{ "id": 11869853, "name": "GEORGE S. CROCKER, Plaintiff v. THE DELTA GROUP, INC., THOMAS N. ANDERSON, JR., and wife, JOAN ANDERSON, Defendants", "name_abbreviation": "Crocker v. Delta Group, Inc.", "decision_date": "1997-03-04", "docket_number": "No. COA96-3", "first_page": "583", "last_page": "588", "citations": [ { "type": "official", "cite": "125 N.C. App. 583" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "N.C. Gen. Stat. \u00a7 45-21.38", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": -1 }, { "cite": "49 ALR 3d 554", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "opinion_index": -1 }, { "cite": "100 ALR3d 940", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "opinion_index": -1 }, { "cite": "100 ALR3d 10", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "opinion_index": -1 }, { "cite": "460 S.E.2d 120", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1995, "pin_cites": [ { "parenthetical": "anti-deficiency statute bars action against guarantors of purchase money note for balance of purchase price represented by the note." } ], "opinion_index": 0 }, { "cite": "340 N.C. 242", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 790254 ], "year": 1995, "pin_cites": [ { "parenthetical": "anti-deficiency statute bars action against guarantors of purchase money note for balance of purchase price represented by the note." } ], "opinion_index": 0, "case_paths": [ "/nc/340/0242-01" ] }, { "cite": "333 S.E.2d 520", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "76 N.C. App. 526", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527606 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/nc-app/76/0526-01" ] }, { "cite": "372 S.E.2d 559", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "pin_cites": [ { "page": "563" } ], "opinion_index": 0 }, { "cite": "323 N.C. 330", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2564955 ], "year": 1988, "pin_cites": [ { "page": "336" } ], "opinion_index": 0, "case_paths": [ "/nc/323/0330-01" ] }, { "cite": "315 S.E.2d 537", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "pin_cites": [ { "page": "538" } ], "opinion_index": 0 }, { "cite": "68 N.C. App. 752", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527943 ], "year": 1984, "pin_cites": [ { "page": "753-54" } ], "opinion_index": 0, "case_paths": [ "/nc-app/68/0752-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 25-9-402", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "183 S.E.2d 109", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1971, "pin_cites": [ { "page": "114" }, { "page": "113" } ], "opinion_index": 0 }, { "cite": "279 N.C. 352", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567797 ], "weight": 2, "year": 1971, "pin_cites": [ { "page": "358" } ], "opinion_index": 0, "case_paths": [ "/nc/279/0352-01" ] }, { "cite": "229 S.E.2d 823", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1976, "pin_cites": [ { "page": "825" } ], "opinion_index": 0 }, { "cite": "31 N.C. App. 495", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8550338 ], "year": 1976, "pin_cites": [ { "page": "497" } ], "opinion_index": 0, "case_paths": [ "/nc-app/31/0495-01" ] }, { "cite": "53 B.R. 281", "category": "reporters:specialty", "reporter": "B.R.", "case_ids": [ 6106101 ], "weight": 2, "year": 1985, "pin_cites": [ { "page": "285" }, { "page": "284-85", "parenthetical": "\"Since a financing statement may be filed for reasons other than the perfection of an existing security interest, the filing of a financing statement alone is not enough to create a security interest.\"" } ], "opinion_index": 0, "case_paths": [ "/br/53/0281-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 25-9-203", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 45-21.38", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "opinion_index": 0 } ], "analysis": { "cardinality": 554, "char_count": 12504, "ocr_confidence": 0.76, "pagerank": { "raw": 5.101247934140471e-08, "percentile": 0.3206364540944279 }, "sha256": "bdc8b8a6818245ae62cf93bf295205b9127f3832defa2b298efd2696fe5d5467", "simhash": "1:4e295cfa416ebcd2", "word_count": 2020 }, "last_updated": "2023-07-14T22:18:02.941264+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges WYNN and JOHN concur." ], "parties": [ "GEORGE S. CROCKER, Plaintiff v. THE DELTA GROUP, INC., THOMAS N. ANDERSON, JR., and wife, JOAN ANDERSON, Defendants" ], "opinions": [ { "text": "McGEE, Judge.