National Surety Corp. v. Sharpe

62 S.E.2d 501 (1950)

233 N.C. 83

NATIONAL SURETY CORP. v. SHARPE et al.

No. 608.

Supreme Court of North Carolina.

December 13, 1950.

*502 John M. Spratt, York, and Carroll & Steele, Rockingham, for York Mills, Inc., appellant.

Gavin, Jackson & Gavin, Sanford, for National Surety Corporation, appellee.

W. D. Sabiston, Jr., Carthage, for American Woolen Company, respondent.

DEVIN, Justice.

In the opinion written for the Court by Justice Ervin on the former appeal the cause was remanded to the Superior Court for the determination of the validity and priority of the claim of the plaintiff in accordance with the rules regulating the "presentation, proof, and payment of claims in receivership. "It was held that there was no valid basis for the contention of the York Mills, Inc., that its claim is a preferred one.

In the subsequent hearing in the Superior Court of Moore County, it appeared that the successive receivers in charge of the defendants' business reported a substantial loss in the operation from July 1949 to September 1950, and that the present receiver did not have funds sufficient to pay the losses and continue operation. Thereupon it was ordered that the receiver cease further operation, only preserving the property, paying laborers, and collecting accounts; that the clerk give notice to all claimants and creditors to present claims in writing on or before October 23, 1950; that the clerk give notice of meeting of all creditors with receiver November 3, to hear his report and to make recommendation to the resident judge whether operation should be continued or the property sold and the business concluded; that all creditors and claimants be required to assert and litigate their rights in this action and be restrained from independent action thereon, and that the clerk notify all creditors and persons interested in the affairs of defendants to become parties to this action. The movant York Mills, Inc., excepted to this order and appealed.

The receivership in this case was based originally upon the affidavit of the plaintiff in which the facts constituting its cause of action are set out, the insolvency of defendants alleged, and restraining order sought, and also upon the petition of the defendants admitting insolvency and praying that a receiver be appointed to operate the business of the defendants and fulfill the contract set out in plaintiff's affidavit. Thereupon by order of court a receiver was appointed and commanded to take charge of and direct the affairs of the defendants according to the law governing receiverships and according to the further orders of the court.

The order of Judge Sink, entered September 1950, from which the appeal in this case was taken, properly required all *503 creditors and claimants to assert and litigate their rights in this action which was begun by issuance of summons July 1949. The law contemplates the settlement of all claims against the insolvent debtor in the original action in which the receiver is appointed. Hence all persons who have claims against the debtor who desire to participate in the distribution of the estate must present their claims in writing to the receiver. G.S. § 55-152; National Surety Corp. v. Sharpe, 232 N.C. 98(101), 59 S.E.2d 593.

The appellant York Mills, Inc., has appeared in this case and filed its claim with the receiver. Its rights thereon are subject to the determination of the court in this action. Its demurrer ore tenus to the affidavit on which, with defendants' petition, the receivership was ordered, cannot be sustained.

On the appeal of York Mills, Inc., the order of Judge Sink is

Affirmed.