Carroll v. Cash Mills, 118 S.E. 290

332 Cash Carroll Mills

Syllabus [125 fendant’s for. motion verdict directed should have been granted.

CARROLL ET AL. v. CASH MILLS ET AL.

IN RE. SACO-LOWELL SHOPS AL. ET E.,

(118 290) 1. Sales —Creditors Under Contracts Executed After Conditional Sale “Subsequent But Prior Held Contract, Not Delivery, Recording Act.—Where pur- contracts for the Creditors” Within 1919, chase of September, were made in under which reserved payment title until purchase price, vendors but no 1920, deliveries May, were made until creditors under contracts March, 1920, executed in subsequent were creditors within Civ. Code, 1912, 3542, 3740, providing §§ that unrecorded conditional sales creditors, contracts are void as to the date of de- livery being day with reference to which the relation of subse- quent creditor is determined. Recording Relating Applicable 2. Sales —General Act to Act Reserving Unrecorded Contracts Title to Vendors or Bailors.— Code, Recording 1912, 3542, General Act (Civ. § as amended 28, 1914, Act February Large, St. at p. 482]), relating to time, manner, recording, applicable effect Section 3740, relating to unrecorded reserving contracts title to vendors or personal bailors of property, in view the history of these sections. 3, Receivers —Conditional A Sale Contract Recorded Out of Time / Against v Code, 1912, Creditors.—Under Civ. Valid Unsecured § as amended February Act (28 Large, p. St. at 482]), and Section a conditional sale of personalty recorded after the ten-day prior limit and to receivership is valid as general creditors, all unsecured who become such between time of execution and the date of recording-. right receiver, Note: On assignee creditors, general behalf of complain of failure to record sale, contract of conditional see note 1917C, L. R. A. 442. toAs conditional to, sale contract prior executed but filed within the period four-months as a preference, voidable see notes in 47 L. R. A. (N. S.), R., and 22 A. L. 1378. validity On and effect of contracts, conditional sales see note R., A. L. Mills

Carroll Term, 1922 Mortgages, Bankruptcy Valid Recorded Out Time, —Chattel Code, 1912, as Against § Civ. General Creditors.—Under as Large, 482), a by February (28 p. at St. amended Act bankrupt present a by good in faith for chattel executed a preference, recorded and not voidable as a valuable consideration limit, specified, prior to ten-day bankruptcy, after the therein but creditors, including be- general who valid as all those held recording execution and came such the time of betw.een mortgage. Appointing 5. Motions —Court’s Un- Receiver Not Effective Order recorded, Where, the that on same date a contract was Filed. — til but Court’s appointed parties, a one of receiver for day, following recording order was not filed until antedated the order was not effective until filed. appointment, as Greater Interest Debtor Receivers —Have no Than Possessed.— creditor; no subsequent purchaser A he has receiver is not a greater possessed. title or debtor interest than Acknowledgment 7. by Not Invalidated .of No- —Probate Absence Code, affi- the fact § Seal.—Under Civ. tary’s proof execu- davit attached to conditional sale contract in of its a signed by person, signed before a his tion was the witness who seal, a not notary public name as a without invalidate does probate. Counting Ap- Day 8. Time —General Rule Not Fraction Not. Conflicting Rights Depending plicable Priority Fact..— on necessary conflicting rights is to determine of rival Where fact, depending priority general on rule claimants day counting applied. of a not be fractions will Priority /9., Proportion Creditor’s Limited Receivers —Lien L/ Machinery of En- That Net Sale Value of Incumbered Proceeds Where, prior appointment Value. — jxo Plant its tire Bears receiver, having specific machinery two lien on insolvent’s creditors plant, to a of insolvent’s entire consented their lien should sale of the value of which the proportion limited to this plant. proceeds net of the sale bear to value of Subject Property At- in Receiver’s Possession Not 10. Receivers — possession regarded property receiver’s tachment. —A being in appointed the receiver and possession the Court which legis by be seized attachment. cannot custodia Reversed and remanded. Before Cherokee. Wilson, J. receiver, etc., of a A. Action for the appointment J. In Mills and others. the Cash and others against Carroll Minns Carrouu Arguments the matter claims Shops, Saco-Lowell Barbe,r-Colman Mason Machine Works, the Chas. Company, Co., O’Neale & Walker, A. C. Bean Bros. From L. confirmed, modified, referee’s Circuit report, Court, the three first named above Re- claimants appeal. versed and remanded.

Mr. Co., W. G. Barber-Colmcm cites: Sirrine appellant for purchase 1912, sec., Attachment Proc. money: Code Sec., on Levy 281; hands Drake Attach. funds of Sheriff: E., 916; C., 1 A. & 36; C., E. Ene. S. 384. License use Wall, machine could be 544; terminated: U. S. Comp. See., 3542, 9444. 1 1912, St. acts: Code Civ. Recording Sec. 3740; Stat., 28 482. Assignment patent unrecorded is Cas., 11196; Fed., between the Fed. good parties: 151 64. This Sec., 67; 20 R. assignment: license C. 186 E. S., 70; Mass., 448; Fed., 536; Fed., 332; U. 159 17 115 Fed., 237; Dec.,-617. (cid:127)219 31 Am. licensee: Rights 9 Wall., Plow., S., 193; 369; 788 119 S., 14 U. 724; 92 U. S., 193; A., 150 U. 25 C. 'C. 280.

Messrs. D. W. Robinson, Jr., Robinson and D. W. Shops, Saco-Lowell cite: appellant, Whether machine re- .mains a or part chattel becomes realty is matter largely intention 26; Burd. Real 11 parties: Prop., R. C. E., 1062, C., 1085; 229; C., 95 27; C., 100 344; S. 33 S. S. C., 365; 14 13 A. S. & (2nd Ene. Ed.), E. L. 597. Agree- 1 ment determines character: Tiff. Real Prop. (2nd Ed.), 271; 280; 59 R. A. Sex., 28; Sec. Bronson Fixt. E. 1 Minor Real Prop., 32. Conditional sale chattel mortgage indicates intention to chattel treat 13 A. & personalty: E. 625; 11 R. (2nd Ed.), E., 1064; C. Ene. E. A, 56 R.E. 557; S., 717; 233 49 R. A. U. (N. S.), 403; 1 B. C., E. R. Y, 691; E., 830; 13 53 377; N. N. Barb., 14 662; 63 E., S. Va., 1071; 109 382. Recording filing, order appoint- before purchaser: Receiver was notice to 1 Tiff. ing Real Prop. Sec., A., 271; 119 Ala., 98; Ed.), 50 (2d R. E. 279; 335 Cash Mitts CARRott Term, 1922 C, B. R. Ala, 242; Me, 162; R, 450; 110 1 12 13 A. R. ,R,A. 664; Fed.; 396; 7 R. 262 C, 207; B. 49 (N. S.), R 754; Mich, 756; 693; 262 1 Fed, Mass, 21; 140 40 Ohio St, 511; S, S, 637; E, 493; 340; 13 N. 205 232 U. U. S, 712; Pac, 233 U. 166 37. in chattel Recording 832; book is notice N. E, 13 164 purchaser realty: Pac, E, 775; 129; Hun, 24 811; Dec, N. 96 Am. 62 586; E, 1071; 63 R, 13 A. S. 484. Conditional sale R. C, 31; 51 S, 223 good: U. 717. contract is Executory S. chose in action need C, 257; not be 115 recorded: S. A, 155; 430; 55 R. 115 C, Bail. R. S. (2nd Ed.), Schauler Sec, C, 188; 49 C, 21 creditors: Subsequent S. S. 214; 446; 13 R, S, 640; C, A. 232 U. 75 206. Re- R. S. position C, ceiver same ; McC, mills: 51 443 3 52; S. Ch, 172; Strob,' 1 Hill 144; 1223; 5 47 R. A. (N. R. S.), R, A, 32 44; 1916-A, R. 1261; 39 R. Ann.' Cas. A. R. 1917-C, 444. Stat, 482; laws: C, 2Ó1; 28 75 Recording S. C, Stat, 300; 1 78 Civ. 3740; S. Code 26 Sec.

747; Fed, 27 Stat, 137; C, 120; C, 23 543; 272 S'.

