Guardian Trust Deposit Company v. Fisher
Statement by Mr. Justice Brewer:
Section 1255 of the Code of North Carolina of 1883 reads:
'Mortgages of incorporate companies upon their property or earnings, whether in bonds or otherwise, hereafter issued, shall not have power to exempt the property or earning of such incorporations from execution for the satisfaction of any judgment obtained in courts of the state against such incorporation, for labor performed [nor for material furnished such incorporation], nor for torts committed by such incorporation, its agents or employees, whereby any person is killed, or any person or property injured, any clause or clauses in such mortgage to the contrary notwithstanding.'
This was subsequently amended by leaving out the matter inclosed in brackets.
In 1887 a corporation was organized under the laws of North Carolina, which soon after secured the passage of an ordinance by the city of Greensboro, giving to it the exclusive right to the use of the streets, sidewalks, and public grounds for the purpose of constructing, operating, and maintaining a complete system of waterworks, A later ordinance provided that 'said water company shall be responsible for all damage sustained by the city, or any individual or individuals, for any injury sustained from the negligence of the said company, either in the construction or operation of their plant.'
The corporation constructed the waterworks and also executed a mortgage or deed of trust, conveying its entire property and plant to secure the payment of fifty thousand dollars of bonds. A subsequent mortgage or deed of trust was foreclosed and the title to the property passed to a new corporation, subject to the lien of the first mortgage. After its purchase the new corporation executed a further mortgage or deed of trust. Subsequently two fires occurred, destroying property belonging to the respondents. Actions were commenced in the superior court of Guilford county by the owners of the property destroyed against the new corporation, and judgments recovered, the judgment entries each reciting that the recovery was 'for the injury and damage done him by the negligence of the defendant.' 128 N. C. 375, 38 S. E. 912. Proceedings having been commenced in the circuit court of the United States to foreclose the existing mortgages, a decree was entered and a sale made. Thereupon the judgment creditors intervened, insisting that, in the distribution of the proceeds, they were entitled to priority over the mortgage liens by virtue of the statute above referred to. The circuit court decided in their favor. 115 Fed. 184. Its judgment was taken on appeal to the court of appeals, from which court the case was brought here on certiorari.
Messrs. John Peirce Brunts, Archibald H. Taylor, and W. P. Bynum, Jr., for petitioners.
[Argument of Counsel from pages 59-62 intentionally omitted]
Mr. Aubrey L. Brooks for respondents.
[Argument of Counsel from pages 62-64 intentionally omitted]
Mr. Justice Brewer delivered the opinion of the court: