent with their testimony, it would have concluded that the bank had waived any foreclosure right it may have had.

According to G.S. 45-21.16, however, there are only four issues before the clerk at a foreclosure hearing: the existence of a valid debt of which the party seeking to foreclose is the holder, the existence of default, the trustee's right to foreclose, and the sufficiency of notice to the record owners of the hearing. The clerk's findings are appealable to the Superior Court within ten days for a hearing de novo, but the court's authority is likewise limited. In re Foreclosure of Burgess, supra. The judge has no equitable jurisdiction and cannot enjoin foreclosure upon any

ground other than the ones stated in G.S. 45-21.16. Golf Vistas v. Mortgage Investors, 39 N.C. App. 230, 249 S.E.2d 815 (1978); In re Watts, 38 N.C. App. 90, 247 S.E.2d 427 (1978).

Because the hearing under G.S. 45-21.16 is designed to provide a less timely and expensive procedure than foreclosure by action, it does not resolve all matters in controversy between mortgagor and mortgagee. If respondents feel that they have equitable defenses to the foreclosure, they should ...


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