1003. Measure C, 206; on claims: damages cotton 78 S. C.,379; R, R. 421; Suth, 106 S. 8 C. Dams. (3rd Ed.), Sec, 75; Sec, R, Conts. Page 3183; R. C. 454. Illegal C, 15; 115 C, 21;' contracts: 113 1 S. Dams S. Suth. Sec, 5; C, 279; Hill, 98 3 2 (3rd ), 171; Ed. S. Page 1103; S, Sec, Conts. 174 U. 654. Where 2 part illegal: Sec, 550; R, Dams. Ed.), Suth 2 A. (3rd 211; 8 A. R. R. R, 309; R, A. 1015; E, 606; 10 81 4 R, 104; A. R. S. R. Div, R. 11 Ch. 197. Cotton 1 1912, Futures: Civ. R. Code 3421, 3422; Code, 1912, Sec, Crim. 263; C, Sec. 98 S. 279; C, 161; C, 115 101; Fed, 98 223 385; Fed, S. S. 222 . 453; R, 782; C, 284; 6 R. C. 104 107 C, S. 334. S. Martin & for

Messrs. Mason Blythe Works, Machine cite: Rights vendor appellant, machinery as against of of 1051; E, 19 65 mortgagee realty: 648; Cyc, S. 134 A. of R, 966; Cas, 936; A, 18 Ann. 103 C. C. 430; S. 37 R.R. 119; R, 460; C, 13 A. 32 S.), A. (N. R. S. 339. Record- 336 Casi-i Minns Carroue S., 116; C., 294; C., 224 U. C., 543; 23 78 87 ing: S. S. S. C., 262. 45 344. Illegal contracts: S. for res- Drummond

Messrs. Perrin and & Lyles W. L. al., Cotton con- & Co. et cite. pondents, Chas. O’Neale R. C, 186; 555; C., C, 511; tracts 111 valid: 89 90 S. S. S. C., R., 6 C., 357; 280; 93 R. C. 783. Measure S. 104 S. of C., C., 113 572; 88 18. damages: S. S. n & Con- Hall, Receiver cite:

Messrs. Btttler for the Sec., 1912, 1 3740. tracts controlled Civ. Code by Property R., in hands Receiver not attachment: subject En. C., 212; 569; 137; 518. Election Cyc., Cj^c., C., 400; 15 Cyc., remedies: 98 S. 12, 5, 1923. July refused

April 1923. Rehearing the Court was delivered Mr. opinion Justice Cothran. for Chero- in the Court common pleas

Action instituted 3, 1921, by certain stockholders kee on County January and its Mills, corporation, a against corporation appoint- directors, insolvency its alleging praying affairs. its ment liquidation receiver Mclver, the Hon. Circuit An order was Edward passed 1921, 1921, and filed January dated January Judge, C. Hamrick Court, W. appointing the office of the Clerk 21, 1921, the temporary February receiver. On temporary order of the Circuit permanent, by was made receivership Judge. referees, special order dated July

aBy subsequent claims upon testimony report take were appointed their amounts corporation, respective presented order, notice if In accordance said any. priorities creditors, and references calling published held. were claims presented of the of cer- questions validity involves The appeal others, claimed priorities partic- and tain claims claims, of Mason Shops, reference to the Saco-Lowell ular Carrorr Mirrs Term, Machine Works, and Barber-Coleman which will Company, be designated claims,” and referred to as “machinery of Charles Walker, O’Neale Bean Co., L. & A. C. Brothers, “cotton claims.” referees special 30, 1921, in reported ’September

favor of the of the validity cotton claims as follows: $47,201.55 Chas. O’Neale & T. Co....................... A. C. Walker 12,295.00 ........................... Bean 83,430.00 Bros.........->..................... —and in favor of the but validity, priority claims, machinery which were: Saco-Towell Shops $30,815.31 ....................... Mason Machine 59,217.19 Works.................... Barber-Colman 4,000.00 Company.................. all, them —placing" claims and claims, cotton upon same plane general unsecured creditors.

The matter came Wilson, before up Hon. Circuit John Judge, upon exceptions by holders of the machinery referees, claims 1921; to the report on November the case was and decision reserved. argued On November 10, 1921, decree, Wilson an Judge passed order and di- a sale of the recting property corporation by receiver, on salesday in January, certain terms upon stated,, and reserving further consideration the issues made exceptions of the referees. report That order further that the be provided sold free property from all creditors, liens discharged incumbrances of sale, which should be transferred to the proceeds of held the further orders Court. On subject November 26, 1921, Wilson filed decree which he Judge held: contractor, claim of H. Curry, That the to whom (1) J. contract, on $6,000 was due could the sum allowed upon lien ground as a he property, had with the statute comply failed mechanics’ relating liens. there, observe we (In passing nothing “case” Mills Carroll Cash this claim, and no exceptions involving to this referring considera- decree; out of it therefore portion passes referees to the report That all tion.) (2) exceptions receiver, and overruled, by be filed except exception the order sustained, adjudicated by that it be been having reference 10, 1921. is no November (There of sale made “case,” and it out of passes too to this exception referees, in- That report consideration.) (3) made, the confirmed and report, cluding supplemental is no statement'in of the Court. judgment, (There of con- and out report, “case” of a supplemental passes sideration.) decree, the holders claims have machinery

From this Court, raise the exceptions fully this appealed The, from herein decided. receiver did not appeal questions decree. any’ portion to the consideration and determination will proceed

We claims, in reference to several presented questions claims, in order the machinery Shops, Saco-Lowell taking up Works, Barber-Colman Machine and and Company, Mason claims, Co.,& A. Walker, Chas. O’Neale C. and the cotton L. Bros. Bean

Machinery Claims over This claims Shops. company priority 1. Saco-Lowell $30,815.31, extent being creditors general to be due them.under the cir claimed following the balance was entered into : A contract and by written cumstances for company corporation, provided this between mill, of certain aggregating the furnishing Charlotte, C., is dated at The contract N. Í0. $46,506. 15, 1919, C., at Gaffney, September September Mass., Boston at on accepted company Sep provides, f. o. b. cars “delivery tember 1920;” terms of one-third net cash payment, shop spring invoices, date of balance covered average from 30 days notes, dated date of 6 months’ invoices. average equal two Carroll Mills Term, times, under Machinery the contract was delivered at various the latter beginning until part May, continuing 7, January 1921. The in company compliance the, contract, furnished ma mechanics to erect and install who chinery, were thus to engaged practically January up 1, 1921. The 1921; last 7, wras machinery January shipped it did not require skilled mechanics to adjust.

The contract contained the relating following provisions title, reservation of and to the remove the ma- right chinery event of nonpayment:

“The title' .to the delivered this machinery under contract shall not from the pass Shops (herein- Saco-Lowell after called the until company), all hereunder payments checks, drafts, (including deferred and and Code, the 10 days required by 1, Section Vol. Laws, A. D. is valid claims, the cotton against holders which are not creditors of subsequent the corpora tion. of the holders cotton claims contend which con- (in

tention the creditors, receiver joins) are they subsequent and as such entitled to under protection such section.

A decision of this issue is therefore of prime importance. that, while contract appears inmade September, 1919, it contemplated deliveries in the 1920,” “spring and that the first deliveries were in made the latter part of 1920. It is May, that the clear lien of Shops Saco-Towell was not consummated until such delivery attached as each delivery was thereafter made. The claim of Charles & (cotton $47,201.55 O’Neale Co. for T. claim) arose out of cotton, a contract for the of 600 purchase bales of dated 1920; March claim of A. C. Walker $12,295, out 8> of a for the contract of 150 purchase cotton, bales of dated Bros, 20, 1920; March and the claim of Bean for $83,430, dated March 1920. None of them could therefore have contracted with the mill faith and credit of machin- installed, which ery subsequently foundation of the statute.

Carrori, Cash Miuus Term, Both 3542, which is and comprehensive Section general in its now scope “all writing embraces instruments in required recorded,” law be to and Section particularly relates to the vendor “between agreements vendee, bailor or intended bailee of are personal property,” to protect subsequent creditors. as to subsequent Except these, creditors, contracts are valid. perfectly The whole acts is purpose prevent recording liens, secret protect bona for value purchasers fide have, creditors, subsequent who posses- relied on the apparent sion vendee, or credit from him to' extend purchase to him. When the vendor has thus led purchaser vendee, creditor on the rely title of the apparent he is from title his of their estopped setting up derogation but, He still rights. title, has these classes of have, persons conduct, who been misled his Court says he should not be allowed to show title. In such retention of title the vendor agreement, retains title to the until goods payment, and can only lose his to set it his con- right up by others to think duct that the allowing vendee has title. In the case there is present no for such ground an estoppel; the, creditors extended credit he vendee before came into possession goods. They did not on this rely credit, for it extending had been delivered credit; time only at way creditors could have known of intended delivery of the deliver, a contract to- through knowledge and such have, them contract would given knowledge the retention vendor, title thus them making creditors with notice the terms of the and not within statute. creditors, are

Are cotton who the largest creditors in case, subsequent such creditors as the this statutes recording The date of their contracts was protect? March, 1920. the conditional The date sale contract of Saco- 1919. September, is Shops But at that time Eowell this more than a chose action, no in contract was or executory Cash Mirks Carrokk S. C.- . not have condition, need and, or contract, in its then state n been recorded. . delivered, it was had been Until the .machinery the, performance. or recall order stop of either power party be liable would the contract course, broke who party Of Davis, v.Co. Acetylene breach. Oxweld such damages E., C., 430; S. relation date, t The with reference to- real determined, the machin- is when creditor is to subsequent contract; accordance with under and in was delivered ery mill and up at the set delivered it was when say, be- no “agreement there was in the mill. that time Until or bailee of vendee, personal bailor tween the vendor of Section meaning within language property,” of the Code. : says Carriers (2d Ed.) on Bailments-and §

Schouler has taken place, transfer of possession an actual “Until bailment; no no is, pledge, there to- precision, speak sufficient con- contract instead, executory but an pledge bound to hold the other sideration, perform: may which each will be awarded aggrieved for non-performance Damages contract; or perhaps equity breach of who sues as for party a performance.” specific would decree 189: And at Section effectual, should be followed to-be in order

“Delivery, and methods of-delivery an acceptance possession; matter and the local subject differ according acceptance n of the thing.” situation used with reference to one ac- “bailee” is only The word So, in order for the credi- goods. tually possession be, bailee, he would have to be as to subse- tor “Bailee” is never used reference to ah delivery. quent bailment. is not a bailee contract of party executory are, It must in his follow possession. 'the until goods tois means say “subsequent” construction only possible there could be no creditors delivery; subsequent 343 Carrohp Cash Mirrs Term, 1922 as to a bailee no bailment prior to for there was possession, and no bailee prior delivery.

