Commissioner of Banks Ex Rel. Citizens Bank of Farmvillee v. Turnage

CoNNOR, J. It appears from the recitals in the deed of trust referred to in the complaint, a copy of which is attached thereto, marked Exhibit “A,” that said deed is not a voluntary deed of assignment for the benefit of creditors, within the meaning of C. S., 1609. The purpose of the deed as appears upon its face, is to secure the payment not only of preexisting debts, but also of debts to be contracted for advancements to' enable the grantors to carry on their business as merchants and farmers during the year 1931. It 'is expressly recited in the deed that the grantors are not insolvent, but have property, both real and personal, more than sufficient in value under normal financial conditions for the payment of all their debts. Owing, however, to the economic and financial conditions prevailing in Pitt County and elsewhere at the date of the deed, it was deémed to the best interest of both the grantors and of their creditors, that the payment of all existing debts should be extended to 1 January, 1932, and that grantors should procure advancements in money and supplies to enable them to carry on their business during the year 1931. These advancements are secured by the deed. Upon default in the payment of the debts contracted for advancements, or upon default in the payment of the debts existing at the date of the deed, on or before 1 January, 1932, the trustees are empowered to sell the property, real and personal, conveyed by the deed, and out of the proceeds of said sale to pay, first, the debts contracted for advancements, and second, the debts existing at the date of the deed. In the meantime, the grantors remained in possession and control of all their property subject to the supervision of the creditors’ committee, provided-for in the creditors’ agreement which appears in the record. Creditors whose claims amounted to more than 75 per cent of the total indebtedness of the grantors were parties to this agreement. The plaintiffs who are and were at the date of the deed creditors of the grantors are expressly secured by the deed of trust. In Cowan v. Dale, 189 N. C., 684, 128 S. E., 155, 'it is said: “It has been held that where one who is insolvent makes a mortgage of practi *487 cally all bis property, to secure one or more preexisting debts, tbe instrument will be considered an assignment, and tbe result will not be changed by tbe omission of a small part of bis property, but to apply tbis doctrine, it is necessary to sbow tbat tbe grantor was insolvent, tbat tbe secured debts were preexistent, and tbat there were other creditors.” Tbe opinion of tbe trial court tbat tbe deed of trust in tbe instant case is not a deed of assignment- for tbe benefit of creditors, is supported by tbe principle stated in tbe opinion of Adams, J., in tbe above cited case. For tbis reason tbe failure of tbe trustees to file an inventory of tbe property which came into their bands under tbe deed, as required by C. S., 1610, did not render the deed void. Tbe judgment dissolving tbe temporary restraining order is .Affirmed.