IioKE, J.,
after stating tbe case: Tbe verdict "of tbe jury on tbe fifth and sixth issues was as follows:
“5. Hid tbe defendant E. E. Young, in December, 1903, agree verbally with tbe defendant bank to transfer to said bank tbe Norfolk city bonds of $4,500 if said defendant bank would loan tbe said E. E. Young for Merchants and Farmers Bank $10,000 and tbe South Dunn Manufacturing Company $10,000, and did tbe defendant bank make said loans as agreed ? Answer: Yes.
“6. Did E. F. Young, in furtherance of tbe agreement of December, 1903, execute tbe paper-writing of 9 February, 1904? Answer: Yes.”
And tbe paper-writing referred to and established by tbe sixth issue, and tbe response thereto, contains tbe following recital as to tbe agreement between defendant bank and E.. E. Young, of date December, 1903, and more than four months prior to tbe institution of tbe proceedings in bankruptcy: “Witnesseth, tbat, whereas tbe Merchants and Farmers Bank, of Dunn, N. C., is indebted to tbe Murchison National Bank, of Wilmington, N. C., in a large sum of money which was loaned to tbe Merchants and Farmers Bank and tbe South Dunn Manufacturing Company, at tbe request of tbe party [325] of tbe first part; and, whereas, at tbe time of said loans tbe party of tbe first part agreed with tbe said Murchison National Bank that if it would make said loans that tbe party of tbe first part bad sold three brick stores in tbe town of Dunn, N. C., to one Charles W. 'Priddy (Incorporated), of Norfolk, Va., and that tbe deed of said'stores was to be made when the abstracts of title for said stores bad been approved by said Priddy (Incorporated), and the purchase money was paid, and it was agreed by the said parties hereto that, if tbe said Murchison Bank would make said loans, tbe party of tbe first part would pay over the money derived from said sale, to-wit, tbe sum of $4,500, to tbe party of tbe second part, on account of tbe indebtedness then created to tbe said party of tbe second part; and, whereas, there has been more delay in consummating said sale than was anticipated, and tbe said party of tbe first part is desirous of carrying out said agreement: Now, therefore, in consideration of tbe premises, tbe said party of tbe first part doth hereby transfer and assign, sell and convey to tbe said party of tbe second part all bis right, title, interest .and estate in tbe three stores bargained to Priddy Company (Limited), and tbe purchase price thereof, when same is received on tbe consummation of tbe sale.” There is no allegation of fraud in tbe transaction between these parties in December, nor that tbe same was bad with any intent to evade tbe general policy or express provisions of tbe Bankruptcy Act. This being true, on tbe facts established by these two findings, tbe Court is of opinion that, for a present cash consideration then passing, a claim was created in favor of defendant to these bonds, tbe purchase price of tbe property referred to in tbe agreement, which .attached as soon as they passed in consideration for tbe sale, good against tbe bankrupt himself, and enforcible in equity against tbe plaintiffs bolding tbe estate as trustees under tbe bankruptcy proceedings, and there is nothing in tbe verdict on tbe other issues which destroys or impairs tbe force .and effect of this [326] position — tbe word “transfer,” in the fourth, issue, evidently having the same significance as in the fifth.
It is accepted doctrine that, as a general proposition, the trustee in bankruptcy is vested with no better right or title to the property than the bankrupt had when the trustee’s title accrued. And, unless in contravention of some established principle of law or public policy, or some express provision of the Bankruptcy Act, a claim valid against the bankrupt will be upheld against his trustee. Manufacturing Co. v. Cassell, 201 U. S., 334-352; Hewitt v. Berlin Machine Works, 194 U. S., 296; Smith v. Godwin, a decision at present term; Loveland on Bankruptcy (2d Ed.), 368. As said in this last citation (Loveland, supra) : “The trustee takes the title of the bankrupt subject to all equities, liens or encumbrances, whether created by operation of law or by the act of the bankrupt, which existed against the property of the bankrupt, except in cases of levies, judgments, attachments or other judicial liens created against the property within four months preceding the commencement of proceedings in bankruptcy, and except in cases where the disposition of property by the bankrupt is declared to be fraudulent.and void.” It is also established that, unless the Bankruptcy Act otherwise provides, the validity of an assignment or claim is to' be determined in accordance with the principles of local law. Thompson v. Fairbanks, 196 U. S., 516; Humphrey v. Tatman, 198 U. S., 91.
