GSNC

ARTICLE 1. Mechanics', Laborers', and Materialmen's Liens.

§ 44-1: Repealed by Session Laws 1969, c. 1112, s. 4.

§§ 44-2 through 44-5: Repealed by Session Laws 1967, c. 1029, s. 2.

Cross References. - As to possessory liens on personal property, see G.S. 44A-1 et seq.

ARTICLE 1A. Wage Liens.

Sec.

§ 44-5.1. Wages for two months' lien on assets.

In case of the insolvency of a corporation, partnership or individual, all persons doing labor or service of whatever character in its regular employment have a lien upon the assets thereof for the amount of wages due to them for all labor, work, and services rendered within two months next preceding the date when proceedings in insolvency were actually instituted and begun against the corporation, partnership or individual, which lien is prior to all other liens that can be acquired against such assets: Provided, that the lien created by this section shall not apply to multiple unit dwellings, apartment houses, or other buildings for family occupancy except as to labor performed on the premises upon which the lien is claimed. This section shall not apply to any single unit family dwelling.

History

(1901, c. 2, s. 87; Rev., s. 1206; C.S., s. 1197; 1937, c. 223; 1943, c. 501; 1955, c. 1345, s. 4.)

CASE NOTES

Section Gives Ancillary Remedy. - This section, giving to laborers of insolvent corporations a specific lien upon the assets of the company for two months' wages at least, was not intended to militate against rights that they might otherwise have under the existing law for debts due them, but gives them a special lien for certain wages. Union Trust Co. v. Southern Sawmills & Lumber Co., 166 F. 193 (4th Cir. 1908), cert. denied, 215 U.S. 596, 30 S. Ct. 398, 54 L. Ed. 342 (1909).

The creditors favored by this section are laborers and workers and all persons doing labor or service of whatever character in the regular employment of certain corporations. Phoenix Iron Co. v. Roanoke Bridge Co., 169 N.C. 512, 86 S.E. 184 (1915).

This section grants a priority lien for the wages paid regular employees. First Citizens Bank & Trust Co. v. Academic Archives, Inc., 15 N.C. App. 186, 189 S.E.2d 551 (1972).

Priority does not extend to those who are independent contractors and not regular employees. First Citizens Bank & Trust Co. v. Academic Archives, Inc., 15 N.C. App. 186, 189 S.E.2d 551 (1972).

A contractor, who furnishes his own teams, labor, etc., in hauling materials for the building of a bridge by a corporation within the two months next preceding the date of the institution of proceedings in insolvency is not engaged in doing labor or performing "service of whatever character" within the meaning of this section. Phoenix Iron Co. v. Roanoke Bridge Co., 169 N.C. 512, 86 S.E. 184 (1915).

Independent Contractor Defined. - An independent contractor is one who (1) is engaged in an independent business, calling or occupation; (2) is to have the independent use of his special skill, knowledge, or training in the execution of the work; (3) is doing a specified piece of work at a fixed price or for a lump sum or upon a quantitative basis; (4) is not subject to discharge because he adopts one method of doing the work rather than another; (5) is not in the regular employ of the other contracting party; (6) is free to use such assistants as he may think proper; (7) has full control over such assistants; and, (8) selects his own time. First Citizens Bank & Trust Co. v. Academic Archives, Inc., 15 N.C. App. 186, 189 S.E.2d 551 (1972).

Test of Employee Status. - The vital test of who are regular employees and who are independent contractors is to be found in whether the employer has or has not retained the right of control or superintendence over the contractor or employee as to details. First Citizens Bank & Trust Co. v. Academic Archives, Inc., 15 N.C. App. 186, 189 S.E.2d 551 (1972).

A practicing attorney rendering professional services to a client is an independent contractor, and his claim is not entitled to a priority under this section. First Citizens Bank & Trust Co. v. Academic Archives, Inc., 15 N.C. App. 186, 189 S.E.2d 551 (1972).

Agent with Authority to Deduct Salary from Collections. - Under this section, an agent with authority to make collections and to deduct his salary and expenses from the sums collected has no lien for claims for salary earned and expenses incurred before his appointment to the position and more than two months before the appointment of a receiver. Cummer Lumber Co. v. Seminole Phosphate Co., 189 N.C. 206, 126 S.E. 511 (1925).

Claim Based on Contracts for Single Piece of Work. - The claim of an independent company which repaired machinery belonging to the insolvent partnership on a single occasion at a contract price fixed by mutual agreement could not constitute a preferred claim under this section, since the claim was for the unpaid contract price, and not wages. Moreover, the claim was based on a single piece of work. The company was not hired to do permanent or steady work in the usual course of the occupation of another, and this being true, it did not render the service in the regular employment of another. National Sur. Corp. v. Sharpe, 236 N.C. 35, 72 S.E.2d 109 (1952).

Work Done for Receiver. - Claims of laborers for wages due them for work done for the receiver of an insolvent partnership during the receivership cannot qualify for a preferred status under this section. National Sur. Corp. v. Sharpe, 236 N.C. 35, 72 S.E.2d 109 (1952).

This section does not apply to any wages except those due "for labor, work, and services rendered within," i.e., inside the limits of, "two months next preceding the date when proceedings in insolvency were actually instituted and begun." National Sur. Corp. v. Sharpe, 236 N.C. 35, 57, 72 S.E.2d 109 (1952), disapproving the suggestion contained in Walker v. Linden Lumber Co., 170 N.C. 460, 87 S.E. 331 (1915), that the word "within" meant "subsequent," and that the statute, therefore, gave laborers "a first lien" for all their wages accruing "after 60 days prior to the insolvency," notwithstanding the supervening receivership.

Severance Pay Is Not Wages Earned. - Employees under a contract providing for severance pay are not entitled to a lien for such pay against the receiver, since severance pay is not wages earned. In re Port Publishing Co., 231 N.C. 395, 57 S.E.2d 366, 14 A.L.R.2d 842 (1950).

Employees under a contract providing for paid vacations have a lien against the receiver of the employer for one-sixth of their vacation pay, since this amount was earned during the two months next preceding the institution of insolvency proceedings. In re Port Publishing Co., 231 N.C. 395, 57 S.E.2d 366, 14 A.L.R.2d 842 (1950).

When Lien Arises. - The lien of the employees arises upon the sequestration of the property of the insolvent for the purpose of liquidation, or rather the institution of a proceeding for that purpose. The lien does not exist so long as the property remains in the hands of the insolvent. It arises when the property is taken in custodia legis for the purpose of distribution among the creditors. Leggett v. Southeastern People's College, 234 N.C. 595, 68 S.E.2d 263 (1951), commented on in 30 N.C.L. Rev. 442 (1952).

Prior Lienholders Protected. - Property acquired by a private corporation subject to a valid and registered mortgage does not become an asset of the corporation except as subject to the prior lien; and the lien given to laborers on the assets of an insolvent corporation for work done under the conditions stated in this section cannot affect the vested rights obtained by the prior lienholders. Roberts v. Bowen Mfg. Co., 169 N.C. 27, 85 S.E. 45 (1915).

Lienholder Taking Mortgage on Corporate Property Not Protected. - One who takes a mortgage upon corporation property for money loaned to operate it or to secure other debts does so with the knowledge that the lien of his mortgage is subject to be displaced in favor of laborers' liens in case of insolvency. Humphrey Bros. v. Buell-Crocker Lumber Co., 174 N.C. 514, 93 S.E. 971 (1917).

Account as Asset of Bank upon Exercise of Offset. - Where insolvent corporate defendant had $2,568.55 balance with bank, where corporate defendant owed bank on note past due, and where bank was attached as debtor of corporate defendant, order of attachment against bank could not be sustained on basis that twenty-one employees of depositor (i.e., corporate defendant) whose checks were outstanding had lien upon company's assets superior to all other liens under provisions of this section; lien that employees had was against assets of their employer and did not attach to assets of others, and checking account balance became asset of bank upon right of offset being asserted. Killette v. Raemell's Sewing Apparel, Inc., 93 N.C. App. 162, 377 S.E.2d 73 (1989).

Priority of Claims of Federal Government. - While this section creates what is denominated a lien, in practical effect it grants to the employees of the insolvent a right of payment of the designated wages prior to the payment of any other claim, secured or unsecured. This preference is subordinate to the right of the United States under the provisions of 31 U.S.C. § 191, giving priority to debts due the United States. Leggett v. Southeastern People's College, 234 N.C. 595, 68 S.E.2d 263 (1951), commented on in 30 N.C.L. Rev. 442 (1952).

The lien of the employees under this section is not specific or preferred in the sense necessary to give it precedence over the claim of the federal government for taxes under the provisions of 26 U.S.C. § 3672. Leggett v. Southeastern People's College, 234 N.C. 595, 68 S.E.2d 263 (1951), commented on in 30 N.C.L. Rev. 442 (1952).

