Opinion
(Decided 19 April, 1898.)
Creditor's Bill — Appeal — Practice — Exception to Judgment — Lien — Mechanic's Lien — Right of Mechanic to Hold Personalty for Lien — Sale — Receiver.
1. If an inspection of the record proper on appeal discloses error in the judgment below it will not be affirmed, although no exception was entered thereto or particular assignments of error therein were set out by appellant.
2. Under section 1783 of The Code, one who cuts timber and manufactures it into lumber for a corporation before a receiver is appointed therefor, has the right to retain the possession of such lumber until his lien is discharged by payment.
3. Where one, who has the right under section 1783 of The Code to retain possession of and to sell personal property for the purpose of defraying his charges, is made a party to an action in the nature of a creditor's bill against the owner, in which the nature and amount of claimant's debt are in dispute, he will be restrained from making a sale of the property until such contentions are settled.
ACTION in the nature of a creditor's bill against the defendant, an insolvent corporation, heard before Greene, J., at August Term, 1897, of MITCHELL. The facts appear in the opinion. From the judgment rendered C. B. Deming, one of the creditors, appealed.
E. J. Justice for appellant.
S. J. Ervin and W. B. Council for receiver, appellee.
The statement of the case on appeal is a most unsatisfactory one, and we are not aided in the least by a reference to the transcript of the record. The case appears to be one in the nature (584) of a creditor's bill against the defendant company, wherein a receiver was appointed to take charge of the property of the defendant corporation "of whatever nature and kind, and in whosesoever hands and wheresoever located," and to hold the same without prejudice to the rights, priorities, and liens of any of the parties or creditors until further orders of the Superior Court of Mitchell County. It was further ordered that the officers of the company or other persons having the charge or custody of any of the property of the defendant turn the same over to the receiver, and that all further proceedings be stayed till the further order of the court. Afterwards, at the August Term, 1897, of the Superior Court, a certain order in the nature of a judgment was made consolidating all actions then pending in that court against the defendant and requiring the plaintiffs to file their claims and demands in the consolidated action, due regard to be had to the rights and priorities and liens of the creditors. It was further ordered that all creditors of the defendant be notified according to law to come in and make themselves parties to this action and file their claims. The judgment contained a further order as follows:
"And it further appearing that a creditor of the defendant company, one C. B. Deming, claims a lien on the lumber stacked on the land leased by him, to wit, 100 acres of land leased from one D. M. Puett, the said creditor, C. B. Deming, having manufactured said lumber from standing timber, claims a right to hold and retain possession thereof until his alleged debt for manufacturing same is discharged by the company or the right to sell the same under the provision of 1783 of The Code is passed upon, and contends that this Court cannot, without an issue of fact as to C. B. Deming's right to hold possession thereof being submitted to a jury, order the possession surrendered by said (585) Deming.
"And it further appearing that the amount of said indebtedness is in dispute and contested, and the existence of any lien or right in the said Deming being also contested, and the court being of opinion that all of said questions should be settled in this action:
"It is ordered by the court that the possession of said property be surrendered by the said C. B. Deming to the receiver appointed in this cause, and that said receiver take possession of said lumber, and that the right of said C. B. Deming be preserved, and his claim to priority be preserved, and the same shall be passed upon in the further progress of this cause without prejudice to the rights of the said C. B. Deming as they now exist. And it is further ordered that the plaintiffs herein have leave to file an amended complaint."
Just how Deming was made a party to the suit does not appear in the record, but it must have been in consequence of the service of the order on him to deliver the lumber in his possession to the receiver appointed by the court. He appealed from the judgment of the court without a particular assignment of errors in the judgment, and the counsel of the plaintiffs and of the receiver insisted here that the judgment ought to be affirmed because of the failure of Deming to point out particularly the nature of his exceptions to the judgment. The point would be well taken if upon an inspection of the record such judgment ought to be affirmed. The judgment below in its recitals declared that Deming claimed the right to hold and retain possession of the lumber of the defendant under a lien for manufacturing the same, and that the receiver ought not to deprive him of its possession until his lien was discharged by a payment of the amount due to him. The recital (586) in the judgment of the plaintiff's claim is a presumption that the same was set up by a proper pleading, and we are compelled to notice it as a part of the record. In Carter v. Rountree, 109 N.C. 29, the Court said, "It is our duty, however, to look through the record proper and to see whether it warrants the judgment appealed from, although no exceptions appear." And in Thornton v. Brady, 100 N.C. 38, the Court construed the record as referring "only to such constituent matters of the action as must necessarily go upon and constitute the record of it, and which the Court sees and must take notice of, such as the pleadings, the verdict, and the judgment." Upon the inspection of the record, then, we are of the opinion that the judgment, in so far as it orders Deming to surrender the possession of the property to the receiver, ought not to be affirmed. If he has a lien upon the lumber which he cut for the company, he cannot be deprived of the possession of it until his lien is discharged by payment. He has possession of the lumber, and under section 1783 of The Code he has a right to retain possession for the purposes therein set forth. His lien, if he has one, appears to have attached the lumber before the appointment of a receiver, and he has the clear right under section 1783 of The Code to the full amount of any lien he may be entitled to, free from any possible or probable charges which might be fixed upon it, if it went into the hands of a receiver, for costs and expenses of the suit, including the receiver's charges.
The court below will proceed in the usual way to have the indebtedness of the company to Deming, if any indebtedness there be, (587) ascertained, and also the matter of whether he be entitled to a lien on the lumber. Until these matters are passed upon Deming should be ordered to withhold from selling the lumber, or any part of it, until his right have been adjudicated. He will not be allowed, pending the dispute between him and the other creditors as to the amount and nature of his debt, to sacrifice the property by a sale made under section 1783 of The Code. Of course if Deming fails to take proper care of the lumber or should undertake to dispose of it without the order of the court, the receiver will be instructed by a judge of the Superior Court, upon application to him, to take possession of the property for safe keeping, pending the determination of Deming's rights in the action. The judgment is affirmed and modified as we have pointed out.
Modified and affirmed.
Cited: Griffith v. Richmond, 126 N.C. 380; Thomas v. Merrill, 169 N.C. 627.