It would this contract have been useless to have recorded at the time into, it was for the was not entered machinery then manufactured. in a distant state It was manufactured and shipped to Carolina. There could be no’effect to South be to the given conditional sale so far as protect- agreement, concerned, ing anybody this until delivery State No machinery. one could extended credit on have the faith of its possession unless: either saw the (1) They machinery itself, or saw the contract for it. could (2) see the They to, mill; before it was delivered the first ship- ment of it was May, several months after the cotton contracts were made. The remainder followed from that 1921; until day and, in January, accordance with the con- contract, ditional sale the installation and erection it com- October, 1920, menced in and continued to- the end of December.

A creditor,” “subsequent within the protection statutes, means recording one who necessarily reason- might have ably extended credit on the faith ostensible own- from ership without possession, notice of anything impairing Cannon, from such detracting v. ownership. Herring 21 215; C. Am. S. and cases. Rep., Beatrice Colo., Co. Creamery 569; v. Sylvester, Pac., 154; 446, 447, A. R. and note at L. and cases. page In Cannon, the case of 21 C., Herring 214; 53 Am. 661, the Court : says Rep., n Conditional sales personal delivered, property annexing a secret condition to visible transaction appearing rise, unconditional, world gave many years, to much dis- cussion some difference of opinion in our Courts. stated there was a

may safely general concurrence contracts that such be enforced might between the parties them; but, as who made possession prima evidence facie in relation to of title there personal property, were obvious

344 v. Minns Carrohu C. S. subsequent rights difficulties as soon as touched they the appar- dealt creditors and bona who purchasers, fide unex- from his title, springing owner on the faith of ent plained possession.” Ct., 640; 34 S., Sup. 232

In the case Holt v. U. Henley, the mort between 459; Ed., 767, a contract 58 there was L. a reservation-of-title the holder of realty gagee the mill' in contract, installed affecting system sprinkling : says The Court after the executed. mortgage was rights depend all their “But the foundation upon for value to purchasers is the statute priority Virginia giving title; unrecorded reservation without notice over Holt’s deed before sprinkler and as the was executed on in, made no advance and the system mortgagees put it, for value purchasers the faith of were they Holt.” ex- creditor who has matter is that the point basis his debtor, possession

tended credit to ac- time, suffered no-prejudice by at the has lien. As the subject an undisclosed quisition property Case, supra: in Holt v. declares Henley Court them- no and do not bring “The have equity mortgagees the better We believe provision. the statutory selves within * * * this, just ‘the take like mortgagees rule in a case as mortgagor an property [purchaser] such interest ” more, less.’ no no acquired; H., Farmer, 42 N. 386 was held that v. McFarland So can no conditional vendee get greater right creditors of a than he himself has. To* same effect sold the property South, 12 Ala., 630; 403. Cook, v. 97 Thornton Strong are: Stearns, 326. Piser v. 1 Hilt. Y.), 2 Hill (N. v Taylor, 233; I., 12 R. Am. Fairbrother, v. 34 86. Goodell (N. Y.), Hands, Ga, 206; E., 81 8 v. 206. 631. S. Steen Rep., Conn., 40 148. McIver v. Kelley, William v. Hughes 454; Pac., 170; 13 R. 92 A. Okl., son, (N. S.), L. 19 Bowman, 3 Sneed (Tenn.), Hawthorne 696. 345 Cash Minus Carrouu Term, 1922 Am. Law, 308; 36 524. N. Cole v. 42 Berry, J. Neb., 178; 25 Am. Rep., 511. Aultman v. 5 Rep., Berry, Tex., Tex., 478. v. Uttley, Bank v. 113. Tufts, Leath 82; W., W. Sup.), 401. v. Cleveland S. (Tex. Tufts therefore, of the holders appears beyond question cotton claims the protec- are not creditors within subsequent If that be tion of statutes in reference to recording. true, to 3740, far extends so protection Section .which concerned, a matter of no cerditors it is subsequent only, the chattel was recorded whether consequence not, time or or whether recorded at all. It was per- '(cid:127) valid as between and and fectly mortgagor mortgagee, so as between creditors and prior mortgagee. equally ' be seen of authorities cited by It will from array of this in the case of American opinion parte Ex writer Co., Machine In re Co. v. Hobbs- Lipscomb-Russell Slicing Co., E., this moment in Henderson 118 at process S. decision, that the of a receiver no meta works appointment in the title interest to or of the assets in morphosis them ; that the receiver as the arm solvent takes possession incumbrances, Court, all liens and subject existing Court, under the direction of the having to be administered and of the equitable to the legal rights parties due regard and creditors the re by those stockholders represented and ceiver. referees, confirmed the Circuit by

The report decree, that the contains a cotton claims were finding 2 claims; not machinery and

subsequent prior been made duly by has holders of the which exception This issue has been of. already claims. disposed machinery that, claims further machinery go say The holders sake, the cotton claims were argument’s assuming claims, to the machinery by force of prior subsequent 1914 3542 at (28 Section St. Large, p. amendment 3740; amends also their Section implication 482), 346 Carrorr Mirrs n time, mortgages, have although recorded out precedence of the unsecured arisen be- claims have may creditors whose tween the and their dates of the execution of the mortgages record. taken the holders consideration of this position of two ques- claims a determination involves

tions : 3542 also Does the amendment of 1914 to Section

amend 3740? Section so,

2. If amend- what is as thus effect Section ed, creditors and rights relative the holders of of time ? recorded out mortgages referred

As Section question: commonly first Act, as the Bailment to an amendment prior Ross, at the time of the decisions in the case ofArmour C., 201; C., E., 315, 294; E., S. S. S. 941; 1906, 1135 D. stood as follows blank (A. 1907), (the left locate the interpolation the. amendment space being : 1910) vendee, between the vendor and bailor “Every agreement bailee, of whereof the personal vendor or property, same, shall to himself interest in any bailor reserve shall be null and void as to creditors or subsequent ( ) pur- notice, consideration without chasers for valuable unless the same reduced to be recorded in manner now writing for the law ex- provided by recording mortgages.” (An to this issue not relevant follows.) ception in the In second Armour v. Ross Case appeal decided, and, by of this Court on judgment stood, held it was it then appeal, (3740), Section or unsecured creditors, reference to simple had no but to had been reduced claims those whose or to judgment on the other liens property those before holding receiving incumbrance; in words, of the unrecorded other notice only protected “lien were creditors” subsequent Statute. Cash Minus Carrouu Term, 1922 Assembly Thereafter, in the General Stat. in- 2655) by passed an Act (then amending Section indicated, the words serting, blank above space creditors.” “whether lien creditors or contract simple further-amended Stat., In 1911, the section was or “or as a pledge to the the words by adding exceptions issue. the present collateral to a loan“—a matter irrelevant to stands Act, 3542, as it now General Recording § irrelevant the amendment follows (omitting : .portions) * * * conveying writing,

“All or in deeds instruments * ** incumber- or either real or or charging estate personal same, writing all or instruments mortgages ing real or personal nature of a property’ any *** re- now and, all instruments writing generally, * * * valid, as to so be recorded shall law to quired or the rights the time of such execution delivery affect from or simple lien creditors creditors subsequent (whether consideration for valuable (cid:127)contract or creditors) purchasers from notice, ten days recorded within without when only * * * Provided, execution: time of such delivery and record of above nevertheless, that the recording instruments of writing named deeds shall, from the date of such re- said ten days expiration all creditors rights the same effect as cord, have if notice as the said deeds or instru- without and purchasers been executed and delivered on the had of writing- ments record thereof.” date of the forth at the end of set Section represents proviso of the of which the holders cotton

the amendment 3740. is not applicable They contend Section claims material difference there is a between the two that contend that, Sections, if the General Assembly intended sections, to both would said they have apply amendment difference is that under 3740 suggested The material so. kind there described void absolutely instrument an Minns Carroia as to creditors, or unless subsequent' lien contract simple be it recorded “in the manner by now (not time) provided law for the under recording whilst mortgages;” admittedly inclusive the same of instruments re- kinds to in 3740, ferred the instrument is not if recorded void beyond time but from that date same required, has the effect as if record; executed on the a day privilege accorded by Section and denied it. practically by

