Sloan Bros. v. Sawyer-Felder Co., 175 N.C. 657 (1918)

May 28, 1918 · Supreme Court of North Carolina

175 N.C. 657

SLOAN BROTHERS v. SAWYER-FELDER COMPANY, ASHCRAFT-WILKINSON COMPANY, Interpleader.

(Filed 28 May, 1918.)

1. Mortgages — Bills of Sale.

A paper-writing conveying personal property, reciting that-it is to better secure the payment of a debt, and upon its payment to be satis-fled in the same manner as deeds may be cancelled at law, though called a bill of sale by the creditor, is in effect a mortgage, and wiE be so regarded.

2. Mortgages — Personal Property — Registration—Attachment.

A mortgage of personal property made to a nonresident must be registered in the county where the property is situated to have priority over the rights of attaching creditors of the mortgagor. Bornthal v. Burwell, 109 N. C., 10, is cited and distinguished.

3. Mortgages — Parol Evidence — Appeal and Error.

Where a chattel mortgage has been introduced in evidence in a controversy to determine the rights of the mortgagee and attaching creditors, the exclusion of testimony in mortgagee’s behalf tending to show that the parties intended the writing to be a mortgage, is harmless and not to the mortgagee’s prejudice.

4. Same — Hearsay—Opinion.

Testimony of a witness as to a conversation between himself and the mortgagee relating to a paper-writing put in evidence and appearing upon its face to be a mortgage, if otherwise competent, is hearsay and incompetent as substantive evidence, as is also the opinion of the witness as to the effect of the transaction.

5. Mortgages — Attachment—Priorities.

The owner of an improperly registered mortgage of personal property in his possession holds it subject to the prior claims raising under attachment of the mortgagor’s creditors.

Appeal by interpleader from Shaw, J., at the Fall Term, 1918, of MacoN.

The creditors of Sawyer-Eelder Company instituted various actions to collect their debts, and levied attachments on a certain motor truck. After the action had been instituted Ashcraft-Wilkinson Company filed interpleas in which it alleged that it was the owner of the truck and the several actions were then consolidated.

On the trial the following instrument was introduced in evidence:

Georgia — Fulton County.

Whereas Sawyer-Eelder Co. (a partnership composed of E. L. Sawyer and K. T. Eelder) is indebted to Ashcraft-Wilkinson Co.,

Now for ($5) in hand paid and to better secure the payment of said indebtedness, and any and all future indebtedness, whether on note or open, account, by said partnership, to Ashcraft-Wilkinson' Co., we hereby bargain, sell and' convey to Ashcraft-Wilkinson Co. the following-described property and all our right, title, equity and interest therein:

A certain tractor truck manufacture of the White Co., model ATH, Serial. No. 31318, s.teel body, power-end-pump, equipped with tractor wheels* and cushions, lamps, and tools.

A certain Aleo truck, 5-ton capacity, purchased from C. B. DuPuy, together with' all accessories and equipment ’ complete, both of said trucks are now in our possession and are hereby covenanted to be free of all liens and incumbrances.

Upon prompt payment by us of all indebtedness which shall become due the said Ashcraft-Wilkinson Co., they are to satisfy this bill of sale in the same manner as deeds may be cancelled in law.

In witness whereof we have hereunto set our hands and seals at Atlanta, Ga., this the 20th day of May, 1916.

Sawyee-Feldee Co. (L. S.)

F. L. Sawyee. (L. S.)

Signed, sealed, and delivered in the presence of P. B. D’Orr, Notary Public, Fulton County, Ga.

The said instrument was filed for record at 5 p. m., 19 September, 1916, and recorded in Pulton County, Ga., 29 September, 1916.

The interpleader introduced as a witness P. B. D’Orr. The witness was handed the instrument hereinbefore set out, and in the absence of the jury certain questions were asked the witness which, with the answers thereto, were as follows:

Q. What is that instrument you have? A. This instrument is a deed of sale in our State and a mortgage, I believe it is called, in your State.

