Taliaferro v. . Sater , 113 N.C. 76 ( 1893 )

The appellees, who are interpleaders in this action, claim the property in dispute under a mortgage made to them on 16 March, 1890, by the defendant, S. J. Rawls, to secure a debt due from him individually to them. In that mortgage the property assigned is described (77) as "all the lumber owned by said Rawls at his mill now on the land of Mrs. Virginia Grizzard, in Halifax County, N.C. near the town of Halifax, both sawed and unsawed, and also all the lumber owned by him at his siding at the junction of the Wilmington and Weldon and the Scotland Neck Railroads, said siding being on the main line, both sawed and unsawed, and all such lumber as the said Rawls may hereafter purchase and saw at said mill between the date hereof and 1 August, 1891." On 15 April, 1891, defendant Rawls made with one Jackson a contract, by the terms of which Jackson agreed to sell him certain pine timber-trees then standing on designated tracts of land, at the price of seventy-five cents per thousand feet for all trees cut by him, payment to be made "at the expiration of every four weeks while engaged in cutting timber on said premises." And this contract provided that Rawls should execute a bond in the sum of three thousand dollars to secure his faithful performance of its stipulations, and it was further provided that without this bond the contract should be of no effect.

This bond was not made till 20 April, 1891, on which date the defendants, Rawls and Sater, formed the copartnership of W. A. Sater Co., and this firm, being indebted to plaintiffs, executed and delivered the following instrument:

"Whereas, W. A. Sater and S. T. Rawls, partners as W. A. Sater Co., are indebted to H. B. Taliaferro Co. in the sum of $576.85 (less amount of freight not charged on bill of said Taliaferro Co.), and they desire to secure the same:

"Now, therefore, the said W. A. Sater Co. do hereby convey to said H. B. Taliaferro Co. all the lumber now owned by them, either sawed or unsawed, at their mill on the land of Mrs. V. S. Grizzard, or (78) at their railroad siding, and all lumber they now own which is uncut. And the said W. A. Sater Co. hereby do agree and bind themselves to ship to said H. B. Taliaferro Co. all the lumber that they may hereafter saw at their said mill, to be sold by them and applied to the payment of said debt until the same is fully paid off, and until all indebtedness hereafter incurred to said Taliaferro Co. by reason of any advance and supplies they may hereafter furnish said mill are paid in full. And the said W. A. Sater Co. do hereby give to said H. B. Taliaferro Co. a lien on the lumber they may hereafter saw at said mill, to secure them for any advances the said Taliaferro Co. may hereafter make said W. A. Sater Co. for the running of said mill.

"S. T. RAWLS. (Seal.) "W. A. SATER. (Seal.)

"Witness: S. M. GARY.

"This 30 May, 1891."

The following issues were submitted to the jury:

1. Are the plaintiffs the owners and entitled to the possession of the property described in the complaint?

2. Are the defendants, Hale Brothers, the owners and entitled to the possession of said property or any part thereof? And if only a part, what part?

3. What was the value of said property at the time of seizure?

4. What amount is now owing on the mortgage debt from S. T. Rawls to Hale Brothers?

The plaintiffs asked the court to charge the jury:

"That although Rawls may have agreed to buy the lumber in his individual name, if a jury shall believe that it was paid for with partnership funds, it became partnership property if the contract for the purchase was not perfected till after the partnership began."

The court declined to give this instruction as prayed for, and charged the jury in lieu thereof as adverted to in the opinion (79) of Associate Justice Burwell.

The plaintiffs also asked the court to charge the jury:

"That if the jury believe that Hale Brothers took possession of the sawmill and cut the lumber under the contract of Rawls, then they were mortgagees in possession, and any profits they made must be credited on their debt from Rawls."

The court gave this instruction verbatim as requested, but added that if the jury should find from the evidence that the defendants, Hale Brothers, took possession of a part of the Jackson timber which was purchased by S. T. Rawls, or any other timber purchased by him, and made a sufficient profit therefrom to discharge the mortgage debt due them by the said Rawls, then the jury should find whether said defendants took possession thereof as mortgagees or not; that if Hale Brothers took possession under the lease from Jackson to Rawls as mortgagees, or under this bond to Andrew T. Jackson to secure themselves against loss thereon, and realized sufficient profit to pay their mortgage debt, the jury should find the fourth issue "Nothing." But if Hale Brothers did not take possession of said timber under the said lease from Jackson to Rawls as mortgagees, or under their bond to Jackson to secure themselves against loss, but took possession thereof without regard to the mortgage or bond, and under a separate and distinct contract with Jackson, then what they may have made therefrom cannot be applied to the discharge of the mortgage to them from Rawls, and the jury will find what amount is due them from the evidence.