It be conceded if must that such an instrument as de- scribed in Section should be recorded within the time reference, fixed by to which Section must be made for be, time, the effect would that for in that provided sec- tion, it would namely, have reference to the date of execu- tion and precede liens or debts created within that period, there is no such though provision 3542, in Section its re- instruments description quired recorded, to be is as comprehensive as could possibly be made: An instrument or “charging per- incumbering” sonal “instruments in property; nature of a writing “instruments now mortgage,;” law to required by be re- corded;” and includes the unquestionably reservation of title contract in the case. It present is full and specific to the privileges granted holders of such a paper; section, should not be denied thpse, privileges another which must be construed pari passu, in the absence of evi- of a dence effect. specific purpose The real purpose Section 3740 was to render it abso- lutely agreements certain kind there described should come liens within secret that must recorded; and that reference should be had to the General Recording manner, time, Act effect of such This recording. is clear from the exception proviso, excluding certain from classes bailments operation the Statute. Statute, not intended recording as plainly appears from the “in the reference to manner recording now provided for the law recording mortgages.” Section 3542 349 v. Cash

Carroee Miees Term, 1922 respective their and for two provides recording modes effects : thereafter. and recording days, within 10 Recording either. The. ‘-manner” of is referable to recording There between a distinction is no-reason for making like instruments and other agreements described 3740 indicate, most character; and the of 3542 provisions general made. In to be intended that no distinction was strongly obligation and harmonious interest regulations stand, the may that both construe the sections so two- 3542 Section of the Court is ruling regulations Act, time, ap- manner, recording as to the and effect ply equally Section The conclusion of question:

As second that, 3542, applicable under Sec Court Section 3740, of title contract reservation (equiv tion a valid recorded after 10-day alent to a chattel mortgage), all limit, is valid as against general receivership, and prior between the time become such unsecured creditors who date, instruments. such of the execution and the of recording after be a work supererogation, very would Connor, decree of satisfactory able entirely Judge In District in the case of re Judge, United States Fed., Co., to-review the his & legislative Saunders his or to reinforce and conclu tory logic Section as a of this adopted part sions. His decree is opinion. Connor oe Judge

Decree the, 7, 1920, Farmers’ & Bank On Merchants’ January claim, C., Court, filed its this Marion, petition, con- S. which are allegations found taining following to be true: Master Special the bank advanced

That and loaned on July Marion, C., Co., $10,000, at & F. H. Saunders & Co. executed their said amount Saunders promissory date, after note, days on same payable due note, execution contemporaneous with of said day, Carrorr Mirrs » and thereof, de- security for and executed payment livered to said bank a leaf “all tobacco pur- on mortgage chased, to- and us season of 1919 purchased, by during on Marion, C., market, and on drafts S. all drawn against shipments of same and on all from proceeds arising sale thereof.”

The was admitted mortgage on 29th of day probate 1919, 487, July, 33, in Book in the office registered Page the, of the Clerk of Court of Common of Pleas Marion County. 1919, On the 6th day of September, for petition adjudication in was filed F. said H. bankruptcy & Co. in the Saunders District Court of United States the, for the Carolina, District of North Eastern on 4th 1919, October, day were they adjudged bankrupts, the trustees elected and duly qualified:

On 28th 1919, day said F. August, H. Saunders the, Co.& had to-their bank credit sum $1,938.34, which was credited on said note and the account balanced. There remained due and on unpaid note, said after crediting $8,061.66. same with amount said The bank on the-day 1919, seized and sold “certain August, leaf tobacco pur- Co., Marion, chased F. FI. & at Saunders lo- C. and S. cated in the Marion, warehouses at C., respective and at of the Atlantic Coast Railroad depot Dine Company $9,125, the sum of covered said mortgage.” After the cost paying seizing incurred said selling tobacco, an fee $350, including attorney’s and applying the sale proceeds the balance of said tobacco to the note, balance due on said the sum discharge of $559.78 of said possession 10-, remained bank. On January its claim the bank filed forth the setting foregoing facts. Co., of F. FI.

The trustees & Saunders on bankrupts, time, 1920, in objections due filed April the claim of bank, that the did insisting mortgage said not constitute a tobacco, said and that lien on the bank valid was not en- v. Cash Carrouu Minns Term, 1922 Octobex- 332J

titled to hold the thereof, same the pay- proceeds apply ment of note, said constituted for that: (1) mortgage a voidable 60b preference under the of Section provisions and Section 67e of the Act. Bankruptcy (Comp. §§ St. ;

9651) not, (2) that the said did at date herein, 1919, or at filing petition September constitute, the date of 1919, the adjudication, 4, a lien tobacco-, valid on said because it was not with- registered in 10 days thereof, after the execution or delivery as re- the quired by of Carolina the South to- relating regis- Statute the, tration of The bank filed answer to- mortgages. its ob- jections of the trustees.

Pursuant the to of the creditors o'f P. IT. request Saun- Co., ders & the Court made an of order reference to- P. H. Master, Bryan, Special to hear the Esq., objections the claim of the bank and his conclusions thereon the report Master, Court. The after Special the hearing testimony, 29, 1920, filed report his the cause September whereupon was heard the C., said at N. on upon report Wilmington, 20, November the,

In addition facts the foregoing Master Special found: “That loan was made bank to P. H. & in Co. faith and without or Saunders good knowledge reason to believe the existence of the of the said insolvency F. H. & Co.” That on Saunders July date of. the bank had no registration mortgage, knowledge, believe,,that or reasonable cause to said & were Saunders Co. fraud, there no collusion, insolvent. That was nor connect- with the transaction. That of proceeds ed the note were placed to the credit advanced actually Saunders & Co. checks for the out purchase and drawn tobacco.- the, The Master dealt with Special questions presented the record in order: following upon Is the claim of the & said Merchants’ Farmers’ Bank (1) the provisions under preference, a voidable 60b. Section 1910? amendment Carroix Minus execu- that, date of the Master found at the Special July

tion and of the registration of the mortgage, F. H. that bank had no reasonable cause to believe Saun- aof the test & constitutes ders Co. were This insolvent. amendment voidable under preference provisions I find Act. of 1910 to- 60b Bankruptcy Section reason- of such in the evidence to existence nothing show insolvent, or was able mortgagor believe ground a preference. that the would mortgage give effect under the pro- Is a voidable preference (2) mortgage 67d? visions of Section based was execution manifest consideration, faith and made present good

upon act, of, thus of, coming fraud contemplation the subdivision within the clearly provisions protective “d,” § the record involves" 3 The third question

( ) presented Carolina. of laws of registration the construction the South difficulty. not from The free question to, Bank money thereby The Marion National loaned of, & creditor F. H. became a contract simple Saunders execution, Co., to the the prior registra- Bank, tion, Farmers’ & Merchants’ of the mortgage of and, adjudication at the date of the bankruptcy Saun- now, were, and are indebted Co., bankrupts & said ders Bank National of such loan. said Marion on account notice, or of the execution of bank had no’ knowledge loan, said nor until its regis- at the of making time mortgage tration. Marion, C., also made advances to

C. M. of Jones, Co., of date the execution and the between & Saunders of said notice date, of the without mortgage, registration either lien of said con- acquired by simple No thereof. Co., of & prior creditors Saunders upon property tract the, of the or their adjudication registration their proven have debts as con- simple They in bankruptcy. 353 Cash Minns Carrori, Term, tract creditors. liens does not other any appear attached to the of the property covered bankrupts, mortgage,. thereof, ad- prior to the or registration judication of the bankrupts.

For the & purpose the status the Farmers’ fixing Merchants’ trustees, and the Bank represent may who- all enforce of the creditors rights against property of the bankrupts, reference be must made to the provisions 70a of 9654). Section Act Bankruptcy (Comp. St. § on

Collier 1106. Bankruptcy (11th Ed.) “The trustee of estate a bankrupt his upon appoint- * n * * * * * ment and qualification shall be vested by operation of law with the title of the the date he was bankrupt, adjudged bankrupt.”

While here, affecting question presented will Ct., Judson, noted S., Everett v. 474; 228 U. 33 Sup. 568; 57 927; 46 R. A. S.) 154, L. Ed. Mr. L. (N. Justice says: Day

“There other which, think, are provisions Statute we evidence intention to vest trustee the title to such as it was at the time property filing the petition”— citing Co., Acme Harvester Co. Beekman Lumber Ct., 96; S., 300; Ed., U. Sup. L.

