M. & J. Finance Corp. v. Hodges
| Decision Date | 21 September 1949 |
| Docket Number | 17 |
| Parties | M. & J. FINANCE CORPORATION v. HODGES, Sheriff, et al. |
| Court | North Carolina Supreme Court |
Civil action in claim and delivery to recover the possession of an automobile.
James Moore is a resident of Rockingham County, N. C. On 30 September, 1948, he purchased a Plymouth 4-Door Sedan from City Auto Sales Company and gave his note in the sum of $1508.40, secured by a chattel mortgage on the automobile, in part payment of the purchase price. On the same day the seller transferred and assigned the note and mortgage to the plaintiff herein. This mortgage was duly registered 26 October 1948.
In January 1948, defendant Bank of Reidsville procured judgment against James Moore in the sum of $961.06, interest and costs. This judgment was duly docketed in Rockingham County.
On 22 October, defendant Bank caused execution to issue on said judgment and the defendant sheriff, under authority thereof duly levied upon and took into his possession said automobile for the purpose of selling the same to satisfy said execution. He proceeded to advertise the same for sale as required by law.
On 15 November 1948 the plaintiff instituted this action and procured the issuance of a writ of claim and delivery under which the coroner of Rockingham County seized said automobile and, the defendants having failed to replevy, delivered possession thereof to plaintiff. The automobile was sold and the proceeds of sale are being held pending the determination of the controversy respecting the priority of liens. The sale price was insufficient to satisfy plaintiff's claim so that if it holds the first lien, the defendants recover nothing.
The parties entered into a stipulation waiving trial by jury and submitting the cause to the resident judge on facts agreed. The judge, being of the opinion that the lien of plaintiff is superior to and takes priority over the levy under execution, rendered judgment that plaintiff have and recover possession of said automobile. Defendants excepted and appealed.
D F. Mayberry, Reidsville, for plaintiff appellee.
Scurry & McMichael, Reidsville, for defendant appellants.
The plaintiff's chattel mortgage was executed 30 September 1948 but was not registered until 26 October 1948. The automobile was seized under execution on defendant's judgment 22 October 1948. Thus on the date of seizure under execution, plaintiff's mortgage was not of record. Which party holds the prior lien? This is the one question posed by this appeal. Our decisions answer in favor of defendants.
The plaintiff stressfully insists that the defendant bank is not a creditor or purchaser for value within the meaning of our registration statute for the reason its judgment was rendered on an antecedent or pre-existing debt. This contention cannot be sustained.
Where a third party is the owner of the equitable title to property by virtue of some equity resting in parol, the grantee or lienee of the apparent owner is protected against the claim of the beneficial owner only in the event he is a purchaser for value without notice, and to constitute him a purchaser for value he must have advanced some new consideration or incurred some new liability on the faith of the apparent ownership. There must be a new consideration moving between the parties, and for such purpose an existing or antecedent debt will not suffice. That is to say, claims in equity resting in parol do not come within the purview of our registration statutes. G.S. Chap. 47, Art. 2. Small v Small, 74 N.C. 16; Southerland v. Fremont, 107 N.C. 565, 12 S.E. 237; Wallace v. Cohen, 111 N.C. 103, 15 S.E. 892; Carpenter v. Duke, 144 N.C. 291, 295, 56 S.E. 938; Commercial & Farmers' Bank v. Scotland Neck Bank, 158 N.C. 238, 73 S.E. 157; Bank of Colerain v. Cox, 171 N.C. 76, 87 S.E. 967; Spence v. Foster Pottery Co., 185 N.C. 218, 117 S.E. 32; Weil v. Herring, 207 N.C. 6, 175 S.E. 836.
That line of cases has no bearing on the question here presented. Plaintiff claims under an unregistered mortgage which creates no equity. Weil v. Herring, supra; Todd v. Outlaw, 79 N.C. 235.
The mortgagor was a resident of Rockingham County. Hence, G.S. s 47-20 is controlling. That statute regulates priorities as between written instruments affecting the title to property and other legal claims and is designed to protect creditors and purchasers for value against any adverse claim founded on an unrecorded lien.
Unregistered mortgages are of no validity whatsoever as against creditors and purchasers for value unless they are registered. They take effect as against such interested third parties from and after registration just as if they had been executed then and there. Robinson v. Willoughby, 70 N.C. 358; Bostic v. Young, 116 N.C. 766, 21 S.E. 552; Bank of Colerain v. Cox, supra.
Even so, it is not every creditor who is protected against unrecorded mortgages. A creditor has no claim to the personal estate of his debtor until he has first fastened a lien upon it in some manner sanctioned by law.
As to liens coming within the purview of the registration statute, a preexisting debt is a valuable consideration and is sufficient to support the claim of a creditor who has fastened his lien upon the property of his debtor. Bank of Colerain v. Cox, supra; Brem v. Lockhart, 93 N.C. 191; Moore v. Sugg, 114 N.C. 292, 19 S.E. 147; Odom v. Clark, 146 N.C. 544, 60 S.E. 513; Weil v. Herring, supra; Sansom v. Warren, 215 N.C. 432, 2 S.E.2d 459; Bostic v. Young, supra; Fleming v. Graham, 110 N.C. 374, 14 S.E. 922; Brown v. Mitchell, 168 N.C. 312, 84 S.E. 404, Ann.Cas.1917B, 933; Southerland v. Fremont, supra.
Thus the title of a receiver in an insolvency proceeding, General Motors Acceptance Corporation v Mayberry, 195 N.C. 508, 142 S.E. 767; Sermons v. Allen, 184 N.C. 127, 113 S.E. 605; Coble & Starr v. Wharton, 177 N.C. 323, 98 S.E. 818, or of a trustee under a deed of assignment for the benefit of creditors, Brem v. Lockhart, supra; Empire Drill Co. v. Allison, 94 N.C. 548; Observer Co. v. Little, 175 N.C. 42, 94 S.E. 526; Coble & Starr v. Wharton, ...
To continue reading
Request your trial