To this charge as given, plaintiffs excepted.

The plaintiffs also asked the court to charge the jury:

"That the Hale Brothers mortgage does not cover the Jackson contract if the same was made after the partnership began, the contract not going into effect until the bond was given."

The court declined to give this instruction as asked, and charged the jury that the mortgage of Hale Brothers does not (80) cover the Jackson contract, 15 April, 1891, if the same was made, before the partnership began, by S. T. Rawls in his own name, for his own benefit, although he may not have executed bond pursuant to said contract until after his copartnership with W. A. Sater, provided he executed said bond on his own responsibility and without making W. A. Sater Co. parties to the same.

To this charge the plaintiffs excepted.

The jury responded to the first issue, "No"; to the second, "Yes, all of it"; to the third, "$500," and to the fourth, "$286.91."

The plaintiffs moved for a new trial. Motion overruled, and plaintiffs excepted, and after judgment for Hale Brothers the plaintiffs appealed. In the argument before us, no question was made as to the validity of the mortgages described in the pleadings, nor is it necessary for us to pass upon them, as the case is now presented to us.

The mill spoken of in this latter instrument was the mill of Rawls mentioned in his mortgage to the interpleaders heretofore set out, and it was operated by the firm of Sater Co. during the existence of the copartnership.

The mortgage made by Rawls to Hale Brothers did not at all affect the right that he acquired by his contract with Jackson to cut timber on the latter's land. It put no lien on that timber or on his right to cut it. If he had himself caused any of that timber to be cut, and had himself caused the logs to be carried to the mill and to be sawed into lumber, that lumber and any unsawed logs, being his individual property and answering to the description contained in the mortgage, (81) would be liable for his individual debt to the interpleaders, Hale Brothers. But the evidence on the trial tended to show that what timber was cut on the Jackson land was cut not by Rawls, but the firm who paid Jackson for the trees, hauled them to the mill which the firm, not Rawls, was operating, and there the logs were sawed into lumber, not by Rawls, but by the firm who paid all the expenses of converting the standing timber, upon which the interpleaders, as we have said, had no lien, into lumber at the mill.

If these facts are true, it seems that the property in dispute — the lumber at this mill — was never subject to the mortgage given by Rawls to the interpleaders, because it was not purchased and sawed by him, and that it is subject to plaintiffs' mortgage because it is both legally and equitably the property of the firm of Sater Co.

We therefore hold that his Honor erred when he charged the jury "that if they found from the evidence that the lumber in controversy was sawed from timber purchased by Rawls in his own name for himself, before the formation of his copartnership with W. A. Sater, and was sawed by the mill owned and operated by said Rawls at the time of the execution of the mortgage by him to Hale Brothers, after the date of said mortgage and before 1 August, 1891, whether the same was sawed by Rawls alone or by him and Sater as partners, the same would be covered by the description of property contained in the mortgage from Rawls to Hale Brothers, and the title passed from him unto Hale Brothers under that clause in their mortgage, conveying all such lumber as said Rawls may hereafter purchase and saw at said mill between the date hereof and 1 August, 1891, and this would be true although the timber from which the lumber was sawed may have been paid for with the copartnership funds of W. A. Sater Co."

If it were true, as the interpleaders seem to insist, that their lien covered the Jackson timber, or rather Rawls's right to take (82) timber from that land, then it would follow, as plaintiffs insist, that whatever clear profit they made out of sawing this timber must be applied on their mortgage debt, for a mortgagee who acquires possession of the mortgaged property must in all cases account for it, and he will not be allowed to say, when called upon to settle, that his possession was not under the mortgage, but will upon the accounting be credited by such sums as he may have properly paid out to perfect his title, to protect his possession or to render the property available for the payment of the mortgage debt. But since we hold that the interpleaders had no mortgage or lien on the Jackson timber, it is of no avail to consider questions concerning the application of profits made by a mortgagee in possession, which are raised by plaintiffs' second exception.

For the error pointed out above there must be a

New trial.

Cited: Furgerson v. Twisdale, 137 N.C. 417.

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