Asheville Safe Deposit Co. v. Hood, 204 N.C. 346 (1933)

March 15, 1933 · Supreme Court of North Carolina

204 N.C. 346

ASHEVILLE SAFE DEPOSIT COMPANY, Trusteé, v. GURNEY P. HOOD, Commissioner of Banks of the STATE OF NORTH CAROLINA, and G. N. HENSON, Liquidating Agent for the CENTRAL BANK AND TRUST COMPANY.

(Filed 15 March, 1933.)

Appeal and Error F a — Defendant held not entitled to raise question of plaintiff's right to sue, no objection having been made in court below.

Where an action is instituted by a corxioration on the theory that it was a duly substituted trustee of an active trust, C. S., 446, 449, and the plaintiff’s right to sue is not raised in the lower court, and the lower court finds as a fact under agreement of the parties that iilaintiff was duly substituted as trustee, the question of whether the plaintiff is the real party in interest may not be raised by the defendant for the first time in the Supreme Court.

(For digest on the question of preference in the distribution of an insolvent bank’s assets see Flacfo v. Hood, Oomr., ante, 337.)

Appeal by defendants from Sink, J., at June Civil Term, 1932, of BuNCOmbe.

Affirmed.

Tbe parties to this controversy, in tbe court below, agreed to waive a jury trial and tbat tbe court should find tbe facts and render judgment tliereon. Tbe findings of fact, in part, are as follows:

“Tbe Continental Mortgage Company is a corporation duly created and existing, and was formerly engaged in business in tbe city of Ashe-ville, North Carolina, and formerly engaged in tbe business of making-loans secured by deeds of trust constituting liens on real estate in tbe county of Buncombe and other counties in tbe State of North Carolina.

Tbat in all tbe loans so made by said Continental Mortgage Company, the Central Bank and Trust Company was designated as trustee in the several deeds of trust securing said loans — tbat is to say, loans were made to individuals by tbe Continental Mortgage Company and notes were executed evidencing said loans, usually payable monthly, secured by deeds of trust in which tbe said Central Bank and Trust Company was named as trustee.

Tbat tbe Continental Mortgage Company issued several series of bonds, payable to bearer, and sold tbe same to tbe public, and pledged, among other things, as collateral security to said bonds, tbe notes and mortgages referred to in tbe preceding paragraph, and said notes and mortgages were held in tbe trust department of tbe Central Bank and Trust Company.

Tbat, as set forth above, tbe notes and mortgages referred to contained a provision for monthly payments by tbe borrowers, and also contained a provision authorizing tbe trustee to bold these monthly payments until a semiannual interest installment matured under the terms of said deed of trust, and pursuant to some arrangement between the said bank and Continental Mortgage Company, the makers of said notes made monthly payments direct to the Continental Mortgage Company, which company received said payments from time to time and deposited same to its own credit in the Central Bank and Trust Company, and then made monthly remittances to the trust department of the said Central Bank and Trust Company, giving one check to said bank for the aggregate amount of all collections made from the numerous individuals who had made payment during the preceding month, the said check being accepted by the trust department of the said Central Bank and Trust Company and deposited to the credit of Trust department’ ; that with each monthly remittance thus made by the Continental Mortgage Company, an accompanying statement was furnished to the bank, showing the several individuals who had made payments, and the amount of such payments, which record and statement was filed with the trust department of the Central Bank and Trust Company, to the end that a proper record might be made of the collections so made by the Continental Mortgage Company and so remitted to said Central Bank and Trust Company, as trustee.

That upon receipt of payments from the Continental Mortgage Company in the manner set forth in the preceding paragraph, the Central Bank and Trust Company opened an individual account with each mortgagor who had thus made payments on his mortgage through the said Continental Mortgage Company, said payments being shown as a deposit on an individual ledger account under the name of the individual so making the payments, and that it was the practice of the bank, upon the maturity of the semiannual payments due by said mortgagor, to debit his account on the individual ledger and credit his individual note to the amount of the payments thus previously made.

That at the time of the failure of the Central Bank and Trust Company the aggregate amount to the credit on the individual ledger account of the several individuals who had made payments on their mortgages to the Continental Mortgage Company, and which company had in turn remitted to the bank, as hereinbefore set out, was ninety-eight thousand, nine hundred and nineteen dollars and ninety cents ($98,919.90) ; and that according to the books of said bank the said entire amount remained to the credit of the several individuals and had not been credited upon their notes and mortgages. . . .

Upon the foregoing findings of fact the court is of the opinion and so adjudges that the plaintiff is entitled to recover the sum of $98,919.90, with interest thereon from 19 November, 1930, and that the same is entitled to be adjudged as a preferred claim against the assets of the Central Bank and Trust Company, in tbe bands of tbe defendants, and to be paid only in tbe event there is sufficient amount to pay all preferred claims, and, if there is not a sufficient amount, that then said claims shall pro rate equally with other preferred claims allowed by tbe court.”

From tbe judgment rendered by tbe court below, defendants excepted, assigned error and appealed to tbe Supreme Court.

Alfred 8. Barnard for plaintiff.

J ohnson, Smothers & Rollins for defendants.

Clarkson, J.

Defendants contend that it is doubtful if tbe plaintiff in this cause is tbe real party in interest. C. S., 446, 449. Sheppard v. Jackson, 198 N. C., 627. Under C. S., 449, supra, “A trustee of an express trust” — “may sue without joining with him tbe person for whose benefit tbe action is prosecuted.” Tbe record discloses that “Tbe plaintiffs and defendants having in open court waived a jury trial and agreed that tbe judge might bear tbe evidence, find tbe facts and render judgment thereon.” Tbe court below found: “That tbe said Central Bank and Trust Company having become, by reason of its insolvency, disqualified to act as trustee in tbe several deeds of trust executed to it for tbe benefit of tbe said Continental Mortgage Company and said Federal Mortgage Company, tbe plaintiff was in accordance with tbe terms and provisions of said deeds of trust duly substituted as trustee in all of said deeds of trust, and all of tbe amounts so collected by tbe Central Bank and Trust Company, as trustee under said deeds of trust on tbe notes and mortgages so delivered to it for collection, as aforesaid, should be paid to tbe plaintiff as such substituted trustee, to be applied by it in accordance with tbe terms and provisions of tbe agreement under which tbe said Central Bank and Trust Company collected tbe same.”

This question as to plaintiff’s right to sue was not raised in tbe court below. Conceding, but not deciding that tbe plaintiff was not tbe real party in interest or “a trustee of an express trust,” we think that it is too late now to make this contention. Tbe theory on which tbe case was tried was to tbe effect that plaintiff was tbe real party in interest and authorized to receive any recovery in this action and make proper application of tbe fund. If tbe question bad been raised in tbe court below an amendment could have been allowed. This Court can allow an amendment as to parties. C. S., 1414. Kent v. Bottoms, 56 N. C., 69; Hodge v. R. R., 108 N. C., 24.

From tbe facts found by tbe court below and tbe judgment thereon, tbe plaintiff, on behalf of tbe Continental Mortgage Company, is entitled to recover of defendants $98,919.90.

Tbe case is governed by Parker v. Trust Co., 202 N. C., 230, and Flack v. Hood, Comr., ante, 337.

Tbe claims filed by plaintiff were on bebalf of tbe Continental Mortgage Company, and tbe Federal Mortgage Company. Tbe Federal Mortgage Company’s claim of $188,428.10 was denied by tbe court below, as a preference and in tbis we see no error. Tbe judgment of tbe court below is

Affirmed.