Notice Need Not Be Filed. - Under this section, the laborer is not required to file a notice of his claim. Walker v. Linden Lumber Co., 170 N.C. 460, 87 S.E. 331 (1915).

ARTICLE 2. Subcontractors', etc., Liens and Rights against Owners.

§ 44-6: Repealed by Session Laws 1971, c. 880, s. 2.

§ 44-7: Repealed by Session Laws 1943, c. 543.

§§ 44-8 through 44-13: Repealed by Session Laws 1971, c. 880, s. 2.

§ 44-14: Repealed by Session Laws 1973, c. 1194, s. 6.

ARTICLE 3. Liens on Vessels.

§§ 44-15 through 44-27: Repealed by Session Laws 1967, c. 1029, s. 2.

Cross References. - As to possessory liens on personal property, see G.S. 44A-1 et seq.

ARTICLE 4. Warehouse Storage Liens.

§§ 44-28, 44-29: Repealed by Session Laws 1967, c. 562, s. 6.

ARTICLE 5. Liens of Hotel, Boarding and Lodging House Keeper.

§§ 44-30 through 44-32: Repealed by Session Laws 1967, c. 1029, s. 2.

Cross References. - As to possessory liens on personal property, see G.S. 44A-1 et seq.

ARTICLE 6. Liens of Livery Stable Keepers.

§§ 44-33 through 44-35: Repealed by Session Laws 1967, c. 1029, s. 2.

Cross References. - As to possessory liens on personal property, see G.S. 44A-1 et seq.

ARTICLE 7. Liens on Colts, Calves and Pigs.

§§ 44-36 through 44-37.1: Repealed by Session Laws 1967, c. 1029, s. 2.

Cross References. - As to possessory liens on personal property, see G.S. 44A-1 et seq.

ARTICLE 8. Perfecting, Recording, Enforcing and Discharging Liens.

Sec.

§ 44-38. Claim of lien to be filed; place of filing.

All claims shall be filed in the office of the clerk of superior court in the county where the labor has been performed or the materials furnished, specifying in detail the materials furnished or the labor performed, and the time thereof. If the parties interested make a special contract for such labor performed, or if such material and labor are specified in writing, in such cases it shall be decided agreeably to the terms of the contract, provided the terms of such contract do not affect the lien for such labor performed or materials furnished.

History

(1869-70, c. 206, s. 4; 1876-7, c. 53, s. 1; Code, s. 1784; Rev., s. 2026; C.S., s. 2469; 1971, c. 1185, s. 4.)

Cross References. - As to filing a false lien or encumbrance, see G.S. 14-118.6.

As to perfection of security interests in vehicles requiring certificates of title, see G.S. 20-58 et seq.

CASE NOTES

The purpose of filing claims for liens under this section is to give the public notice of the claims, the amount, the material supplied or the labor done, and when done, on what property, specified with such details as will give reasonable notice to all persons of the character of the claims and the property on which the lien attached. Cook v. Cobb, 101 N.C. 68, 7 S.E. 700 (1888); Fulp v. Kernersville Light & Power Co., 157 N.C. 157, 72 S.E. 867 (1911).

Necessity of Compliance. - Compliance with this section is necessary to perfect lien. Equitable Life Assurance Soc'y v. Basnight, 234 N.C. 347, 67 S.E.2d 390 (1951).

The claimant must comply strictly, certainly substantially, in all material respects, with the requirements of the statute, and it is but reasonable and just that he should do so. Cook v. Cobb, 101 N.C. 68, 7 S.E. 700 (1888), holding claim of lien insufficient for failure to comply with statutory requirements.

Compliance with this section was not required to perfect lien under former G.S. 44-2. Barbre-Askew Fin., Inc. v. Thompson, 247 N.C. 143, 100 S.E.2d 381 (1957).

What "Filing" Imports. - The filing of a lien for labor or materials imports more than mere delivery of the written claim to the clerk's office, and requires the transcribing of the notice of lien in the lien docket in the clerk's office and the indexing of same in the name of the claimant; but, as distinguished from liens required by statute to be registered in the office of the register of deeds, it does not require cross-indexing. Saunders v. Woodhouse, 243 N.C. 608, 91 S.E.2d 701 (1956).

Place of Filing. - As to place of filing under former law, see Chadbourn v. Williams, 71 N.C. 444 (1874).

A lien for material and labor was properly filed where the clerk after delivery attached it in its original form to specified page in a book labeled "Lien Docket," where the book without question was the book intended as the lien docket contemplated by former G.S. 2-42 (now G.S. 7A-109), even though the book was also used for the filing of liens for old age assistance, since former G.S. 108-30.1 provided that such liens should be filed in the regular lien docket. Saunders v. Woodhouse, 243 N.C. 608, 91 S.E.2d 701 (1956).

Stipulation that notice was filed with defendant landlord does not comply with this section requiring notice to be filed in the office of the superior court clerk. Eason v. Dew, 244 N.C. 571, 94 S.E.2d 603 (1956).

Particularity Required. - A claim of lien filed under the provisions of this section must comply with the requirements of the statute. Therefore, when the plaintiff's claim failed to specify in detail the material furnished and the labor performed, or the time when the material was furnished and the labor was performed, it was irregular and void. Wray v. Harris, 77 N.C. 77 (1877).

While a substantial compliance with this section is necessary to the validity of a lien filed for material, etc., furnished in the erection of a building, it is not required that the claimant file his itemized statement of the material used in a building which he had contracted to complete for the owner for one sum; but the time of the completion of the work must be stated. Jefferson & Bros. v. Bryant, 161 N.C. 404, 77 S.E. 341 (1913).

This section does not require a listing of material item by item, or the labor hour by hour. Yet it demands more than a mere summary statement. It requires a statement in sufficient detail to put parties who are or may become interested in the premises on notice as to the labor performed and material furnished, the time when the labor was performed and the material was furnished, the amount due therefor, and the property upon which it was employed. Lowery v. Haithcock, 239 N.C. 67, 79 S.E.2d 204 (1953).

Statements Held Sufficient. - When a lienor's schedule for material contains a full itemized statement in detail of the material furnished, and the clerk has entered on his docket the names of the lienor and lienee, the amount claimed by each lienor, a description of the property by metes and bounds, and the dates between which the materials were furnished, referring to the schedule of prices and materials attached to the notice, and asking that it "be taken as a part of the notice of lien," compliance with this section was sufficient. Fulp v. Kernersville Light & Power Co., 157 N.C. 157, 72 S.E. 867 (1911).

Claim for a laborer's lien before a justice of the peace, which read, "J.S.C., owner and possessor, to D.A.C., 22 October, 1894. To 1221/2 days of labor as sawyer at his sawmill, on Jumping Run Creek, from 1 October, 1893, to 31 August, 1894, $127.24. (Signed) D.A.C., claimant," and was sworn to was a reasonable and substantial compliance with the statute. Cameron v. Consolidated Lumber Co., 118 N.C. 266, 24 S.E. 7 (1896). See also, Lowery v. Haithcock, 239 N.C. 67, 79 S.E.2d 204 (1953).

Lien for Building Materials. - The lien of a plaintiff who furnished materials for a building was not avoided because in the notice thereof that was filed with the clerk the lien was made to attach on two distinct lots separated by a street. Chadbourn v. Williams, 71 N.C. 444 (1874).

Defect When Lien Is Filed. - The claim of lien is the foundation of the action to enforce the lien, and if such lien is defective when filed, it is no lien. Mebane Lumber Co. v. Avery & Bullock Bldrs., Inc., 270 N.C. 337, 154 S.E.2d 665 (1967).

Defects Not Cured by Amendment or Pleadings. - Where a laborer's claim of lien as filed was defective in failing to specify the time of his labor and that it was done on a particular crop, these defects were not cured by alleging the necessary facts in the pleadings in action to enforce the lien. Cook v. Cobb, 101 N.C. 68, 7 S.E. 700 (1888).

Where suit was brought by a contractor to enforce a lien on a building which was to have been paid for in a single sum, and the claim as filed with the clerk was defective in not stating the time the house was completed, as required by this section, it could not be cured by amendment allowed in the superior court at the trial. Jefferson & Bros. v. Bryant, 161 N.C. 404, 77 S.E. 341 (1913).

A defect in a lien cannot be cured by amendment after the filing period has expired, nor by alleging the necessary facts in the pleadings in an action to enforce the lien. Mebane Lumber Co. v. Avery & Bullock Bldrs., Inc., 270 N.C. 337, 154 S.E.2d 665 (1967).

