
    TOBACCO GROWERS CO-OPERATIVE ASSOCIATION, a Corporation, v. L. HARVEY & SON COMPANY, a Corporation, J. K. DIXON and D. J. DIXON, Trading as DIXON BROTHERS, L. D. POLLOCK, WILLIAM LOFTIN, RALPH HADDOCK, JOSEPH BROWN, LEE JERKINS, SENUS HILL and LYON PARKER.
    (Filed 22 April, 1925.)
    1. Injunction — Hearings—Affidavits—Pleadings—Statutes.
    A motion to vacate or modify an injunction may be made, under the provisions of C. S., 856 et seq., upon the complaint and affidavits upon which the injunction is sought, or upon counter affidavits filed on the part of the defendants, the verified answer, if filed, having only the effect of an affidavit if introduced upon the hearing of the motion, and it is not required that the answer should have been previously filed.
    2. Same — Issues.
    While a restraining order will be continued to the hearing when the pleadings raise material issues of fact, or where the relief sought is not merely ancillary, but is itself the principal relief demanded, if the plaintiff has made out a prima facie case, these allegations must be of the facts necessary to raise the appropriate issues, and the conclusions of the pleader from an insufficient statement of facts is ineffectual.
    3. Same — Fraud—Collusion—Cooperative Marketing.
    A cooperative marketing association sought to enjoin its members from marketing their tobacco elsewhere in violation of their contracts, and alleged fraud and collusion by them and another in giving agricultural liens to defeat the plaintiff of its rights, and it appeared on the hearing that the liens had been given for advancements: Held, the plaintiff’s rights had not been invaded, whatever the motive may have been in giving the. liens, fraudulent or otherwise, and the injunction was properly dissolved.
    4. Same — Solvency.
    In this case, held that an allegation in the complaint that members of the Cooperative Association had fraudulently given agricultural liens on their crops for which they were charged in excess of the ten per cent over the retail cash price as fixed by statute (C. S., 2482), was insufficient upon which to continue the injunction to the final hearing, especially in view of the admitted solvency of the lienors.
    5. Same — Liens—Mortgages.
    The contract made by a tobacco growers cooperative association and its members does not transfer the title of the crop to be grown, and under the provisions of the statute the member may “place a mortgage” or lien thereon for agricultural advancements; and the agreement is an executory contract between the association and its members enforceable in equity by a suit for specific performance subject to valid liens thus given thereon. C. S., 2486.
    6. Same — Trials.
    In this case, helé, the Tobacco Growers Cooperative Association was not entitled to have the injunction it sought continued to the hearing on the question of whether the full amount of the advancements claimed by the agricultural lienors had actually been made, it appearing that to some extent the liens were valid, and whatever difference there may be can be determined in the present action.
    Varser, J., did not sit.
    Appeal by plaintiff from an order of Allen, J., dissolving a temporary restraining order on 26 September, 1924, tbe summons and tbe complaint having been served on tbe defendants on 22 September. From LENOIR.
    Tbe plaintiff alleges that L. 0. Pollock, a farmer cultivating tobacco, and Loftin, Haddock, Brown, Jerkins, Hill and Parker, bis tenants, are members of tbe plaintiff association, all having executed tbe marketing agreement set out in Exhibit “A” and having delivered to tbe association a part of tbe tobacco raised by them in 1922 and 1923, and that in violation of their agreement they sold a portion to parties other than tbe plaintiff and in December, 1923, announced their purpose not to deliver any more- of their tobacco to tbe plaintiff association. For this reason tbe plaintiff instituted an action against these defendants in tbe Superior Court of Onslow County on 21 October, 1923, to enjoin them from disposing of their crops to any one except tbe plaintiff. Tbe judgment was reversed on appeal (187 N. 0., 409) and tbe restraining order was continued