Opinion
(February Term, 1895).
Practice — Controversy Without Action — Matter of Public Interest — Hearing on Appeal — Conditional Sales and Mortgages, Validity of — Present Consideration — Preexisting Debts — Construction of Statute.
1. Where, under section 567 of The Code, a controversy is submitted which involves matters of great public concern and which is supported by an affidavit that a real case exists, and that the controversy is submitted in good faith to determine the rights of the parties, this Court will, upon appeal, determine the question of law thus raised, although the statement of facts is not full enough to render a judgment commanding or prohibiting a thing to be done.
2. Under rules 10 and 12, this Court will, by consent of parties, receive printed argument, without regard to the number of the case on the docket or date of docketing the appeal, and in a cause directly involving a matter of great public interest, will assign an earlier place on the calendar or fix a day for its hearing.
3. Chapter 466, Laws 1895, entitled "An act to regulate assignments and other conveyances of like nature in North Carolina," applies only to conveyances made to secure preexisting debts and not to those executed to secure a debt growing out of the transaction itself and for a present consideration.
CONTROVERSY submitted without action, heard before Green, (316) J., at March Term, 1895, of DURHAM, and from the judgment rendered therein the plaintiff appealed.
The appeal was docketed in this Court on the ____ day of _____, 1895, after the cases from the Fifth District had been disposed of, and, by consent, was heard on the ____ day of April, 1895.
The submission to the court below was as follows:
To the Hon. L. L. Green, Judge Presiding at the March Term, 1895, of Durham Superior Court:
G. C. Farthing, Hiram Jones, and W. T. Carrington, being parties to a question in difference which might be the subject of a civil action, present a submission of the same to the court for its decision, as follows:
All said parties are residents of Durham County, North Carolina, except Jones, who lives in Chatham. All parties agree that the case may be tried in Durham County.
On 23 March, 1895, said Hiram Jones, desiring to borrow one hundred dollars, applied to W. T. Carrington, who loaned him said sum, which was attempted to be secured by the execution of a bond and mortgage, the following being a copy of said mortgage:
I, Hiram Jones, of the County of Chatham, of the State of North Carolina, am indebted to W. T. Carrington, of Durham County, in said State, in the sum of one hundred dollars, for which he (317) holds my note, to be due on 1 November, 1895, and to secure the payment of the same I do hereby convey to him these articles of personal property, to wit, one gray mare, name, Mollie, known as the Gaston Foard mare, about 6 years old; one bay horse mule, name John, known as the Dick Atwater mule, about 5 years old; one red no-horned cow, about 6 years; one brindle horned cow, about 5 years old; eight head of hogs, now on my farm where I now live; one 1-horse wagon; all my farming tools and gear; all the crop that I raise on my land or any other land that I tend in the year of 1895, such as wheat, corn, fodder, shucks, cotton, tobacco, etc.; all free from any encumbrance or lien.
But on this special trust, that if I fail to pay said debt and interest on or before 1 November, 1895, then he may sell said property or so much thereof as may be necessary, by public auction, for cash, first giving twenty days' notice at three public places, and apply the proceeds of such sale to the discharge of said debt and interest on the same, and pay any surplus to me, after all cost and attorney, etc.
Given under my hand and seal, this 23 March, 1895. HIRAM (his X mark) JONES. (Seal) Witness: J. J. THAXTON.
$100. DURHAM, N.C. 23 March, 1895.
On or before 1 November, 1895, with interest from date at the rate of 8 per cent per annum, until paid, I promise to pay to the order of W. T.
Carrington the sum of one hundred dollars for value received, (318) and secured by chattel mortgage with even date with this note. HIRAM (his X mark) JONES. (Seal)
Witness: J. J. THAXTON.
That at the time of, and before the execution of said mortgage, said Hiram Jones was indebted by note to G. C. Farthing, above named, in the sum of $100, and said Farthing contends that said mortgage is void, for the reason that at the date of its execution he was a creditor of said Jones, as above stated; whereas said W. T. Carrington and Hiram Jones contend that neither the letter nor the spirit of the new anti-preference law embraces a case of this kind, in which one person, however much indebted at the time, creates a new debt and seeks to secure the same by mortgage, trust deed or other security. And so, desiring to save costs and trouble, they ask the decision of the court upon the state of facts. W. T. CARRINGTON, HIRAM JONES, G. C. FARTHING.