Admiralty Proceedings. - The provisions of this section and former G.S. 44-39 are not binding on an admiralty court in a proceeding to establish a lien for labor and materials furnished in the repair of a vessel, but the limitations which they prescribe can be considered by the admiralty court in applying the doctrine of laches. Phelps v. The Cecelia Ann, 199 F.2d 627 (4th Cir. 1952).

While state statutory provisions of limitation do not bind a federal court in admiralty proceedings, it is proper to consider them in applying the principle of laches. Thus a proceeding to enforce a maritime lien for supplies and materials furnished to a vessel and its owner was barred by laches, in view of this section and former G.S. 44-39, where the libel was not instituted until 21 months after the claim became due. Davis v. The Nola Dare, 157 F. Supp. 420 (E.D.N.C. 1957).

As to a contract negotiated by husband for drilling of well on wife's property, see Lowery v. Haithcock, 239 N.C. 67, 79 S.E.2d 204 (1953).

Applied in Gainey v. Gainey, 203 N.C. 190, 165 S.E. 547 (1932); Rural Plumbing & Heating, Inc. v. Hope Dale Realty, Inc., 263 N.C. 641, 140 S.E.2d 330 (1965); Neal v. Whisnant, 266 N.C. 89, 145 S.E.2d 379 (1965).

Cited in King v. Elliott, 197 N.C. 93, 147 S.E. 701 (1929); United States v. Durham Lumber Co., 257 F.2d 570 (4th Cir. 1958); United States v. Durham Lumber Co., 363 U.S. 522, 80 S. Ct. 1282, 4 L. Ed. 2d 1371 (1960); Priddy v. Kernersville Lumber Co., 258 N.C. 653, 129 S.E.2d 256 (1963); McDonough Constr. Co. v. Hanner, 232 F. Supp. 887 (M.D.N.C. 1964); G.L. Wilson Bldg. Co. v. Leatherwood, 268 F. Supp. 609 (W.D.N.C. 1967).

§ 44-38.1: Repealed by Session Laws 1967, c. 562, s. 7.

§§ 44-39 through 44-46: Repealed by Session Laws 1969, c. 1112, s. 4.

§ 44-47: Repealed by Session Laws 1971, c. 1185, s. 5.

§ 44-48. Discharge of liens.

All liens created by this Chapter may be discharged as follows:

By filing with the clerk a receipt or acknowledgment, signed by the claimant, that the lien has been paid or discharged.
By depositing with the clerk money equal to the amount of the claim, which money shall be held by said officer for the benefit of the claimant.
By an entry in the lien docket that the action on the part of the claimant to enforce the lien has been dismissed, or a judgment rendered against the claimant in such action.
By a failure of the claimant to commence an action for the enforcement of the lien within six months from the notice of lien filed.

History

(1868-9, c. 117, s. 12; Code, s. 1793; Rev., s. 2033; C.S., s. 2479; 1971, c. 1185, s. 6.)

CASE NOTES

Failure to Enforce as Discharge. - Failure of claimant to enforce his lien within six months as prescribed by former G.S. 44-43 operated as a discharge of the lien. Norfleet v. Tarboro Cotton Factory, 172 N.C. 833, 89 S.E. 785 (1916).

Applied in Rural Plumbing & Heating, Inc. v. Hope Dale Realty, Inc., 263 N.C. 641, 140 S.E.2d 330 (1965).

Cited in Equitable Life Assurance Soc'y v. Basnight, 234 N.C. 347, 67 S.E.2d 390 (1951); Lowery v. Haithcock, 239 N.C. 67, 79 S.E.2d 204 (1953).

ARTICLE 9. Liens upon Recoveries for Personal Injuries to Secure Sums Due for Medical Attention, etc.

Sec.

§ 44-49. Lien created; applicable to persons non sui juris.

From and after March 26, 1935, there is hereby created a lien upon any sums recovered as damages for personal injury in any civil action in this State. This lien is in favor of any person, corporation, State entity, municipal corporation or county to whom the person so recovering, or the person in whose behalf the recovery has been made, may be indebted for any drugs, medical supplies, ambulance services, services rendered by any physician, dentist, nurse, or hospital, or hospital attention or services rendered in connection with the injury in compensation for which the damages have been recovered. Where damages are recovered for and in behalf of minors or persons non compos mentis, the liens shall attach to the sum recovered as fully as if the person were sui juris. The priority of a lien held by the State Health Plan for Teachers and State Employees shall be superior to all nongovernmental liens and rights, whether such liens and rights are prior or subsequent to the lien.
Notwithstanding subsection (a) of this section, no lien provided for under subsection (a) of this section is valid with respect to any claims whatsoever unless the physician, dentist, nurse, hospital, corporation, or other person entitled to the lien furnishes, without charge to the attorney as a condition precedent to the creation of the lien, upon request to the attorney representing the person in whose behalf the claim for personal injury is made, an itemized statement, hospital record, or medical report for the use of the attorney in the negotiation, settlement, or trial of the claim arising by reason of the personal injury, and a written notice to the attorney of the lien claimed.
No action shall lie against any clerk of court or any surety on any clerk's bond to recover any claims based upon any lien or liens created under subsection (a) of this section when recovery has been had by the person injured, and no claims against the recovery were filed with the clerk by any person or corporation, and the clerk has otherwise disbursed according to law the money recovered in the action for personal injuries.

History

(1935, c. 121, s. 1; 1947, c. 1027; 1959, c. 800, s. 1; 1967, c. 1204, s. 1; 1969, c. 450, s. 1; 2001-377, s. 1; 2001-487, s. 59; 2018-52, s. 5(b).)

Editor's Note. - Session Laws 2018-52 provides in its preamble: "Whereas, the employee benefit programs operated by the Department of State Treasurer are an intergenerational partnership between public employees and taxpayers of the State, it is incumbent upon the administrators of those programs to provide for Financial Accountability, Integrity, and Recovery of assets (FAIRness); and

"Whereas, taxpayers should expect FAIRness in these employee benefit programs, and the Department of State Treasurer should be provided all tools necessary to promote that goal; and

"Whereas, public employees who are participants in these employee benefit programs by virtue of deductions from compensation should also expect FAIRness as a baseline in the operation of these programs; and

"Whereas, future generations of North Carolinians benefit from fiscally responsible management provided by FAIRness of these employee benefit programs by the current generation; Now, therefore,"

Session Laws 2018-52, s. 1, provides: "This act shall be known and cited as the 'Financial Accountability, Integrity, and Recovery Act of 2018'."

Session Laws 2018-52, s. 5(e), provides, in part: "Priority of the State Health Plan for Teachers and State Employees' lien over nongovernmental liens and rights created under this section shall apply only to nongovernmental liens and rights that have attached to the applicable property on or after the effective date of this act." Session Laws 2018-52, s. 5(b), added the last sentence in subsection (a).

Effect of Amendments. - Session Laws 2018-52, s. 5(b), effective June 25, 2018, added the last sentence in subsection (a). For applicability, see editor's note.

Legal Periodicals. - For discussion of amendment, see 25 N.C.L. Rev. 450 (1947).

For article concerning liens on personal property not governed by the Uniform Commercial Code, see 44 N.C.L. Rev. 322 (1966).

For comment on new North Carolina wrongful death statute, see 48 N.C.L. Rev. 594 (1970).

CASE NOTES

Strict Construction. - This section and G.S. 44-50 provide rather extraordinary remedies in derogation of the common law and must be strictly construed. Ellington v. Bradford, 242 N.C. 159, 86 S.E.2d 925 (1955).

G.S. 44-50 must be read in conjunction with this section. Charlotte-Mecklenburg Hosp. Auth. v. First of Ga. Ins. Co., 340 N.C. 88, 455 S.E.2d 655 (1995).

Violation of Statute. - Trial court did not err in granting a hospital summary judgment because a settlement between an insurer and a patient resulted in insufficient funds to cover the hospital's liens; by issuing a multi-party check for the settlement amount rather than a check solely payable to the hospital, the insurer violated the requirement that the retention of funds be sufficient to satisfy the lien, for which the insurer had proper notice. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Insurance company's failure to retain, for payment directly to medical lienholders, their share of proceeds from a settlement with a pro se claimant violates the statute. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

The lien of this section attaches to the recovery, if any, and is not a general lien against the assets of the alleged debtor. Gordon v. Forsyth County Hosp. Auth., 409 F. Supp. 708 (M.D.N.C. 1975), aff'd in part, vacated in part, 544 F.2d 748 (4th Cir. 1976).

This section and G.S. 44-50 make any plaintiff's unpaid medical expenses a lien upon his recovery in a personal injury action. Travelers Ins. Co. v. Keith, 283 N.C. 577, 196 S.E.2d 731 (1973).

