Bailey v. Hassell

• Decision Date: 22 November 1922
• Docket Number: 61.
• Citation: 115 S.E. 166,184 N.C. 450
• Parties: BAILEY v. HASSELL ET AL.
• Court: North Carolina Supreme Court

115 S.E. 166

184 N.C. 450

BAILEY v. HASSELL ET AL.

No. 61.

Supreme Court of North Carolina

November 22, 1922

Appeal from Superior Court, Washington County; Daniels, Judge.

Action by C. L. Bailey, trustee, against T. R. Hassell and others. Judgment for defendants, and plaintiff excepts and appeals. No error.

If the substance of a requested instruction, so far as it is material and comports with the real merits and justice of the case, is given, there is no ground for exception that it is not given in the language of the request.

On or about the 21st day of March, 1915, the Farmers' Union Supply Company, a corporation, executed to T. J. Basnight a certain mortgage deed, recorded in Book 67, p. 165, to secure the payment of money borrowed by it for the purpose of purchasing a lot and erecting a building thereon in which to conduct its business, it being the same property described in said mortgage. Sometime thereafter, T. J. Basnight died and H. S. Basnight qualified as his administrator and made demand upon the supply company for payment of this mortgage in order to settle his estate. The supply company, being unable to make payment, procured B. F. Bailey to take this instrument up for it.

Later on, Mr. Bailey, he being the father of the plaintiff in this action, sold and assigned the said mortgage, with the indebtedness thereby secured, to the Bank of Roper, which paid him full value therefor. It appears from the record that no part of this indebtedness has been paid. Sometime after he had transferred and assigned the mortgage, H. S. Basnight attempted to cancel the same of record, without the knowledge or consent of the holder of the note it secured.

On the 31st day of December, 1918, the Farmers' Union Supply Company, being desirous of acquiring title to the other half of the building, same being owned by J. O. Highsmith borrowed from the Bank of Roper the sum of $5,750 and secured the loan by a deed of trust on the property duly registered. It is admitted that the Bank of Roper advanced the full amount, represented by this loan and deed of trust, to the supply company and that the latter used the same in purchasing the other half of the building from Highsmith.

It also appears that this loan and deed of trust were authorized by the stockholders and directors of the supply company. No part of this indebtedness has ever been paid.

On the 14th day of January, 1921, the Farmers' Union Supply Company borrowed from the Bank of Roper the sum of $4,800 for the purpose of taking up certain notes to a bank in Elizabeth City and for the other purposes of its business. To secure this amount, it executed to Hassell, trustee, the deed of trust recorded in Book 74, p. 178. It is admitted that the Bank of Roper advanced the full amount shown in this deed of trust to the supply company, and that no part of the same has ever been repaid. It also appears that this loan and deed of trust were authorized by the stockholders and directors of the supply company.

It also appears that some time prior to the execution of the two last deeds of trust, the corporate seal of the Farmers' Union Supply Company had been broken or misplaced, and that the stockholders and directors of the company, in a duly constituted meeting, had adopted the form of seal as it appears on said instrument, as the corporate seal of the company. There was also evidence that the stockholders and directors of the supply company authorized and directed the execution of valid deeds of trust to secure the Bank of Roper, and that the president and secretary of the supply company, pursuant to resolutions to that effect, appeared before the notary, taking the probates of the said instruments, and acknowledged the execution of the same to be the acts and deeds of the Farmers' Union Supply Company.

Some time after the execution of the said instruments, the Farmers' Union Supply Company was adjudicated a bankrupt, and the plaintiff was appointed trustee of the estate. The Bank of Roper has also been adjudged insolvent by decree of the superior court of Washington county, and the defendant Litchfield has been appointed receiver of the said bank, with power and authority to wind up its affairs and distribute the assets as appears from the record.

Plaintiff's only attack upon the Basnight mortgage, as appears, is that it was canceled of record, and this was the only issue with reference to that mortgage. Plaintiff attacks the two deeds of trust to Hassell, trustee, upon two grounds: (1) That the corporate seal of the Farmers' Union Supply Company was not affixed to the said deeds. (2) That the deeds were not properly probated.

The jury returned the following verdict:

"1. Were the deeds of trust from the Farmers' Union Supply Company to T. R. Hassell, trustee, offered in evidence, executed in pursuance of resolutions of the Farmers' Union Supply Company authorizing the execution of the same? Answer: Yes.

