Kistler v. Wilmington Development Co.
| Decision Date | 04 January 1939 |
| Docket Number | 689. |
| Citation | 200 S.E. 400,214 N.C. 630 |
| Parties | KISTLER et al. v. WILMINGTON DEVELOPMENT CO. et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Guilford County; F. D. Phillips, Judge.
Action by Mary W. Kistler and others against Wilmington Development Company and others, in which receivers were appointed to liquidate the assets of the corporate defendant, and in which the secured creditors were restrained from selling under foreclosure. Upon petition of Life Insurance Company of Virginia, a mortgage creditor, the superior court entered an order dissolving the order restraining foreclosure sale and ratifying agreement between the mortgage creditor and receivers for the segregation of rent. Thereupon the Life Insurance Company of Virginia made a motion to require the receiver to comply with such order. From an order denying the motion of the Life Insurance Company of Virginia, the movant appeals.
Reversed and remanded.
Where mortgage creditor was deprived of its right of possession of mortgaged property until the debt was paid or until foreclosure by an order of the superior court, and thereupon entered agreement with receivers of mortgagor, subsequently approved by order of the superior court, under which net rentals after deducting certain named expenses, and "other items properly chargeable thereto" were to be segregated and paid to mortgage creditor, such special fund in the hands of the receivers could not be charged with a pro rata part of the receivership expenses.
Civil action in which receivers were appointed to liquidate the assets of the corporate defendant and in which the secured creditors were restrained from selling under foreclosure or otherwise interfering in any manner with the possession of the receivers.
The petitioner and movant is a secured creditor under two deeds of trust. Each series of notes held by it is in substantial arrears.
In the order appointing receivers the receivers were authorized to permit secured creditors to collect the rent from the property to the extent of overdue interest on the indebtedness. Subsequent to a petition by the movant, praying that the receivers be required to segregate rental income derived from the properties upon which they held security the movant and the receivers entered into an agreement for the segregation of such rents.
The trustees in the deeds of trust on April 8, 1937, filed a petition for the dissolution of the restraining order against foreclosure. On April, 28, 1937, the movant filed a supplemental petition renewing its motion to require the receivers to segregate the rents to be applied as set forth in its former petition and further praying for the dissolution of the restraining order against foreclosure.
The pending petitions and motions came on to be heard before Armstrong, J., May 21, 1937. In its order the court found as a fact "that following the filing of the original petition of the Life Insurance Company of Virginia on January 8, 1934, the receivers in this cause and the said petitioner entered into an arrangement for the segregation of the rentals from said properties in the manner prayed for in the original petition, and that the receivers have paid all of the net income derived from said properties to the Life Insurance Company of Virginia up to September 4, 1936." The court further found that the amount due the Life Insurance Company of Virginia under one of the deeds of trust was, as of April 15, 1937, $58,628.39, and that the amount due under the other trust deed as of said date was $54,467.23, and that the indebtedness under each of the deeds of trust greatly exceeded the value of the respective security and that the receivers have no equity in the property and that the same does not constitute an asset from which any benefits could be derived for the estate or the creditors thereof. The court further found that the Life Insurance Company of Virginia in consideration of the granting of its motion agreed that it would waive any claim against the estate of the Wilmington Development Company which might arise by reason of any deficiency in the event the security did not bring at public sale the full amount of its indebtedness. It now appears that the deficiency was more than $30,000.
The court thereupon entered an order: (1) Dissolving the order restraining foreclosure sale. (2) Ratifying, confirming and approving the agreement between the movant and the receivers for the segregation of rents and directing the receivers "to pay over to the ...
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