to tbe final bearing. Thereafter (in September, 1924) L. Harvey & Son Co., by virtue of an alleged agricultural lien and chattel mortgage, took control of tbe tobacco cultivated by Pollock and said tenants and threatened to dispose of it through parties other than tbe plaintiff association. It is alleged that tbe Harvey Company took tbe tobacco at tbe request of Pollock and with knowledge that tbe restraining order above referred to bad been continued. On 18 February, 1924, Pollock executed and delivered to tbe Harvey Company an agricultural lien and chattel mortgage on tbe crops of 1924, to secure an indebtedness to it of $5,000 and on tbe same day a similar instrument to Dixon Bros, to secure an indebtedness to them in tbe same amount. Both these papers were acknowledged and filed for registration on 18 November, 1924, tbe latter at 11 a. m. and tbe former at 12 m. It is alleged that tbe Harvey Company and Dixon Bros, knew tbe contents of tbe marketing agreement and that Pollock was a member of tbe association and bad announced bis intention not to deliver to tbe plaintiff any other tobacco grown by or for him and that tbe plaintiff was seeking to enjoin him from disposing of bis tobacco except as provided in bis agreement. Tbe Harvey Company, it is said, knew that Pollock was solvent, that be bad not formerly given a mortgage on bis crops; that tbe lien was not necessary to secure tbe amount alleged to be due tbe lienors; that tbe amounts advanced were small in comparison with the sum secured; and that the lien was a device resorted to for the purpose of defeating the injunction. The plaintiff says that the prices charged for the advances made were in excess of those fixed by C. S., 2482. On 17 April, 1924, the tenants named above to secure advances executed to the Harvey Company and to Dixon Brothers agricultural liens and chattel mortgages. The former were filed at 3 p. m. and the latter at 4 p. m. on 19 April. It is asserted that the lienors knew that the tenants were members of the plaintiff association; that they had delivered to it a part of their tobacco and had said they would not deliver any more; that the liens were in excess of the advancements; that the prices were in excess of those allowed by the statute; and that the liens were executed in pursuance of a fraudulent scheme to defeat the agreement made with the plaintiff by Pollock and his tenants.
    Upon the complaint, which was treated as an affidavit, Judge Allen, oti 22 September, 1924, issued a temporary restraining order returnable before Judge Daniels at Goldsboro on 4 October, 1924, and on the same day at the request of the defendants, who had not had previous notice of the plaintiff’s motion, his Honor issued a notice to the plaintiff to show cause before him at the courthouse in Kinston on 25 September, why the restraining order should not be vacated or modified.
    Pollock and his tenants filed an answer which was treated as an affidavit; and affidavits were filed on behalf of the Harvey Company and Dixon Bros. In these affidavits all the material allegations of the plaintiff are denied, and exhibits are attached showing an itemized statement of the advances made by the lienors.
    At the hearing his Honor vacated the temporary restraining order theretofore issued by him and the plaintiff appealed upon the following assignments of error:
    1. That his Honor erred in overruling the plaintiff’s objection to his jurisdiction and in holding that he had jurisdiction to hear the motion to vacate or modify the restraining order.
    2. That the court erred in admitting the affidavits of C. E. Harvey, Jr., Dan Quinerly, J. K. Dixon and Allen Knott.
    3. That the court erred in denying the plaintiff’s motion for continuance in order to enable it to prepare and present affidavits in support of the complaint and in answer to the affidavits and answer filed by the defendants.
    4. That the court erred in denying the motion of the plaintiff that the temporary injunction be continued until the final hearing of the cause.
    6. That the court erred in denying the motion of the plaintiff that the temporary restraining order be continued until the original date set for the hearing before Hon. E. A. Daniels.
    