This section and G.S. 44-50 impose no obligation with reference to such expenses upon the defendant against whom judgment has been rendered. Travelers Ins. Co. v. Keith, 283 N.C. 577, 196 S.E.2d 731 (1973).

The lien provided for by this section is created only where the beneficiary may be indebted for the expenses incurred. Ellington v. Bradford, 242 N.C. 159, 86 S.E.2d 925 (1955).

Lien Should Attach Before Payment by Insurance Company. - If a plaintiff under G.S. 44-50 is to have a lien such as is provided for in this section, the lien should attach before the insurance company makes its payments and when the parties agree upon a settlement; this being so, the plaintiff may enforce the lien against the money which is payable for the personal injury. Charlotte-Mecklenburg Hosp. Auth. v. First of Ga. Ins. Co., 340 N.C. 88, 455 S.E.2d 655 (1995).

Failure to Timely Bill Insurer. - Patient's evidence of a hospital's lien was admissible because, when the hospital chose to rely on the hospital's lien on the patient's expected judgment against an alleged tortfeasor instead of timely billing the patient's health insurer, the hospital did not abandon the lien as (1) applicable statutes permitted this choice, and (2) a contrary interpretation frustrated the fair medical billing statute, which did not intend to force hospitals to bill insurers when other payment sources were available, so the patient remained indebted to the hospital under the medical lien statute. Sykes v. Vixamar, 266 N.C. App. 130, 830 S.E.2d 669 (2019).

Minor Cannot Recover for Medical Expenses. - This section does not change the common-law rule so as to permit the recovery of expenses for medical treatment as a part of a minor's cause of action for injuries. Ellington v. Bradford, 242 N.C. 159, 86 S.E.2d 925 (1955); Price v. Seaboard Air Line R.R., 274 N.C. 32, 161 S.E.2d 590 (1968).

Disbursement. - Insurer lost control over funds, as evidenced by its need to retrieve the multi-party check it issued to a patient prior to re-disbursing funds directly to a hospital, at the time it issued the check to the patient; the insurer's effective loss of control over the funds amounted to a disbursement because the risks that the patient would simply not seek to negotiate the check were the consequences beyond the control of a settlement payor that the medical lien statutes were intended to avoid. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Damages. - Trial court's calculation of damages awarded to a hospital was in error because when trebled based on the trial court's judgment that an insurer engaged in an unfair or deceptive trade practice, the total damages to which the hospital was entitled was $ 971; a pro rata distribution to lienholders is required in the event that fifty percent of a judgment or settlement amount was insufficient to satisfy all valid medical liens. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

No Provision for Lien Where Patient Settles with Wrongdoer. - While this section creates a lien in favor of any person, corporation or governmental body which has provided medical care upon personal injury damages recovered in civil actions by patients who have received medical treatment, there is no provision for creation of a lien where the patient settles with the wrongdoer instead of filing a civil action. Johnston County v. McCormick, 65 N.C. App. 63, 308 S.E.2d 872 (1983).

Pro Rata Distribution of Funds Not Required - G.S. 44-49 and G.S. 44-50 do not require a pro rata distribution of funds among valid lien holders where there are insufficient funds to compensate all of the holders; thus, an attorney was properly granted summary judgment in a hospital's action alleging violation of G.S. 44-49 and G.S. 44-50. N.C. Baptist Hosps., Inc. v. Crowson, 155 N.C. App. 746, 573 S.E.2d 922 (2003), aff'd, 357 N.C. 499, 586 S.E.2d 90 (2003).

Unfair And Deceptive Trade Practices. - Hospital was in privity with an insurer and was permitted to assert a claim for unfair or deceptive trade practices because the insurer was on notice of its duty to settle valid liens before disbursing funds directly to a pro se claimant, and the hospital provided the insurer with the required documentation. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

As to the right of a hospital receiving funds under the Hill Burton Act, 42 U.S.C. § 291 et seq., to file lien under this section, see Gordon v. Forsyth County Hosp. Auth., 409 F. Supp. 708 (M.D.N.C. 1975), aff'd in part, vacated in part, 544 F.2d 748 (4th Cir. 1976).

Hospital acted to assert and preserve its unsecured claim for the full balance owing. Since the settlement proceeds were sufficient to satisfy the hospital's claim and those proceeds were exempt from the claims of all other creditors in the bankruptcy, the hospital was entitled to recover its fees from the settlement proceeds. Omar v. Metrolina Orthopaedic & Sports Medicine Clinic, P.A. (In re Omar), - F. Supp. 2d - (W.D.N.C. Mar. 26, 2008).

Plaintiffs Held Not Entitled to Lien. - Where action for child's damages was instituted in the Edgecombe County Superior Court and plaintiffs did not file a claim for their lien with the clerk of that court within the time designated by this section, they were not entitled to a lien under its provisions. Duke Univ. Medical Ctr., Private Diagnostic Clinic v. Hardy, 89 N.C. 719, 367 S.E.2d 6 (1988).

Cited in Smith v. Hewett, 235 N.C. 615, 70 S.E.2d 825 (1952); Doss v. Sewell, 257 N.C. 404, 125 S.E.2d 899 (1962); Bowen v. Constructors Equip. Rental Co., 283 N.C. 395, 196 S.E.2d 789 (1973); North Carolina Baptist Hosps. v. Mitchell, 88 N.C. App. 263, 362 S.E.2d 841 (1987); Triangle Park Chiropractic v. Battaglia, 139 N.C. App. 201, 532 S.E.2d 833 (2000).

§ 44-49.1: Recodified as § 58-3-135 by Session Laws 1995 (Regular Session, 1996), c. 674, s. 1.

§ 44-50. Receiving person charged with duty of retaining funds for purpose stated; evidence; attorney's fees; charges.

A lien as provided under G.S. 44-49 shall also attach upon all funds paid to any person in compensation for or settlement of the injuries, whether in litigation or otherwise. If an attorney represents the injured person, the lien is perfected as provided under G.S. 44-49. Before their disbursement, any person that receives those funds shall retain out of any recovery or any compensation so received a sufficient amount to pay the just and bona fide claims for any drugs, medical supplies, ambulance services, services rendered by any physician, dentist, nurse, or hospital, or hospital attention or services, after having received notice of those claims. Evidence as to the amount of the charges shall be competent in the trial of the action. Subject to G.S. 135-48.37, the priority of a lien held by the State Health Plan for Teachers and State Employees shall be superior to all nongovernmental liens and rights, whether such liens and rights are prior or subsequent to the lien. Nothing in this section or in G.S. 44-49 shall be construed so as to interfere with any amount due for attorney's services. The lien provided for shall in no case, exclusive of attorneys' fees, exceed fifty percent (50%) of the amount of damages recovered. Except as provided in G.S. 44-51, a client's instructions for the disbursement of settlement or judgment proceeds are not binding on the disbursing attorney to the extent that the instructions conflict with the requirements of this Article.

History

(1935, c. 121, s. 2; 1959, c. 800, s. 2; 1969, c. 450, s. 2; 1995, c. 538, s. 6(b); 1995 (Reg. Sess., 1996), c. 674, s. 3; 2001-377, s. 2; 2018-52, s. 5(c).)

"Whereas, taxpayers should expect FAIRness in these employee benefit programs, and the Department of State Treasurer should be provided all tools necessary to promote that goal; and

"Whereas, future generations of North Carolinians benefit from fiscally responsible management provided by FAIRness of these employee benefit programs by the current generation; Now, therefore,"

Session Laws 2018-52, s. 1, provides: "This act shall be known and cited as the 'Financial Accountability, Integrity, and Recovery Act of 2018'."

Effect of Amendments. - Session Laws 2018-52, s. 5(c), effective June 25, 2018, inserted the fifth sentence. For applicability, see editor's note.

CASE NOTES

Legislative Intent. - By directing third parties as to how to disburse funds received for personal injury claims and limiting percentage of balance of recovery, after deducting attorneys' fees, to be paid to those benefitted by statute, legislature intended that such third parties pay no more than 50% of any such balance to service providers. North Carolina Baptist Hosps. v. Mitchell, 323 N.C. 528, 374 S.E.2d 844 (1988).

Insurer's actual notice of the medical expenses incurred by an injured party created a lien against future settlement proceeds, where such notice was provided to the insurer by the pro se injured party rather than by the medical provider or the injured party's attorney, thus triggering the obligations under G.S. 44-50; the intent of the statute was to ensure that medical service providers were paid when injured parties later received compensation for their injuries. Smith v. State Farm Mut. Auto. Ins. Co., 157 N.C. App. 596, 580 S.E.2d 46, cert. denied, 357 N.C. 507, 587 S.E.2d 674 (2003).

