Odom v. . Clark

60 S.E. 513, 146 N.C. 544, 1908 N.C. LEXIS 260

Opinion

Hoke, I.,

after stating the case: The Court is of opinion that this cause has been correctly tried, and that the merits of the controversy have prevailed. It was urged against the validity of plaintiffs’ claim, or that portion of it which must rest for its security upon the alleged verbal, mortgage:

1. That no such mortgage was, in fact, given as an executed contract.

2. That if there was such contract, it was established under an erroneous charge as to the quantum of proof, Avhich defendants contend should be “clear, strong and convincing.”

But neither objection can be sustained.

A chattel mortgage is properly defined as a conditional sale of personal property as security for the payment of a debt or the performance of some other obligation. And in the third issue his Honor properly charged the jury: “No special form of words is necessary for a verbal mortgage. The question of fact for you to decide is, Was there an agreement between Clark and Neville, or either of them, with Odom, that the property and crops included in the deed of trust of 1 January, 1903, to Odom, should be security for advances to be made by the Kocky Mount Supply Company in excess of the amount specified in said deed ? Have plaintiffs satisfied you, by the greater weight of evidence, that there was such agreement?” etc. And, further: “As I have instructed you, the burden is on the plaintiffs to satisfy you, by the greater weight of evidence, that the defendants did give the Kocky Mount Supply Company the verbal mortgage,- as alleged.”

The jury were thus directed to inquire and determine as to the existence of an executed verbal mortgage, and the evidence of plaintiffs tended to support the charge as given. Thus, the witness Odom, after saying that he notified defendants that the amount specified in the written lien had been reached, and that they would have to execute another written one, testified: “And they agreed to do this, and told me to fix the papers to that effect and send to them, and they would execute. It was agreed between us that, until the papers were fixed, we were to have a verbal mortgage on all the property, crops, etc.” And again, on a later occasion: “Clark, again, at that time promised me that the papers would be executed and that everything would be all right, and sáid I needn’t feel any uneasiness, as I had a verbal mortgage oil everything. He assured me that we would be all right, as we had a verbal mortgage on everything, and kept on ordering (supplies) and we kept on shipping.” According to this evidence, the parties were, as to the verbal mortgage, clearly speaking of it as an executed agreement, and-the jury, in response to the third issue, has so established it. Nor is there any reason that occurs to us why such a contract should be required to be established by clear, strong and convincing proof, rather than by the greater weight of testimony, the rule as stated in the charge.

The authority relied upon by defendants (Shelburne v. Selsinger, 52 Ala., 92) seems to have been as to an executory agreement to make a chattel mortgage. It is termed an equitable mortgage by the reporter, and the decision has been interpreted as a ruling on an executory agreement in a textbook of recognized authority. Jones Chattel Mortgage (4th Ed.), sec. 3. But in either event there seems to be no good reason for such a requirement as to the quantum of proof contended for by defendants in cases of this character, and we do not think it comes within the principle established by the weight of authority. When a claimant is seeking to en-graft a trust on a written instrument, or to annex a condition to one, or establish a mistake therein, he is required to make good his allegation by clear, strong and convincing proof. In such ease the effect of his position is to alter or change a written instrument, which should be upheld, unless clearly .impeached, as shown in Harding v. Long, 103 N. C., 1, and other like cases, and a similar ruling obtains in written certificates of officers as to their official action, as in Leonard v. Lumber Co., at the last term. But no such conditions exist in tbe case we are considering. A chattel mortgage is not required to be under seal. It is not, as we shall endeavor to show, required to be in writing. There is no effort here to impeach or change any written paper, or to challenge any official action. It is just an open question, to be determined by testimony, and, to our minds, under ordinary circumstances, it is proper that it should be determined, as such questions in civil suits usually are, by the greater weight of evidence.