And it will be observed that, under our law, no valid objection can be urged against the defendants’ claim by reason of the fact that the bonds, the subject-matter of the contract, and which represented the purchase price of the property, were not in the possession or control of the bankrupt when the agreement of December was entered into. On the contrary, unless inhibited by some principle of public policy, our decisions expressly uphold and enforce such contracts, both as to tangible property and choses in action, to vested as well as [327] contingent interests. Brown v. Dail, 117 N. C., 41; Williams v. Chapman, 118 N. C., 943; Chemical Co. v. McNair, 139 N. C., 326; Nelson v. Edwards, 40 Barbour, 283.
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IioKE, J.,
after stating tbe case: Tbe verdict "of tbe jury on tbe fifth and sixth issues was as follows:
“5. Hid tbe defendant E. E. Young, in December, 1903, agree verbally with tbe defendant bank to transfer to said bank tbe Norfolk city bonds of $4,500 if said defendant bank would loan tbe said E. E. Young for Merchants and Farmers Bank $10,000 and tbe South Dunn Manufacturing Company $10,000, and did tbe defendant bank make said loans as agreed ? Answer: Yes.
“6. Did E. F. Young, in furtherance of tbe agreement of December, 1903, execute tbe paper-writing of 9 February, 1904? Answer: Yes.”
And tbe paper-writing referred to and established by tbe sixth issue, and tbe response thereto, contains tbe following recital as to tbe agreement between defendant bank and E.. E. Young, of date December, 1903, and more than four months prior to tbe institution of tbe proceedings in bankruptcy: “Witnesseth, tbat, whereas tbe Merchants and Farmers Bank, of Dunn, N. C., is indebted to tbe Murchison National Bank, of Wilmington, N. C., in a large sum of money which was loaned to tbe Merchants and Farmers Bank and tbe South Dunn Manufacturing Company, at tbe request of tbe party [325] of tbe first part; and, whereas, at tbe time of said loans tbe party of tbe first part agreed with tbe said Murchison National Bank that if it would make said loans that tbe party of tbe first part bad sold three brick stores in tbe town of Dunn, N. C., to one Charles W. 'Priddy (Incorporated), of Norfolk, Va., and that tbe deed of said'stores was to be made when the abstracts of title for said stores bad been approved by said Priddy (Incorporated), and the purchase money was paid, and it was agreed by the said parties hereto that, if tbe said Murchison Bank would make said loans, tbe party of tbe first part would pay over the money derived from said sale, to-wit, tbe sum of $4,500, to tbe party of tbe second part, on account of tbe indebtedness then created to tbe said party of tbe second part; and, whereas, there has been more delay in consummating said sale than was anticipated, and tbe said party of tbe first part is desirous of carrying out said agreement: Now, therefore, in consideration of tbe premises, tbe said party of tbe first part doth hereby transfer and assign, sell and convey to tbe said party of tbe second part all bis right, title, interest .and estate in tbe three stores bargained to Priddy Company (Limited), and tbe purchase price thereof, when same is received on tbe consummation of tbe sale.” There is no allegation of fraud in tbe transaction between these parties in December, nor that tbe same was bad with any intent to evade tbe general policy or express provisions of tbe Bankruptcy Act. This being true, on tbe facts established by these two findings, tbe Court is of opinion that, for a present cash consideration then passing, a claim was created in favor of defendant to these bonds, tbe purchase price of tbe property referred to in tbe agreement, which .attached as soon as they passed in consideration for tbe sale, good against tbe bankrupt himself, and enforcible in equity against tbe plaintiffs bolding tbe estate as trustees under tbe bankruptcy proceedings, and there is nothing in tbe verdict on tbe other issues which destroys or impairs tbe force .and effect of this [326] position — tbe word “transfer,” in the fourth, issue, evidently having the same significance as in the fifth.
