Whitlock v. Auburn Lumber Co., 152 N.C. 192 (1910)

March 23, 1910 · Supreme Court of North Carolina

152 N.C. 192

C. M. WHITLOCK v. AUBURN LUMBER COMPANY.

(Filed 23 March, 1910.)

1. Courts — Reference to Inform Court — Equity—Chancellor—Procedure.

A referee appointed by the court to ascertain and report upon matters arising for the court’s determination, is not a reference under the Code of Civil Procedure, and the judge, sitting as a chancellor, may adopt the findings of the referee, hear additional evidence, reject such as he may disapprove, determine the matter upon the facts found by himself and adjudge the result thereupon.

2. Corporations Insolvent — Receiver’s Sale — Purchaser’s Defective Title — Cost to Perfect — Purchase Money — Interest.

Upon petition of a purchaser at a receiver’s sale of an insolvent corporation, setting forth that the title to a certain tram-road, necessary for the hauling of lumber from the lands purchased, and sold with the land, was, as to certain parts, defective, and that the receiver announced at the sale that he would sell the property, including the tramroad, free from liens or encumbrances, the court referred the matter for a report of the facts, and found and adjudicated from the facts appearing that the receiver made no misrepresentations, that there was no element of fraud, and that the purchaser had not tendered a certain balance of the purchase price, but it. had cost him the sum of $20 to perfect his title to the tramway: Meld, that it was not error to enter judgment that the purchaser pay the balance of the purchase price, less the $20 so paid by him, with interest; and the question as to whether the sale of .the property of an insolvent corporation is a judicial sale is not presented.

Appeal by Thomas B. Pierce from Guión, J., at January Term, 1910, of New IIaitover.

This appeal presents the following facts for consideration: The defendant, an insolvent corporation, was placed in the hands of Cameron F. McRae, receiver. Its property, consisted of a sawmill plant, timber rights, tramroad, rights of way, etc. During the progress of the litigation an order was made transferring the rights of certain creditors asserting liens upon certain of the company’s property to the fund to be derived from the sale by the receiver, and an order of sale was made. Pursuant to said order, the receiver executed the order of sale on 3 October, 1903, when T. B. Pierce became the last and highest bidder for $3,141. The sale was duly reported and confirmed, and the purchaser has paid $2,275.32 of the purchase price, leaving unpaid $865.68. At the sale the receiver announced that, by an order of court, all liens held by creditors against the property had been transferred from the property to the funds to be derived from sale, and that he would sell the property of tbe lumber company, including timber, mill plant, buildings, tramroad, etc., free from liens or encumbrances. It is also found as a fact by tbe referee to whom tbe matter was referred by tbe judge, that botb tbe receiver and tbe purchaser understood and believed that tbe company owned rights of way over all tbe lands on which tbe tramway was located. This tramroad was about six miles in length, running from tbe mill to tbe A. O. L. Eail-road, and was valuable in getting tbe lumber from tbe mill to tbe railroad. It developed after tbe sale that tbe company did not own tbe right of way across all tbe lands between its mill and tbe railroad, and the" purchaser, Pierce, was forbidden, two years after bis purchase and possession thereunder, to longer use tbe tramroad on certain lands over which it passed; thereby tbe tramroad was rendered ineffective for its purpose, and tbe purchaser hauled a large quantity of lumber to another station, at an increased cost to him. It, however, developed, and this fact is so found by tbe referee and adopted by tbe court, that tbe purchaser acquired tbe use of tbe right of way over tbe land of one of tbe contrariant owners for $20, and this sum was allowed tbe purchaser, Pierce, as a credit on tbe balance due, and that be acquired tbe right of way over tbe land of tbe only other objecting landowner without tbe payment of any money or other thing of value. His Honor disallowed tbe exceptions filed by tbe purchaser to the'findings of tbe referee, among them a claim for damages for tbe difference in tbe cost of hauling tbe lumber, adopted bis findings and gave judgment against tbe purchaser for tbe balance, $865.68, less $20 paid as aforesaid, and interest from 10 October, 1903, tbe day of sale. Tbe purchaser excepted and appealed to this Court.

Meares & Ruarle for receiver.

Stevens, Beasley & Weelcs for appellant.

MANNING, J\,

after stating tbe case: In sneaking of tbe character of tbe reference in such cases as this, and of tbe power of tbe courts over tbe findings of tbe referee, this Court said, in Tate v. Davis, ante, 177, a case similar to this: “Tbe reference'was not one made under tbe provisions of tbe Code of Civil Procedure, where a referee is appointed to bear and determine issues raised by tbe pleadings in a civil action. It is mere inquiry made at the direction of a chancellor who wishes to inform bis conscience as to tbe justice of a demand made on a fund in bis control. He may set aside ex mero motu tbe recommendations of tbe referee or master, and examine into tbe facts himself.” Tbe judge, sitting as a chancellor in such matters, may adopt tbe findings of tbe person appointed by him to bear tbe evidence and report Ms findings of fact, using tbe same evidence taken in sueb bearing, or bearing additional evidence, or tbe judge may reject sueb findings as be may disapprove, and determine tbe matter upon tbe facts so found by bim, and adjudge tbe result thereupon.

Tbe contention of tbe appellant is that tbe sale by tbe receiver . was a judicial sale, and be bad tbe right to assume that be offered a good title — tbe entire title — as tbe sale of a less estate or interest was not expressly mentioned in tbe face of tbe decree, or clearly implied from tbe nature of tbe sale. Shields v. Allen, 77 N. C., 375; Edney v. Edney, 80 N. C., 81; Carraway v. Stancill, 137 N. C., 472. 'The question whether the sale of the property of an insolvent corporation is a judicial sale, Avithin tbe comprehension of tbe principle stated in tbe three eases above cited, is an interesting question, but we do not think it is presented by this appeal, for, conceding that it is a judicial sale and embraced within tbe rule stated, it is found by tbe referee and bis findings adopted by tbe judge, that in tbe two particulars wherein tbe purchaser claims be has suffered any loss or inconvenience, to wit, in securing tbe right of way over tbe land of Frederick and over the land of tbe Carlton heirs, be paid $20 for tbe former, which was allowed as a credit, and that to acquire tbe latter cost bim nothing. Upon tbe general question as to tbe application of tbe principle stated in tbe cases cited above, in Smith on Receivership, sec. 34, p. 100, it is said: “As to tbe title and condition of tbe property, the rule of caveat emptor applies, and tbe purchaser takes tbe property subject to all liens or outstanding interests therein.” Gluck and Becker’s Receiver of Corporations, sec. 39, p. 100, sec. 40, jd. .117; Alderson on Receivers, ¡5. 817; Beach on Receivers, sec. 73, p. 785; Larch v. Aultman, 75 Ind., 162; Hackensack Water Co. v. DeKay, 36 N. J. Eq., 548. We will not, however, determine this question.

While the purchaser charges in bis petition filed, that be relied upon certain statements made bim by tbe receiver in a conversation about tbe sale, it is found as a fact that no misrepresentation was made by tbe receiver, and tbe findings expressly negative every suggestion of fraud. There is no evidence that tbe purchaser ever tendered tbe sum adjudged to be due by bim, and be is obliged, therefore, to pay interest. Our conclusion, therefore, is that there is no error in tbe judgment appealed from, and it is

Affirmed.