It is said by Day: further Judge which, all trustee, 70a vests property

“Section filing could prior petition, bankrupt by any transferred, have means have been levied which,might n under him.” judicial and sold process held the

The Courts have that title to the uniformly prop vested, law, of the the by operation of erty bankrupt trustees, had, to all liens which date fil subject prior to the of The attached the right the thereto. of creditors petition, ing for fraud or such liens other element invalidating to attack Co., Hewit in the trustee. Machine Berlin 194 vested U. 690; Ed., Ct., For S., 296; Sup. 986. that L. purpose “the 70e that trustee may Section avoid provides any trans- Cash Mirrs Carrorr of creditor any fer the of his by bankrupt property 67a provides bankrupt such have avoided.” Scetion might * * * would record, which, “claims want of creditors of the the claims not have been valid liens as against be, estate,” and his shall liens bankrupt against such of recovery action for the trustee maintain such may have could a lien thereon as creditor a holding property be, therefore, solved, is whether The question maintained. bank, at of filing the date held mortgage by con- Co.,& bankrupts, petition adjudication Saunders seized the bank by a lien the tobacco upon stituted valid Co. creditors of & the. contract simple Saunders against the construction upon The answer to this question depends Carolina, at the law of to be the registration South given No of the execution and registration mortgage. date Court of Caro- Supreme South authoritative decision cited, found, none rendered it is conceded bemay lina is of 1914 the act (Taws the statute was amended since and as it existed date the. mortgage. at p. 482), have, decided the Court which I examined cases have have, question. bearing upon supposed any or are that, in re have been may conceded whatever law It is its effect mortgages to the registration gard creditors, Act of 1843 at prior (11 Targe, St. rights enacted at that time terms: express was 256), p., credi- is invalid “That mortgage same, consideration, unless the shall be for valuable tors Mesne officeof Register Conveyances recorded execution.” after sixty days within Piester, C., 139; 53 Am. Piester v. Rep., In Piester executed a secure a valid mortgage it appeared November, 1869, and a second Decem- obligation, The were not recorded until Au- 21, 1869. mortgages ber became indebted to one The Wright, mortgagor gust, had no notice of who existence April died and the question mortgagor pre- mortgages. 355 Carroll Mills Term, 1922 sented in the settlement of his the mortgage estate whether was a valid lien as purpose For against Wright. present it is sufficient find that the Act under the of provisions of it was been re- held that “if had these mortgages corded before arose, note 60 days later than Wright’s though execution, after this would have constructive constituted notice. But case, this was not the and as the act declares ‘invalid,’ them so as to affect the of one in rights Wright’s position, to' impossible seems the conclusion that escape these cannot affect claim to the es- mortgages Wright’s tate of the debtor therein conveyed.” Other were questions discussed, presented and none of are material case,. the decision of the instant

The at its Legislature, session of 1876 at (16 Large, St. p., re-enacted, 92), so far Statuté affects rights case, in this Act parties the time fixing within which the was to be mortgage required at registered days, within providing mortgages registered after days valid, execution and ‘shall be so as to delivery affect from time of such or execution delivery rights * * * Provided, nevertheless, creditors. subsequent that the above-mentioned deeds or instruments in writing, if subsequent recorded to the expiration said period shall forty be valid tO'affect the days, rights consideration, creditors and purchasers for valuable without notice, from date of such only registration.” term, 1885,

At the and while the Act April effect, v. Fraser case of was before the Court. King C., 543. from appeared Master report Doar held a on that one certain ex- mortgage property, and recorded February, ecuted January the. became Between dates mortgagor indebted to other these were, the date of the at persons, who of mort- registration creditors, without notice of Doar’s gage general arose controversy until as to the registration. its rights under his and the of Doar mortgage, subsequent general mortgagor, distribution respect creditors

356 v. Cash Mills Carroll The the of the sale the mortgaged. proceeds property an elaborate Master, referred, filed to whom the cause was new as a de- 1843 and able to the Act of report. Referring state, “It he said: of the laws parture registration effectively deal with a effort to evidently well-considered subject whole of registration.” the held by the The that opinion mortgage Master was after its Doar, 40 days been recorded within not having Act, lien as execution, not a valid as required by were con whose debts creditors of mortgagor of its execution and its registration. tracted between date in this re Hudson, the exceptions overruled Judge, Circuit appeal, Master. Upon confirmed spect report “Whether Mr. said was: question McGowan Justice of Doar to1put the omission on the executors part execution, after its their on record within mortgage days afterwards before commence recorded although made, all suit, ment of this it invalid as to debts absolutely between execution and contracted its reg mortgagor recorded, a that is whether after istry; say, law, date, lien, as that the time has prescribed by lien, as at of a all debts which that incidents ordinary incidents, shorn these as that time are unsecured or were of debts which contracted between execu class thereof. and the This is a new delivery question tion know, so far State, the as we never point, this precise having before; one free from certainty and is arisen difficulty, from the terms of the registra general arising principally tion Act of 1876.” entered the discussion of learned Justice his concurrence with statement

subject by expressing which our has subject upon “there is no law been more that than that of both as to obscure registry, confused within, record and of omission to recording effect of well after, the time law.” prescribed after Act said: The “ mort- prescribing He affect, as to so from the date of ‘shall be valid such gages Carropp Mipps Term, delivery execution, creditors rights subsequent * * * notice, without within recorded when only * ** days from the time of such or execution: delivery Provided, nevertheless, above-mentioned deeds or instruments if subsequent recorded writing, expiration of said days, of 40 shall be valid to af- period fect the creditors and rights purchasers valuable notice, consideration without from the date only of such recod.’ If this section to be considered were with- reference, out to the would be little proviso there difficulty. the is clear the Ignoring proviso, it the section body that, declares without none of the instruments recording, notice,’ referred to would be valid as to debts any ‘without whether contracted before or after the date of the instru- ment in that, question; but on if provide it to goes recorded be, within the time instrument prescribed, said shall valid even creditors, as to ‘all without subsequent notice’ reaching time back the instrument. delivery Without the the proviso would section the same substantially the of 1843 Act in reference to which was mortgages, * * * times several before this Court. But the addi- tion of the in the Act of 1876 makes a very material proviso law, in the change applying registry mortgages be, the same rules which were declared” to substantially ap- plicable “to absolute registry conveyances Steele *** There, Rich., Mansell, cannot be doubt this was intended proviso least ato give time, recorded out mortgage, though some ‘effect’ upon indicated; not, however, the class creditors to reach back to the date of as in the'case of one mortgage, recorded time, but from the -time of only within recording.” disposes question The learned so far itas Justice relates liens before acquired registration, after the limit, of the time “Of saying: course expiration the lien * ** over has acquired so far priority mortgage. So there is no but matter is not difficulty, so plain as' Cash Minns Carrouu the time after what of a recorded is effect mortgage without execution its contracted after general debts of unsecured notice, condition which are found its lien recorded debts at the time the is rule that a bona attaches. is certainly general fide has lien, entered, forth matter from that time no- when unsecured, without are then over all debts which priority date,.” the least to their regard “subsequent After the contention made stating creditors,” after date contracted whose debts were McGowan Judge and before its mortgage, registration, hesitate, to this view. accept “For several reasons we says: on the satisfactory point, In order to reach a conclusion meant persons are clearly first to settle who necessarry ” notice.’ without ‘subsequent purchasers, creditors and re- creditors” He concludes that the words “subsequent contracted fer to those debts were whose found phrase execution of same mortgage. creditors, class he to the same says, has reference proviso, debts contracted and not to those whose were subsequent settled, it “This seem the would recording. being clearly a the of the itself the idea that proviso- that terms negative out of time is null and registered absolutely mortgage the to- all debts contracted between execution and void as thereof, declares in for it terms that such express registry ‘shall be valid so- as to so affect registered mortgage creditors,’ etc. seems to us that rights a been doubt could never have but subject, there which makes the proviso-, the last clause for ambigu- such effect shall be from ‘only that the date ous declaration record,’ which, contended, isit limits of such lien debts, to future after registry leaving rights mortgage creditors before the class described entirely prior before existed registry.” as they unaffected reasons his this rejecting construction stating After (cid:127) McGowan says: Judge proviso, “Considering Cash Mirrs Carrou, Term, 1922 that doubt context, cannot subject-matter we and the intended, not ‘from record’ was phrase the date of such mortgage, fix the lien of that as the from which point time indicate forwards, was operate but simply words, that or, in other at which it received vitality, the, lien, a fixed mortgage-becomes the time at which registry affect, such, which, it might but as not the date of the debts unsecured, condition, secured to the as to-being according * * * the, To say at time. which were found they course, as a means, of valid that shall a be valid mortgage property, lien upon specific that is to a say, mortgage; lien, is priority such one incidents of ordinary other all debts over property as to that particular into time ripened to- that which have prior mortgagor lien.” a of no effect conceive he “We can

In conclusion says: end tothe. exemption than the an putting other recording notice, until notice and continued which arose from want them that the registry giving (cid:127)was that recording, given vitality mortgage notice at the same moment gives had never ex- old as if the a lien with priority, and recorded on a new one had been executed isted and from want of notice arising ceasing exemption day, with approval as notice is exist as soon given” quoting — v. Mansell: “Being Steele Wardlaw Judge language it, made as to who party good without registration it be considered as if all other persons, as to deed might, in other day registered; executed on had been on that had been executed words, acknowledged if it time, the prescribed a beyond grantee By delaying day. has lost the to insist right (or mortgagee)

a deed relation to the shall have date of the tardy registration claims; but against intervening why to provide so as deed the, from registration benefit day he lose the should made?” C. —125. 24 —s. Carrorr Cash Mirrs

Judge McGowan reached the conclusion that “the Doar mortgage, time, recorded although out of from that date be- came valid lien, as a and as such had all the over priority general debts of the had then become mortgagor liens, of the time regardless were contracted or prior they subsequent.” Mr. Mclver con- dissented from this Justice clusion. A to rehear petition was denied.

