Biggs v. . Lassiter

ClabKSON, J. In the present case we think the referee found the facts on the competent evidence and made his conclusions of law based on the facts found. The court below held “That said exceptions be, and the same are hereby overruled, and that the Report of the Referee be, and the same is hereby in all respects confirmed, approved and adopted by the Court as the findings of fact and conclusions of law in this Court.” In Kenney v. Hotel Co., 194 N. C., 44 (45-6), it is written: “It is settled by all the decisions on the subject, with none to the contrary, that the findings of fact, made by a referee and approved by the trial judge, are not subject to review on appeal, if they are supported by any competent evidence. Dorsey v. Mining Co., 177 N. C., 60. Likewise, where *770 the judge, upon bearing and considering exceptions to a referee’s report, makes different or additional findings of fact, they afford no ground for exception on appeal, unless there is no sufficient evidence to support them, or error has been committed in receiving or rejecting testimony upon which they are based, or some other question of law is raised with respect to said findings. S. v. Jackson, 183 N. C., 695, and cases there cited.” Usry v. Suit, 91 N. C., 406; Wilkinson v. Coppersmith, 218 N. C., 173. On the record, as set forth below, defendant’s contentions cannot be sustained. (1) “Defendant’s contention is that the distribution of 1,193 shares of the stock of Guilford Construction Company to the Receiver of Commercial National Bank of High Point, North Carolina, was in full payment of the indebtedness of Robert G. Lassiter & Company, and its surety, the appellee herein.” This contention is based on the testimony of George R. Poole, an auditor, who was employed by the Receiver of Robert G. Lassiter & Co., in connection with the plan whereby the stock of the Guilford Construction Company was issued to the various creditors. Also on the testimony of Herman Wolff, who was employed by the Receivers of Robt. G. Lassiter & Company and as assistant secretary and treasurer of that company. He summarized as to the distribution of the stock, as follows: “I would say the creditors were to take the stock in full settlement of their claims, and let the Guilford Construction Company operate as a going concern, and then they would participate in any profits or any money made by the Guilford Construction Company through its operation.” This was practically the testimony of George R. Poole. This testimony was duly objected to when offered. If competent, its credibility and weight was for the Referee to determine. It was more of a conclusion, based on generalities. The report of the Receivers for Robert G. Lassiter & Company to Judge Johnson J. Hayes, Judge of the District Court of the U. S., for the Middle District of North Carolina, is to the effect that they advised the Court “That if the Company is liquidated at the present time that there would be very little, if anything, left for creditors.” This report, the offer of the Guilford Construction Company to purchase the assets of Robert G. Lassiter & Company, and the orders mf the Court, directing the sale, all provided for the sale of the assets of Robert G. Lassiter & Company to the Guilford Construction Company subject to such mortgages and other liens as might be against the same. The exact language: “It is further Considered, Ordered and Decreed that the assets so conveyed to Guilford Construction Company shall be conveyed subject to such mortgages and other liens as may be against the same, Guilford Construction Company not, however, to assume any of such mortgages or liens, or any other indebtedness or obligations of Robert G. Lassiter & Company.” *771 This very matter has been heretofore adjudicated in the case of Guilford Construction Company, et al., v. Biggs, Receiver, 102 Federal Be-porter (2nd), 46 (47). The decision is by Parker, Circuit Judge, and is so well stated that we quote, as follows: “The principal contention of appellants is that the receipt of the stock in the Guilford Construction Company by the receiver of the bank extinguished his claim, and that thereupon the judgment which had been assigned as collateral security thereto was freed of the lien of the assignment. We see no basis, however, for this contention. There was no reorganization of Lassiter & Company but merely a transfer of its assets of stock, made in the thought that the creditors would receive more through ownership thereof than through a liquidation of the assets in the receivership. As this was an equity and not a bankruptcy receivership, secured creditors were entitled to participate in dividends derived from the free assets on the basis of the face amount of their claims, and not on the basis of the amount thereof reduced by the value of their securities, subject only to the limitation that they should not collect from all sources more than the amount of their