Q. Who drew that instrument? A. I drew the instrument.

Q. At whose instance? A. At the instance of Ashcraft and Wilkinson, president and vice-president of the interpleader.

Q. For what purpose was the instrument drawn? A. After the Sawyer-Felder Company had been engaged in this mining business for some time it was the sense of the company, of the Ashcraft-Wilkinson Company, and those who control its affairs, that the Sawyer-Felder Company would be unable to pay the funds advanced;, that their behavior had become such that Ashcraft-Wilkinson were disturbed over their transactions under which they loaned them this money and they had turned this truck over to them to my personal knowledge, and they instructed me to prepare a deed of sale, which would put the title of the truck in us in order that it might on the Fulton Company records so that if Sawyer-Felder attempted to sell the truck they would have a record showing that it belonged to us, and they had no record and said that something ought to be on the books to show in whom the title lay, and Mr. Ashcraft instructed me to prepare a deed from Sawyer-Felder Company to put on record for'the truck. At the time I told Mr. Ash-craft that we owned the truck and had never sold it and never passed the title and I did not think it necessary to have a deed, and being a layman and contrary, insisted, and I drew tbe deed and it was put on record in September, although I drew it on the 30th of May.

The court instructed the sheriff to recall the jury to the box, and the following proceedings were had:

The interpleader offered to introduce the foregoing evidence of the witness D’Orr. Plaintiffs objected; objection sustained; interpleader excepted.

The only other evidence offered by the interpleader was that of one Wilkinson, who, after testifying to certain facts, substantially those stated by the witness D’Orr, admitted that he knew nothing about the ti'ansaction and that he was speaking from hearsay.

The purpose of the interpleader in offering the evidence of D’Orr and Wilkinson was to prove an -outstanding title in the interpleader derived by purchase from the White Company before the execution of the paper introduced in evidence and to avoid the effect of the paper as a mortgage-

At the conclusion of the evidence his Honor dismissed the interpleas, and the Asheraft-Wilkinson Company excepted and appealed.

Johnston & Horn, Q. L. Jones, JR. D. SisTc, and J. Franlc Bay for plaintiff.

T. J. Johnston and P. B. D’Orr for defendant.

Allen, J.

The paper introduced in evidence, while called a bill of sale, is in legal effect a mortgage, because it purports to convey personal property as a security for debt (Harris v. Jones, 83 N. C., 321), and being a mortgage, and the mortgagor being a nonresident of the State, it was necessary to cause it to be registered in the county of Macon, where the property was situate, to give it priority over attaching creditors.

The case of Hornthal v. Burwell, 109 N. C., 10, has no application because it does not appear that the truck was not in Macon County when the mortgage was executed.

This principle is therefore decisive of the appeal against the inter-pleader unless error has been committed in excluding the evidence of the witness D’Orr or in holding that the evidence of the witness Wilkinson was not sufficient to be submitted to the jury.

The last part-of-the evidence of D’Orr,-as to the conversation with Ashcraft, was clearly incompetent, as it does not come within any exception to the rule excluding hearsay evidence, and, omitting this, his evidence was immaterial, as it could not change the relation of mortgagor and mortgagee, but would confirm it, as it shows that the Ashcraft-Wil-kinson Company had loaned money to the Sawyer-Eelder Company, and becoming uneasy about tbe debt, it took tbe mortgage for tbe purpose of putting tbe title to tbe truck in Asbcraft-Wilkinson Company, so tbat tbe other company could not dispose of it.

Tbe evidence is a very good description of a sale of personal property on credit, and taking a mortgage on tbe property as a security, upon becoming doubtful as to tbe solvency of tbe debtor.

And tbe evidence of Wilkinson, if it ought to be considered, after bis admission tbat be knew nothing of tbe transaction and was speaking from hearsay, is subject to the same condemnation. It is true, be says tbe truck was not sold to Sawyer-Felder Company, but this is merely bis conclusion, and be afterwards testified “tbat so far as witness knew personally Ashcraft might have sold this truck to Sawyer-Felder Company.”

He also testified tbat tbe Asbcraft-Wilkinson Company bought tbe truck from tbe White Company and turned it over to the Sawyer-Felder Company, which was to pay for it when able, and tbat tbe mortgage was taken to protect tbe Asbcraft-Wilkinson Company.

This evidence, if true, has no tendency to prove an outstanding title in tbe interpleader derived from tbe White Company if it was permissible to do so, to which we do not give our assent, and on tbe contrary establishes tbe relationship between tbe parties as shown by tbe mortgage.

We are, therefore, of opinion there was no error in tbe exclusion of evidence or in tbe dismissal of tbe interpleas.

Tbe judgment must, however, be modified by declaring tbe Asbcraft-Wilkinson Company to be the owners of tbe property, subject to tbe prior claim and lien of tbe attachments, and to this modification tbe plaintiffs consent.

Tbe interpleader will pay tbe costs of tbe appeal.

Modified and affirmed.