      6. That tbe court erred in signing tbe order vacating tbe restraining order.
    7. Tbat tbe court erred in denying tbe plaintiff’s motion for continuance of tbe restraining order pending tbe appeal under tbe provision of chapter 58 of tbe Public Laws of 1921.
    8. Tbat tbe court erred in refusing to require a bond of tbe defendants L. Harvey & Son Company and Dixon Brothers.
    
      Burgess & Joyner and Kenneth G. Royall for plaintiff.
    
    
      F. E. Wallace, Spruill & Spruill, and Battle & Winslow for defendants.
    
   Adams, J.

In reference to tbe second assignment of error (tbe first having been abandoned) tbe plaintiff cites Ransom v. Shuler, 43 N. C., 304, as authority for tbe position tbat a motion to dissolve an injunction before tbe answer has been filed is premature. There an injunction was granted upon tbe bill and at tbe first term tbe defendant demurred for want of an equity; tbe demurrer was set down for argument at tbe next term and then tbe defendant’s counsel moved to dissolve tbe injunction. Tbe Court said, “There is an obvious inconsistency in such a course, for tbe motion to dissolve must be founded on tbe defects and insufficiency of tbe bill itself, and therefore it involves precisely tbe same questions of equity which must arise on tbe demurrer when brought on for argument and decision. It is, therefore, an attempt to obtain by tbe summary action on a motion a declaration of tbe court as to tbe equity between tbe parties, which is to come up for solemn determination on tbe demurrer.” It is now provided tbat a motion to vacate or modify an injunction may be made upon tbe complaint and affidavits on which it was granted or upon affidavits filed on tbe part of tbe defendants, with or without answer, and tbat a verified answer shall have only tbe effect of an affidavit. C. S., 856 et seq. Tbe time when tbe affidavits should be filed was a matter largely within tbe discretion of tbe judge. This is true likewise as to tbe matters involved in tbe third, seventh, and eighth exceptions; and for this reason all these exceptions must be overruled. Tbe fourth, 'fifth, and sixth present tbe chief controversy between tbe parties.

Tbe plaintiff first contends tbat tbe affidavits raise an issue of fraud which requires tbe intervention of a jury. Tbe allegations relating to this issue are substantially as follows: (1) Tbe lienors took possession of tbe tobacco crop at tbe request of tbe lienees; (2) all parties knew tbat tbe restraining order bad been issued; (3) tbe liens were executed tbe same day and filed together for registration; (4) tbe lienors knew tbat tbe lienees were members of tbe plaintiff association and tbat they bad previously delivered tobacco to it under their marketing agreement; (5) the principal lienee had not theretofore mortgaged his crop to secure advances and it was unnecessary for him to execute a lien or mortgage for this purpose; (6) the amount secured by the liens was in excess of the advancements; (7) the prices charged were in excess of those authprized by C. S., 2482; (8) the lienors took possession of the crop of tobacco but did not take possession of the other crops; (9) the acts complained of were the result of a fradulent scheme to enable the lienees to evade their obligations to the plaintiff association.

We are not inadvertent to decisions holding that where the pleadings raise material issues of fact or where the relief sought is not .merely ancillary, but is itself the principal relief demanded, the restraining order will be continued to the^ final hearing if a prima facie case is made out. Marshall v. Comrs., 89 N. C., 103; Jones v. Lassiter, 169 N. C., 750; Cobb v. R. R., 172 N. C., 58; Byrd v. Hicks, 184 N. C., 628. But it is by no means clear that the allegations recited above, considered separately or collectively are sufficient to constitute actionable fraud, the last (ninth) assuming the character of a legal conclusion. If the several acts set out were not illegal or fraudulent in themselves they were not made so merely because prompted by an alleged evil motive which the defendants deny. We had occasion to. consider this question in Bell v. Danzer, 187 N. C., 224, and there decided that the exercise of a right which does not infringe the legal right of another is not actionable even when prompted by malice, and that the motive is immaterial if the act is otherwise lawful. If the lienors actually made advancements to enable the lienees to produce their crops and were entitled to the possession of the tobacco for the purpose of enforcing the liens, a sinister motive would not in itself defeat the legal right. It is important to note that there-is no allegation that the lienors’ claims are fictitious or that the secured debts were not contracted, although the amount really advanced is in controversy. True, the plaintiff alleges upon information and belief that the lienors charged more than ten per cent over the retail cash price of the advances in breach of C. S., 2482; but the lienors deny this upon oath and affix an itemized statement of the advances.