\nIn this case, the parties stipulated the value of the real property purchased by Delta was $3,738,500 and the value of the personal property purchased was $611,500. On appeal, plaintiff argues the trial court erred in determining he had no security interest in the personal property transferred as part of the 1985 sale. Plaintiff further argues that because he had a security interest in the personal property, the anti-deficiency statute does not bar recovery from the defendants to the extent of his security interest in the personal property. We hold plaintiff did not have a security interest in the personal property and affirm the judgment of the trial court.\nPlaintiff alleges that the purchase contract, when read together with the financing statement, constitutes a security agreement. We disagree.\nThe determination of whether a security interest exists is a two-step process. First, the court must determine as a question of law whether the language in the writing required by N.C. Gen. Stat. \u00a7 25-9-203 objectively indicates that the parties intended to create a security interest. If the statute of frauds requirement is met, then the factfinder must determine whether the parties actually intended to create a security interest.\nIn re Murray Brothers, Inc., 53 B.R. 281, 285 (Bankr. E.D.N.C. 1985). Plaintiff failed to show a valid security interest under both prongs of this test.\nThe fact that the parties did not execute a separate instrument denominated as a \u201csecurity agreement\u201d is not fatal to plaintiffs claim, Little v. Orange County, 31 N.C. App. 495, 497, 229 S.E.2d 823, 825 (1976), and our Supreme Court has held that separate writings may be considered together to satisfy the statute of frauds requirement. See Evans v. Everett, 279 N.C. 352, 183 S.E.2d 109 (1971). However, at a minimum, the writings claimed to be a security agreement must: (1) \u201ccontain language clearly manifesting the debtor\u2019s intent to create, grant, and provide for a security interest;\u201d (2) bear the debtor\u2019s signature; (3) describe the obligation secured; (4) describe the collateral subject to the security interest; and (5) describe the land-involved if the security interest covers crops or timber. Id. at 360,183 S.E.2d at 114. Here, the writings fail to fulfill these requirements.\nThe promissory note in favor of Cabana East states it is a purchase money note and does not mention personal property. Instead, it states it is secured by a deed of trust. The deed of trust in favor of Cabana East states it is a purchase money deed of trust and only lists a description of real property as security for the note.\nThe financing statement in this case, standing alone, does no more than meet the requirements of N.C. Gen. Stat. \u00a7 25-9-402, and therefore, does not create a security interest in the personal property. Evans, 279 N.C at 358, 183 S.E.2d at 113. The only writing that could conceivably be read in conjunction with the financing statement to create a security agreement is the purchase agreement. However, language in the contract stating the buyer \u201cwill execute UCC Financing forms\u201d falls far short of \u201cclearly manifesting the debtor\u2019s intent to grant, create, and provide for a security interest\u201d as required by Evans. See In re Murray Brothers, Inc. 53 B.R. at 284-85 (\u201cSince a financing statement may be filed for reasons other than the perfection of an existing security interest, the filing of a financing statement alone is not enough to create a security interest.\u201d). Further, neither the financing statement nor the clause in the purchase agreement describe the obligation alleged to be secured by the personal property. See Evans, supra; see also 8A Ronald A. Anderson, Anderson on The Uniform Commercial Code \u00a7 9-203:99 (3rd ed. 1996) (\u201cA written security agreement must identify the debt or obligation for the securing of which the security interest has been given.\u201d). Therefore, the writings in this case fail as a security agreement as a matter of law.\nWe also note plaintiff failed to satisfy the second prong of the Murray Brothers test, i.e., convincing the factfinder that the parties intended to create a security interest. The trial court found as a fact that \u201cthe parties did not agree in the contract that the purchase money note would be secured by any personal property.