There would seem that, to be no- room doubt unless this decision reversed, has been or the statute so.amended as to work a law, change held mortgage Farmers’ & Bank, Merchants’ recorded out of although time, is a valid lien from the date of its registration, creditors of the general whose debts mortgagor were- cntracted between the date of its execution and registration, respect which no liens had attached prior registration of the mortgage.

At the Session of 1898 (Laws p. 746) Leg- islature re-enacted the ofAct all whereby mortgages are valid, declared to “be so as to affect from the time of their delivery or execution the rights credi- tors * lien (whether creditors or simple contract creditors) ** notice, without only when recorded within forty from time days of such execution,” or delivery etc. “Provided, nevertheless, that the or recording record of the above mentioned deeds or instruments of subse- writing quent of said expiration forty shall days from the date of such record as notice operate to all who sub- may thereto become sequently creditors or purchasers.” the, Act of 1909 By (Laws-1909, p. 189) the time with- in which were mortgages required to. be recorded was from 40 to 10 days. changed will be noted that words lien creditors “whether contract simple creditors” are act, inserted the amended and the record of out of time is made proviso of 1898 “from the date of such record” to “operate as notice to all who may subsequently thereto- become creditors.” This v. Cash

Carroll Mills Term, 1922 interest, change becomes language proviso in view of the decision of the Court in Brown Sartor C., 116; (1910) E., S.

In that case a mort- plaintiff suit to foreclose brought gage 1, 1905, executed defendant and recorded by on May 2,May defendants, 1905. The other mortgagor, than held liens on mort- subordinate to property plaintiff’s as trustees, follows: gage, others, Thomas Barrett and mortgage, 6, 1905, executed October and recorded"January others, 1908. Gist receivers, mortgage April 1907, and recorded November 1907. Merchants’ National Bank of Richmond held a rendered judgment 28, 1909, May subsequent to the of both mort- registration debts gages, upon contracted to the execution of both The Union & Associatoin mortgages. Building Roan held a 1908. T. judgment W. Norwood September held notes the common debtor contracted subsequent to the execution of the two held Barrett and by mortgages were, Gist, which not reduced to He had no judgment. notice at the time his debts mortgage were contracted. Plaintiff’s from mortgage of the sale paid proceeds Mr. property. Woods thus states the conten- Justice tion the parties:

“All that neither the agree held Barrett mortgage others, trustees, nor the as held Gist and mortgage others, receivers, can have any preference over the Mer ¡for chants’ Bank Richmond Norwood, W. rea J. that the son were not within mortgages recorded the time statute, and the Merchants’ Bank required by and Nor- * * * wood became creditors without notice of these so, claims, This Norwood being mortgages. between creditors, him and the other that his right to have the of sale entire after proceeds remaining payment plain debt, rata to tiff’s the payment of mortgage applied pro his the two debts and along debt of the Bank now In Merchants’ judgment. to this opposition Carroia Mirhs [X2S that, claim of Norwood, Bank by the'Merchants’ insists ob-. claim, judgment on its it a lien on taining prop acquired entire reason erty by pro of which it is entitled to have ceeds of sale of its debt the satisfaction applied Norwood, exclusion of the debt of debts and the mortgage Norwood, which is not in the debt of debts and judgment is not in moment aside for judgment. Laying other, the claim of the each we consider mortgagees against Bank, has, whether of its first the Merchants’ by virtue over the The judgment, any preference pre mortgages. point cise here has been decided under our involved statute, but from object a consideration of the scope on the it subject statute (Civil 2456) Code § seems clear such perfectly has no judgment pref erence over The statute makes mortgages. mortga Norwood, of no the Merchants’ Bank ges effect against notice, creditors because without of the lack subsequent of record within 40 But the statute also- days. provides that the to1the expiration said 40 recording, ‘subsequent shall from the date of such record as notice days, operate to all who there to become may subsequently creditors or creditors to purchasers.’ right subsequent assert not recorded within the time statutory to be mortgages void statute, them is fixed cannot by the be changed time,. If out of the subsequent recording creditor has no lien the time of the at the 40 beyond recording days, then he an with the stands on equal footing creditor. mortgage he, lien, If he has a then must be acquired satisfied first.” justice the learned no reference While makes to the pro- 1876 viso in the Act of and the construction placed it upon Fraser, v. it would clear se.em that this King conclusion is based the view that in the Act proviso worked a radical status of a change mortgage record- time reference to the ed out of rights creditors, lien who had not a at the date acquired of record- that, It would seem under the mortgage. ing decision Cash Minns Carroul Term, 1922 recorded Fraser, been v. King having both mortgages, out Merchants’ time, would taken over priority have record, Bank, after the because its rendered judgment Woods Norwood had lien. Judge, any never acquired after the proceeds to “But for all say: purposes, other recorded, after statutory has been the. mortgage though limit, made as to be if had been a regarded record, -of the from the date re day lien having which cannot lien cording subsequently by any displaced laid record or This is the acquired principle otherwise. Frazier, down in Rich.,442. Mansell, Steele v. King * C., C., 576. 543, and v. S. Carraway, Carraway * * The rule es which was intended Statute tablish, is that and we think plain meaning, mortgages .its invalid as to subse not recorded within the time fixed are whose, before actual creditors debts were contracted quent record, lien can be but that after actual record no' superior acquired otherwise.” by judgment reached by result of the conclusion Judge practical here,

Woods, so far as it to the question presented relates entitled, held Barrett and Gist were is the mortgages by that Norwood, Merchants’ Bank and to share pro as against sale, in of neither the entire rata proceeds having surplus the Merchants’ Bank and Norwood. against lien any prior of of phases controversy were other by There disposed material to the here. presented not opinion, question in or briefs counsel of is arguments suggested overrules, or inconsistent in Brown v. the decision Sartor The last case with, Fraser. is based upon pro v. King and, assume, I in the Act of tois contained viso upon of Carolina subject as the law taken South unless later by legislation. changed to a consideration of the are thus brought

We question made, 1914. The of only of Act change light Act, to strike was out the by this proviso Act of “Provided, thereof the following: in lieu insert never- v. Cash CARRonn Minns theless, that the of above-mention- recording record * * * ed deeds and instruments the ex- record, piration shall, said ten from date of days such ¿11 have the same effect to the creditors rights purchasers without notice as if the said deed or instruments had been executed and the date of writing delivered on the, record thereof.”

While counsel for the trustees contend for a earnestly construction contrary of this I venture to think that proviso, the Legislature what it inteneded said—that mortgage, time, out of recorded its relation deprived validity execution, date of its as to debts contracted sub sequent' its execution and before registration, but was valid lien as all lien debts had respect to no attached, fi*omthe date its if the mort registration —as had gage been executed on the date its registration; statute, other words, the into- a Legislature crystallized construction the Act put Supreme Court in Fraser, supra. not of King While controlling force, it is the proviso 1914 is in substan significant tially same as the second headnote language to King v. Fraser. the, that,

It of.interest to is note while words “whether lien creditors simple contract creditors” are the first time found Act of re-enacted in the the of to of proviso- gives registration mortgage * * * to the of ten “subsequent days expiration the to-the of all same effect as creditors rights and purchasers * * * without notice as if executed and delivered on the the record thereof.” date of It would seem that the words creditors or simple “whether lien contract creditors” were in- in the Act of 1898 to remove serted doubt any as to the ex- of of the retroactive effect tent within registration the 10-day limit, all doubt as to and to exclude the intention to-give to-the time, of same out the effect as a registration, ex- Carrou, v. Minns Term, 1922 the of the. comprehensive ecuted on its day registration, words “all creditors” used. were of the proviso

It be that the construction may put leg- the 1898 in accordance Brown v. not in was Sartor to intended mind, 1914 was islative and the amendment con- 1876 as restore, terms, the proviso unmistakable far that, so- of note structed in v. It is worthy Fraser. King has of 1914 discovers, the the Act as of counsel industry Carolina, Court not been construed by Supreme South it has been in effect years. although Circuit by

Counsel call attention rendered to decree o:f Pleas in the Court Common Peurifoy, Judge presiding Vincent, Company in Nellwood Hampton County Lumber an taken. Upon agreed from which no was appeal the ef facts presented respecting state of question time,” as lease “out of against fect of the of a registration notice, debts were contract creditors without whose simple to but prior reg contracted execution lease. The learned istration of the Judge, quoting “I am of says: to Act language proviso it means exactly this amendment what- opinion facts, from above statement of says, and consequently Pat lease Nellwood Company Lumber Starr it rick be considered as executed as of date was. would recorded, and as to all contract cred simple therefore valid claims arose between the date of the execution itors whose of the record.” date if, understand difficult as why, provided time limit statute, within which within the mortgage a lien recorded give should be both lien contract debts relation date of simple its exe- not, as cution, provided by it should proviso-, given registration from the date its “all creditors,” a lien to- been executed on if had the day upon as it which it was doubt the lurked Whatever recorded. language of the the Act of 1876 was so to resolved proviso v. Fra- King Cash Mirrs Carrorr C. S. ser, so supra. The Act of thereto proviso construed Sartor, in Brown v. to con- as this nullify supra, struction of the to the Act of 1876. It was mani- proviso festly intention of the to all remove doubt Legislature as and effect of statute of the purpose law State this of so much to the se- regarding question, importance of title to curity extent of incumbrances property thereon. denotes, SO' By construing, clearly as the language proviso recorded, 1914 as to make after mortgages limit, the time “all operate creditors” against though had been they executed and on the delivered their day relieves the registration, of the and subse- rights mortgagees conceded, which, creditors of the quent uncertainty existed. previously This rendered titles uncertainty prop- insecure because of erty difficulty frequent impos- sibility what debts had ascertaining been contracted during interim days’ between the execution and registration and whether such mortgage, creditors had notice of This construction harmonizes with mortgage. usually placed upon registration acts in other states.

