Boney & Harper Milling Co v. J. C. Stevenson Co

• Decision Date: 19 March 1913
• Citation: 161 N.C. 510,77 S.E. 676
• Court: North Carolina Supreme Court
• Parties: BONEY & HARPER MILLING CO. v. J. C. STEVENSON CO.

77 S.E. 676

161 N.C. 510

BONEY & HARPER MILLING CO.

v.J. C. STEVENSON CO.

Supreme Court of North Carolina.

March 19, 1913.

1. Pledges (§ 11^*) — Validity — Delivery — Identification of Goods.

A pledge of goods as collateral for a loan was invalid where there was no delivery of the goods to the lender, and they were so intermingled with other goods as not to be subject to identification.

[Ed. Note—For other cases, see Pledges, Cent. Dig. §§ 28-35; Dec. Dig. § 11.*]

2. Pledges (§ 19*)—Security for Other Indebtedness.

A note pledging collateral security for the "payment of this or any other obligation" to the lender, "due or to become due, " authorized the lender to hold the collaterals for any indebtedness due from the maker.

[Ed. Note.—For other cases, see Pledges, Cent. Dig. §§ 58-63; Dec. Dig. § 19.*]

3. Receivers (§ 148*)—Secured Creditors-Participation in Distribution.

On receivership proceedings, a bank holding notes secured by collateral is entitled to prorate with the general creditors on the basis of the amount due it, and then apply the proceeds of the collaterals to payment of the balance of its claim unless the collaterals amount to more than the balance due.

[Ed. Note.—For other cases, see Receivers, Cent. Dig. § 260; Dec. Dig. § 148.*]

Appeal from Superior Court, New Hanover County; Carter, Judge.

Action by the Boney & Harper Milling Company against the J. C. Stevenson Company. From an order approving a report of the receiver, the Home Savings Bank appeals. Modified.

J. W. Little, of Wilmington, for appellant.

Davis & Davis, Rountree. & Carr, and K. O. Burgwin, all of Wilmington, for receiver.

CLARK, C. J. This is a creditor's bill in which T. W. Davis, Esq., was appointed receiver. The court approved the report and findings of the receiver, and there are two exceptions to the judgment of the court

1. The Home Savings Bank held the Stevenson Company's note as follows: "Wilmington, N. C, Nov. 15, 1912. We hereby assign to the Home Savings Bank as collateral for a loan of one thousand ($1,000) dollars, due Jan. 14, 1913, 750 cases No. 3 standard tomatoes, branded, some Pride of Virginia, and some Russell, paid for, and stored in our warehouse at No. 11 Water street, or should sale of said tomatoes be made, the proceeds from the sale to be placed to the credit of note given the above-mentioned bank for amount mentioned with date of maturity expressed. J. C. Stevenson Company, per Jas. M. Stevenson." The court approved the finding of the receiver that by verbal agreement between the Stevenson Company and the bank, some of the goods mentioned in the pledge had been sold and the money used by the Stevenson Company and other goods substituted. And further that there were no marks to identify any of the goods except a regular trade-name or brand, and nothing to put creditors upon notice of said pledge, and that the goods were put in two piles in the store of the Stevenson Company alongside of other goods piled in like manner; that the pledge was made in good faith, but that the bank never had the actual possession of the goods which were at all times stored in the warehouse of the Stevenson Company. The judge found as additional facts that the goods so pledged were recognized at all times by both parties as pledged to the bank, and that there was an understanding between them that the goods could not be removed from the store of Stevenson Company without the bank's consent, except as permitted by the contract, and upon these findings of fact the court held that the pledge was invalid.

The finding of his honor was correct, both because there was no delivery of the pledged property to the bank to be held by it as security, for delivery is the essence of a pledge, says Pearson, C. J., in Owens v. Kin-sey, 52 N. C. 246, and because the goods were intermingled with other goods and had no identifying...