The Employee Retirement Income Security Act preempts this section, the North Carolina apportionment statute. Hampton Indus., Inc. v. Sparrow, 981 F.2d 726 (4th Cir. 1992).

Strict Construction. - This section and G.S. 44-49 provide rather extraordinary remedies in derogation of the common law and must be strictly construed. Ellington v. Bradford, 242 N.C. 159, 86 S.E.2d 925 (1955).

This section must be read in conjunction with G.S. 44-49. Charlotte-Mecklenburg Hosp. Auth. v. First of Ga. Ins. Co., 340 N.C. 88, 455 S.E.2d 655 (1995).

Literal Interpretation Was Improper. - Plaintiff's argument that plain language of this section did not prevent assignment of proceeds of personal injury claim received by third party failed, because strictly literal interpretation would have contravened intent of legislature, which was, in part, to provide that injured party receive some part of amount recovered for his injury by requiring third parties, receiving funds paid for personal injury claim, to pay no more than 50% of amount recovered, exclusive of attorneys' fees, to service providers. North Carolina Baptist Hosps. v. Mitchell, 323 N.C. 528, 374 S.E.2d 844 (1988).

Failure to Retain Payment for Medical Lienholders. - Insurance company's failure to retain, for payment directly to medical lienholders, their share of proceeds from a settlement with a pro se claimant violates the statute. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Trial court did not err in granting a hospital summary judgment because a settlement between an insurer and a patient resulted in insufficient funds to cover the hospital's liens; by issuing a multi-party check for the settlement amount rather than a check solely payable to the hospital, the insurer violated the provision requiring the retention of funds sufficient to satisfy the lien, for which the insurer had proper notice. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

This section and G.S. 44-49 make plaintiff's unpaid medical expenses a lien upon his recovery in a personal injury action. Travelers Ins. Co. v. Keith, 283 N.C. 577, 196 S.E.2d 731 (1973).

But they impose no obligation with reference to such expenses upon the defendant against whom judgment has been rendered. Travelers Ins. Co. v. Keith, 283 N.C. 577, 196 S.E.2d 731 (1973).

Lien Should Attach Before Payment by Insurance Company. - If a plaintiff under this section is to have a lien such as is provided for in G.S. 44-49, the lien should attach before the insurance company makes its payments and when the parties agree upon a settlement; this being so, the plaintiff may enforce the lien against the money which is payable for the personal injury. Charlotte-Mecklenburg Hosp. Auth. v. First of Ga. Ins. Co., 340 N.C. 88, 455 S.E.2d 655 (1995).

Recovery Against Attorney. - Plain language of former G.S. 135-45.15, now codified at G.S. 135-48.37, similarly to G.S. 44-50, places a duty upon an injured party's attorney to direct settlement funds recovered by an injured State Health Plan for Teachers and State Employees (State Health Plan) member to the State Health Plan in satisfaction of its statutory lien; by establishing this duty, the statute necessarily also creates a cause of action by which the State Health Plan may enforce its lien under the statute against an attorney who violates its requirements by failing to disburse his client's settlement proceeds in accordance with the statute. State Health Plan for Teachers & State Emples. v. Ellison, 227 N.C. App. 114, 744 S.E.2d 473 (2013).

The doctrine of election of remedies did not bar plaintiff chiropractor's recovery from defendant attorney where the attorney's clients were liable to plaintiff for having received services for which they had not paid and the defendant was liable to plaintiff pursuant to this section; the separate actions by plaintiff against either its patients or their attorney were not inconsistent and did not seek any additional or alternative forms of relief and there was no threat of double recovery, as the defendants in each action could claim contribution for payments made by the other, both in defense of the suit and in defense of any proceedings to collect a judgment. Triangle Park Chiropractic v. Battaglia, 139 N.C. App. 201, 532 S.E.2d 833 (2000).

Unfair And Deceptive Trade Practices. - Trial court properly granted a hospital summary judgment because an insurer's unfair and deceptive conduct arose out of its violation of G.S. 44-50 and G.S. 44-50.1 and its repeated failure to settle a medical provider's valid lien upon request; the insurer's failure to notify the medical lienholders of its settlement, and its direction of the hospital for months to seek its recovery from a patient were not only unfair but deceptive. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Trial court did not err in concluding that an insurer committed an unfair trade practice because its failure to withhold funds subject to valid medical liens, including a hospital's lien, prior to its disbursement of funds to a patient resulted in an actual injury to the hospital; the insurer's failure to retain funds delayed the hospital's recovery of funds to which it was legally entitled, and that delay constituted injury. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Insurer's violation of G.S. 44-49 and 44-50 and refusal to pay a hospital's lien before disbursing settlement funds to a pro se claimant amounted to an unfair or deceptive act because the insurer repeatedly refused to reissue a check payable solely to the hospital; the hospital presented letters it sent to the insurer requesting payment of the lien, admissions by the insurer of receipt of those letters, and its admission of its failure to respond to the hospital's requests. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Hospital was in privity with an insurer and was permitted to assert a claim for unfair or deceptive trade practices because the insurer was on notice of its duty to settle valid liens before disbursing funds directly to a pro se claimant, and the hospital provided the insurer with the required documentation. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Distribution of Proceeds Held Proper. - Action of defendant attorney in receiving $25,000.00 in settlement proceeds, deducting her fee of 25%, and then dividing the balance equally between injured party and medical providers was in direct accord with this section. North Carolina Baptist Hosps. v. Mitchell, 88 N.C. App. 263, 362 S.E.2d 841 (1987), aff'd, 323 N.C. 528, 374 S.E.2d 844 (1988).

Attorney who followed disbursement provisions of this section when disbursing client's funds from personal injury settlement was not held liable for client's unpaid debt to medical service provider whom attorney knew had obtained client's assignment of all such funds up to full amount of client's debt for medical services. North Carolina Baptist Hosps. v. Mitchell, 323 N.C. 528, 374 S.E.2d 844 (1988).

G.S. 44-49 and G.S. 44-50 do not require a pro rata distribution of funds among valid lien holders where there are insufficient funds to compensate all of the holders; thus, an attorney was properly granted summary judgment in a hospital's action alleging violation of G.S. 44-49 and G.S. 44-50. N.C. Baptist Hosps., Inc. v. Crowson, 155 N.C. App. 746, 573 S.E.2d 922 (2003), aff'd, 357 N.C. 499, 586 S.E.2d 90 (2003).

§ 44-50.1. Accounting of disbursements; attorney's fees to enforce lien rights.

Notwithstanding any confidentiality agreement entered into between the injured person and the payor of proceeds as settlement of compensation for injuries, upon the lienholder's written request and the lienholder's written agreement to be bound by any confidentiality agreements regarding the contents of the accounting, any person distributing funds to a lienholder under this Article in an amount less than the amount claimed by that lienholder shall provide to that lienholder a certification with sufficient information to demonstrate that the distribution was pro rata and consistent with this Article. If the person distributing settlement or judgment proceeds is an attorney, the accounting required by this section is not a breach of the attorney-client privilege.
The certification under subsection (a) of this section shall include a statement of all of the following:
1. The total amount of the settlement.
2. The total distribution to lienholders, the amount of each lien claimed, and the percentage of each lien paid.
3. The total attorney's fees.
Nothing in this Article shall be construed to require any person to act contrary to the requirements of the Health Insurance Portability and Accountability Act of 1996, P.L. 104-91, and regulations adopted pursuant to that Act.

History

(2003-309, s. 1.)

CASE NOTES

Insurer's violation of G.S. 44-49 and G.S. 44-50 and refusal to pay a hospital's lien before disbursing settlement funds to a pro se claimant amounted to an unfair or deceptive act because the insurer repeatedly refused to reissue a check payable solely to the hospital; the hospital presented letters it sent to the insurer requesting payment of the lien, admissions by the insurer of receipt of those letters, and its admission of its failure to respond to the hospital's requests. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Violation of Statute. - Trial court did not err in granting a hospital summary judgment because a settlement between an insurer and a patient resulted in insufficient funds to cover the hospital's liens; by issuing a multi-party check for the settlement amount rather than a check solely payable to the hospital, the insurer violated the provision requiring the retention of funds sufficient to satisfy the lien, for which the insurer had proper notice. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Damages. - Trial court's calculation of damages awarded to a hospital was in error because when trebled based on the trial court's judgment that an insurer engaged in an unfair or deceptive trade practice, the total damages to which the hospital was entitled was $ 971; the statute requires a pro rata distribution to lienholders in the event that fifty percent of a judgment or settlement amount was insufficient to satisfy all valid medical liens. Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co., 254 N.C. App. 726, 803 S.E.2d 256 (2017), review denied, 370 N.C. 578, 809 S.E.2d 869, 2018 N.C. LEXIS 128 (2018).

