{
  "id": 8520514,
  "name": "RAY WATERHOUSE, Plaintiff v. CAROLINA LIMOUSINE MANUFACTURING, INC., d/b/a CAROLINA COACHBUILDERS, Defendant v. SOUTHWESTERN NORTH CAROLINA PLANNING AND ECONOMIC DEVELOPMENT COMMISSION and SCRONCE AUTOMOTIVE SUPPLY, INC., Intervenors",
  "name_abbreviation": "Waterhouse v. Carolina Limousine Manufacturing, Inc.",
  "decision_date": "1989-10-17",
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  "analysis": {
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  "last_updated": "2023-07-14T18:28:35.242103+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
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  "casebody": {
    "judges": [
      "Judges Johnson and Greene concur."
    ],
    "parties": [
      "RAY WATERHOUSE, Plaintiff v. CAROLINA LIMOUSINE MANUFACTURING, INC., d/b/a CAROLINA COACHBUILDERS, Defendant v. SOUTHWESTERN NORTH CAROLINA PLANNING AND ECONOMIC DEVELOPMENT COMMISSION and SCRONCE AUTOMOTIVE SUPPLY, INC., Intervenors"
    ],
    "opinions": [
      {
        "text": "EAGLES, Judge.\nWaterhouse excepted to the trial court\u2019s conclusions regarding Southwestern\u2019s good faith effort to file and Southwestern\u2019s priority. Because of Southwestern\u2019s failure to file the financing statement with the Secretary of State, Southwestern\u2019s security interest in Carolina\u2019s equipment was not perfected by filing. Both parties agree that Southwestern\u2019s interest was perfected, if at all, by possession, which occurred on 4 December 1987. Therefore, the trial court\u2019s conclusion regarding good faith efforts to file is not dispositive; filing is not the basis on which Southwestern\u2019s perfecting of its security interest rests.\nSouthwestern asserts it perfected its security interest by physically possessing the collateral. Under the Uniform Commercial Code a security interest in goods is perfected without filing when the secured party takes possession of the collateral. G.S. 25-9-302(l)(a); G.S. 25-9-305. This perfected status \u201ccontinues only so long as possession is retained.\u201d G.S. 25-9-305. Here, the trial court concluded that the posting of the notice of levy \u201cconstituted an interruption in the possession of [the collateral] by Southwestern.\u201d Although the issue of whether a levy by the sheriff interrupts a creditor\u2019s possession has apparently not been answered in North Carolina, other states with statutory provisions identical or sufficiently similar to our G.S. 25-9-305 have answered the question. They have held that a prior perfected interest is superior to the interest of a judgment creditor who has obtained a lien. See Grain Merchants of Indiana, Inc. v. Union Bank and Savings Co., 408 F.2d 209 (7th Cir. 1969), cert. denied, 396 U.S. 827, 24 L.Ed. 2d 78, 90 S.Ct. 75 (1969); Rocky Mountain Ass\u2019n. of Credit Mgmt. v. Hessler Mfg. Co., 37 Colo. App. 551, 553 P.2d 840 (1976); National Shawmut Bank v. Vera, 352 Mass. 11, 223 N.E.2d 515 (1967); General Motors Acceptance Corp. v. Stotsky, 60 Misc. 2d 451, 303 N.Y.S.2d 463 (1969); William Iselin & Co. v. Burgess & Leigh, Ltd., 52 Misc. 2d 821, 276 N.Y.S.2d 659 (1967). In one case remarkably similar to the instant case the court found that a creditor who had perfected his security interest in goods by possession had priority over the sheriff who, at a later date, levied on the goods for delinquent personal property taxes of the debtor. Walter F. Heller & Co. v. Salerno, 168 Conn. 152, 362 A.2d 904 (1975).\nUpon proper presentation to this court, when a ruling below is based on a misapprehension of applicable law, we will remand the cause in order that it may be considered in its true legal light. Nationwide Mut. Ins. Co. v. Chantos, 298 N.C. 246, 252, 258 S.E.2d 334, 338 (1979). Here, however, no exception was taken to the conclusion of the trial court that the levy constituted an interruption of Southwestern\u2019s possession. Where there is no exception by any of the parties to the adjudication of a particular matter presented for decision, that part of the judgment to which there is no exception becomes the law of that case. North Carolina Nat. Bank v. Barbee, 260 N.C. 106, 112, 131 S.E.2d 666, 671 (1963); Kessler v. North Carolina Nat. Bank, 256 N.C. 12, 17, 122 S.E.2d 807, 811 (1961). Therefore, the law of this case is that Southwestern\u2019s possession was interrupted by Waterhouse\u2019s levy.\nBecause Southwestern\u2019s lien perfection was based only on possession of the collateral and the sheriff\u2019s levy interrupted that possession in this case, the trial court erred in finding that Southwestern had priority over Waterhouse. We therefore reverse the judgment of the trial court and remand for entry of judgment in favor of Waterhouse.\nReversed and remanded.\nJudges Johnson and Greene concur.",
        "type": "majority",
        "author": "EAGLES, Judge."