In Riggsbee v. Durham, 98 N. C., 81, 87, it is said: “ 'But,’ as was said by Bynum, J., in Perry v. Michaux, ‘it is also a well-settled rule, that when by the answer of the defendant, the plaintiff’s whole equity is denied, and the statement in the answer is credible and exhibits no attempt to evade the material charges in the complaint, an injunction, on motion, will be dissolved.’ Perkins v. Hollowell, 40 N. C., 24; Sharpe v. King, 38 N. C., 402. This is clearly so, if, upon the complaint, answer and affidavits, it appears that the plaintiff’s claim to have tbe restraining order continued, is fully met.” In our opinion tbe injunction should not be continued for sucb alleged fraudulent collusion, especially in view of tbe admitted solvency of tbe lienors.

Tbe decisive question, therefore", is this: Is tbe legal relation of tbe lienors to'the other parties to tbe suit sucb as to require tbe collection of their claims through tbe plaintiff association according to tbe method by which it usually distributes tbe proceeds arising from a sale of tbe crops under tbe marketing agreement, or may they foreclose their liens independently of tbe marketing agreement?

Tbe agreement between tbe association and its members contains these sections: (2) Tbe association agrees to buy and tbe grower agrees to sell and deliver to tbe association all of tbe tobacco produced by or for him or acquired by him as landlord or lessor, during tbe years 1921, 1922, 1923, 1924, 1925. (4a) All tobacco shall be delivered at tbe earliest reasonable time after picking or curing, to tbe order of tbe association. (11) Tbe grower shall have tbe right to stop growing tobacco and to grow anything else at any time at bis free discretion; but if be produces any tobacco, as landlord or lessor, during tbe term hereof, it shall all be included under tbe terms of this agreement and must be sold only to tbe association. (12) Nothing in this agreement shall be interpreted as compelling tbe grower to deliver any specified quantity of tobacco each year; but be shall deliver all tbe tobacco produced by or for him. (13a) This agreement shall be binding upon tbe grower as long as be produces tobacco directly or indirectly, or has tbe legal right to exercise control of any commercial tobacco or any interest therein as a producer or landlord during tbe term of .this contract. (13c) If tbe grower places a crop mortgage upon any of bis crops during tbe term hereof, tbe association shall have tbe right to take delivery of bis tobacco and to pay off all or part of tbe crop mortgage for tbe account of tbe grower and to charge tbe same against him individually. Tbe grower shall notify tbe association prior to making any crop mortgage and tbe association will assist tbe grower in any sucb transaction as far as it deems proper.

Tbe plaintiff says that tbe marketing agreement effects a present sale of future crops to be delivered at tbe earliest reasonable time; that tbe lienors bad knowledge of this agreement and took their liens subject to tbe plaintiff’s equitable title; and that this principle is not affected by tbe statutes relating to tbe probate and registration of instruments required or allowed by law to be registered in tbe office of tbe register of deeds. C. S., cb. 65.

"We do not concede tbe accuracy of tbe plaintiff’s position. A sale is tbe transmutation of property from one man to another in consideration of a price or recompense in value; and if it be granted that tbe crops in question bad a potential existence when the marketing agreements were made (a circumstance wbicb the defendants do not grant), we fail to discover in the agreements any present transfer of title from the defendant members to the association. In the express words of the contract the “association agrees to buy and the grower agrees to sell and deliver” the tobacco; and moreover they agree “tbat tbis is a contract for the purchase and sale of personal property.” The crop is described as tbat of the grower, and he may “place a mortgage upon any of his crops.” See Marketing Agreement, secs. 2, 5, 13c, 18a, 18b. The agreement considered in its entirety imports, not a present sale of future crops or a mortgage of after-acquired property, but an executory contract between the association and its members enforceable by a suit for specific performance. Indeed, tbis remedy not available where the title has actually been transferred, seems to be approved, not only by the courts, but by the terms of the agreement itself. By statute and by agreement the association is given an equitable remedy for the breach of an executory contract. Public Laws 1921, ch. 87, sec. 17c; Agreement, 18b; Tobacco Association v. Battle, 187 N. C., 260; Tobacco Asso. v. Spikes, 187 N. C., 367; Tobacco Asso. v. Patterson, 187 N. C., 253.

