Carolina Coach Co. v. Begnell, 203 N.C. 656 (1932)

Dec. 14, 1932 · Supreme Court of North Carolina

203 N.C. 656

CAROLINA COACH COMPANY v. BESSIE BEGNELL, and E. G. BELVIN, Sheriff of DURHAM COUNTY.

(Filed 14 December, 1932.)

1. Corporations G d — Absolute sale of personal property by corporation is not required to be in writing or registered.

There is no statutory requirement that a sale or conveyance of 'personal property by a corporation shall be in writing or shall be registered for any purpose when such sale is absolute and delivery of the property is made to the purchaser, C. S., 3311, applying only to sales of real estate and transfers of personal property by chattel mortgage or conditional sale.

2. Same — Transfer of personal property by corpoi’ation held not void as to torts under the facts of this case.

Construing N. C. Code of 1927, 1138 with C. S., 3309, 3311, the amendments to N. C. Code, 1138, not applying in the instant case, it is held that an absolute sale by a corporation of its personal property, accompanied by delivery to the purchaser, is not void as to a judgment creditor of the corporation on a judgment obtained against the corporation for a tort committed before the transfer, when the sale was not made with the purpose of hindering, defrauding, etc., the creditors of the corporation, the provisions of the statute not applying to such transfer, and upon a verdict of a jury in his favor on the question of fraud the purchaser of the property from the corporation is entitled to an order restraining the judgment creditor from issuing execution on the property in his hands.

Appeal by defendants from Qowper, Special Judge, at May Special Term, 1932, of Waice.

No error.

Tbis is an action to enjoin tbe defendant, E. Gf. Belvin, sheriff of Durham County, from levying on and selling certain personal property now in tbe possession of and owned by tbe plaintiff, Carolina Coach Company, under an execution in bis bands, issued by tbe clerk of tbe Superior Court of Durham County. Tbe execution was issued at tbe request of tbe defendant, Bessie Begnell, to satisfy a judgment in favor of tbe said Bessie Begnell and against tbe Safety Ooacb Lines, Incorporated. Tbis judgment is duly docketed in tbe office of tbe clerk of tbe Superior Court, and bas not been paid or satisfied.

Tbe facts as stipulated by tbe parties and as found by tbe jury, at tbe trial, are as follows:

1. On 19 March, 1925, tbe defendant, Bessie Begnell, instituted an action in tbe Superior Court of Durham County against tbe Safety Coach Lines, Incorporated, a corporation organized and doing business under tbe laws of tbe State of North Carolina, to recover damages sustained by tbe said Bessie Begnell, and resulting from personal injuries caused by tbe negligence of tbe Safety Coach Lines, Incorporated, on 23 October, 1924.

2. While said action was pending in tbe Superior Court of Durham County, to wit: on 24 November, 1925, tbe defendant therein, Safety Coach Lines, Incorporated, for and in consideration of tbe sum of $80,000, paid to it in cash by tbe Carolina Ooacb Company, sold, transferred and delivered to said Carolina Coach Company, all its property, except certain accounts receivable. Tbe Safety Coach Company duly executed a bill of sale, dated 24 November, 1925, by which the said company sold and transferred tbe personal property described therein to tbe Carolina Ooacb Company. Tbis bill of sale was duly probated and registered in tbe office of tbe register of deeds of Wake County, on 29 December, 1925. Among other articles of personal property described in tbe bill of sale, are certain buses theretofore used by tbe Safety Coach Lines, Incorporated, in carrying on its business. These buses were delivered to tbe plaintiff, Carolina Coach Company, and are now in its possession, and used by it in carrying on its business.

3. At tbe date of tbe sale, transfer and delivery of tbe property described in tbe bill of sale, by tbe Safety Coach Lines, Incorporated, to tbe plaintiff, Carolina Coach Company, tbe Safety Ooacb Lines, Incorporated, was solvent. Tbe said sale was not made by tbe Safety Coach Lines, Incorporated, with intent to binder, delay, or defraud tbe defendant, Bessie Begnell, or other creditors of tbe Safety Coach Lines, Incorporated. Tbe sum of $80,000 paid by tbe Carolina Coach Company to tbe Safety Coach Lines, Incorporated, as tbe purchase price for said property, was its fair market value. Tbe plaintiff, Carolina Coach Company, knew at tbe time it paid tbe said purchase price for said property to tbe Safety Ooacb Lines, Incorporated, that tbe action instituted by tbe defendant, Bessie Begnell against tbe Safety Coach Lines, Incorporated, was then pending in tbe Superior Court of Durham County. Since tbe dissolution of tbe Safety Coach Lines, In-eorporated, as a corporation, on 16 August, 1926, tbe sum of $80,000 received by it from tbe Carolina Coacb Company, as tbe purchase price for its property, bas been distributed among its creditors and stockholders. No part of said sum was reserved for or applied as a payment on tbe judgment which Bessie Begnell recovered against tbe Safety Coacb Lines, Incorporated, in tbe action in tbe Superior Court of Durham County.

4. On 20 May, 1926, tbe Carolina Coacb Company was made a party defendant in tbe action entitled “Bessie Begnell v. Safety Coacb Lines, Incorporated,” pending in tbe Superior Court of Durham County, on tbe motion of tbe said Bessie Begnell, plaintiff therein. Tbe demurrer of tbe Carolina Coacb Company was subsequently sustained, and tbe action dismissed as to tbe said Carolina Coacb Company. See 198 N. O., 688, 153'S. E., 264.