I concur in the conclusion of the Master Special held by the Merchants’ & Farmers’ Bank of Marion on the tobacco by seized it is a valid lien to the ex- tent of the unpaid $10,000, balance note of executed F. H. Co. & Saunders 1919. I am February further that the opinion its terms, is mortgage, express limited to $10,000, note of securing due and payable Merchants’ & Marion, C., Farmers’ Bank S. and can- not, as the trustees of F. IT. Co.,& Saunders ex- separate tended secure a indebtedness due the Bank Latta, C.S.

The Merchants’ & Farmers’ Bank of Marion, C., will from the of the sale proceeds deduct $9,125, tobacco note, $8,061.66, balance due on said together with $404 insurance, fees, cost, and attorney’s pay balance bankruptcy the trustees of F. IT. Saunders & Co. 367 Carropp Mipps v. Cash Term, 1922 The con is suggestion that argued Saco-Eowell 5 a tract not was recorded to the prior appointment It

receiver. that the receiver-was appointed appears the, 5th, on filed until January but order was not contract was on recorded the 4th. The order was before, filed, and, effective until it been had on the day we, recorded, contract was hold to be sufficient to antedate the appointment.

“While the written instrument to-be the purporting judg cause, ment in a remains in possession of the. judge who is and, it is pronounce it, effect, deed, no like not de moment, however, livered. The it is the Clerk filed Court, it becomes the of the fixes Court and judgment rights parties.” C., 295; Arcker v. 46 24 Long, S. E., 83. West, C., S. Genobles v. 23 160. v. Rail S. King Co., C., road 512; E., 86 68 S. S. 769. Duntonv. Harper, C., 343; 64 42 E., S. 153. S. needs hardly for the authority proposition

6 the receiver in no sense a subsequent purchaser

creditor, but stands debtor, shoes no title or than greater interest possessed. he v. Grube 51 Lilienthal, C., ; E., Smith, 443 29 230. S. S. Mairs v. McCord, 3 52. v. Carew, Hill, Plunkett 1 Eq., 172. Tib Weaver, Strob., v. 5 betts 144. Four Big Co. v. Wright, Fed., 535; A., 207 125 C. C. 577; 47 R. A. (N. S.), L. A., 1223. 44; Note R. Ann. 1916A, Cas. 1261. L. Holt S., 639; Ct., Henley, Sup. 459; U. 767. 58 L. Ed. 1917C, A. Note R. 444. L. This

2. Mason Machine Works. company claims priority over creditors extent $59,217.19, general the amount claimed due them under being the follow- circumstances: A-written contract was ing entered into-by and between the company corporation, and provided certain machinery to the mill furnishing aggre- 25, 1919, contract $59,217.19. The is dated August gating Mills signed Cash 1919. September Minus Carroia C. after April, the mill and installed in delivered to relating following provision The contained the contract reservation of title:

“It is understood and expressly that the hereby agreed title the to named in this contract shall machinery remain with and in Mason Machine all Works until payments cash, both and full, record the same upon the day order appointing receiver was filed: The rule is general that fractions of a will be considered, day and that acts done on the. same day are done at the time. same 314. Cyc., There are, however, rule, to exceptions this as it where is necessary to determine the conflicting rights rival claimants, when they depend in fact. upon priority that Assuming this is a case within such exceptions, opposition has failed to any evidence to their offer contention support that the order was'filed prior recording. the,

The next arises as question to mode in which claimants, 9 these two are who accorded priority over creditors, unsecured general shall be allowed the benefit of that priority. Prior to the a re appointment ceiver, each had a lien they certain specific machinery. consented a sale whole, to the entire They a in plant such machinery, and that whatever cluding rights, legal had, they or which should be equitable, transferred to the sale. is that sale proceeds highly probable did the, full value of the entire not realize at least plant; that to If is be determined. it not, a did and question these extent, are allowed to full priority claimants of their claims, they loss, clear bear no part all of be, borne fair, will creditors. general It is Carroix Miixs C.

therefore, limited to such proportion these claimants be pro- of the incumbered net value the, plant. sale value entire ceeds of bear over claims 3. This company priority Barber-Colman Co. $4,000, that being creditors the extent of general circum- following due them under amount claimed ’ and be- entered into by : A stances written contract for the corporation tween provided company the'corporation Machine to Tying certain Warp sale.of dated $10,000. Septem- The contract was for the sum of installed delivered and The machine was ber the hold- claim of thereafter, the mill soon before long arose. ers the cotton claims in his argument: claimant states this attorney ' Company which Barber-Colman is a contract by “This for, a sell, pay mill buy and the agrees agrees The, ex- contains also an contract machine. Warp Tying under numerous to use the machine patents, license press price that if any part purchase the further provision the machine the license to use unpaid interest shall remain be determined.” immediately shall That two (1) claimants grounds: These appeal upon reason allow them priority by refused to any Court their the Court erred in contract; dismissing (2) their attachment. that holders so clearly the first It ground: appears

As to creditors, so far as cotton were claims concerned; falls that the contract are these claimants wifhin that it not recorded and was the of Section provisions that further the receiver was appointed; until after long- of the denial is priority unnecessary. in of support comment not The attachment was the second ground: As to filed, the referees was report long the of until after levied the assets. took possession'of the receiver after is, a receiver eye of property “The possession the, Court, the the law, of possession of regarded Casi-i

Carrorr Mirrs Term, 1922 in the appointed receiver, being and such hence property L., custodia R. C. legis cannot be attachment.” seized by 69. The the at- Circuit vacating Judge clearly right tachment. Cotton

Thr Craims It would at first appear blush that this es- Court having tablished the right and Shops Saco-Towell Mason Machine Works to over creditors, the unsecured priority general that these two claimants are the ones the only contesting of the cotton validity claims even receiver (not joining them in the attack), question validity these claims become has academic. But when it con- sidered that accorded priority the above claim- two ants does not extend to the full amounts of their respective claims, but such only to proportion value of in- cumbered as the net of the sale bear property proceeds value, of the entire plant incumbered ma- including that, for the chinery,- claims, balances their unpaid upon take rank they all other creditors, with unsecured general the, these claimants have a direct interest in reduction of the claim creditor. The any general evidence support these claims in to' a unsatisfactory degree. is confused contradictory; books documents were called for and excuses; the flimsiest produced receiver whose upon it was to duty require proof of all rigidly validity contest, claims took no rather part co-operated submitted to the the claimants and establishment of the claims whether the without losses of these appeal. question claimants were based upon legitimate standard the contract and the difference between market at price price upon their losses delivery, the time con- agreed breaches, is nebulous. tracts supervening conclusions : following announce We are entitled to Shops priority Saco-Rowell That creditors, claim, their out of net over general sale, the extent such proportion proceeds Cash Miees Carroee Dissenting net proceeds as the value incumbered machinery entire, sale at the time bear to the value of plant sale, unpaid that for the the said machinery; including cred- their unsecured portion of claim rank as they general itors. are, he same entitled

That Mason Machine Works as are accorded the rights Shops. Saco-Towell 3. That the priority claim of Barber-Colman Company is denied. referred by the cotton claims That the validity hereto than those referee, other

the Circuit Court a special his report fore de novo testimony to take appointed, that Court; pro and in conclusions of and fact law to take are directed attorneys the receiver and his ceeding of said the establishment active participation requiring Master claims; special tO'said and that there be referred also claim preferred to1which the two amounts question'of declraed. hereinbefore ants are entitled under principle the decree is Court The of this judgment case, be remanded reversed and that Circuit Court be 'with consistent for further proceedings Court conclusions. foregoing and Marion concur. Watts

Messrs. Justice : The (dissenting ) Cash Mills did Mr. Fraser Justice not manufacture It became anything-. insolvent . before mill, was for work. It built its ready for bought machinery cotton, the manufacture of and cotton to be manufactured. mill in the hands a The was receiver before all the ma installed. The was cotton was chinery for future bought 1,800 mills at least delivery. bargained bales of cotton, 100 bales of which were ever only delivered. The under forms, contracts bought various them intended to clearly all of were secure but purchase is the law of that an and it this State instrument of money, be its which is may form), (whatever intended as writing debt, a for a These security mortgage. were mortgages v. Carroee Miees Term, 1922 not recorded the and were days, within time of ten statutory not recorded until after the cotton contracts were made. long The contest in this the cotton claims and is Court between, claims. machinery The men claim that while machinery the original valid, contracts of sale to the mills are of cotton yet cotton men made contracts in violation of hedging our statutes, and are the cotton losses on claims unlawful contracts, and their are not recoverable.. claims Bros, The claim of mill, Bean claim largest against and is for Bean, more than $80,000. R. W. S. When witness stand, for Bean Bros., was on the he was allowed sale, the contract prove Cash Mills and the failure of the mills to and the amount of receive cotton loss. The men machinery then demanded production the book. The Orleans; witness said books were New here; that was too much trouble and it them bring would be a serious inconvenience to his firm to have an in- made. spection books, did not and no They produce so, effort was ref- made to them to do the* require either by or the Circuit en- erees men were Judge. machinery to have the cotton men their claims prove titled records. would to allow the cotton men to right take, of the advantage "exceeding great generosity men. There are machinery many exceedingly interesting case, in this but the at the first is to facts. questions thing get back, Inasmuch as this' case will it is well to have go the record the several chattel let show dates of plainly delivered, and when the when mortgages, recorded. Gary

Mr. Chief concurs with Mr. Justice Justice Fraser.