      }
    ],
    "attorneys": [
      "Stephen L. Barden, III, for plaintiff-appellant.",
      "Philo and Spivey, hy Samuel C. Briegel, Steven E. Philo and David C. Spivey, for intervenor-appellee."
    ],
    "corrections": "",
    "head_matter": "RAY WATERHOUSE, Plaintiff v. CAROLINA LIMOUSINE MANUFACTURING, INC., d/b/a CAROLINA COACHBUILDERS, Defendant v. SOUTHWESTERN NORTH CAROLINA PLANNING AND ECONOMIC DEVELOPMENT COMMISSION and SCRONCE AUTOMOTIVE SUPPLY, INC., Intervenors\nNo. 8930SC35\n(Filed 17 October 1989)\nExecution \u00a7 5 (NCI3d)\u2014 lien perfection based on possession of collateral-interruption by sheriff\u2019s levy\nWhere one creditor\u2019s lien perfection was based only on possession of the collateral, and there was no exception by any of the parties to the trial court\u2019s adjudication that the sheriffs levy constituted an interruption of the creditor\u2019s possession, that part of the judgment became the law of the case, and the trial court therefore erred in finding that the creditor with possession had priority over the creditor with the sheriff\u2019s levy.\nAm Jur 2d, Creditors\u2019 Bills \u00a7\u00a7 86, 91-93.\nAppeal by plaintiff from Downs, Judge. Judgment entered 12 October 1988 in Superior Court, JACKSON County. Heard in the Court of Appeals 30 August 1989.\nThis is an action to determine lien priorities between two creditors of Carolina Limousine (hereinafter \u201cCarolina\u201d), namely, plaintiff Ray Waterhouse (hereinafter \u201cWaterhouse\u201d) and intervenor Southwestern North Carolina Planning and Economic Development Commission (hereinafter \u201cSouthwestern\u201d). Another creditor, Scronce Automotive Supply, Inc., is no longer a party to this action.\nThe uncontested facts are that in September of 1985 Carolina executed a promissory note in favor of Southwestern. The parties also executed a security agreement and financing statement. The financing statement and security agreement identified as collateral certain equipment owned by Carolina and operated at its Buster Brown Plant. Southwestern filed the financing statement in the Jackson County Register of Deeds\u2019 Office but failed to file the document with the Secretary of State as required by G.S. 25-9-401(l)(c). Carolina defaulted on the note. Southwestern took physical possession of the equipment identified as collateral by padlocking the Buster Brown Plant building on 4 December 1987.\nOn 14 March 1988 Waterhouse sued on a note executed in his favor and obtained a judgment against Carolina. On 6 April 1988 execution was issued by the Clerk of Court of Jackson County. On 12 April 1988 a deputy sheriff posted a \u201cNotice of Levy\u201d document on the exterior of the padlocked Buster Brown Plant.\nBased on the evidence the trial court made findings of fact and conclusions of law. Among other things the court concluded that \u201cSouthwestern made a good faith effort to accomplish the necessary filing.\u201d The trial court also found that the sheriff\u2019s posting of the notice of levy \u201cwas sufficient as a levy on the personal property in the Buster Brown Plant. Such levy constituted an interruption in the possession of said property by Southwestern.\u201d However, the trial court also concluded that \u201cSouthwestern\u2019s lien on said property takes precedence over the lien claimed by the Plaintiff [Waterhouse].\u201d Waterhouse appeals.\nStephen L. Barden, III, for plaintiff-appellant.\nPhilo and Spivey, hy Samuel C. Briegel, Steven E. Philo and David C. Spivey, for intervenor-appellee."
  },
  "file_name": "0109-01",
  "first_page_order": 141,
  "last_page_order": 143
}
