Morris v. Y. & B. Corporation

• Citation: 153 S.E. 327,198 N.C. 705
• Decision Date: 21 May 1930
• Docket Number: 464.
• Parties: MORRIS v. Y & B CORPORATION.
• Court: North Carolina Supreme Court

153 S.E. 327

198 N.C. 705

MORRIS v. Y & B CORPORATION.

No. 464.

Supreme Court of North Carolina

May 21, 1930

Appeal from Superior Court, Mecklenburg County; Stack, Judge.

Action by Harvey Morris, on behalf of himself and all other creditors of the Y & B Corporation, for appointment of a receiver. W. J. Shuford was appointed receiver, and the Guardian Life Insurance Company of America filed a claim for payment of certain indebtedness. Judgment for claimant, and the receiver appeals.

No error.

Temporary arrangement to cancel corporation's indebtedness to obtain loan from which indebtedness was paid did not affect right of assignee of new note to subrogation.

See also, 153 S.E. 335.

This was an action brought by plaintiff on behalf of himself and all other creditors of the Y & B Corporation to have a receiver appointed for the Y & B Corporation. W. J. Shuford was appointed receiver on November 30, 1927.

The Guardian Life Insurance Company of America, a corporation of New York state, filed a claim with the receiver of the Y & B Corporation for the payment of certain indebtedness, totaling $50,000, and interest, alleging that it was secured by deed of trust on certain land of the Y & B Corporation. The material allegations of the complaint: J. A. Yarborough and wife, Josephine Yarborough, made and executed a certain note for $50,000 on April 28, 1927, to the Home Real Estate & Guaranty Company of Charlotte, N. C., and to secure the payment of the same executed a deed of trust to P. C Whitlock and J. Arthur Henderson, trustees for the Home Real Estate & Guaranty Company, on certain real estate therein described, on the corner of East Fourth and South Caldwell streets in the city of Charlotte, N.C. The same was duly recorded in the office of the register of deeds for Mecklenburg county on May 3, 1927, Book 650 of Deeds, p. 19 and "that the property described in said deed of trust and given as security for said loan was, at the time said note and deed of trust were executed, the property of the Y & B Corporation and was immediately prior to the execution of said note and deed of trust conveyed to the said J. A. Yarborough and said Y & B Corporation in order that he might obtain said loan thereon for the benefit of the said corporation, and that when said loan was made the proceeds thereof were paid to the Y & B Corporation and said corporation immediately took a conveyance from J. A. Yarborough and wife back to it for said property and in the deed of conveyance assumed the payment of said $50,000 note, and that it has been from the time said loan was made, and still is, liable for the payment thereof. That the Home Real Estate & Guaranty Company immediately transferred and assigned said note without recourse to the National Mortgage Corporation of New York, which company furnished the money with which to make said loan. That on May 12th, 1927, before the maturity of any part of said note, the National Mortgage Company, for value, transferred and assigned said note, together with all its rights in and under the deed of trust securing the same, to this claimant, the Guardian Life Insurance Company of America, which company took said notes before maturity, for value, and without notice of any defects or infirmities therein and is still the owner and holder thereof. That no part of said note, principal or interest has been paid, although the first installment of $2,500.00, fell due on the 28th day of April, 1928, and that there is now due and owing to this claimant on account thereof the sum of $50,000, with interest at the rate of 6% per annum from and after the 28th day of October, 1927, with interest on $1,500.00 unpaid interest since the 28th day of April, 1928. That said deed of trust constitutes, as claimant is advised, informed and believes, a first lien on the property described therein for the payment of said indebtedness and that said claimant is entitled to have its claim allowed as a preferred claim to the extent of the value of the property described in said deed of trust and to have said property sold and the proceeds applied toward the payment thereof."

W. J. Shuford, receiver, on September 4, 1928 and December 15, 1928, in his reports, after setting forth the reasons, disallowed the claim as a lien on the real estate before mentioned, but allowed it as an unsecured claim against the corporation. Exception was duly made by the Guardian Life Insurance Company of America. The case came on for hearing before Stack, J., and the following stipulations of counsel appear in the record, duly signed by them: "It is stipulated in this case by counsel for both parties that a jury trial be waived and the presiding Judge find the facts." The findings of fact and conclusions of law made by the court below were in favor of the Guardian Life Insurance Company of America. Judgment was rendered by the court below in favor of the Guardian Life Insurance Company of America.

