Johnson Cotton Company v. Hobgood

90 S.E.2d 541 (1955) 243 N.C. 227

JOHNSON COTTON COMPANY, Inc.
v.
O. T. HOBGOOD, Levi E. Maddox and C. N. Castleberry, trading as Central Warehouses.

No. 533.

Supreme Court of North Carolina.

December 14, 1955.

I. R. Williams, Dunn, for appellant.

D. B. Teague, Sanford, for appellees.

DENNY, Justice.

This appeal presents for determination whether the indexing and cross-indexing of the chattel mortgage, in the manner set forth above, constituted a sufficient compliance with G.S. § 161-22 to give notice of plaintiff's lien on the tobacco crop in controversy.

It is now established law in this jurisdiction that the proper indexing and cross-indexing of instruments required to be registered is an essential part of their registration. Dorman v. Goodman, 213 N.C. 406, 196 S.E. 352; Story v. Slade, 199 N.C. 596, 155 S.E. 256; Heaton v. Heaton, 196 N.C. 475, 146 S.E. 146; Whitehurst v. Garrett, 196 N.C. 154, 144 S.E. 835; Clement v. Harrison, 193 N.C. 825, 138 S.E. 308; Wilkinson v. Wallace, 192 N.C. 156, 134 S.E. 401; Hooper v. Tallassee Power Co., 180 N.C. 651, 105 S.E. 327; Bryant Manufacturing Co. v. Hester, 177 N.C. 609, 98 S.E. 721; S. W. Fowle & Son v. Ham, 176 N.C. 12, 96 S.E. 639; Ely v. Norman, 175 N.C. 294, 95 S.E. 543. The last cited case overruled Davis v. Whitaker, 114 N.C. 279, 19 S.E. 699, 41 Am.St.Rep. 793, in which it was held that the filing of a deed for registration was in itself constructive notice and that failure to index it did not impair its efficacy.

This Court has held in a number of cases that where the name of one of the grantors in an instrument requiring registration was not listed in the index, the registration was not notice as to the interest of the omitted party. Dorman v. Goodman, supra; Woodley v. Gregory, 205 N.C. 280, 171 S.E. 65; Watkins v. Simonds, 202 N.C. 746, 164 S.E. 363; Heaton v. Heaton, supra; Wilkinson v. Wallace, supra; S. W. Fowle & Son v. Ham, supra.

However, in the case of Tocci v. Nowfall, 220 N.C. 550, 18 S.E.2d 225, a large number of lots were conveyed to a real estate corporation as trustee, to be conveyed by it as trustee to the purchasers of the lots. The corporate trustee conveyed one of the lots in its own name to T. A. Ratcliff and wife without disclosing that it held title thereto as trustee. Later, it conveyed the same lot in its capacity as trustee to Mrs. J. Nowfall. The Court held that the holders of the first deed obtained a good title. Stacy, C. J., dissented and Barnhill and Winborne, JJ., concurred in the dissent.

On the other hand, it has been held that where a man and wife execute a conveyance and the instrument is duly recorded and properly indexed and cross-indexed under the name of the husband, followed by the words "and wife" or "et ux," the registration is good. North Carolina Joint Stock Land Bank v. Cox, 204 N.C. 335, 168 S.E. 213; Prudential Insurance Co. v. Forbes, 203 N.C. 252, 165 S.E. 699; West v. Jackson, 198 N.C. 693, 153 S.E. 257. Cf. Henry v. Sanders, 212 N.C. 239, 193 S.E. 15.

In the present action it is stipulated that the chattel mortgage in controversy was filed for registration on the 23rd day of May, 1952 and, thereafter, on the 29th day of May, 1952, was duly transcribed upon the records in the office of the Register of Deeds of Moore County in Chattel Mortgage Book 115, page 70 thereof, and an erroneous book and page given opposite the name of the grantor in the direct index and opposite the name of the grantee in the cross-index. However, it is also stipulated that in May 1952 the cross-index was corrected. This means that within two days of the time the chattel mortgage was transcribed on the records it was cross-indexed in accordance with the requirements of the statute, G.S. § 161-22.

Brogden, J., speaking for this Court in West v. Jackson, supra, in construing C.S. § 3561, now G.S. § 161-22, said [198 N.C. 693, 153 S.E. 258]: "The construction of this statute produces two divergent theories. Upon one hand, it is asserted that as indexing and cross-indexing is an essential part of registration and essential thereto, and since such indexing is statutory, the statute should be complied with to the exact letter. Upon the other hand, it is insisted that the underlying philosophy of all registration is to give notice, and that hence the ultimate purpose and pervading object of the statute is to produce and supply such notice. Therefore, if the indexing and cross-indexing upon a given state of facts is insufficient to supply the necessary notice, then such indexing ought to fail as against subsequent purchasers or incumbrancers. Nevertheless, it is a universally accepted principle that ``constructive notice from the possession of the means of knowledge, will have that effect (of notice), although the party were actually ignorant * * * merely because he would not investigate. It is well settled that, if anything appears to a party calculated to attract attention or stimulate inquiry, the person is affected with knowledge of all that the inquiry would have disclosed.' Wynn v. Grant, 166 N.C. 39, 81 S.E. 949, 952; Bridgers v. [Farmers Banking &] Trust Co., 198 N.C. 494, 152 S.E. 393. This principle of law received the sanction of this court in Ely v. Norman, 175 N.C. 294, 95 S.E. 543, 545. In that case the court quoted with apparent approval from the Supreme Court of Iowa to the effect ``that an index will hold a subsequent purchaser to notice thereof if enough is disclosed by the index to put a careful or prudent examiner upon inquiry, and if, upon such inquiry, the instrument would have been found.' * * * It must be conceded that the indexing and cross-indexing of the deed of trust in the case at bar is not a strict compliance with the statute, and the registers of deeds through the state should doubtless set out on the index and cross-index the name of the wife. There are perhaps hundreds of deeds of trust in the state indexed and cross-indexed in the same manner employed in the present case, and we are not inclined to strike down these instruments as a matter of law, particularly when there was sufficient information upon the index and cross-index to create the duty of making inquiry." Whitehurst v. Garrett, supra; Prudential Insurance Co. v. Forbes, supra; North Carolina Joint Stock Land Bank v. Cox, supra; Metropolitan Life Insurance Co. v. Dial, 209 N.C. 339, 183 S.E. 609.

In light of our decisions, we hold that the indexing was sufficient to put a careful and prudent examiner upon inquiry. Moreover, from and after the 1st day of June, 1952, the instrument was cross-indexed properly and accurately as required by statute. We cannot conceive of a careful examiner failing to examine the cross-index when he found the instrument was not recorded in the book and on the page referred to in the direct index. Hence, the judgment of the court below is reversed and the cause remanded for further proceedings in accord with this opinion.

Reversed and remanded.

HIGGINS, J., took no part in the consideration or decision of this case.