Sherrill v. Hood
| Decision Date | 18 September 1935 |
| Docket Number | 237. |
| Citation | 181 S.E. 330,208 N.C. 472 |
| Parties | SHERRILL v. HOOD, Com'r of Banks, et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Alexander County; Oglesby, Judge.
Suit by F. C. Sherrill against Gurney P. Hood, Commissioner of Banks and others. From a judgment for plaintiff, defendants appeal.
Affirmed.
In action by junior mortgagee to require senior mortgagees to transfer bonds and trust deed, upon payment by plaintiff of amount due defendants after deducting alleged usurious interest payments, evidence that usurious interest was charged under first mortgage held sufficient for jury (C.S. § 2306).
Issue raised by pleadings involving exaction of usury should be submitted to jury.
This is a civil action instituted by the plaintiff, F. C. Sherrill wherein he alleges that he is the owner of certain notes totaling approximately $36,000 issued by the Carolina Spinning Company, a corporation, and secured by a second mortgage executed by said corporation upon its real estate plant, and machinery, and that the balance due on a prior bond issue of $50,000 secured by a prior and first deed of trust executed by said corporation upon said property is approximately $15,265, and that bonds representing this balance are owned and held by the defendants, the liquidating agent of the Independence Trust Company and J. A. Abernethy et al., trustees for certificate holders of the Trust Certificate Fund of the Independence Trust Company, and prays the court to determine the balance due of the bonds secured by the first deed of trust and to require the holders thereof to transfer and assign the same, together with said deed of trust, to him upon the payment to them by him of the amount so determined.
The plaintiff further alleges that the bonds secured by the first deed of trust are tainted with usury because they were issued in return for a loan of $40,000 to the Carolina Spinning Company by the Independence Trust Company, in the making of which loan the Independence Trust Company charged and required the payment of $10,000 in excess of the legal rate of interest, and for that reason said bonds draw no interest, and that when all of the amounts paid thereon are credited on the principal thereof the balance due is approximately $15,265.
The defendants the liquidating agent of the Independence Trust Company and J. A. Abernethy et al., trustees for the certificate holders of the Trust Certificate Fund of the Independence Trust Company, filed separate answers wherein they each deny that the plaintiff is the owner of the notes secured by the second mortgage executed by the Carolina Spinning Company, and, while admitting that they together own the unpaid bonds secured by the first deed of trust executed by said company, they allege that these unpaid bonds amount to $40,000 (less $1179.05 credit by sale of machinery), plus interest from February 1, 1934; and they both specifically deny that these unpaid bonds secured by the first deed of trust held by them are tainted with usury, or that their interest-bearing qualities have been in any way destroyed or impaired.
The issues submitted and answers made thereto were as follows:
"1. Did the Independence Trust Company, either for itself or as agent of the trust department of the Independence Trust Company, or the trust certificate fund of the Independence Trust Company, loan to the Carolina Spinning Company the sum of $40,000.00 and knowingly take, receive, reserve or charge thereon a greater rate of interest than six per cent., as alleged in the complaint? Answer: Yes.
2. If so, what amount has been paid on the indebtedness evidenced by the first mortgage bonds? Answer: $24,714.05, including $2500.00 paid by M. M. Rudisill for purchase of a bond in that amount.
3. Is the plaintiff the owner and holder of an indebtedness secured by the second mortgage or deed of trust, referred to in the complaint? Answer: Yes."
From judgment adjudicating that the balance due on the bonds secured by the first deed of trust is $15,285.95 ($40,000 less $24,714.05), and that upon the payment of said amount the plaintiff is entitled to have said bonds held by the liquidating agent of the Independence Trust Company and J.
A. Abernethy, trustee for the Trust Certificate Fund of the Independence Trust Company, assigned to him, and ordering and requiring said defendants to transfer and assign said bonds to said plaintiff upon the payment to them by him of said amount, the defendants appealed to the Supreme Court, assigning errors.
Stewart & Bobbitt, of Charlotte, for appellants Liquidating Agent of Independence Trust Co. and Independence Trust Co., trustee.
John M. Robinson and Hunter M. Jones, both of Charlotte, for appellants J. A. Abernethy and others, trustees for certificate holders of Trust Certificate Fund of Independence Trust Co.
Burke & Burke, of Taylorsville, and Carswell & Ervin, of Charlotte, for appellee.
The allegations and contentions of the plaintiff, denied and controverted by the defendants, which gave rise to the first issue as to the taking and receiving from the Carolina Spinning Company of usurious interest on a loan of $40,000 to it by the Independence Trust Company, either for itself or as trustee, are that prior to 1928 the North State...
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