Bank of Greensboro v. Clapp

• Decision Date: 31 January 1877
• Citation: 76 N.C. 482
• Court: North Carolina Supreme Court
• Parties: BANK OF GREENSBORO v. ABRAM CLAPP and others.

76 N.C. 482

BANK OF GREENSBORO

v.ABRAM CLAPP and others.

Supreme Court of North Carolina.

January Term, 1877.

CIVIL ACTION, tried at Fall Term, 1876, of GUILFORD Superior Court, before Kerr, J.

The plaintiffs alleged that theretofore the firm of Shields & Co. owned certain premises (mentioned in the complaint,) and were conducting a licensed distillery thereon. They became indebted to the government for taxes and said premises were sold at public auction for cash on the 27th of May, 1871, when the defendant Owen became the purchaser in the sum of $2700. In order to raise the money to pay his bid he borrowed said amount of the plaintiff, upon the execution of an instrument of writing, of which the following is a copy:

“This instrument witnesseth, that whereas on the 27th of May, 1871, the premises of the ‘Greensboro Steam Distillery'--about five acres of land with improvements, steam engine, boilers, &c.--were sold by order of C. S. Winstead, Collector of Internal Revenue, on account of taxes assessed upon Shields & Co., the proprietors and owners of said property; and whereas, Thomas M. Owen became the purchaser at $2700; and whereas, the Bank of Greensboro did advance and lend to me, for the purpose of paying for said property, the said sum of $2700, as per my note of this date; Therefore, I do hereby assign, transfer and make over to said Bank, my bid for, and right, title and interest in said property, as a guaranty for the payment of said note. And said Collector or his successor in office is hereby empowered and requested to make a deed at the twelve months maturity, to the said Bank instead of to me. This instrument to be void in case I discharge said note to the satisfaction of said Bank.

Thomas M. Owen.

June 1st, 1871.”

Knowing that Shields & Co. had the right to redeem their property at any time within twelve months, the defendant Owen, in order more effectually to secure the plaintiff, executed another instrument, of which the following is a copy:

“To Mr. C. S. Winstead, Collector, &c. In case Shields & Co. should redeem the property sold by Thomas M. Owen, Dep. Collector and bought by me, I will thank you to pay the said money to the Bank of Greensboro, as I borrowed the purchase money from the Bank and gave them an instrument transferring my bid for and interest in said property to secure the payment of my note to said Bank for said purchase money. June 5th, 1871. Thomas M. Owen.”

Shields & Co. failed to redeem and thereupon the plaintiff applied to the Collector for a deed but was informed that $835.40 of the purchase money had not been paid by defendant Owen, and that no deed would be executed until it was paid. So the plaintiff paid the amount on the 25th of January, 1875, and obtained a deed.

The plaintiff insists that it is entitled to hold said property as a security for both of said amounts, $2,700 and $835.40, and demands a sale of the premises to satisfy the same.

The defendant Clapp alleged, that under a decree of Court in another action wherein the Executors of one Summers were plaintiffs, and Mrs. Wright and Mrs. Cobb, femes covert, were defendants, his co-defendant Owen had been appointed trustee for said femes covert. In that action it was adjudged that the defendants Wright and Cobb, the heirs of said Summers, were entitled to a sum of money to be paid by said Executors, and that said Owen their trustee should execute a deed in trust to the defendant Clapp, who was then the Clerk of said Court, to secure and protect the estate of said femes covert. Accordingly Owen executed the deed to Clapp on the 23d day of May, 1872, conveying the premises hereinbefore mentioned, to the end that such funds as should come into his hands as trustee aforesaid, might be secured.

The said deed from Owen to Clapp was registered on the 11th of September, 1872, and the said instrument from Owen to plaintiff was not registered until the 2d of March, 1876.

After the execution of said deed to Clapp, the money to which the said femes covert were entitled as heirs of Summers, was paid to said Owen as their trustee, who still held it by virtue of his appointment as trustee and by his conveying said premises in trust to secure the payment thereof.

The defendant Owen paid to plaintiff an amount sufficient to discharge the said note for $2,700, but the money was not applied to said note as directed by Owen. It was also alleged that the plaintiff contracted for and took from said Owen, usurious interest.

The defendant Clapp insisted that said premises should be sold and the proceeds applied to the payment of the amount due from said Owen to said femes covert.

The other facts material to the points decided are stated by the CHIEF JUSTICE in delivering the opinion of this Court.

The jury rendered a verdict in favor of the plaintiff. Judgment. Appeal by defendants.

Messrs. Smith & Strong and Scott & Caldwell, for plaintiff .

Mr. Thomas Ruffin, for defendants .

PEARSON, C. J.

On the argument, the counsel properly conceded that as both sides claim under Owen and as the Collector of Internal Revenue had ratified the transaction and had passed the legal title, neither side could call in question the validity of Owen's bid.

1. Taking Owen's bid to be valid, the first question is in regard to the character of the instrument executed by Owen to plaintiff on the 1st June, 1871. Every feature in the face of that...