
    EDGECOMBE COUNTY and R. B. HYATT, Sheriff, v. A. T. WALSTON, Trustee, et als.
    (Filed 19 September, 1917.)
    1. Taxation — Funds—Custodia Legis — Statutes—Constitutional Law.
    Tbe taxation of funds in eustodia legis is regulated by tbe Legislature, subject to constitutional provisions.
    2. Taxation — Funds—Clerks of Courts.
    Tbe clerk of tbe court is both a “receiver’'’ and “accounting officer” of funds paid into bis bands in tbe course of litigation, witbin tbe meaning of tbe statute, and thereunder should properly list such funds for taxation on May first of each year, when no adjudication as to tbe rightful owners has been made.
    3. Same — Claimants—Title—Judgment.
    Where tbe proceeds of tbe sale of tbe property of an insolvent corporation have been paid into tbe office of tbe clerk of tbe Superior Court awaiting adjudication as to its distribution among first and second mortgagees, bondholders and others claiming a superior lien, tbe duty of tbe clerk to list tbe fund for taxation on May first, as tbe statute requires, is not affected by tbe fact that some of the bondholders have listed their bonds for taxation which others claim to be exempt, for they can acquire no title to or control over tbe funds or a part thereof until the matter lias been determined.
    Civil actioN tried before Whedbee, J., at April Term, 1917, of Edge-COTMBE.
    By consent, tbe court found tbe facts as set out in tbe answer to be true, and tbat those not found in tbe answer, but set forth in tbe complaint, are also true.
    Tbe purpose of tbe action is to determine whether certain moneys listed for taxation by tbe clerk of tbe Superior Court, 1 May, 1915, are liable to taxation.
    His Honor rendered judgment against plaintiffs, dismissing the action. Plaintiffs appealed.
    
      Alsbrook & Phillips for plaintiff.
    
    
      G. M. T. Fountain & Son for defendant.
    
   BROWN, J.

From tbe pleadings we gather tbat these are tbe admitted facts:

The property of the Tarboro Cotton Factory, a corporation, was sold by decree of the Superior Court by the receivers under foreclosure of a second mortgage for $60,000, subject to a first mortgage for $100,000. The property subject to said first lien was sold for $29,000, the sale confirmed, and the money paid to the receivers who made the sale. By interlocutory decree, this money was paid to the clerk of Superior Court (after deducting certain allowances) to await tlie subsequent determination of the court as to the rights of the various creditors, the fund being insufficient to pay them all in full. Under the decree of June Term, 1914, the receivers paid to the clerk $18,700.

No further decree having been made in the cause since June, 1914, the clerk of the Superior Court duly listed said fund for taxation on 1 May, 1915.

Subsequently, at June Term, 1915, a decree was entered in the cause directing the clerk to pay over to the codefendants Staton, Cobb, and Zoeller (who own all the second mortgage notes) all of said fund except $2,275 retained to await the disposition of certain contested claims supposed to have priority over the second mortgage.

It is contended that the money on deposit with the clerk was not taxable on 1 May, 1915 It is true that at common law, property in custodia legis was not subject to taxation (Cyc., 797), but the subject of .taxation is one now regulated exclusively by statute, subject to constitutional provisions, and the law-making power has the right to tax property in the custody of the courts and judicial officers as well as any other property.

The statutes of this State require that taxes shall be listed as of 1 May, each year, and every person owning property is required to list all the real and personal property, money, credits, etc., in his possession or under his control on the first day of May, either as owner or holder thereof, or as parent, guardian, trustee, executor, executrix, administrator, administratrix, receiver, accounting officer, partner, agent, factor, or otherwise.

The clerk was both receiver and accounting officer as to this fund, and it was plainly his duty to list it for taxation as it was in his hands and no decree for distribution had been entered on 1 May. By use of the words “or otherwise,” the statute is made broad enough to cover all funds in the hands of the clerk of the Superior Court or any other public official or fiduciary.

For a further defense, it is averred in the answer “that the money was due to the parties named in the exhibit hereto attached, marked ‘A,’ by bonds secured under the trust deed recorded in Book 146, at page 68, and was by those who are liable therefor duly listed as solvent credits. That a large number of the creditors secured in said mortgage were not liable for taxes on said funds, for that they were themselves indebted to others in a larger amount than others were indebted to them. That the said clerk was holding the fund under the order of court, awaiting the dicision of this court as to who was entitled to said fund.”

It is manifest that the facts stated are too meager and indefinite to base any judgment upon. It is not stated what creditors listed their second mortgage notes, or wbat valuation was placed upon tbem. It does not appear tbat tbe entire second mortgage notes were listed at valuations at all equaling tbe sum in tbe bands of tbe clerk, nor -wbat amount of taxes bave actually been paid on said notes. But if tbe facts were fully and sufficiently stated, tbey would constitute no defense to plaintiff’s claim.

On 1 May, 1915, no decree bad been made disposing of tbe fund, or any part of it. Tbe rights of tbe claimants to it bad not been adjudicated, and no one of tbem bad acquired a title to any specific part of it. At tbat time there were other claimants seeking to subject part of this fund to their demands whose claims were supposed to bave priority. These claims bad not been passed upon by tbe court, and wbat dividend would be paid on tbe second mortgage notes was uncertain and unascer-tained. Until tbe June decree, defendants acquired no title to or control over tbe fund and bad no right to list any part of it for taxation on 1 May. Tbat was plainly tbe duty of tbe clerk.

Before tbe foreclosure of tbe mortgage tbe factory property was taxable separate and distinct from tbe notes. Tbe corporation paid tbe taxes on tbe property, and tbe owners of tbe notes were chargeable with tbe taxes upon tbem. Tbe same rule prevailed as to tbe proceeds of sale up to tbe final decree in June, 1915. Tbe second mortgage notes, after tbe foreclosure, may bave been worth but little, if anything. _ Tbe owners were not required to list tbem at more than their actual cash value, deducting their indebtedness. If tbey were worthless in' consequence of such foreclosure and tbe insolvency of tbe corporation, tbey were not required to list tbem at all. If tbey listed tbem at a substantial value when tbey were worthless, it was their own folly. Tbe clerk bad no knowledge of wbat defendants claim to bave done, and even if be bad be could not be governed by their actions. It was bis duty to obey tbe statute, which be did.

Upon tbe facts agreed let judgment be entered for plaintiffs.

Eeversed.  