\u201d \u201c[T]he trial court\u2019s findings of fact have the force and effect of a verdict by a jury and are conclusive on appeal if there is evidence to support them, even though the evidence might sustain findings to the contrary.\u201d Fortis Corp. v. Northeast Forest Products, 68 N.C. App. 752, 753-54, 315 S.E.2d 537, 538 (1984).\nHere, the note and the deed of trust did not mention a security interest in the personal property and the parties never executed a separate security agreement. Further, plaintiff\u2019s former attorney testified in his deposition it was his understanding that the note was secured only by real property, and that there would be no further recourse against Delta if the property sold for less than the amount of the debt at a foreclosure sale. Also, after default but before foreclosure, plaintiff\u2019s former attorney sent defendants\u2019 attorney a letter stating he had \u201cno problem with [defendants] removing items of personal property\u201d from the premises, but that \u201cno item which can be considered a fixture\u201d could be removed. Although there was also some evidence to the contrary, this evidence supports the trial court\u2019s finding-that the parties did not agree the note would be secured by personal property. The trial court\u2019s finding is therefore binding on this Court.\nBecause plaintiff failed to perfect a security interest in the personal property, as a purchase money creditor his recovery upon foreclosure was limited to the sale proceeds. Merritt v. Edwards Ridge, 323 N.C. 330, 336, 372 S.E.2d 559, 563 (1988). Even though the foreclosure of the senior deed of trust eroded the security for plaintiff\u2019s purchase money deed of trust, plaintiff is barred by the anti-deficiency statute from bringing an in personam action against Delta for the outstanding debt. N.C. Gen. Stat. \u00a7 45-21.38; Sink v. Egerton, 76 N.C. App. 526, 333 S.E.2d 520 (1985). Plaintiff is also barred by the statute from bringing an action against the Andersons as guarantors of the note. See Adams v. Cooper, 340 N.C. 242, 460 S.E.2d 120 (1995) (anti-deficiency statute bars action against guarantors of purchase money note for balance of purchase price represented by the note.).\nFor the reasons stated, the judgment of the trial court ordering plaintiff recover nothing from the defendants is affirmed.\nAffirmed.\nJudges WYNN and JOHN concur.", "type": "majority", "author": "McGEE, Judge." } ], "attorneys": [ "Aycock, Spence & Butler, by W. Mark Spence, for plaintiff-appellant.", "Aldridge, Seawell & Khoury, by Christopher L. Seawell, for defendant-appellees." ], "corrections": "", "head_matter": "GEORGE S. CROCKER, Plaintiff v. THE DELTA GROUP, INC., THOMAS N. ANDERSON, JR., and wife, JOAN ANDERSON, Defendants\nNo. COA96-3\n(Filed 4 March 1997)\n1. Secured Transactions \u00a7 34 (NCI4th)\u2014 sale of business\u2014 personal property \u2014 absence of security interest\nPlaintiff seller had no security interest in personal property transferred as part of the sale of business property where the parties never executed a separate writing denominated a security agreement; the purchase money note and deed of trust do not mention personal property; language in the purchase contract stating that the buyer \u201cwill execute UCC Financing forms\u201d is insufficient to create a security interest in the personal property; although a UCC financing statement stated that it covered inventory and personal property, the financing statement and purchase contract together were insufficient to constitute a security agreement; plaintiffs former attorney testified that it was his understanding that the note was secured only by real property; and plaintiffs former attorney permitted the buyers to remove personal property from the business premises after default.\nAm Jur 2d, Secured Transactions \u00a7\u00a7 192-194.\nSufficiency of description of collateral in financing statement under UCC \u00a7\u00a7 9-110 and 9-402. 100 ALR3d 10.\nSufficiency of description of collateral in security agreement under UCC \u00a7\u00a7 9-110 and 9-203. 100 ALR3d 940.