claims. Rierson v. Hanson, 211 N. C., 203, 189 S. E., 502; Merchants Nat. Bank v. Flippin, 158 N. C., 334, 74 S. E., 100; Merrill v. National Bank, 173 U. S., 131, 19 S. Ct., 360, 43 L. Ed., 640. No surrender of securities can be inferred, therefore, from the acceptance of the stock dividend on the basis of the face of the claim. There is no presumption that the stock dividend was accepted in extinguishment of the debt, but the presumption is to the contrary (Cf. Jefferson Standard Life Ins. Co. v. Lightsey, 4 Cir. 49 F. 2d 586; 1 Am. Jur., 223, 224), and no evidence whatever that anyone intended that it should be so accepted. On the contrary, there is evidence that the judgment which the receiver of the bank held by assignment as collateral security was supposed to be worth at the time around $25,000; and it is unreasonable that he would have surrendered this security in order to receive stock worth about one-tenth that amount, or that anyone would have suggested that he do so. The assets, as has been noted, were transferred subject to existing liens and mortgages; and there is nothing to indicate an intention that these were to be extinguished upon the contemplated distribution of stock to which their holders would become entitled or that the holders were to be accorded their rights under the distribution only upon surrender of these securities. As to the value of the stock distributed to the receiver and credited upon the claim of the bank, there is nothing in the record which would justify our disturbing the finding of the District Judge with regard thereto.” From the record it appears that the United States District Judge, for the Middle District of North Carolina, the United States Circuit Court of Appeals for the Fourth Circuit, the Beferee in the instant case, and *772 the trial judge in the instant ease have all held upon competent evidence tbat receipt of the stock did not discharge or extinguish the notes herein sued on. (2) The defendant contends: “That the purchase by the Receiver of Commercial National Bank of High Point, North Carolina, of the collateral of Robt. Gr. Lassiter & Company held by him amounted to the payment and discharge of the primary obligations for which said collateral was held as security.” From the evidence, we cannot so hold. The defendant, to sustain his contention, cites N. C. Code, 1939 (Michie), section 2593 (d) : “Right of mortgagee to prove in deficiency suits reasonable value of property by way of defense,” etc., Also Va. Trust Co. v. Dunlop, 214 N. C., 196, and other cases, but they are distinguishable from the case at bar. In the present action the judgment was sold under an order of court for the sum of $75,000, the court below, we think, properly held that this was the amount that should be credited on the indebtedness herein sued on as respects said collateral. At the time the judgment was sold at public auction, under order of court, the city of Lake Worth, Florida, the judgment debtor, was in bankruptcy in the District Court of the United States for the Southern District of Florida. After the purchase of said judgment the plaintiff filed in said bankruptcy proceeding a claim for the balance due thereon in the sum of $195,876.34 and thereafter bonds were issued to him in payment of said claim. Over objection of plaintiff the defendant proved by the plaintiff that he sold these bonds at different times from May 1, 1940, to July 9, 1940, about a year after his purchase of said judgment, for the sum of $108,450.59, and the defendant contends that he is entitled to credit on the note? in that amount rather than in the sum of $75,000 allowed as a credit by the court. We cannot so hold. Plaintiff later was able to realize more on the purchase, but the bidding was open to all and plaintiff purchased for $75,000.00, under an Order of Court. We cannot deal with the moral aspect, if any, but can consider only the legal rights. The proviso to section 2593 (d), supra, is as follows: “Provided, further, this section shall not apply to foreclosure sales made pursuant to an order or decree of court nor to any judgment sought or rendered in any foreclosure suit nor to any sale heretofore made and confirmed.” In Loan Corp. v. Trust Co., 210 N. C., 29 (32), affirmed by the Supreme Court of the United States, 300 U. S., 124, this Court said: “It does not apply to a sale made under an order, judgment or decree in an action to foreclose a mortgage or deed of trust, or similar instrument.” The Act applies when the land is sold under power of sale, and this provision was held constitutional in the above cited case. The .court *773 below refused to recommit and approved and adopted tbe findings of fact and conclusions of law of tbe Eeferee as tbe findings of fact and conclusions of law of tbe court below. In tbis we can see no error. For tbe reasons given, tbe judgment of tbe court below is Affirmed. Devin, J., took no part in tbe consideration or decision of tbis case.