Chemical Co. v. . Johnson , 98 N.C. 123 ( 1887 )

SMITH, C. J.,

(after stating the case as above). The only question before us is as to the character and construction of the agreement, and whether it is an instrument required to be registered, and inoperative and void unless and until so registered, against creditors and purchasers. The Code, §1254.

We are unable to concur in the opinion of the Court that the contract is within the purview of the enactment cited,, or of the mischiefs which were remedied by it, and the amendatory act which extends it to conditional sales of personal property. The Code, §1275.

In form it is largely executory in its provisions, requiring the vendor to take and hold all securities received upon sales of the guano for payment of the original purchase-money. This .trust, at least as between the parties, attach es-to this substituted fund, and it can only be conveyed (except in certain cases) in the same plight to another.

There are present none of the features and essential elements of “ a deed of trust or mortgage,” as there were none-before the new statute in conditional sales of personal property. The statute was intended to meet this latter class of cases, because they were in legal effect of the nature of mortgages, the legal title being retained to secure payment of the-price for which the property was sold.

Again, if it were otherwise, the want of registration (for the contract would be valid as between the parties without registration) would apply to the articles sold, and as this has all been disposed of, would not reach the dioses in action-taken in exchange. Can it be supposed that as soon as a sale is made, it must be put in writing, and so toties quoties, so that upon inspection of the registry the attaching trust to the fund substituted would appear?

In form and fact the property passes from the plaintiff to the defendant Johnson, and if the expression “all of the above mentioned goods, as well as the proceeds therefrom, are to be held in trust by him for the payment of his notes to us,” creates a trust in the sense of the statute, it accompanies and attaches to the property conveyed, and hence the plaintiff would become mortgagor and Johnson mortgagee-in their relations to each, and in such case the want of registration avoids the operation of the instrument “ as against. creditors or purchasers for a valuable consideration from the' donor, bargainor or mortgagor,” but from the registration, &c., §1254, but not creditors or purchasers of the mortgagee ; in other words, for such creditors and purchasers as the statute refers to. The title does not pass but remains in the mortgagor as if no such conveyance had been made. The effect then would be, to leave the property in the mortgagor for the benefit of his creditors or vendees for value,, and none claiming under the Chemical Company are assailing the transfer as obstructing the enforcement of demands against it, and none others can, for the alleged defect. As then, the defendant, Johnson, transferred these claims clothed with the trust he had assumed, and which is valid and effectual as against him, they pass into the hands of his assignee in the same plight and condition, and must be accounted for in like manner by the latter.

It is suggested that the contract may admit of a construction reversing the relations of the parties, and giving the character of mortgagor to Johnson, by virtue of his stipulations as to the holding and disposition to bo made of the property. But in our opinion it will not bear this interpretation. There is but' one transfer of property, and the trust declared and assumed is an incident to the conveyance. In most deeds of trust such is the case. The trust is declared by the bargainor, the estate accepted subordinate thereto, and the trusts are equally obligatory on the mortgagee, whether he in terms agrees to carry the trust into effect or not. ITis acceptance of the estatp fixes upon him this duty. The stipulations therefore of Johnson do not alter the nature of the transaction, but it remains a transfer with the restrictions imposed by the company that made it, and they are not removed by his general assignment for the benefit of his creditors.

There is error and must be a new trial, to which end this, will be certified to the Superior Court.