Virginia Trust Co. v. Pharr Estates, Inc.

ConNOb, J. The facts alleged in the complaint and admitted by the demurrers in this action are as follows: On 1 October, 1927, the defendant, Pharr Estates, Incorporated, for value received, executed and delivered seventy-five bonds, each in the sum of $1,000, all bearing interest from date at the rate of six per cent per annum, payable semiannually. These bonds are payable to bearer, and were due on 1 October, 1932. Four of said bonds were paid at maturity; the remaining seventy-one bonds are now held and owned by the plaintiffs other than the Virginia Trust Company, trustee. There is due on each of said bonds the sum of one thousand dollars, with interest from 1 October, 1932. For the purpose of securing the payment of said bonds, when they should become due, the defendant, Pharr Estates, Incorporated, on 1 October, 1927, executed a deed of trust by which it conveyed to the plaintiff, Virginia Trust Company, trustee, certain lots, parcels and tracts of land fully described in said deed of trust, and located in Mecklenburg County, North Carolina. This deed of trust was duly recorded in the office of the register of deeds of Mecklenburg County. The property conveyed by the said deed of trust is not sufficient in value to secure the payment in full of the bonds now held and owned by the plaintiffs, and if and when the same shall be sold under the power of sale contained in the deed of trust, or under a decree of foreclosure, the proceeds of the sale will not be sufficient to pay the said bonds and accrued interest. *896 Contemporaneously witb tbe execution of tbe said bonds, to wit: on 1 October, 1927, and prior to tbeir delivery, W. S. Pbarr, now deceased, and tbe defendants, W. H. Pbarr, Edgar W. Pbarr, and Mary E. Pbarr, jointly and severally, and in writing, guaranteed tbe payment of eacb of said bonds, botb as to principal and interest, as tbe same should become due, and expressly waived demand for payment, protest for nonpayment, or notice of dishonor, agreeing to remain bound under tbeir guarantee, notwithstanding any extension of time for payment, which might be granted by tbe bolder or holders of any of said bonds. ~W. S. Pbarr, one of tbe said guarantors, died on 11 November, 1932, having first made and published bis last will and testament, which has been duly probated and recorded. Tbe defendants, W. II. Pbarr and Edgar W. Pbarr, were duly appointed and have duly qualified as executors of tbe said W. S. Pbarr, deceased. Tbe defendants, Julia Pbarr, bis wife, and W. H. Pbarr, Edgar W. Pbarr, Ernest Springs Pbarr and Mary E. Pbarr, bis children, are tbe devisees and legatees named in tbe last will and testament of W. S. Pbarr. Tbe defendants, R. A. Dunn and Commercial National Bank of Charlotte, N. C., are tbe trustees of Ernest Springs Pbarr. Also, contemporaneously witb tbe execution of said bonds, to wit, on 1 October, 1927, and prior to tbeir delivery, tbe defendant, Independence Trust Company of Charlotte, N. C., for value received, and in writing, guaranteed tbe prompt payment of tbe interest on each of said bonds, as tbe same should become due, and also tbe prompt payment of all taxes levied on tbe property conveyed by tbe said deed of trust, during tbe period from tbe date of said bonds until tbeir maturity. There is now due not only tbe interest on said bonds from 1 October, 1932, but also as taxes levied on said property for tbe year 1932, tbe sum of $642.13. On 1 August, 1931, tbe defendants, W. II. Pbarr and Edgar W. Pbarr, executed and delivered to tbe defendant, W. B. McOlintock, trustee, a deed of trust, by which they, conveyed to tbe said trustee, a certain tract of land fully described in said deed of trust, and located in Mecklenburg County. This deed of trust was duly recorded in tbe office of tbe register of deeds of Mecklenburg County, and purports to secure certain preexisting indebtedness of tbe said W. H. Pbarr and Edgar W. Pbarr to tbe defendant, Charlotte National Bank. Botb W. H. Pbarr and Edgar W. Pbarr were insolvent at tbe date of tbe execution of said deed of trust. Tbe property conveyed by said deed of trust, was practically all tbe property then owned by tbe said W. H. Pbarr and Edgar W. Pbarr. Tbe defendant, W. B. McOlintock, trustee, in said deed of trust, has not complied witb statutory provisions applicable to a trustee in a deed of assignment by a debtor for tbe benefit of creditors. *897 Oh 1 October, 1932, W. S. Pharr, one of the guarantors of the payment of the bonds now held and owned by the plaintiffs, executed and delivered to the defendant, J. M. Trotter, trustee, three deeds of trust, by which he conveyed to the said trustee certain tracts or parcels of land fully described in said deeds of trust and -located in Mecklenburg County. These deeds of trust were duly recorded in the office of the register of deeds of Mecklenburg County, and purported to secure the payment of certain preexisting debts of the said W. S. Pharr, to the defendants, Independence Trast Company of Charlotte, N. C., Commercial National Bank of Charlotte, N. 0., American Trust Company of Charlotte, N. C., and Carmel Credit Union, and also to W. L. Hood, who has since died. The defendant, Zelda A. Ilood, is the executrix of the said V. L. Hood, deceased. At the date of the execution of said deeds of trust, W. S. Pharr was insolvent. The property conveyed by said deeds of trust was practically all the property then owned by the said W. S. Pharr. The defendant, J. M. Trotter, trustee in said deeds of trust, has not complied with statutory provisions applicable to a trustee in a deed of assignment by a debtor for the benefit of his creditors. Since the institution of this action, the Independence Trust Company of Charlotte, has closed its doors and ceased to do business, because of its insolvency. Its assets are now in the possession of the defendant, Gurney P. Hood, Commissioner of Banks, for liquidation as provided by statute. These facts are sufficient to constitute a cause of action, certainly as against the defendant, Pharr Estates, Incorporated, on which the plaintiffs are entitled to the relief demanded in the complaint as against this defendant. They are sufficient also to constitute a cause of action as against the defendants, W. H. Pharr and Edgar W. Pharr, executors of W. S. Pharr, deceased, and as against these defendants, individually, on their guarantee of prompt payment of said bonds, at maturity, both as to principal and interest. They are sufficient also to constitute a cause of action as against the defendant, Independence Trust Company, on its guarantee of prompt payment of interest on said bonds, and of taxes levied on the property conveyed by the deed of trust, by which the said bonds were secured. On these facts the deeds of trust which were executed by the defendants, W. H. Pharr and Edgar "W. Pharr, to the defendant, W. B. McClintock, and by ~W. S. Pharr, to the defendant, J. M. Trotter, are assignments for the benefit of all the creditors of the grantors, and are void, because of the failure of the trustees in said deeds to comply with statutory provisions applicable to such assignments. C. S., 1610. Odom v. Clark, 146 N. C., 644, 60 S. E., 513. The facts alleged in the com *898 plaint and admitted in the demurrers are sufficient to constitute causes of action against the trustees in said deeds of trust, and as against the defendants who are secured by the same. These causes of action are so related to each other that the complaint is not subject to demurrer for improper joinder of either causes of action or parties. The demurrers were properly overruled. The judgments to that effect are Affirmed. Clakkson, J., not sitting. Schekok, J., took no part in the consideration or decision of this case.