The receiver requested the court below to find certain facts, setting them forth, which was refused. Exceptions and assignment of errors were duly made. The receiver duly excepted to the findings of fact and conclusions of law by the court below. Numerous exceptions and assignments of error were made by the receiver and appeal taken to the Supreme Court. The necessary facts will be set forth in the opinion.

E. B. Cline, of Hickory, and Preston & Ross and Tillett, Tillett & Kennedy, all of Charlotte, for appellant.

Whitlock, Dockery & Shaw, of Charlotte, for appellee Guardian Life Ins. Co. of America.

CLARKSON J.

The main points relied upon by the receiver are:

"1. That the attempt by J. A. Yarborough to convey corporation property to himself individually, without any authority from the Corporation and without the knowledge of any director of the Corporation was absolutely void and passed no title whatsoever to himself individually.

"2. That even if it should be held that the deed was not void, but only voidable, nevertheless under the circumstances in this case the deed of trust should be declared void upon several separate and distinct grounds."

On the other hand, the Guardian Life Insurance Co. of America contends that the questions involved are: "1. The deed from Y & B Corporation to its President, J. A. Yarborough, dated April 28, 1927, was not void, but was voidable, and the burden was on the claimant to show that it was either authorized or ratified by the corporation and that the transaction was fair, open and free from undue advantage and fraud. 2. Having received and used the proceeds of the loan, for its corporate purposes, the corporation is estopped to repudiate the acts of its officers in procuring the loan for it."

The receiver, at the close of the evidence for the Guardian Life Insurance Company of America, and at the close of all the evidence, moved for judgment as in case of nonsuit. C. S. § 567. The court overruled these motions, and in this we think there was no error. We think the controversy hinges on the question whether there was sufficient evidence to support the findings of fact.

It is the well settled rule of practice and the accepted position in this jurisdiction that, on a motion to nonsuit, the evidence which makes for the plaintiff's claim and which tends to support his cause of action, whether offered by the plaintiff or elicited from the defendant's witnesses, will be taken and considered in its most favorable light for the plaintiff, and he is entitled to the benefit of every reasonable intendment upon the evidence, and every reasonable inference to be drawn therefrom. Abel v. Dworsky, 195 N.C. 867, 142 S.E. 475.

It is also well settled in this jurisdiction that controversies on issues of fact are determinable by a jury, and, if there is any competent evidence on the issue, the weight thereof is for the jury. It was agreed in the present controversy that the court below should find the facts.

In Eley v. R. Co., 165 N.C. at page 79, 80 S.E. 1064, 1065, we find: "A jury trial being waived, the findings of fact by the judge are as conclusive as the verdict of a jury, when there is evidence to support them (Matthews v. Fry, 143 N.C. 385, 55 S.E. 787)." In the Matter of Assessment against Property of Railway Co., 196 N.C. 756, 147 S.E. 301; Colvard v. Dicus, 198 N.C. 270, 151 S.E. 191. From the findings of fact in the court below we think the contentions of the Guardian Life Insurance Company of America must be sustained.

The facts found by the court below, and we think there was evidence to support same, were to the effect: That the Y & B Corporation had borrowed $30,000 from the American Trust Company on March 7, 1927, and had made a deed in trust to T E. Hemby, trustee for the American Trust Company, on the land in controversy on the corner of East Fourth and Caldwell streets in the city of Charlotte, N.C. The deed in trust was duly recorded. The president of the Y & B Corporation, J. A. Yarborough, to take up this loan, was desirous of borrowing an additional sum on the same property and paying off that lien, and application was made to the Home Real Estate & Guaranty Company of Charlotte, N.C. Sundry loans had been made by this corporation for the Pennsylvania Mutual Life Insurance Company, and in every instance the title to the property had to be transferred to an individual and a lien given on the property by the individual, and the property reconveyed to the corporation and it assumed the payment of the indebtedness. the law firm of Whitlock, Dockery & Shaw represented the Home Real Estate & Guaranty Company in its legal matters. Application for the loan of the Y & B Corporation was turned over to Henry C. Dockery, a member of the firm. Supposing that it was a Pennsylvania Mutual Life Insurance Company...