Under these circumstances it is not necessary to enter into a discussion of tbe principle underlying tbe right of priority between antagonistic claimants for tbe reason tbat tbe specific question presented has heretofore been determined by tbis Court. In Tobacco Asso. v. Patterson, supra, Mr. Justice Hoke, said: “It is true tbat a member may place a mortgage or crop lien on bis crop for tbe current year for tbe purpose of enabling him to successfully cultivate and produce tbe same, tbe contract between plaintiffs and defendant clearly contemplates such a mortgage, and good policy requires tbat such a privilege should never be withdrawn, and we understand tbat plaintiff has no desire or purpose to interfere with any such claim to tbe extent tbat it constitutes a valid and superior lien to plaintiff’s rights and interests under tbe .contract.” . . . “Tbe matter here is not further pursued for tbe reason tbat tbe mortgagee is not thus far a party, and until be is, bis rightful claims should not and cannot be in any way impaired and jeopardized in tbis proceeding, nor, -as a rule, should a grower’s rights to place a mortgage on bis crop for tbe bona fide purpose of raising tbe same be in any way hindered or lightly interfered with.” Tbis decision expressly recognizes and approves tbe grower’s legal right to execute a mortgage or crop lien for tbe current year in order tbat be may produce bis crop, as it likewise construes tbe marketing agreement as contemplating tbe execution of such lien or mortgage. Tbe plaintiff, it is true, undertakes to differentiate tbe instant case from Patterson’s in these respects: (1) in .the latter tbe mortgagee was not a party; (2) there was no allegation or evidence that the mortgagee had notice of the marketing agreement; (3) the relative rights of the mortgagee and the association were not presented; (4) there was no question of collusion between the grower and the mortgagee.

The distinction is apparent rather than real. The question of collusion has been referred to; and with respect to the other points of difference it may be said that the brief filed by the plaintiff in Patterson’s case apparently recognized the outstanding mortgage. While the mortgagee was not a party the relative rights of the parties were, nevertheless, discussed. In its brief the plaintiff said, “The creditor Roberson (mortgagee) has a security right only. He has a title but not a beneficial title; merely a security title. He can protect his security and if necessary can, in a proper proceeding, apply the security to the discharge of the debt.” This is just what the mortgagees in the instant case are seeking to do.

The plaintiff says, however, that by virtue of the agreement, see. 13c, it may “pay off all or a part of the crop mortgage”; that is, that the association may take the tobacco and pay the liens “according to its regular method of distribution,” and that the lienors canpot otherwise enforce their security. Several cases from other jurisdictions are cited in support of this position, among them Redford v. Tobacco Asso., 266 S. W. (Ky.), 24; Tobacco Asso. v. Dunn, ibid. (Tenn.), 308; Feagain v. Tobacco Asso., 261 S. W. (Ky.), 607; Wheat Asso. v. Floyd, 227 Pac. (Kan.), 336; Oregon Asso. v. Lentz, 212 Pac. (Or.), 811. But these cases, however persuasive on the questions decided, have no bearing upon our interpretation of local statutes dealing with agricultural liens which the Legislature clearly intended to prefer. C. S., 2480 et seg. In these statutes it is provided that advances in money or supplies to a person engaged in the cultivation of the soil may be secured by a lien on the crops made during the year upon the land in the cultivation of which the advances have been expended. The phraseology of the statutes and the legislation affecting the subject manifest a policy to encourage such advances by preferring them to all other liens.. It is immaterial that no “lien” is given the plaintiff under the terms of its agreement; if the plaintiff’s claim under the agreement be given priority over the agricultural lien the legislative intent to protect the lienor must yield to an agreement to which he is not a party, and for the execution of which he is not responsible. It is upon this principle that we sustain the ruling of the lower court.

It is finally urged that the entire amount secured by the lien includes indebtedness other than that incurred for advances; but it is unquestionable that advances were made, and if the amount is disputed it may be determined in the present action. We must therefore hold that the plaintiff is not entitled to an order enjoining the lienors from enforceing their liens to the extent of the amounts advanced by them for the “current year” to enable their codefendants to cultivate and produce their crops.

The judgment is

Affirmed.

Vabser, J., did not sit.  