Cited in Dickson v. Rucho, 366 N.C. 332, 737 S.E.2d 362 (2013).

§ 44-51. Disputed claims to be settled before payments.

Whenever the sum or amount or amounts demanded for medical services or hospital fees shall be in dispute, nothing in this Article shall have any effect of compelling payment thereof until the claim is fully established and determined, in the manner provided by law: Provided, however, that when any such sums are in dispute the amount of the lien shall in no case exceed the amount of the bills in dispute.
This section shall not apply to amounts owed to the State Health Plan for Teachers and State Employees for past-due account receivables related to claims payments.

History

(1935, c. 121, s. 3; 1943, c. 543; 2018-52, s. 5(d).)

"Whereas, taxpayers should expect FAIRness in these employee benefit programs, and the Department of State Treasurer should be provided all tools necessary to promote that goal; and

"Whereas, future generations of North Carolinians benefit from fiscally responsible management provided by FAIRness of these employee benefit programs by the current generation; Now, therefore,"

Session Laws 2018-52, s. 1, provides: "This act shall be known and cited as the 'Financial Accountability, Integrity, and Recovery Act of 2018'."

Effect of Amendments. - Session Laws 2018-52, s. 5(d), effective June 25, 2018, added subsection (b). For applicability, see editor's note.

ARTICLE 9A. Liens for Ambulance Service.

Sec.

§ 44-51.1. Lien on real property of recipient of ambulance service paid for or provided by county or municipality.

There is hereby created a general lien upon the real property of any person who has been furnished ambulance service by a county or municipal agency or at the expense of county or municipal government. The lien created by this section shall continue from the date of filing until satisfied, except that no action to enforce it may be brought more than 10 years after the date on which ambulance service was furnished nor more than three years after the date of recipient's death. Failure to bring action within such times shall be a complete bar against any recovery and shall extinguish the lien.

History

(1969, c. 684.)

§ 44-51.2. Filing within 90 days required.

No lien created by G.S. 44-51.1 shall be valid but from the time of filing in the office of the clerk of superior court a statement containing the name and address of the person against whom the lien is claimed, the name of the county or municipality claiming the lien, the amount of the unpaid charge for ambulance service, and the date and place of furnishing ambulance service for which charges are asserted and the lien claimed. No lien under this Article shall be valid unless filed in accordance with this section within 90 days of the date of the furnishing the ambulance service.

History

(1969, c. 684.)

Cross References. - As to filing a false lien or encumbrance, see G.S. 14-118.6.

§ 44-51.3. Discharge of lien.

Liens created by this Article may be discharged as follows:

By filing with the clerk of superior court a receipt or acknowledgment, signed by the county or municipal treasurer, that the lien has been paid or discharged;
By depositing with the clerk of superior court money equal to the amount of the claim, which money shall be held for the benefit of the claimant; or
By an entry in the lien docket that the action on the part of the lien claimant to enforce the lien has been dismissed, or a judgment has been rendered against the claimant in such action.

History

(1969, c. 684.)

ARTICLE 9B. Attachment or Garnishment and Lien for Ambulance Service in Certain Counties.

Sec.

§ 44-51.4. Attachment or garnishment for county or city ambulance or county or city supported ambulance service.

Whenever ambulance services are provided by a county, by a county-franchised ambulance service supplemented by county funds, or by a municipally owned and operated ambulance service or by an ambulance service supplemented by municipal funds and a recipient of such ambulance services or one legally responsible for the support of a recipient of such services fails to pay charges fixed for such services for a period of 90 days after the rendering of such services, the county or municipality providing the ambulance services, or providing financial support to the ambulance service, may treat the amount due for such services as if it were a tax due to the county or municipality and may proceed to collect the amount due through the use of attachment and garnishment proceedings as set out in G.S. 105-368.

History

(1969, c. 708, s. 1; 1973, c. 1366, s. 1; 1975, c. 595, s. 2; 1991, c. 595, s. 1.)

Local Modification. - Pitt: 2014-72, s. 1, as amended by 2021-104, s. 1.5; Union: 2014-72, s. 1, as amended by 2021-104, s. 1.5.

§ 44-51.5. General lien for county or city ambulance service.

There is hereby created a general lien upon the real property of any person who has been furnished ambulance service by a county, by a county-franchised ambulance service supplemented by county funds, or municipal agency or at the expense of a county or municipal government or upon the real property of one legally responsible for the support of any person who has been furnished such ambulance service.

History

(1969, c. 708, s. 2; 1973, c. 1366, s. 2.)

Local Modification. - Pitt: 2014-72, s. 2, as amended by 2021-104, s. 1.5; Union: 2014-72, s. 2, as amended by 2021-104, s. 1.5.

§ 44-51.6. Lien to be filed.

No lien created by G.S. 44-51.5 shall be valid but from the time of filing in the office of the clerk of superior court a statement containing the name and address of the person against whom the lien is claimed, the name of the county or municipality claiming the lien, the amount of the unpaid charge for ambulance service, and the date and place of furnishing the ambulance service for which charges are asserted and the lien claimed. No lien under this section shall be valid unless filed after 90 days of the date of the furnishing of ambulance service, and within 180 days of the date of the furnishing of ambulance service.

History

(1969, c. 708, s. 3.)

Cross References. - As to filing a false lien or encumbrance, see G.S. 14-118.6.

§ 44-51.7. Discharging lien.

Liens created by G.S. 44-51.5 may be discharged as follows:

By filing with the clerk of superior court a receipt of acknowledgment, signed by the county treasurer, that the lien has been paid or discharged;
By depositing with the clerk of superior court money equal to the amount of the claim, which money shall be held for the benefit of the claimant; or
By an entry in the lien docket that the action on the part of the lien claimant to enforce the lien has been dismissed, or a judgment has been rendered against the claimant in such action.

History

(1969, c. 708, s. 4.)

§ 44-51.8. Counties to which Article applies.

The provisions of this Article shall apply only to Alamance, Alexander, Alleghany, Anson, Ashe, Beaufort, Bertie, Bladen, Brunswick, Buncombe, Burke, Cabarrus, Caldwell, Camden, Carteret, Caswell, Catawba, Chatham, Cherokee, Chowan, Cleveland, Columbus, Craven, Cumberland, Dare, Davidson, Davie, Duplin, Durham, Edgecombe, Forsyth, Franklin, Gaston, Gates, Graham, Granville, Greene, Guilford, Halifax, Harnett, Haywood, Henderson, Hertford, Hoke, Hyde, Iredell, Johnston, Jones, Lee, Lenoir, Lincoln, McDowell, Macon, Madison, Mecklenburg, Mitchell, Montgomery, Moore, Nash, New Hanover, Onslow, Orange, Pasquotank, Pender, Person, Pitt, Polk, Randolph, Richmond, Robeson, Rockingham, Rowan, Rutherford, Sampson, Scotland, Stanly, Stokes, Surry, Swain, Transylvania, Tyrrell, Union, Vance, Wake, Warren, Washington, Watauga, Wilkes, Wilson, Yadkin and Yancey Counties.

History

(1969, c. 708, s. 5; c. 1197; 1971, c. 132; 1973, c. 880, s. 1; cc. 887, 894, 907, 1182; 1975, c. 595, s. 1; 1977, cc. 64, 138, 357; 1977, 2nd Sess., cc. 1144, 1157; 1979, c. 452; 1983, cc. 186, 424; 1983 (Reg. Sess., 1984), c. 933; 1985, c. 9; 1985 (Reg. Sess., 1986), c. 936, s. 6; 1987, c. 466; 1995, c. 9, s. 1; 1995 (Reg. Sess., 1996), c. 676, s. 1; 2000-15, s. 3; 2000-107, s. 1; 2017-53, s. 1.)

Effect of Amendments. - Session Laws 2017-53, s. 1, effective June 27, 2017, inserted "Bertie" following "Beaufort" and "Gates" following "Gaston."

ARTICLE 10. Agricultural Liens for Advances.

§§ 44-52 through 44-64: Repealed by Session Laws 1965, c. 700, s. 2.

ARTICLE 11. Uniform Federal Tax Lien Registration Act.

§§ 44-65 through 44-68: Repealed by Session Laws 1969, c. 216.

§§ 44-68.1 through 44-68.7: Repealed by Session Laws 1989 (Regular Session, 1990), c. 1047, s. 2.

Cross References. - For the Uniform Federal Lien Registration Act, see now G.S. 44-68.10 et seq.

§§ 44-68.8, 44-68.9: Reserved for future codification purposes.

ARTICLE 11A. Uniform Federal Lien Registration Act.

Sec.

§ 44-68.10. Short title.

