Traders' Nat. Bank of Charlotte v. Lawrence Manuf'g Co.
| Decision Date | 28 February 1887 |
| Court | North Carolina Supreme Court |
| Parties | TRADERS' NAT. BANK OF CHARLOTTE and others v. LAWRENCE MANUF'G Co. and others.SAME v. SAME, (HALL'S APPEAL.)SAME v. WOODLAWN MANUF'G Co. and others. |
OPINION TEXT STARTS HERE
Appeal from superior court, Gaston county; AVERY, Judge.
These were civil actions, heard upon exceptions to the report of a referee at spring term, 1886.
The Lawrence Manufacturing Company, created, by a special act of the general assembly, (Priv. Acts 1879, c. 63,) a defendant with others, in one action, and the Woodlawn Manufacturing Company, formed under the general law contained in Battle's Revisal, c. 26, sued, with other defendants, in another action, which actions have been consolidated and prosecuted as one, became involved and embarrassed in the prosecution of their business operations, to procure relief from which the latter company on November 16, 1879, obtained from the defendant J. W. Fries a loan of $10,000, for which it gave its note, and to secure the same executed a mortgage deed conveying its corporate property and franchises. The two companies, located near each other in the county of Gaston, and engaged in the same general business of manufacturing, were under the management of the same officers and agencies, and most of the capital stock in each was held by the same owners. In January, 1880, the indebtedness of the borrowing company was assumed by its associate, which substituted its own note therefor, and made to the creditor a similar mortgage of its own property to assure its payment. Thereupon the first note and mortgage were canceled. On March 30, 1882, the debt was reassumed by the Woodlawn Manufacturing Company, which, after making a payment of $2,500 on the debt, gave its note to said J. W. Fries for $7,500, and executed a second mortgage, to secure the residue, upon its lands, mill, machinery, and all waters and water privileges used in connection therewith; whereupon the note of the second mortgagor company was also surrendered, and its mortgage in like manner canceled for its exoneration. This mortgage was proved the next day, and admitted to registration in Gaston county on the first day of April, 1882.
Under a resolution of the directors, and with the approval of the stockholders, on the day of registration of the last mortgage to Fries, the Lawrence Manufacturing Company executed a deed conveying all its land, mill, and machinery thereon, rights, privileges, and franchises, to the Fidelity Insurance, Trust & Safe Deposit Company, a corporation formed under the laws of Pennsylvania, and located in the city of Philadelphia, in trust to secure 45 coupon bonds, each of the denomination of $1,000, bearing interest at the rate of 7 per cent. per annum, which the company caused to be issued and placed in the hands of the defendant Hall, he guarantying that they would bring upon a sale a sum not less than two-thirds of their face value. Unable to dispose of them in the market on these terms, Hall, in pursuance of his contract, took the bonds himself, and paid over to the company the stipulated sum of $30,000, from which was deducted a sum charged by the agent for his services in obtaining the loan. On July 15th following, both corporations becoming utterly insolvent and incapable of carrying on their business, the Lawrence Manufacturing Company made an assignment of all its property, the land, mill, and machinery thereon, with all its rights and privileges, to John M. Williamson, of Philadelphia, in trust to secure such of its notes, bills, and other business paper on which there were indorsers or guarantors for its accommodation, as well as certain debts specifically mentioned; and, secondly, to secure all other of its debts not mentioned. On the same day the Woodlawn Manufacturing Company made a similar assignment of its property to the same trustee, to secure such of his debts as had accommodation indorsers or guarantors, and the same creditors whose claims are preferred in the deed of the other corporation. These deeds were made by the same official agencies, and in terms identical in declaring the trusts, mutatis mutandis.
The actions were instituted by unpreferred creditors against the separate companies for an adjustment of their liabilities, and the appropriation of the property of each thereto, and, as they were under the same management, and their operations and interests intermixed, they have by consent been considered, prosecuted, and defended as a single proceeding. A reference was made to T. H. Cobb to ascertain the outstanding indebtedness of both companies, the resources applicable thereto, and the manner in which they should in law be appropriated to the defendants' debts. He made such inquiry, and reported the full and voluminous evidence of the demands against each, and his findings of fact and conclusions of law as to priorities in the distribution of the funds, to which exceptions were entered by the contestant parties, and from the rulings of the judge thereon appeals are taken to this court.
W. P. Bynum, for plaintiffs.
J. C. Buxton and C. B. Watson, for defendant Fries. Jos. B. Batchelor, (P. D. Walker, A. Burwell, and Geo. F. Bason, by brief,) for the other defendants.
SMITH, C. J., (after stating the facts.)
It is to be observed that no specific exception is taken to the rulings of the court, as should have been done, limiting the examination to them, many of which objections to the referee's report, if this had been done, might not have been pressed in this court, and so relieved it of unnecessary labor. The proper course is to state the exceptions to the rulings of the court which the appellant wishes to be reviewed, after the rulings have been made, and to let them come up as part of the record, as contemplated in section 418 of the Code. This would serve as a distinct and definite announcement to the opposing party of the matter relied on, lessen the labor of the court and counsel in hearing the appeal, and tend to a fair trial of the cause. While there are, as there should be, full records in each appeal, it will be more convenient to consider, in proper order, the exceptions of the appellants and dispose of them, as they arise, in one opinion. Preliminary to this, we advert to the fact that the said Hall, originally a defendant, having by assignment become the owner of many of the proved claims, and purchaser of the corporate property of both companies at foreclosure sales, has assumed the place of plaintiff, and filed an independent complaint in the cause. We proceed accordingly to an examination of the essential subject-matter involved in the exceptions.
1. The mortgage of April 1, 1882: Objection is made to the validity of the bonds secured in this deed for their full amount, as a loan un warranted by law as usurious and void, for the excess above the sum borrowed. The answer to this is found in section 14 of the charter of the Lawrence Manufacturing Company, which declares that this corporation may borrow money on such terms as its directors may determine, and they may issue bonds or other evidences of indebtedness. It is true that words essentially similar, contained in the charter of the Bank of Statesville, by which it was authorized “to lend money upon such terms and rates of interest as may be agreed upon,” were held to confer a power to be exercised under the restraints of the general law, and not independently of them. Simonton v. Lanier, 71 N. C. 498. A like limiting interpretation was given to general words in the charter of the Bank of Fayetteville, authorizing it to issue notes, and not defining their denomination, in State v. Matthews, 3 Jones, 451. But these cases differ from that before us in that here the enabling provision is for the benefit of the borrower, and that it may secure needed financial assistance in carrying on its business operations, while in the others the claim was not allowed to relieve those banking institutions from the restraints imposed by law upon all others, nor, in terms, does it undertake to do so, to the oppression of those who deal with them. Morrison v. Railroad Co., 14 Ind. 110.
2. The mortgages to Fries: In Hyman v. Devereux, 63 N. C. 624, a...
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