\n2. Mortgages and Deeds of Trust \u00a7 119 (NCI4th)\u2014 purchase money deed of trust \u2014 no security interest in personalty\u2014 anti-deficiency statute\nWhere plaintiff failed to perfect a security interest in personal property transferred as part of the sale of business property and had only a subordinate purchase money note and deed of trust secured by real property, the anti-deficiency statute barred plaintiff from bringing an in personam action against the purchaser or the guarantors for the outstanding debt after the foreclosure of a senior deed of trust eroded the security for plaintiffs purchase money deed of trust. N.C.G.S. \u00a7 45-21.38.\nAm Jur 2d, Mortgages \u00a7 775.\nMortgages: effect upon obligation of guarantor or surety of statute forbidding or restricting deficiency judgments. 49 ALR 3d 554.\nAppeal by plaintiff from judgment entered 25 April 1994 by Judge J. Richard Parker in Dare County Superior Court. Heard in the Court of Appeals 24 September 1996.\nIn March 1985, defendant The Delta Group, Inc. (Delta) entered into a contract with Cabana East, Inc. (Cabana East) to purchase a business property in Nags Head. Upon purchase of the property, Delta executed a promissory note and deed of trust in favor of Sovran Bank, N.A. (the Bank) in the amount of $2,200,000. At the same time, Delta executed a promissory note and deed of trust in favor of Cabana East in the amount of $1,400,000. The promissory note and deed of trust to Cabana East were purchase money instruments, and defendants Thomas N. Anderson, Jr. and Joan Anderson (the Andersons) signed the promissory note in favor of Cabana East as guarantors. The purchase contract provided the $1,400,000 was to be secured by a second mortgage on the real estate. The deed of trust in favor of Cabana East was subordinate to the lien in favor of the Bank and constituted a second lien on the property.\nThe purchase contract contained a clause stating: \u201cBuyer will execute UCC Financing forms assigning a second position to Seller of all furniture, fixtures, and equipment.\u201d At the time the deed and deeds of trust covering the property were filed, a UCC financing statement was also filed in the office of the Dare County Register of Deeds. The financing statement stated it covered \u201citems purchased by Delta Group from Cabana East, Inc., constituting inventory and personal property\u201d in the purchased businesses, and stated the filing was \u201cjunior and subordinate to a filing on the same property for Sovran Bank, N.A.\u201d The parties never executed a separate writing denominated as a security agreement.\nIn December 1989, Cabana East assigned its rights in the deed of trust to plaintiff George S. Crocker, the president of Cabana East. Delta defaulted on the note held by the Bank, and the property was sold at auction pursuant to the Bank\u2019s deed of trust in May 1990. Prior to the sale, Thomas Anderson sold certain items of personal property from the businesses located on the real property. The foreclosure sale generated insufficient funds to satisfy Delta\u2019s debt to the Bank, and therefore, no funds were available to pay the second deed of trust in favor of Cabana East. As of 30 October 1989, the date of the last payment made on the promissory note payable to Cabana East, the outstanding principal amount remaining unpaid to Cabana East was $1,339,738.50.\nPlaintiff filed this action 19 June 1991 seeking recovery of the unpaid amount. Plaintiff amended his complaint 5 June 1992 to include, among other things, allegations that plaintiff held a security interest in the personal property transferred under the purchase contract, and that the Anderson\u2019s personal guarantee constituted a separate obligation outside the anti-deficiency judgment statute, N.C. Gen. Stat. \u00a7 45-21.38. The parties waived trial by jury.\nIn a judgment entered 25 April 1994, the trial court held plaintiff\u2019s promissory note was secured only by real property, that plaintiff did not have a security interest in the personal property that was a part of the 1985 sale, and that the anti-deficiency statute barred any recovery against Delta. The trial court also held the personal guaranty by the Andersons fell within the scope of the anti-deficiency statute, barring any recovery against the Andersons by plaintiff. From this judgment, plaintiff appeals.\nAycock, Spence & Butler, by W. Mark Spence, for plaintiff-appellant.\nAldridge, Seawell & Khoury, by Christopher L. Seawell, for defendant-appellees." }, "file_name": "0583-01", "first_page_order": 621, "last_page_order": 626 }