Helms v. . Green, 105 N.C. 251

Avery, J.'

-after stating the facts: At an early period in the judicial history of this State, it was held that courts of law might hear evidence and allow a jury to pass even incidentally upon the question, whether a deed was void for fraud in the factum or under 13th or 27th Eliz. (The Code, §§1545 and 1546.) Logan v. Simmons, 1 Dev. & Bat., 16. Hence, in the trial of actions of- ejectment where the question arose whether a deed, relied upon by either of the parties as a part of a chain of title, was executed to hinder, delay or defraud creditors;evidence was heard to attack or sustain such conveyances, though the action was not brought to directly impeach its character. Lee v. Flannagan, 7 Ired., 471; Hardy v. Skinner, 9 Ired., 191; Hardy v. Simpson, 13 Ired., 132; Black v. Caldwell, 4 Jones, 150; Winchester v. Reid, 8 Jones, 377; Wharton on Evidence, §931.

Where land has been sold at execution sale, a party seeking to set aside the Sheriff’s deed because of a fraudulent combination to prevent a fair competition among bidders, was compelled to file his bill formerly in a Court of Equity and must now allege such facts in his pleadings as are relied upon to establish the fraud. Young v. Greenlee, 82 N. C., 346. But in actions for the recovery of land, as in the old action of ejectment, any deed offered as a link in a chain of title is thereby exposed to attack for incapacity in the maker or because it was void under the statute of frauds, though it may not have been mentioned in the pleadings. Jones v. Cohen, 82 N. C., 75; Fitzgerald v. Shelton, 95 N. C., 519. It is this distinction that makes the authorities cited and relied on by defendant’s counsel inapplicable in the case before us.'

The defendant asked the Court to instruct the jury that, “ (4) even if said deed was executed by W. B. Hinson with the actual intent to defraud his creditors, still the plaintiff cannot recover unless the plaintiff satisfies you that the defendant Green co-operated in said fraudulent intent, or had notice thereof.”

The Court gave the instruction, adding the words, “ unless it was a voluntary deed, and not sufficient property was retained to pay Hinson’s debts.” And the defendant further prayed for the charge that, “(5) even if W. B. Hinson was notoriously insolvent, and the defendant knew it at the time said deed was executed, the law raises no presumption that Green knew that Hinson intended to defraud his creditors,” to which the Judge added, “ It is a circumstance, however, to be weighed.”

It was eminently proper that the qualifying words should have been attached by the Court in both instances. There was evidence tending to show that Hinson was embarrassed with debt, and that he did not retain property sufficient and available to discharge his indebtedness. A number of witnesses testified that he was reputed to be insolvent. The defendant Green claims under a deed from Hinson and wife, executed March 20th, 1881, but proven and recorded in April, 1885. Pie offers the tax lists, showing that for the year 1881 W. B. Hinson returned $1,060, and for the year 1882, $1,585, consisting entirely of personal, and almost exclusively of “unspecified property.” We cannot concede the correctness of counsel’s position that the evidence tending to show fraud was rebutted by the return of property, the nature of which was not pointed out, and most of which, we must infer, could not have been reached by an ordinary fieri facias. There was evidence that made it proper that the Judge should modify the fourth instruction as he did. Hin-son had not only disposed of all of his lands to different members of his family, at what witness said were inadequate prices, and afterwards returned for taxation property that did not appear to be within the reach of the ordinary process of law to subject it for debt, but the execution of the deed when no persons but members of the family were present, as insisted, the failure to register, the great discrepancy between the recited and alleged prices, the wide difference between the aggregate amount recited as consideration in the deeds to different members of his family and the amount upon which Hinson paid taxes soon after, and other circumstances, certainly justified the argument to the jury, and would have supported a finding by them that the deed to Green was voluntary, and that in fact no money was paid by him to Hinson for the land.

The fact that the defendant Green was examined by the plaintiff as a witness, does not preclude the latter from insisting before the jury that his testimony was not, and that of witnesses who contradicted him was true, nor prevent the Judge from submitting any view of the law predicated upon that hypothesis.

The Code, § 579, abolishes the action to obtain discovery under oath, and provides that ho “ examination of a party shall be had on behalf of the adverse party except in the manner prescribed in this chapter.” The four succeeding sections, after providing how a party may be compelled to appear and answer both before and at the ltrial, conclude with the provision (section 583) that “the examination of the party thus taken may‘be rebutted by adverse testimony.” The rules prescribed in that chapter for regulating such examinations, interpreted according to their plain import and construed in connection with section 268 of The Code, furnish a substitute equal to the old bill of discovery as a means of eliciting material facts within the peculiar knowledge of an adversary party, and which, moreover, harmonize with the general idea of the code system by obtaining the discovery and the remedy sought by the party asking it in the same action. Coates v. Wilkes, 92 N. C., 382. The allegations of the complaint, and every material allegation of new matter constituting a counter-claim in an answer, directly admitted or not denied, have the effect of a finding by a jurjL Bonham v. Craig, 80 N. C., 224. When the pleadings are complete, other material facts may be elicited from an adversary by examination in support of the main action or the cross-action set up in the counter-claim, if the disclosures by way of admissions are not deemed sufficiently full. A party who puts his adversary on the stand gives him an opportunity to testify on his own behalf on cross-examination, and waives his right of impeaching him by attacking his credibility, but retains the privilege of contradicting him by testimony of other witnesses inconsistent with his. Coates v. Wilkes, supra; Turner v. McIlhaney, 8 Cal., 575; Tul v. Byme, 24 N. J., 631; Drake v. Eakin, 10 Cal., 312; Wharton Ev., §§488,489. We think, therefore, that neither the defendant’s second assignment of error, nor his exception to the refusal to give his instructions numbered 8 and 9, can be sustained.