Mr. : It Gary, Chief (dissenting) has not been Justice that the appear made of fact findings by his Honor the were presiding Judge, preponderance of the testi mony. And Brown v. Sartor, case 87 C., 116; 69 S. E., shows none clearly the creditors were entitled Cash Minns CARRonn

Per Curiam Order The appeals assets. distribution priority Cir- dismissed, should and the judgment therefore be cuit Court affirmed.

Order Remittitur. Stay of Revoking of Court the the opinion Per After the of Curiam. filing 1923, applications in the 12, following this case on April were to> Court: made the Mason Machine and by Shops

1. Application Saco- Rowell of the Court a the judgment Works for modification of in full several allow them payment which would claims, allowed the proportions amounts their instead of of in opinion. the Walker, Co., A. & C. Chas. O’Neale by R. Application fo,r for modifica- or at least a Bean a rehearing,

and Bros. the, estab- their claims respective declaring tion of judgment their estate instead remitting the receiver’s lished against Court. adjudication Circuit by claims for a Co. for rehearing. Barber-Colman by 3. Application in order named. be considered These will applications and Mason Machine Shops 1. Application Saco-Lowell (cid:127) of counsel for these the affidavit by appears Works. claimants, by counsel by written statements supported claimants, for the counsel cotton by for receiver Wilson, dated Novem- by the order of sale Judge after that order directed a sale free which was ber passed, and that such liens or incumbrances of all discharged sale, attach to proceeds and incumbrances liens therefrom, which appeal intention notice claimants gave 2, 1921, counsel for the sale; on December that stayed receiver, and counsel for the for claimants, counsel' in conference reference to had' a proceeding claimants cotton sale; the result that conference was an agree- counsel for the referred re- (the counsel ment sale of as a speedy property desiring particularly ceiver upon the claimants whole, machinery including ; sale that the take liens) place their should upon insisted Carrorr Mirrs Term, on the first price, Monday upset at the February, $300,000; be that, if claimants should the claims creditors, established in to the claims general priority these claims be there- should These claimants full. paid fore ask that effect modified, so as to give judgment to that agreement.

If the into, we have alleged agreement entered not the was, been in- slightest doubt it have should corporated by order in the decree of sale supplemental signed Judge Wilson, dated 1921. -As the matter November stands, now not a it is of the record and can part appeal, be considered only of a be- private agreement light counsel, it, tween who entered into binding parties the cotton claimants and the claimants. It is a whether or question not his counsel had the the receiver or the, the power without confirmation of Court barter to thus the creditors, interests away of the some whom of general the Court is advised contest the may alleged agreement. The, most that we can or do of the in say agreement support to hold is is that between the above-named claim- binding ants, assets, them, and in the of the distribution as between is entitled to recognition. question

The not whether or the other general creditors are the bound consent of counsel for by the receiver is one are entitled they that heard and is accordingly The is reserved. therefore application refused. Cotton Application the Claimants a Rehearing of for The,

or the at Least Judgment. Court has Modification of considered the for a carefully grounds and does rehearing of law or any matter perceive principle of fact has the, dismissed, is been overlooked. accordingly order the remittitur is staying hertofore passed revoked. They for the ask a modification opinion also their declaring instead established them claims remitting the Circuit adjudication. Court C. —125.

25 —s. v. Cash Mirrs Carrorr

Per Curiam Order C.— of the the validity The in favor of special reported referee cotton His was confirmed respect claims. report this appeal decree. The claimants machinery only Circuit from Court reverses that decree. The of this opinion case to decree in to this and remands respect holding adjudication. Circuit Court for further testimony into cotton claimants entered agreement, now an appear machinery to1the of the with the opinion, subsequently filing machinery claimants to the effect that the of the exceptions claims cotton claimants with reference tO‘ validity abandoned; the effect of which be deemed withdrawn In affirmed them. regards to leave Circuit decree words, other established claimants machinery having are, interested their claims no priority longer creditors and claims general validity invalidity fate. arrange abandon them to their To this proposed interest receiver, ment the for the attorneys representing all cotton claimants other creditors well as general have assented. the stockholders corporation, In the appeal the first the Court has assumed that place, an ad- was intended to secure claimants That been raised. has question judication question justifying and we know of no adjudicated, authority the decision. It is not improbable Court reversing now creditors relied upon other general appeal claimants, and it would be unfair now to deprive The for benefit. a modification application them of a possible Court is therefore refused. this judgment a Rehear- Company Barber-Colman Application of has not convinced us that material petition any ing. been fact has overlooked. It is therefore of law or matter order heretofore the re- dismissed, passed and the staying is revoked. mittitur notes payments, thereof, renewals if shall have in any) been made fully cash. Until such full cash made, is settlement the purchaser agrees keep machinery repair insured for fully benefit of as interests company may appear. case, “In contract, breach of this it is understood that the, or its company enter agents and remove may peaceably the articles from the custody wherever purchaser, be, and they may purchaser herewith do agrees all acts to perfect and assure such necessary retention of title in above company contemplated.” The contract was recorded, both in duly the real estate book, in the chattel book, in the office of the of Mesne Conveyances of Cherokee Register where County, located, the mill was on January the order day a receiver was and the appointing signed, before it day office. filed the. clerk’s The account was closed certain and the payments ex- balance, for the ecution of two notes both dated July $15,011 each for due 6 months after date. The due the date of the company amount report of the $30,815.31. referees was conceded to It is not clear to Carrorr Cash Mirrs the Court how this at; is arrived figure but the notes being n in evidence any error be corrected. may The contest is between the really holders of machinery claims and claims; the holders of the cotton receiver is only interested behalf such creditors as are not parties this action, it immaterial to the being stockholders how the issue turn. may The of attrition between the point holders of the claims and the holders machinery of the cot- ton claims is this: contend that Saco-Lowell are people, they 1 holders of what practically which will be (and. a chattel considered) mortgage upon installed them, which, not recorded within although

Notes

notes interest shall have in been made for same the proper The receipt acknowledged by seller. sale of is to enumerated made solely Mills for a mill at C., is to-be in Gaffney, opera- S. put therefrom, tion on their and must not be removed premises, resold, or another all to until claims -party transferred full; in Machine have been or by Mason Works settled Machine written consent of the Mason Works.” The recorded in chattel book contract was in office mense of Chero- conveyances of the register after 1921, the the order County day kee on January ap- in it day a was filed signed, was pointing receiver the holders of cotton the Clerk’s office. Counsel for contract to the introduction of Mason objected claims their claim for following grounds: preference and to no defective, that it bears seal of That the probate (1) that as notary public; (2) who person sign purported recorded, 25, 1919, and not dated August the contract was 5, 1921, recorded, after the until January or attempted receiver; the claims represented (3) aof appointment claim. to the Mason them arose subsequently contract, proof The attached affidavit before, a the witness execution, was signed 7 its Macomson, Notary his name “Roy who person signed C.,” a seal. for without to-the reference Saco-Lowell announced The conclusions claim, this and the questions applicable, claim are Shops the contentions exception of it, to with the in reference raised recorded, ato defect owing improperly contract was until not recorded January was and that in the probate, v. Cash Carrorr Mirrs Term, 1922 5, 1921, filed day receiver’s appointment seal, Clerk’s office. It is claimed that the absence Public, proof rendered execution before a Notary contract Vol. recorded. incapable being Section Code Caws, A. D. provides: office, “He have a seal of shall [notary public] shall be his affixed and to to his instruments of publication render protestations; but the shall not absence of such seal invalid, his acts affixed.” his title be official provided title, the Probate Public affixed his official Notary was therefore valid. As to the objection that the contract was lodged

Case Details

Case Name: Carroll v. Cash Mills

Court Name: Supreme Court of South Carolina

Date Published: Apr 12, 1923

Citations: 118 S.E. 290; 125 S.C. 332; 1923 S.C. LEXIS 239; 11189

Docket Number: 11189

Court Abbreviation: S.C.