This Article may be cited as the Uniform Federal Lien Registration Act.

History

(1969, c. 216; 1989 (Reg. Sess., 1990), c. 1047, s. 1.)

Editor's Note. - Session Laws 1989 (Reg. Sess., 1990), c. 1047 repealed Article 11 of this Chapter, the Uniform Federal Tax Lien Registration Act, and enacted in its place this Article, the Uniform Federal Lien Registration Act. Where appropriate, the historical citations to sections of former Article 11 have been added to the sections of this Article.

§ 44-68.11. Scope.

This Article applies only to federal tax liens, to other federal liens notices of which under any Act of Congress or any regulation adopted pursuant thereto are required or permitted to be filed in the same manner as notices of federal tax liens, and to notices of federal liens upon real property pursuant to 42 U.S.C. § 9607(l).

History

(1989 (Reg. Sess., 1990), c. 1047, s. 1.)

§ 44-68.12. Place of filing.

Notices of liens, certificates, and other notices affecting federal tax liens or other federal liens must be filed in accordance with this Article.
Notices of liens upon real property for obligations payable to the United States and certificates and notices affecting the liens shall be filed in the office of the clerk of superior court of the county in which the real property subject to the liens is situated.
Notices of federal liens upon personal property, whether tangible or intangible, for obligations payable to the United States and certificates and notices affecting the liens shall be filed as follows:
1. If the person against whose interest the lien applies is a corporation or a partnership whose principal executive office is in this State, as these entities are defined in the internal revenue laws of the United States, in the office of the Secretary of State;
2. In all other cases, in the office of the clerk of superior court of the county where the person against whose interest the lien applies resides at the time of filing of the notice of lien.

History

(Ex. Sess. 1924, c. 44, § 1; 1969, c. 216; 1989 (Reg. Sess., 1990), c. 1047, s. 1.)

Cross References. - As to filing a false lien or encumbrance, see G.S. 14-118.6.

§ 44-68.13. Execution of notices and certificates.

Certification of notices of liens, certificates, or other notices affecting federal liens by the Secretary of the Treasury of the United States or his delegate, or by any official or entity of the United States responsible for filing or certifying of notice of any other lien, entitles them to be filed and no other attestation, certification, or acknowledgement is necessary.

History

(1969, c. 216; 1989 (Reg. Sess., 1990), c. 1047, s. 1.)

§ 44-68.14. Duties of filing officer.

If a notice of federal lien, a refiling of a notice of federal lien, or a notice of revocation of any certificate described in subsection (b) is presented to a filing officer who is:
1. The Secretary of State, he shall cause the notice to be numbered, maintained, and indexed in accordance with G.S. 25-9-519, as if the notice were a financing statement within the meaning of the Uniform Commercial Code, Chapter 25 of the General Statutes; or
2. Any other officer described in G.S. 44-68.12, he shall endorse thereon his identification and the date and time of receipt and forthwith file it alphabetically or enter it in an alphabetical index showing the name and address of the person named in the notice, the date and time of receipt, the title and address of the official or entity certifying the lien, and the total amount appearing on the notice of lien.
If a certificate of release, nonattachment, discharge, or subordination of any lien is presented to the Secretary of State for filing he shall cause:
1. A record of a certificate of release or nonattachment to be numbered, maintained, and indexed as if a record of the certificate were a termination statement within the meaning of the Uniform Commercial Code, Chapter 25 of the General Statutes, but the record of the notice of lien to which the certificate relates may not be removed from the files; and
2. A record of a certificate of discharge or subordination to be numbered, maintained, and indexed as if the record of the certificate were a release of collateral within the meaning of the Uniform Commercial Code, Chapter 25 of the General Statutes.
If a refiled notice of federal lien referred to in subsection (a) or any of the certificates or notices referred to in subsection (b) is presented for filing to any other filing officer specified in G.S. 44-68.12, he shall permanently attach the refiled notice or the certificate to the original notice of lien and enter the refiled notice or the certificate with the date of filing in any alphabetical lien index on the line where the original notice of lien is entered.
Upon request of any person, the filing officer shall issue his certificate showing whether there is on file, on the date and hour stated therein, any notice of lien or certificate or notice affecting any lien filed under this Article or (reference previous federal tax lien registration act), naming a particular person, and if a notice or certificate is on file, giving the date and hour of filing of each notice or certificate. The fee for a certificate is five dollars ($5.00). Upon request, the filing officer shall furnish a copy of any notice of federal lien, or notice or certificate affecting a federal lien, for a fee of one dollar ($1.00) per page.

History

(Ex. Sess. 1924, c. 44, ss. 2, 3; 1953, c. 1106, ss. 1, 2; 1963, c. 544; 1969, c. 216; 1989 (Reg. Sess., 1990), c. 1047, s. 1; 2000-169, ss. 33, 34.)

Editor's Note. - The phrase "(reference previous federal tax lien registration act)" in subsection (d) is language from the uniform act that would normally be considered directory. References to former Article 11 should have been inserted in the place of this language.

§ 44-68.15. Fees.

The fee for filing and indexing each notice of lien or certificate or notice affecting the lien in the Office of the Secretary of State is:
1. For a lien on real estate, five dollars ($5.00);
2. For a lien on tangible and intangible personal property, five dollars ($5.00);
3. For a certificate of discharge or subordination, five dollars ($5.00);
4. For all other notices, including a certificate of release or nonattachment, five dollars ($5.00).
The fee for filing and indexing each notice of lien or certificate or notice affecting the lien in the office of the Clerk of Superior Court, and the fee for furnishing the certificate or copies provided for in G.S. 44-68.14(d), is as provided in G.S. 7A-308.
The officer shall bill the district directors of internal revenue or other appropriate federal officials on a monthly basis for fees for documents filed by them.

History

(1969, c. 216; 1983, c. 713, ss. 29-31; 1989 (Reg. Sess., 1990), c. 1047, s. 1.)

§ 44-68.16. Uniformity of application and construction.

This Article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this Article among states enacting it.

History

(1989 (Reg. Sess., 1990), c. 1047, s. 1.)

§ 44-68.17. Liens and notices filed before August 1, 1990.

All liens, notices, certificates, releases and refilings filed before August 1, 1990, to which this Article would otherwise apply if such filing occurred on or after August 1, 1990, and any indexes pertaining thereto, shall be transferred to and maintained in the office in which such filing would have been made had the filing occurred on or after August 1, 1990.

History

(1969, c. 216; 1973, c. 480; 1989 (Reg. Sess., 1990), c. 1047, s. 1.)

ARTICLE 12. Liens on Certain Agricultural Products.

Sec.

§ 44-69. Effective period for lien on leaf tobacco sold in auction warehouse.

No chattel mortgage, agricultural lien, or other lien of any nature upon leaf tobacco shall be effective for any purpose for a longer period than six months after the sale of such tobacco at a regular sale in an auction tobacco warehouse during the regular season for auction sales of tobacco in such warehouse. This section shall not absolve any person from prosecution and punishment for crime.

History

(1943, c. 642, s. 1; 1975, c. 318.)

Legal Periodicals. - For article concerning liens on personal property not governed by the Uniform Commercial Code, see 44 N.C.L. Rev. 322 (1966).

§ 44-69.1. Effective period for liens on peanuts, cotton and grains.

No chattel mortgage, agricultural lien or other lien of any nature upon peanuts, cotton, soybeans, corn, wheat or other grains shall be effective for any purpose for a longer period than 18 months from the date of sale or the date of delivery to the purchaser, whichever date shall fall last. This section shall not absolve any person from prosecution and punishment for crime.

History

(1955, c. 266; 1975, c. 318.)

CASE NOTES

Recovery on Federal Loan Program. - While an action brought by the United States to recover damages for conversion of property is governed by the six-year statute of limitations contained in 28 U.S.C. § 2415(b), and not by similar statutes provided by state law, this section specifically controls the legal duration of an agricultural lien upon soybeans under state substantive law and is not a statute of limitations. Actions to recover on federal loan programs are controlled by federal common law and state law is adopted as the federal common law unless it is found to be discriminatory. In this regard, this section is far from discriminatory and provides an effective mechanism for resolution of disputes concerning perishable, agricultural commodities. United States v. Bailey Feed Mill, Inc., 592 F. Supp. 844 (E.D.N.C. 1984).

Applied in United States v. Currituck Grain, Inc., 6 F.3d 200 (4th Cir. 1993).

§ 44-69.2. Effective period for liens on fruits and vegetables.

No security interest in or lien on fruits and vegetables sold at a regular sale at an auction market at which the Department of Agriculture and Consumer Services furnishes certified inspectors pursuant to Article 17 of Chapter 106 is effective for any purpose more than six months after the date of the sale. This section does not absolve any person from prosecution and punishment for crime.