It is accepted doctrine that, as a general proposition, the trustee in bankruptcy is vested with no better right or title to the property than the bankrupt had when the trustee’s title accrued. And, unless in contravention of some established principle of law or public policy, or some express provision of the Bankruptcy Act, a claim valid against the bankrupt will be upheld against his trustee. Manufacturing Co. v. Cassell, 201 U. S., 334-352; Hewitt v. Berlin Machine Works, 194 U. S., 296; Smith v. Godwin, a decision at present term; Loveland on Bankruptcy (2d Ed.), 368. As said in this last citation (Loveland, supra) : “The trustee takes the title of the bankrupt subject to all equities, liens or encumbrances, whether created by operation of law or by the act of the bankrupt, which existed against the property of the bankrupt, except in cases of levies, judgments, attachments or other judicial liens created against the property within four months preceding the commencement of proceedings in bankruptcy, and except in cases where the disposition of property by the bankrupt is declared to be fraudulent.and void.” It is also established that, unless the Bankruptcy Act otherwise provides, the validity of an assignment or claim is to' be determined in accordance with the principles of local law. Thompson v. Fairbanks, 196 U. S., 516; Humphrey v. Tatman, 198 U. S., 91.
And it will be observed that, under our law, no valid objection can be urged against the defendants’ claim by reason of the fact that the bonds, the subject-matter of the contract, and which represented the purchase price of the property, were not in the possession or control of the bankrupt when the agreement of December was entered into. On the contrary, unless inhibited by some principle of public policy, our decisions expressly uphold and enforce such contracts, both as to tangible property and choses in action, to vested as well as [327] contingent interests. Brown v. Dail, 117 N. C., 41; Williams v. Chapman, 118 N. C., 943; Chemical Co. v. McNair, 139 N. C., 326; Nelson v. Edwards, 40 Barbour, 283.
Applying these principles, we are of tbe opinion that tbe force and effect of tbe verdict is to establish, for a cash consideration, to-wit, tbe loan, an equitable assignment of these bonds, the purchase price of the property in December, 1903, the date when the contract was made, to be consummated by delivery of the bonds whenever and as soon as they came into the control of E. E. Young pursuant to the sale which was then being conducted. "While the language of the issue, “verbally agreed to transfer,” might be construed as constituting an executory agreement, when taken in connection with the pleadings .and evidence, and especially in reference to the more explicit ascertainment of the terms of the December trade, made a part of the verdict on the sixth issue, we think that a present equitable assignment was thereby created, and the words “agree to transfer” clearly referred to an .agreement to “deliver” the bonds whenever the same came to hand. This meaning of the term “transfer” is recognized in the definition of the word given by the Bankruptcy Act, United States Statutes at Large, Vol. XXX, ch. 541, sec. 1, has been applied in various decisions rendered in administration of the law (Words and Phrases Judicially Defined, Vol. VIII, 7066), and is so clearly the significance contemplated by the parties in the transaction, as established by the verdict, that we have no hesitation in holding, as stated, that the contract amounted to a present equitable assignment in December, more than four months prior to the institution of the bankruptcy proceedings, and the right of defendants to the bankrupt’s interest in these bonds is supported by well-established principles of equity and by the great weight of authority. Walker v. Brown. 165 U. S., 655; Hauseet v. Harrison, 105 U. S., 401; Union Trust Co. v. Bulkely, 150 Fed., 510; In re J. F. Grandy & Son, 146 Fed., 318; Wilder v. Watts, 138 Fed., [328]*328436; Sabin v. Camp, 98 Fed., 914; Smith v. Godwin, trustee, supra; Brem v. Covington, 104 N. C., 589; Lawson v. Pringle, 98 N. C., 450. See, also, a very full and learned note by the editor to case of Moody v. Wright, reported in 46 Amer. Decisions, 106-117 (tbe case being from 13 Met., 17). In this last reference, on page 717, it is said: “Tbe grounds of these decisions are, that the mortgage, though inoperative as a conveyance, is operative as an executory contract, which attaches to the property when acquired, and, in equity, transfers the beneficial interest to the mortgagee, the mortgagor being held as trustee for him, in accordance with the familiar maxim that equity considers that done which ought to be done: per Durfee, G. Jin Williams v. Briggs, 11 R. I., 478. The ease of Mitchell v. Winslow, 2 Story, 630, is a leading American case upon this subject. A mortgage was given in that case by two manufacturers of cutlery upon all the tools and machinery in their manufactory and upon all the tools and machinery which they might purchase within four years, and all stock that they might manufacture during the same time. It was held to create a good, equitable lien, and was protected as such under the Bankruptcy Act. At page 644, Btory, J., said: Tt seems to me a clear result of all the authorities that, wherever the parties, by their contract, intend to create a positive lien or charge, either upon real or upon personal property, whether then owned by the assignor or contractor or not, or, if personal property, whether it is then esse or not, it attaches in equity as .a lien or charge upon the particular property as soon as the assignor or contractor acquires a title thereto- against the latter, and all persons asserting a claim thereto under him, either voluntarily or with notice, or in bankruptcy.’ ” And in Walker v. Brown the general doctrine is stated thus, citing with approval Pomeroy’s Equity, Yol. Ill, 1235: “Every express execu-tory agreement in writing, whereby the contracting party sufficiently indicates an intention, to make some particular prop[329] ■erty, real or personal, or fund, therein described or identified, a security for a debt or othqr obligation, or whereby the party promises to convey or assign or transfer the property as security, creates an equitable lien upon the property so indicated, which is enforcible against the property in the hands, not only of the original contractor, but of his heirs, administrators, executors, voluntary assignees and purchasers,, or encumbrances with notice.”
