Joyner v. . Reflector Co.

AxleN, J. This appeal is premature and must be dismissed, because the order appealed from disposes of only one question of many arising upon the record (Hinton v. Ins. Co., 116 N. C., 222; Richardson v. Express Co., 151 N. C., 61); but upon dismissal, the exceptions, duly taken, are preserved to be passed on upon appeal from the final judgment. Gray v. James, 147 N. C., 141. We have, however, examined the record at the request of both parties, and as another appeal may be avoided by expressing an opinion on the principal questions in controversy, have concluded to do so. (1) We agree with his Honor in the conclusion that Hux has no preference. He cannot claim a preference under section 1130 of the Revisal because he did not commence an action to enforce his claim within sixty days after the registration of the deed of trust, and section 1131 confers no lien or priority. It simply wipes out the mortgage as against a judgment for tort, so that the judgment creditor may proceed to collect his judgment as if there was no mortgage, by execution if the property is not in the hands of a receiver, or by pro rating with the mortgage creditors if a receiver has taken charge. Clement v. King, 152 N. C., 460, and cases cited. (2) We are of opinion his Honor was in error in directing a verdict on the third, fourth, and fifth issues, as there is evidence that the Mer-genthaler and Miehle notes and mortgages were paid by the Reflector Company, the debtor; and if this should be found to be true, there would be no ground for subrogation, legal or conventional, and the distribution of the funds in the hands of the receiver would have to be made without reference to these mortgages. See Pub. Co. v. Barber, 165 N. C., 488, for a discussion of the difference between legal and conventional subrogation and the effect of payment by a volunteer. If these notes and mortgages were not paid by the Reflector Company *278 there should be specific answers to the following questions as to the Mergenthaler notes and mortgages, and the same as to the Miehle notes and mortgages: 1. Were the Mergenthaler notes and' mortgage executed before or after the incorporation of the Reflector Company? It would seem that they were executed before, but it is stated in the record as an agreed fact that the company was incorporated 28 May, 1910, and that the Mergenthaler machine was bought 7 June, 1910. 2. If executed before, did the corporation assume the payment of the debt, and was any other paper executed therefor, and if so, what paper ? 3. Were these notes and mortgage executed for the purchase money of the linotype machine sold by the receiver? 4. Was it the understanding and agreement when these notes and mortgages were paid in bank they should be kept alive and held by Everett, trustee, for the benefit of the creditors in the deed in trust? 5. If not, were these notes and mortgage paid by the creditors secured in the deed in trust for the purpose of relieving the property in the deed in trust of the lien of the mortgage ? If the fourth question should be answered “Tes,” the creditors in the deed of trust would be entitled to the benefit of legal subrogation; and if the fifth “Yes,” to conventional subrogation to the extent of the value of the property conveyed at the time of the sale by the receiver; and if the mortgage was executed before the Reflector Company was incorporated, it would have priority over the judgment in favor of Hux, because section 1131 only applies to mortgages executed by corporations, and the same result would follow if the mortgage was executed by the corporation to secure the purchase money under the authority of Walker v. L. Co., 170 N. C., 460. On the other hand, if the debt secured by the mortgage was paid by the Reflector Company, or if the third and fourth questions should be answered “No,” there would be no subrogation, or if the facts are such as to entitle the creditors to subrogation, there would be no preference or priority in their favor if the mortgage was executed by the corporation and not to secure the purchase money. Legal subrogation is based upon payment and exists where one who has an interest to protect or is secondarily liable makes payment, while conventional subrogation, so named from' the convention or agreement of the civil law, is founded upon the agreement of the parties, which really amounts to an'equitable assignment. Liles v. Rogers, 113 N. C., 197; Bank v. Bank, 158 N. C., 250; Pub. Co. v. Barber, 165 N. C., 488. We have expressed an opinion on the questions discussed in the briefs because the fund in the hands of the receiver, not sufficient to pay the creditors, is in danger of being exhausted in litigation, and it seemed *279 we might enable the parties to settle their controversy without further appeal; but fragmentary appeals must not be encouraged, as they tend to prolong litigation and to increase cost and expense, and those who resort to them must understand that they need not expect anything except a dismissal with costs. We suggest that the findings of the jury on the third, fourth, and fifth issues be set aside by consent and the questions involved be tried again on account of the erroneous instruction heretofore referred 8to, which enters into the findings, and would avail the parties on an appeal from the final judgment. Appeal dismissed.