Francis v. Herren

Smith, J. (after stating the case.) By an act of the General Assembly, passed at the session of 1885, chap. 148, it is provided that “ no conveyance of land nor contract to convey or lease of land for more than three years shall be valid to pass any property, as against creditors or purchasers for a valuable consideration from the donor, bargainor or lessor, but from the registration thereof within the county wherein the land lieth,” with certain qualifications not pertinent to the present case. Two of the judgments held by defendants were docketed before the making of the contract with the plaintiffs, according to the referees’ finding — one in favor of Carhart & Co. for $112.61, and costs, against A. L. Herren and the defendant J. P. Herren, as a stay thereto, and the other in favor of the officers of the Court for $4.98, against the latter alone, for costs incurred by him. . [507] The other numerous judgments reported were docketed after the making the contract, but before the registration of the bond on March 7th, 1888. Under the statute, therefore, all the docketed judgments have a preferable lien to that acquired by the plaintiffs by the registration of their bond. Some criticism was made in the argumentmpon the words of the statute, which its construction, in our opinion, does not warrant, and we must give it an import and scope commensurate with similar language employed in reference to mortgages and deeds in trust — The Code, § 1254 — and to conditional sales of personal property — § 1275. The want of registration does not invalidate the instrument so that creditors, merely as such, may treat it as a nullity in a collateral proceeding; but it is void against proceedings instituted by them and prosecuted to a sale of the property or acquirement of a lien, as against all who derive title thereunder. Boyd v. Turpin, 94 N. C., 137; Brem v. Lockhart, 93 N. C., 191. The present action, which proposes to require that the creditors, having acquired a prior lien opon the land embraced in the contract of sale to the plaintiffs, shall exhaust all the other property of the debtor liable to his creditors before proceeding to sell under the executions in the Sheriff’s hands, is based upon the equitable principle thus enunciated by Bynum, J., in Jackson v. Sloan, 76 N. C., 306: “ It is an analogous principle of-equity that when a debtor, whose lands are encumbered by a judgment lien, sells one portion of it, the creditor who has a lien upon that which is sold and upon that which is unsold, shall be compelled to take his satisfaction out of the undisposed of land, so that thus the creditor and the purchaser both may be saved”— citing several authorities, to which may be added 2 Story Eq. Juris., § 1233 a. [508] But upon this is put the restriction mentioned in the •opinion and following the words quoted : “ But this is never done when it trenches on the right or operates to the prejudice of the party entitled to go upon both funds,” fortified also by-cited cases. Thus far, and no farther, does the doctrine go which puts one fund in front of the other, so that without disturbing priorities levied to secure the application of both to the secured debts. But the creditor may not be delayed or needlessly obstructed in the-adjustment of the equity between the other creditor and himself. Now the present suit, utterly ignoring the limits of the equity, seeks "to suspend ¡he action of the judgment creditors, until all the estate of the debtor J. P. Herren has been ascertained and applied to the preferred creditors, and this is accordingly done by the exercise of the restraining power of the Court, the results of which -will be manifest from the inquiries prosecuted before the referees and their findings shown in their report The controversy is thus made to involve the settlement of the estate of a living party among his judgment creditors, and in which numerous'disputes have arisen as to the validity of the debtor’s title to some of the property claimed by others, and the amount of debts due and owing to him, which may be difficult of adjustment and cause long delay, those having a direct and expeditious remedy under executiqn are to be kept back and not allowed to assert their legal rights. The controversies that have sprung up are mostly among the defendants themselves, and inuring to the plaintiffs’ benefit only as it prevents the immediate sale of the land purchased by them, but whose title is in subordination to the creditors’ judgment liens. The only relief open to the plaintiffs is not in an inter-ruplion of the executions, but in a mandate requiring the sale of such property as the debtor has and is subject to exe [509] cution to be made, before proceeding to the sale of the land sold to the plaintiffs, and this without hindrance in the prompt making of the money due the execution creditors. All the directions in the judgment that go beyond this limit are unauthorized, and must be reversed. There should be no restraint imposed upon any of the defendants, except as they may be applied by the requirement that the Sheriff postpone the sale of the plaintiffs’ land until he has first disposed of .property of the defendants which he may rightfully seize and sell, and which are not under lien to others, and this without a determination of the conflicting claims of the debtor and others to any portion of it. This dispenses with an examination of the various exceptions of different parties, and disposes of the action. The affidavit is insufficient to warrant the issue of the writ of certiorari. The judgment, except in the allowance to the commissioners, must be reversed, and the case proceed in accordance with the law declared in this opinion. Error.