History

(1981, c. 640, s. 2; 1997-261, s. 109.)

§ 44-69.3. Liens on tangible and intangible assets of milk distributors.

A producer, or an association of producers who supplies milk either through an agreement of sale or on consignment to a distributor shall, upon complying with the provisions of this section, have a lien upon the tangible and intangible assets, including but not limited to the accounts receivable of the distributor to secure payment for such milk. For the purposes of this section, "milk" means the lacteal secretion of cows and includes all skim, butterfat, or other constituents obtained from separation or other process.
The lien claimed by the producer or association of producers must be filed in the office of the clerk of court for the county of the distributor's principal place of business. Provided that if the distributor is not a resident of the State a filing must be made with the clerk of superior court for the county in which the distributor's registered office is located. The clerk shall note the claim of lien on the judgment docket and index the same under the name of the distributor at the time the claim is filed.
A producer or association of producers claiming nonpayment for milk sold to a distributor shall file with the clerk a notarized statement of nonpayment. The statement shall contain at a minimum all of the following information:
1. The name of the distributor who received the milk.
2. The date and quantity of milk shipped for which payment has not been received.
3. Repealed by Session Laws 2004-199, s. 27(f), effective August 17, 2004.
The lien created by this section may be discharged in any of the following manner:
1. Repealed by Session Laws 2004-199, s. 27(f), effective August 17, 2004.
2. By depositing with the clerk of superior court money equal to the amount of the claim, which money shall be held for the benefit of the producer.
3. By an entry in the lien docket that the action on the part of the lien claimant to enforce the lien has been dismissed or a judgment has been rendered against the claimant in such action.
4. By filing with the clerk a sworn statement signed by the producer or an official of an association of producers that the lien or claim of lien has been satisfied.
Action to enforce the lien created by this section may be instituted in any court of competent jurisdiction in the county where the lien was filed not later than 90 days following the maturity of the distributor's obligation to pay for the milk. In the event no action to enforce the lien is commenced within the 90-day period the lien created hereby shall no longer be valid.

The producer or association of producers shall furnish a copy of the statement as provided by this subsection to the distributor, which shall constitute a notice of claim of lien. The notice shall be served personally by a person authorized by law to serve process or by certified mail. The lien granted by this section shall be effective as of the time it is filed with the clerk of court. Provided the distributor shall have the right to contest the validity of such lien by filing, with the clerk of court and serving on the producer within 10 days after he receives notice that the producer has filed a claim of lien, a notice that the distributor contest the amount due thereunder. In the event the distributor fails to contest the lien or is unsuccessful in obtaining a discharge of the lien, the lien shall be perfected as of the date of filing with the clerk of court.

History

(1985, c. 678, s. 1; 2004-199, s. 27(f).)

Effect of Amendments. - Session Laws 2004-199, s. 27(f), effective August 17, 2004, rewrote the second sentence in subsection (a); in subsection (c), inserted "all of" preceding "the following" in the introductory language, repealed subdivision (c)(3), and made minor stylistic changes; in subsection (d), repealed subdivision (d)(1), and made minor stylistic changes in subdivision (d)(2); and deleted the former last sentence in subsection (e), which read: "Nothing herein shall prohibit the North Carolina Milk Commission from acting as a mediator or an arbitrator between the distributor and producer or association of producers when there is a claim of nonpayment at any time before or after claim of lien is filed but before a judgment is rendered."

ARTICLE 13. Factors' Liens.

§§ 44-70 through 44-76: Repealed by Session Laws 1965, c. 700, s. 2.

ARTICLE 14. Assignment of Accounts Receivable and Liens Thereon.

§§ 44-77 through 44-85: Repealed by Session Laws 1965, c. 700, s. 2.

ARTICLE 15. Liens for Overdue Child Support.

§ 44-86. Lien on real and personal property of person owing past-due child support; definitions; filing required; discharge.

Definitions. - As used in this Article, the terms "designated representative", "obligee", and "obligor" have the meanings given them in G.S. 110-129.
Lien Created. - There is created a general lien upon the real and personal property of any person who is delinquent in the payment of court-ordered child support. For purposes of this section, an obligor is delinquent when arrears under a court-ordered child support obligation equals three months of payments or three thousand dollars ($3,000), whichever occurs first. The amount of the lien shall be determined by a verified statement of child support delinquency prepared in accordance with subsection (c) of this section.
Contents of Statement; Verification. - A verified statement of child support delinquency shall contain the following information:
1. The caption and file docket number of the case in which child support was ordered;
2. The date of the order of support;
3. The amount of the child support obligation established by the order; and
4. The amount of the arrearage as of the date of the statement.
Filing and Perfection of Lien. - The verified statement shall be filed in the office of the clerk of superior court in the county in which the child support was ordered. At the time of filing the verified statement, the designated representative in a IV-D case and the obligee in a non-IV-D case shall serve notice on the obligor that the statement has been filed. The notice shall be served and the return of service filed with the clerk of court in accordance with Rule 4 of the North Carolina Rules of Civil Procedure. The notice shall specify the manners in which the lien may be discharged. Upon perfection of the lien, as set forth herein, the clerk shall docket and index the statement on the judgment docket. The clerk shall issue a transcript of the docketed statement to the clerk of any other county as requested by the designated representative in a IV-D case or the obligee in a non-IV-D case. The clerk receiving the transcript shall docket and index the transcript. A lien on personal property attaches when the property is seized by the sheriff. A lien on real property attaches when the perfected lien is docketed and indexed on the judgment docket.
1. IV-D Cases. - In IV-D cases, the filing of a verified statement with the clerk of court by the designated representative shall perfect the lien. The obligor may contest the lien by motion in the cause.
2. Non-IV-D Cases. - In a non-IV-D case, the notice to the obligor of the filing of the verified statement shall state that the obligor has 30 days from the date of service to request a hearing before a district court judge to contest the validity of the lien. If the obligor fails to contest the lien after 30 days from the time of service, the obligee may make application to the clerk, and the clerk shall record and index the lien on the judgment docket. If the obligee files a petition contesting the validity of the lien, a hearing shall be held before a district court judge to determine whether the lien is valid and proper. In contested cases, the clerk of court shall record and index the lien on the judgment docket only by order of the judge. The docketing of a verified statement in a non-IV-D case shall perfect the lien when duly recorded and indexed.
Lien Superior to Subsequent Liens. - Except as otherwise provided by law, a lien established in accordance with this section shall take priority over all other liens subsequently acquired and shall continue from the date of filing until discharged in accordance with G.S. 44-87.
Execution on the Lien. - A designated representative in a IV-D case, after 30 days from the docketing of the perfected lien, or an obligee in a non-IV-D case, after docketing the perfected lien, may enforce the lien in the same manner as for a civil judgment.
Liens Arising Out-of-State. - This State shall accord full faith and credit to child support liens arising in another state when the child support enforcement agency, party, or other entity seeking to enforce the lien complies with the requirements relating to recording and serving child support liens as set forth in this Article and with the requirements relating to the enforcement of foreign judgments as set forth in Chapter 1C of the General Statutes.

The statement shall be verified by the designated representative in a IV-D case and by the obligee in a non-IV-D case.

History

(1997-433, s. 7; 1998-17, s. 1.)

Cross References. - As to filing a false lien or encumbrance, see G.S. 14-118.6.

§ 44-87. Discharge of lien; penalty for failure to discharge.

Liens created by this Article may be discharged as follows:
1. By the designated representative in IV-D cases, or by the obligee in non-IV-D cases, filing with the clerk of superior court an acknowledgment that the obligor has satisfied the full amount of the lien;
2. By depositing with the clerk of superior court money equal to the amount of the claim and filing a petition in the cause requesting a district court judge to determine the validity of the lien. The money shall not be disbursed except by order of a district court judge following the hearing on the merits; or
3. By an entry in the judgment docket book that the action on the part of the lien claimant to enforce the lien has been dismissed, or a judgment has been rendered against the claimant in such action.
An obligee in a non-IV-D case who has received payment in full for a delinquent child support obligation which is the basis for the lien shall, within 30 days of receipt of payment, file with the clerk of court an acknowledgment that the obligor has satisfied the full amount of the lien and that the lien is discharged. If the lienholder fails to timely file the acknowledgment, the obligor may, after serving notice on the obligee, file an action in district court to discharge the lien. If in an action filed by the obligor to discharge the lien, the court discharges the lien and finds that the obligee failed to timely file an acknowledgment discharging the lien, then the court may allow the prevailing party to recover reasonable attorneys' fees to be taxed as court costs against the obligee.

History

(1997-433, s. 7; 1998-17, s. 1.)