Liberty Mfg. Co. v. Malloy

• Decision Date: 08 June 1940
• Docket Number: 674.
• Citation: 9 S.E.2d 403,217 N.C. 666
• Parties: LIBERTY MFG. CO. v. MALLOY et al.
• Court: North Carolina Supreme Court

9 S.E.2d 403

217 N.C. 666

LIBERTY MFG. CO. v. MALLOY et al.

No. 674.

Supreme Court of North Carolina

June 8, 1940

Civil action to recover the value of property sold by individual defendant to corporate defendant and upon which plaintiff claims a lien.

On October 31, 1938, the defendant Malloy was indebted to the plaintiff as evidenced by two notes in the aggregate sum of $1,657.27, which notes were secured by a real estate mortgage. The first note in the sum of $857.27 matured October 1, 1938. On October 31, 1938 defendant Malloy executed to the plaintiff a note in the sum of $800 and at the same time executed and delivered a chattel mortgage to secure the same conveying "52 hogs averaging about 3 months old each, and weighing approximately 60 pounds each being all the hogs of this age and weight that I now own" subject to the agreement that from this number of hogs grantor excepted two as brood sows to be selected by him. This chattel mortgage contained the provision that "This chattel is given as additional security to a certain deed of trust on the lands of grantor in favor of Liberty Manufacturing Company, which deed of trust matured in part on 1 October, 1938". At the same time Malloy was indebted to the plaintiff on a crop lien mortgage in the sum of $577.93.

Subsequent to the execution of the chattel mortgage Malloy conveyed to the plaintiff the lands described in the deed of trust in satisfaction of the indebtedness thereby secured and said deed of trust was duly cancelled of record. The crop lien mortgage was marked paid November 23, 1938 and was duly cancelled of record.

In February and March, 1939, after the execution of the chattel mortgage, Malloy sold to the defendant Armour & Company 38 hogs for the sum of $393.10. Of this amount $11.24 was paid to plaintiff by Armour & Company on order of Malloy. Plaintiff sues for the balance claiming same under the terms of the chattel mortgage.

Issues were submitted to and answered by the jury under the instructions of the court that if they believed all of the evidence they would answer the same in favor of the plaintiff as indicated by the answers as follows:

"1. Did the defendant James D. Malloy execute the note to the plaintiff bearing date October 31, 1938, for value, as alleged in the complaint?

"Answer Yes.

"2. What amount, if any, is the defendant James D. Malloy indebted to the plaintiff on said note?

"Answer: $800.00 with interest from October 31, 1938, subject to a credit of $11.24 as of May 5, 1939.

"3. Did the defendant James D. Malloy execute the chattel mortgage as alleged in the complaint?

"Answer: Yes.

"4. Did the defendant Armour & Company purchase from James D. Malloy the hogs described in the chattel mortgage as described in the complaint?

"Answer: Yes.

"5. What amount, if any, is the defendant Armour & Company indebted to the plaintiff on account of the matters alleged in the complaint?

"Answer: $393.10, together with interest from February 9, 1939, subject to a credit of $11.24 as of May 5, 1939.

"6. Did the plaintiff Liberty Manufacturing Company hold a valid recorded lien against the hogs described in the chattel mortgage when purchased by Armour & Company?

"Answer: Yes."

From judgment thereon defendant Armour & Company appealed.

Downing & Downing, of Fayetteville, and Myers & Snerly, of Chicago, for defendant-appellant Armour & Co.

Johnson & Timberlake, of Lumberton, for plaintiff-appellee.

BARNHILL Justice.

There was no present consideration for the execution of the chattel mortgage and note secured thereby. It was executed and delivered as additional security to the notes secured by the trust deed as is indicated upon its face. Witness for plaintiff so testified: "When he gave the chattel mortgage he owed the money. He already had the consideration for the chattel mortgage. We asked for additional security on what he already had. He gave the additional security because we asked for it. There was no additional consideration. We did not give him anything additional for it. When Mr. Malloy executed the chattel mortgage referred to there was no additional credit given him."

When an instrument creating a lien upon real or personal property is recorded as required by law it is for the purpose, in part at least, of giving notice of the lien to all persons who may thereafter acquire an interest in the property thus conveyed. It is equally true that when such instrument thus recorded is duly cancelled of record it gives notice that the lien thereby created no longer exists. All persons are charged with notice of the lien created by the registered instrument. They may rely with equal security upon the cancellation.

The debt secured is the life of the mortgage and gives it vigor and efficacy. The essential effect and consequence of the...