Again, it is insisted that if the verbal mortgage should be properly established the same is not a valid lien — Erst, because it was executed -by only one of the partners; second, because it was not in writing. But the authorities are against defendants on both of these positions. As a matter of fact, while Clark chiefly attended to the business, and there is evidence of several declarations made by him alone admitting the existence of a verbal mortgage, the testimony of Odom (record, p. 24) seems to indicate that, when this mortgage was made, both parties were present and assented; and if it were otherwise the objection would not avail defendants, for it is accepted doctrine that one partner may execute a chattel mortgage on partnership goods to secure a partnership debt. Jones Chattel Mortgage (4th Ed.), sec. 46. And this principle has been approved by express adjudication with us. Pipe and Foundry Co. v. Wollman, 114 N. C., 178-185. And the second objection, that the mortgage is not in writing, is equally untenable. There are decisions which hold that a chattel mortgage must be in writing, but these cases will, we apprehend, be found to rest on the inhibitive provisions of seventeenth section, 29 Charles II., the English statute of frauds, by which sales of goods to the Avalué of £10, or -upAA^ards, are required to be in writing, unless a part of the'goods are delivered, or earnest given to bind the bargain. But Avhile this statute was at one time declared to be the laAV of this State in tolo (Laws of North .Carolina, 1749, published in State Records, Vol. XXIII, p. 324), it bas not been in force here since 1192, except to tbe extent that its different provisions bave been especially re-enacted. See Martin’s Collection of British Statutes, in force in tbe State in 1792, and Potter’s Revisal, Vol. I, p. 85. Tbis section referred to (section 17 of the English statute) never having been re-enacted, tbe principles of tbe common law are applicable and controlling (Foy v. Foy, 3 N. C., p. 131 [296] ; Pittman v. Pittman, 107 N. C., 159-163), and are to tbe effect that a valid mortgage of personalty can be made without writing. Jones on Chattel Mortgages, sec. 2. Accordingly, it bas been held with us that a chattel mortgage in parol is good between tbe parties without writing. McCoy v. Lassiter, 95 N. C., 88. Nor is it required that tbis lien asserted by plaintiffs should be in writing, by tbe statute providing for agricultural liens. Re-visal, sec. 2052. True, the statute requires that a lien executed and to be effective under its provisions should be in writing and registered, but tbis is only required in order to make tbe claim good as against creditors and third persons, and to entitle tbe bolder to tbe superiority given by tbe statute over all other liens, except those of the landlord and laborer. Tbe statute, however, being only affirmative in terms, does not and was not intended to prohibit agreements otherwise valid and binding as between tbe parties. Nor is writing required to make the lien binding on growing crops. While we have held that such contracts as to crops for a second or greater number of years are void from reason of public policy, “because,” as said by the present Chief Justice, in Loftin v. Hines, 107 N. C., 360, “they may operate to oppress labor and to diminish production and the general prosperity dependent upon it,” our decisions uphold them as to the next succeeding or current year. Hahn v. Heath, 127 N. C., 27; Loftin v. Hines, supra. And it is also a generally recognized doctrine that parties, as between themselves, may by contract constitute and deal with growing crops as personalty. Ewell on Fixtures (2d Ed.), pp. 370, 371, 372. The plaintiffs, then, having established in their favor a valid lien as against 'defendants Clark and Neville, are entitled to the property, unless the claimants under the two deeds of trust to J. C. Randolph have a superior right.

It will be noted that the advancements of supplies made to these grantors by the Randolph Supply Company have all been paid, or a payment is directed and provided for in the judgment as rendered, and the claimants, who now object to the judgment, are holders of pre-existing debts provided for in these deeds. It has been held with us that such debts are sufficient to constitute the holders purchasers for value, within the meaning of our registration laws. Brem & McDowell v. Lockhart, 93 N. C., 191, cited with approval in Moore v. Sugg, 114 N. C., 292. And under these laws (Revisal, sec. 982) defendants would hold the property, if the deeds themselves are good.

The jury have found that they were made with intent to defraud plaintiffs, this intent, however, being confined to the grantors, and there are many exceptions appearing in the record as tending to impeach the verdict on these issues. We find, however, that it is not necessary to consider or determine them, because we are of opinion that these deeds are avoided by decisions of the Court construing the statute of 1893 (chapter 453) touching assignments. Revisal, sec. 969 et seq.j Brown & Co. v. Nimocks, 124 N. C., 417; Bank v. Gilmer, 116 N C., 684; same case reaffirmed, 117 N. C., 416.

In these last cases it was, in substance, held that, Avhere an insolvent man makes an assignment of practically all of his property to secure one or more pre-existing debts, such an instrument will be considered an assignment, subject to the , regulations of the statutes addressed to that question, and that this result will not be changed because some small portion of his property shall have been omitted or because the instrument may have been drawn in the form of a mortgage having a defeasance clause. In tbe first of these cases it is held: “While the act of 1893 (chapter 153) does not prohibit bona fide mortgages to secure one or more pre-existing debts, yet, where a mortgage is made of the entirety of a large estate for a pre-existing debt (omitting only an insignificant remnant of property), the mortgage is in effect an assignment for the benefit of creditors secured therein, and is subject to the regulations prescribed in said act of 1893” (sixth headnote, 116 N. C., 685) ; “and to hold otherwise,” said Avery, J., “would be to nullify the act.” On a petition to rehear, the decision was reaffirmed and announced in the same terms.

It is insisted for the defendants that these decisions should not be held as controlling here, because in them the debts named amounted to more than $49,000, while the property was only $25,000, thus making the clause of defeasance in the instrument of no significance. But, while this large difference between the debts and the value of the property conveyed is referred to by Justice Fwrches in his opinion, the difference, or the amount of it, is not made of itself a controlling fact in the case, and the principle announced in these decisions will extend to and include the deeds under which defendants claim. The grantors were insolvent. They conveyed all of their property, so far as appears, to secure a large number of pre-existing debts, omitting the debt due plaintiffs, and the interest of the grantors in the property conveyed was insufficient to pay the claims and their other indebtedness. Under these decisions, therefore, the deeds in question are subject, as stated, to the regulations established by the law in reference to assignments, and, these not having been complied with, the deeds are void.

The objection made, that the statute (chapter 453, Laws 1893) was repealed by chapter 466, Laws 1895, and this condition remained until the former statute was re-enacted by Revisal, is without force. The second statute did not repeal the former law, except as to a certain class of assign ments, and tbe repealing statute was itself repealed at tbe following session (chapter 14, Laws 1897), from wbicb time tbe original act bas been in force. Brinkley v. Swicegood, 65 N. C., 626; Hughes v. Boone, 102 N. C., 137; State v. Goulding, 131 N. C., 715.

There is no error in tbe proceedings below, and tbe judgment as rendered is affirmed.

No Error.