W. T. Carrington and G. C. Farthing, being duly sworn, state that this controversy is real and the proceedings in good faith, to determine the rights of the parties. W. T. CARRINGTON.
Sworn to and subscribed before me, this 1 April, 1895.
Witness my hand and notarial seal. CHAS. K. FAUCETTE, Notary Public.
The following judgment was rendered:
"The court, having carefully read and considered this controversy without action, and after hearing argument of counsel, is of opinion, and so adjudges here and now, that G. C. Farthing is not entitled (319) to have the mortgage set out in the `controversy submitted' declared void, but, on the contrary, that said mortgage is as operative and effectual to pass title as it would have been prior to the passage of the anti-preference law by the recent Legislature."
Boone Boone for plaintiff.
Fuller, Winston Fuller for defendant.
AVERY and CLARK, JJ., dissenting.
This case was submitted to the court below under section 567 of The Code, and is here by appeal. This section of The Code answers a most excellent and useful purpose, in that it enables parties to have their questions in difference settled upon an agreed state of facts, without delay and without the cost of witnesses and a trial below. It disregards forms, as such, and the perplexities of pleadings. It requires only that, by affidavit, it shall be made to appear that a real case exists, and that the controversy is submitted in good faith to determine the rights of the parties. One of the long-standing rules of practice of this Court (No. 10) provides that, "When, by consent of counsel, it is desired to submit a case without oral argument, the Court will receive printed arguments without regard to the number of the case on the docket, or date of docketing the appeal. . . . ." Rule 13, amongst other things, provides that the Court, at the instance of a party to a cause directly involving a matter of great public interest, may assign an earlier place in the calendar, or fix a day for the argument thereof, which shall take precedence of other business. Under these rules, we have felt it to be our duty to give an early hearing to the matters involved in the case before us, because of its public and general interest.
Upon examination of the proceeding before us, we are not satisfied that the facts are stated with sufficient fullness to entirely comply with the statute under which the matter is submitted; but (320) the question of law which is submitted is presented with entire distinctness. And while ordinarily we might dismiss the proceeding because the case is not full enough as to its statement of facts, yet where a matter involves a great public interest, as does this matter, we have concluded to follow a late precedent of this Court — "Treat the case as in the nature of a submission of the controversy without a formal action." The precedent to which we refer will be found in Appendix "A," 114 N.C. This controversy arises upon a state of facts which brings (323) before us the construction of the act of the General Assembly of 13 March, 1895, entitled "An act to regulate assignments and other conveyances of like nature in North Carolina." Section 1 is as follows: "That all conditional sales, assignments, mortgages or deeds in trust which are executed to secure any debt, obligation, note or bond which gives preference to any creditor of the maker shall be absolutely void as to existing creditors." The plaintiff contends that the mortgage in this case is void under the provisions of the act. We are of the opinion that the mortgage is valid and that the act is limited to conditional sales, assignments, mortgages and deeds in trust made to secure preexisting debts and obligations, and that mortgages of the nature of the one before the Court, growing out of the transaction itself and executed for a present consideration, do not come within the operation of the statute referred to, and that it (the statute) evidently refers to preexisting debts, and was not intended to embrace transactions of this kind, where the debt grows out of the transaction itself and is for a present (324) consideration. We are supported in this position by an opinion of this Court at its January Term, 1871, delivered by Chief Justice Pearson, in McKay v. Gilliam, 65 N.C. 130, construing Laws 1861, ch. 4, sec. 12, which act is substantially like the one now under consideration. The same principle of construction is also recognized in Reeves v. Cole, 93 N.C. 90, although that case arose on the construction of the statute concerning agricultural supplies. However, after deciding the point raised in that case, Chief Justice Smith, for the Court, further said: "A similar method of construction was pursued in ascertaining the meaning and giving effect to a section in the act of 11 September, 1861, which declared that `all deeds of trust and mortgages hereafter made and judgments confessed to secure debts shall be void as to creditors,' unless providing for the payment pro rata of all the debts and liabilities of the maker. It was held in McKay v. Gilliam, supra, that, notwithstanding the broad terms of the act, its purpose was `to take from the debtors the right to give preference to some creditors to the exclusion of others,' and its operation was confined to preexisting debts and did not include a loan contracted at the time of the execution of the deed and secured by it." We are, therefore, further of the opinion that the act before us is intended only to prevent a preference in favor of preexisting creditors in the cases specified in the act itself. The appellant will pay the costs of this proceeding.