By the contract of December, 1903, when these bonds came into his possession and control, E. E. Young had no right to deal with them, except to deliver them to the defendant bank, as required by its terms. On the equitable principle which ■considers that done which the parties are under a binding-agreement to do, said Young had no right to make any other disposition of this specific property. This is the principal test by which an equitable assignment may be distinguished from an executory agreement to assign, and a case is presented where the claimant has a right tó the specific property against the bankrupt himself, and where, in the absence of some interfering State regulation or of some adverse provision of the Bankruptcy Law itself, the defendants’ right is enforcible against the trustee. It is this creation of a present interest in the bonds themselves, amounting to an equitable assignment thereof, which differentiates the present case from many of those cited and relied upon by the plaintiff trustees. Some of these were cases where, from the very general terms of the agreement, no right in .any specific property was acquired at all. In others, from the nature of the interest, or by reason of some interfering principle of positive law or public policy, no right in any specific property was created, except within the period when it'was avoided by express provisions of the Bankruptcy Law itself. Thus, in Sheridan’s case, 98 Fed., 406, there was an executory .agreement to pledge property made prior to the four months, and the property was .actually delivered within such period. By the very nature of [330] a pledge, no interest passes until delivery, and tbis was on that ground avoided as a prohibited preference.
In several other decisions an executory agreement to give a chattel mortgage made prior to the four months was not allowed to validate the mortgages executed or registered within the prohibited period. In re Great Western Manufacturing Co., 152 Fed., 123; Loeser v. Bank and Trust Co., 148 Fed., 975; In re Dismal Swamp Co., 135 Fed., 415. These and other like cases, .as we apprehend them, were decided either because of some State law which avoided such mortgages against creditors, except from registration, or by reason of the amendment to the Bankruptcy Act made in February, 1903. Yol. XXXII, Statutes at Large (Part I), ch.' 487, to the effect that, “Where a preference consists in a transfer, such period of four months shall not expire until four months after the recording and registering of the transfer, if by law such recording and registering is required.-” And this requirement of registration distinguishes a decision of our own Court. Lance v. Tainter, 137 N. C., 249.
Without going into .a careful analysis of these decisions, which could serve no good purpose and would unduly lengthen our opinion, we deem it sufficient to say that they do not apply here. This case presents no executory agreement to make a pledge of personal property as security for a past indebtedness, nor is it an executory agreement to give a chattel mortgage or other lien which requires registration, either by State law or the Bankruptcy Act and its amendments. But, as we have endeavored to show, it is a present equitable assignment for a cash consideration of the bonds, to be delivered or “transferred” to the defendant bank whenever they come into possession of the bankrupt,' and to be then appropriated to the indebtedness as far as they would pay the same.
Since the opinion was prepared, it has been earnestly contended that, inasmuch as the contract under which the defendants claim the bonds applies also in terms to realty, the [331] case of Lance v. Tainter, supra, is direct authority against tbe defendants’ claim. This position might avail the plaintiffs if the sale of the land had not been carried out and the defendants were seeking to establish their claim against the land itself. The sale, however, was completed according to the contract with the Norfolk company, and this litigation is over the proceeds. Our registration laws concerning realty have, therefore, no application to the cause, on the principle established in the decisions of Bourne v. Sherrill, 143 N. C., 381, and the authorities therein cited.
We are of opinion, therefore, and so hold, that there was error in the judgment as rendered, and that, as a conclusion of law on the verdict as it now stands, there should be judgment entered that defendants go without day. Let this be certified and judgment entered accordingly.
Eeversed.
EeowN, <L, did not sit.