5. Tbe action entitled “Bessie Begnell v. Safety Coacb Lines, Incorporated,” was tried at September Term, 1929, of tbe Superior Court of Durham County. This trial resulted in a judgment in favor of Bessie Begnell and against tbe Safety Coacb Lines, Incorporated, for tbe sum of $4,400, with interest and costs. Executions on this judgment have been returned unsatisfied. An execution issued on said judgment, dated 18 September, 1930, is now in tbe bands of tbe defendant, E. G. Belvin, sheriff of Durham County. Under this execution, tbe said defendant was about to levy on and sell tbe buses described in tbe bill of sale from Safety Coach Lines, Incorporated, to tbe plaintiff, Carolina Coacb Company, at tbe request of tbe defendant, Bessie Begnell, on their contention that said bill of sale is void, and that tbe buses described therein, although now in tbe possession of tbe plaintiff, are tbe property of tbe Safety Coacb Lines, Incorporated, and not tbe property of tbe plaintiff, Carolina Coacb Company, and are therefore subject to sale under execution to satisfy tbe judgment in favor of Bessie Begnell and against tbe Safety Coacb Lines, Incorporated.

From judgment enjoining tbe defendants from levying on and selling tbe property described in tbe bill of sale from Safety Coacb Lines, Incorporated, to tbe Carolina Coacb Company, or any part thereof, tbe defendants appealed to tbe Supreme Court.

Smith & Joyner for plaintiff.

Pou& Pou and Bryant & Jones for defendants.

Connor, J.

The bill of sale under which tbe plaintiff, Carolina Coacb Company, claims title to tbe buses now in its possession; and on which tbe defendant, E. G. Belvin, sheriff of Durham County, proposes to levy as directed in the execution now in bis bands, and issued at the request of the defendant, Bessie Begnell, to satisfy ber judgment against the Safety Coacb Lines, Incorporated, is not void, for the reason that said bill of sale was executed by the Safety Coacb Lines, Incorporated, with intent to binder, delay or defraud the said Bessie Begnell, or other creditors of the Safety Coacb Lines, Incorporated. Tbe jury by its answer to the third issue has negatived the contention of the defendants to that effect. There is no contention on this appeal that there was error at the trial with respect to the answer to the third issue.

Tbe only question presented by this appeal is whether tbe bill of sale is void as to tbe defendant, Bessie Begnell, under tbe provisions of tbe statute in force at tbe date of said bill of sale. See N. 0. Code of 1921, section 1138. Tbe subsequent amendments to this statute are not applicable to tbe instant ease. Tbe statute involved in this action is in words as follows:

“Any corporation may convey lands, and other property which is transferable by deed, by deed sealed with tbe common seal and signed in its name by tbe president, a vice-president, presiding member or trustee, and two other members of tbe corporation, and attested by a witness, or by deed sealed with tbe common seal and signed in its name by tbe president, a vice-president, presiding member or trustee, and attested by tbe secretary or assistant secretary of tbe company.

But any conveyance of its property, whether absolutely or upon condition, executed by a corporation, is void as to torts committed by such corporation prior to tbe execution of said deed, if persons injured, or their representatives, commence proceedings or actions to enforce their claims against said corporation within sixty days after tbe registration of said deed as required by law.”

It is provided by statute in this State that “no conveyance of land, or contract to convey, or lease of land for more than three years, shall be valid to pass any property as against creditors or purchasers for a valuable consideration, from tbe donor, bargainor, or lessor, but from tbe registration thereof within tbe county where tbe land lies.” 0. S., 3309.

There is no statute, however, in this State which requires that a sale and transfer, or conveyance, of personal property by a person or corporation, where such sale and transfer or conveyance is absolute, shall be in writing or shall be registered for any purpose.

It is provided by statute, however, that “no deed of trust, mortgage for real or personal estate shall be valid in law to pass any property as against creditors or purchasers for a valuable consideration, from tbe donor, bargainor or mortgagor, but from tbe registration of such deed of trust or mortgage in the county where the land lies, or in case of personal estate, when the donor, bargainor, or mortgagor resides.” C. S., 3311.

The statute involved in the instant case must be construed in connection with the foregoing statutes, from which it appears that a distinction is made in the law in this State, with respect to requirements for registration, between conveyances of personal property upon condition, as by deeds of trust or mortgages, and conveyances by bills of sale by which the title to such property passes absolutely. In the latter case, not only the title but the possession passes with the bill of sale, while in the former, ordinarily, only the title passes. Possession is usually retained by the grantor or mortgagor.

It is only where personal property is sold and transferred, or conveyed, by a corporation, upon condition, as by deed of trust or mortgage, that the conveyance is void as to torts committed by the corporation prior to such conveyance, where the person or persons injured by such torts commence proceedings or actions to enforce his or their claim against the corporation for damages resulting from such torts, within sixty days after the registration of the deed of trust or mortgage, or other conveyance upon condition, as required by law.

Where, as in the instant case, personal property is sold and transferred, or conveyed by a corporation, absolutely, and accompanied by delivery, the statute is not applicable, and for that reason the conveyance is not void under the provisions of the statute. The vendee or grantee acquires title to the property free from the claim or claims of creditors, whether such claims arise out of torts or out of contracts. The judgment in the instant case must be affirmed.

No error.