2. Prior to the execution of the said deeds of trust aforesaid, had the word 'seal' appearing upon said instruments been adopted as the corporate seal of the Farmers' Union Supply Company pursuant to resolutions of its stockholders and directors in a meeting duly called and held for that purpose? Answer: Yes.

3. Were the said deeds of trust acknowledged by the president and secretary and treasurer in the form appearing upon said deeds of trust offered in evidence, in pursuance of the said resolutions of the stockholders and directors, and did the said president and secretary and treasurer appear before a notary public and acknowledge the execution of the said deeds as the act and deed of the said Farmers' Union Supply Company? (Plaintiff excepts to the submission of this issue.) Answer: Yes.

4. Were the amounts represented by the deeds of trust aforesaid actually received by the Farmers' Union Supply Company and used by it in the purchase of the property therein described and in carrying on the business of the company? Answer: Yes.

5. Was the cancellation of the mortgage from the Farmers' Union Supply Company to T. J. Basnight unauthorized as alleged in the answer? Answer: Yes."

The court rendered judgment upon the verdict, declaring therein that the mortgage and deeds of trust were validly executed by the Farmers' Union Supply Company and valid debts secured thereby and were binding upon it, as its subsisting obligations. The court further provided for a sale of the lands described in said deeds and appointed a commissioner for that purpose, and then gave specific directions, as to the payment of the debts and costs. Plaintiff excepted and appealed.

Zeb Vance Norman, of Plymouth, for appellant.

W. L. Whitley and Van B. Martin, both of Plymouth, for appellees.

WALKER J.

We will consider the questions in the same order as they are presented in the record.

It may be taken as settled that a corporation may adopt, alter, or change a common seal at its pleasure. Com. Stat. § 1126, subsec. 3.

"The power to have common seal and to alter or renew the same at will is frequently conferred on corporations by statute, but such a power is one of the incidental and implied powers of every corporation when not expressly conferred." 14 C.J. § 404, p. 334; 7 A. & E. (2d Ed.) p. 690 et seq.; Railway Co. v. Hooper, 160 U.S. 514, 16 S.Ct. 379, 40 L.Ed. 515.

In this state a corporation must convey its real property by instrument under seal, the same as an individual, but this does not necessarily mean that it must be done by attaching the ordinary common seal of the corporation. Any device used on the instrument, as and for the seal of the corporation, would be sufficient for that purpose, provided it was intended for and used as the seal of the corporation.

"If a seal is necessary to a corporate contract, and authority is shown for the corporation to attach its seal thereto, it is by no means indispensable that use should be made of the ordinary common seal of the corporation. Any other seal would have the same effect, if adopted by the corporation, and this is ordinarily established by showing authority to execute a contract on behalf of the company under seal, and the fact of attaching some seal to the name of the corporation with intent to seal on its behalf." 7 A. & E. (2d Ed.) p. 692, citing numerous authorities from State and Federal Courts, including the United States Supreme Court; Taylor v. Heggie, 83 N.C. 244; 14 C.J. p. 336; Womack on Corporations (1904) p. 203, § 403; Benbow v. Cook, 115 N.C. 324, 20 S.E. 453, 44 Am. St. Rep. 454.

There was evidence that all of the instruments in question were duly authorized by the stockholders and directors of the Farmers' Union Supply Company and that the stockholders and directors were present at these meetings. It further appears, in the evidence that, prior to the execution of the deeds of trust to Hassell, trustee, the corporate seal of the Farmers' Union Supply Company had been broken or misplaced and that the stockholders and directors of the Farmers' Union Supply Company had duly adopted the word "seal" as the corporate seal of the said company, and that it was so used on the instruments in question. It appears from the testimony of the witness J. E. Singleton, that all directors were present when this was done. Therefore, assuming this to be the fact, and the verdict of the jury has established the same, then the seal on the instruments in question is the corporate seal of the Farmers' Union Supply Company. It appears from a perusal of the instruments in question that they are made for and in the name of the Farmers' Union Supply Company, and it also appears from the attestation clause that they are executed for and in behalf of the Farmers' Union Supply Company.

Plaintiff attacks the probates of the two...