Court Opinion

ID: 6695421
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:48:54.362015+00
Date Added: 2024-06-11T16:01:13.115339
License: Public Domain

BbowN, J., dissenting:
I agree with the Chief Justice that Causey Jarrett, haying proven his claim in bankruptcy, could • not pi’oceed at the same time in the State court, and that the sale under his judgment is a nullity.
To my mind, it is plain that if there was any estate or remnant of title left in the bankrupt corporation which its deed in trust to Lindsay could not pass by reason of our statute (Ke-visal 1905, sec. 1131), that interest passed to the trustee in bankruptcy under section 67f of the bankrupt law, for our statute does not prevent it. I think the decision of the Supreme Court of the United States in Bank v. Staake, 202 IJ. S., 141, is an authoritative adjudication upon the provisions of that section, that all judgments within the four-months period are nullified and annihilated, not only as against the trustee, but as against third parties and all the world as well. The language of Mr. Justice Brown, in delivering the opinion, seems to admit of no other construction. He says: “The argument that section 67f in question here refers only to liens upon property which, if such liens were annulled, would pass to the trustee of the bankrupt, we think is unsound, since that contingency is amply provided for by the prior clause of the section annulling all such liens, and providing that property affected thereby shall pass to the trusted as a part of the estate.”
But to my mind there are other reasons why plaintiff is not entitled to a judgment upon the pleadings.
1. This motion must be treated in the light of "a demurrer to the answer, and therefore as admitting its allegations to be true. The defendants in their answers expressly deny that plaintiff is the owner and entitled to possession, and they deny, in express terms the allegation of unlawful possession, thus raising the general issue as to title. Under these pleadings defendants are entitle®, to prove, if they can, an outstanding legal title' paramount to that of the Trunk and Bag Corporation, and to connect themselves with it. While they admit that the corporation executed the deed in trust to Lindsay, they nowhere admit that the corporation had a valid and indefeasible title to the property. It is true, the answer set up other defenses and facts, but it is settled in this State that a defendant may plead different as well as inconsistent defenses to the same action.
2. There appears to me to be another reason why, taking the facts as set out in the answers to be true, the plaintiff is not *467entitled to recover. Altbongb some of tbe defendants may claim title under tbe deed in trust to Lindsay, tbey all claim title under valid judgments against tbe Trunk and Bag Company wliicb antedated tbe Causey Jarrett judgment. Tbe defendant King, who filed a separate answer, does not claim under tbe deed in trust, but under a judgment likewise antedating tbe Causey Jarrett judgment.
Section 1131, Revisal,' applies only to mortgages and not to judgments. This is expressly recognized in Coal Co. v. Electric Light Co., 118 N. C., 235, where it is said: “It (meaning section 1131 of tbe Revisal) does not seem to provide against prior judgment liens, whether taken upon a prior or subsequent debt. Nor does it provide against an absolutely bona fide sale, but only provides,” etc. Assuming that a sale under tbe deed in trust could not in consequence of tbe statute pass an absolute and indefeasible title as against a judgment founded upon tort (such as tbe Causey Jarrett judgment), there is no such restriction in regard to judgments duly docketed. If after tbe mortgage was executed or foreclosed there was any right, interest or estate left in tbe Trunk and Bag Company that Causey Jarrett could sell and convey under bis judgment and execution, it follows that such interest must have passed out of tbe Bag Company under tbe sale in August, 1907, made under executions upon judgments antedating his. If Jarrett could sell such interest, tbe prior judgment creditors could do tbe same, for their judgments were not affected by tbe statute and were as valid and unrestricted as bis.
If there was no interest left in tbe Bag Company, tbe subject of execution, then plaintiff acquired no title under tbe Causey Jarrett execution.
If there was an interest or estate of any kind left in tbe corporation after tbe execution of tbe mortgage, plaintiff likewise got no title, because it had been sold and passed under prior judgments and executions.
For this reason, tbe cases of R. R. v. Burnett and Williams v. R. R., cited in tbe opinion, have no application. In those cases there were no prior judgments against tbe mortgagor corporation under which tbe property bad been sold and conveyed to purchasers. This is not a contest between Causey Jarrett and tbe purchaser under tbe mortgage, as in tbe Burnett case, but it is a contest between a purchaser under Causey Jarrett’s judgment and a purchaser under prior judgments equally valid and binding on the corporate defendant as Causey Jarrett’s.
If this was an action in which Causey Jarrett was seeking to subject tbe property to tbe payment of bis judgment debt in tbe *468bauds of a purchaser under tbe mortgage, tbe ease would be different. But it is not that. It is an action of ejectment under wbicb plaintiff claims title under an execution sale. It must therefore appear tbat there was some interest left in tbe judgment debtor subject to sale under execution. There must have been something in tbe debtor for tbe execution to operate on.
If there was, then such interest bad been previously sold and conveyed to defendant King under prior judgments, for tbe statute applies only to mortgages and does not restrict or in any way limit tbe lien and operation of a judgment and execu-' tion.
Whatever residuum of estate was left in tbe corporate mortgagor was liable to be sold under any docketed judgment, whether founded on tort or contract, and therefore priority must govern.
Another obstacle, in my opinion, stands in plaintiff’s way. Tbe mortgage to Lindsay, trustee, was executed and recorded before Causey Jarrett was injured or bis action commenced. It seems to me subversive of elementary principles of law to bold tbe trustee and those claiming under him bound by tbe findings in a cause to wbicb neither of them were parties.
It is true, tbe mortgage is voi,d as to a tort, but tbe tort wbicb thus avoids it must be proved in an action to wbicb tbe trustee or bis assigns were parties. They are entitled to “a day in court” when tbe fact wbicb avoids their title is adjudicated; otherwise, an insolvent corporation might submit to judgment upon fictitious torts for tbe purpose of avoiding its mortgage, and those interested in tbe mortgage be without remedy.
To destroy tbe value of tbe existing mortgage by a trial and judgment when tbe mortgagee cannot be beard and of wbicb be may be in entire ignorance, is taking bis property without due process of law.
I think, therefore, tbe plaintiff is required to establish tbe tort again to tbe satisfaction of a jury in this action before be can recover.