The Judge unquestionably stated the law correctly when he told the jury that the notorious insolvency of Hinson, if admitted, as set forth in the prayer of defendant, would be a circumstance tending to show that the defendant was a participant in the fraud, and we concur in the propriety of modifying the original proposition drawn by defendant, as it was qualified by the addition made by the Court.

The declared object in enacting 13 Eliz. was to avoid and abolish “feigned gifts, grants, alienations, &c., which may be contrived and devised of fraud, to the purpose and intent to delay, hinder and defraud creditors and others of their just and lawful actions and debts.” So that, if Plinson had conveyed to Green in order to évade the payment of any judgment that might be recovered in an action for slander then pending against him, the deed must be treated as fraudulent in so far as it affected the rights of creditors, such as the plaintiff in the execution under which G. W. Helms bought. 2 Blk., 436; 2 Atkins’Reports, 481.

The defendant asked the Court to instruct the jury that, “even though the purchase money agreed to be paid may have been less than the actual value of the land, this can raise no presumption against the defendant, for it is in proof that the land was involved in litigation, and this fact may well explain the inadequacy of price.”

In lieu of this, the Judge charged them: “That if the jury believe that W. B. Hinson, being much involved in debt, conveyed to his son-in-law, J. L. Green, the land in dispute at much less than its value, and the said son-in-law was himself insolvent at that time, and secured the purchase-money by executing his individual note, which has not been paid, and without any further security, then the lawT presumes the said deed to be fraudulent, and it is incumbent upon the defendant to rebut said presumption, for the law looks with suspicion upon such transactions between near relatives.”

The rule laid down by Justice BoydeN in Reiger v. Davis, 67 N. C., 189, was, that when a debtor, much embarrassed, conveys property of much value to a near .relative, and the transaction is secret and no one is present to witness the trade but these near relatives, it is to be regarded as fraudulent; but when these relatives are made witnesses in the cause, and depose to the fairness and bcma fides of the transaction, and that, in fact, there was no purpose of secrecy, it then becomes a question for the jury to determine the intent which influenced the parties, and to find it fraudulent, or otherwise, as the evidence may satisfy them.

In Brown v. Mitchell, 102 N. C., 372, it is said that, in Reiger v. Davis, svpra, the Court intended only to lay down a rule of evidence applicable in all cases, whether an issue of fraud is involved or not, that “w'here effective proofs are in the power of a party who refuses or neglects to produce them, that naturally raises a presumption that those proofs, if produced, would make against him.”

The language used by Justice Boydkk is not correctly reproduced in the syllabus that seems to have led to an incorrect inference in Tredwell v. Graham, 88 N. C., 208. But in any view of the case, it is only after the relatives, who were present, make some explanation which, if believed, inspires confidence in their good faith and shows that they had no reason or purpose to conceal anj- of the circumstances attending the transaction or the motives leading to it, that the presumption is rebutted and the inadquacy of consideration and the failure to summon others to witness what occurred in the family dwindles in importance from the basis of presumption to mere badges of fraud. Gret-n, when forced as an unwilling witness to testify, did not repel the presumption of a fraudulent intent by shopping that there was no purpose to conceal the fact that the conveyance had been made, and that in fact there was no intention, so far as he knew, on the paz't of Hinson, to defraud creditors. The explanation made by him is couched in very well guarded language. He testified, on cross-examination, that there was “no understanding between him and Hinson that he w'as to take the deed to the land in dispute for the purpose of keeping off Hinson’s creditors,” and he did not say that the price was equal to the real value of the land, but was as much as it was worth, wdth the cloud of litigation as to the title hanging over it. He assigned no reason for postponing the registration of the deed, nor-did he state that it was the positive purpose of his father-in-law to exact, and of himself to pay, the consideration evidenced by the note. He does not state whj7 it wras that the recited consideration was $300, while the real price was $200. In order to repel the presumption, of fraud, the explanation, when attempted, should have been so full that, if believed, it vpould have relieved the transaction of all suspicion and established the good faith of the parties to it. The fact that it is exclu sively within, the power of persons, so nearly related as the defendant and his father-in-law Hinson, to explain every suspicious circumstance, if they did act in good faith, and the neglect to do so voluntarily, or the failure of one of the parties, when he was forced to go upon the stand, to throw light upon it, so as to fully establish, if their explanations were credited, the bona fides of the transaction, is to be considered as due to inability to show that their conduct was consistent with an honest purpose. The presumption arises rather from the peculiar knowledge, on the part of parties to a deed, of facts that would either confirm or remove suspicion raised by circumstances in evidence as to the embarrassment of the grantor and his relationship'to the grantee and the failure to state or prove what they know7, than from any positive testimony as to the persons actually present at the transaction Badges of fraud are suspicious circumstances that overhang a transaction (such as those we have airead}7 mentioned in this case), and where the parties to it withhold testimony that it is exclusively within their-powrer to produce, and that would remove all uncertainty, if believed, as to its character, the law puts the interpretation upon such conduct most unfavorable to the suppressing party, as it does in all cases where a party purposely or negligently fails to furnish evidence under his control and not accessible to his adversary. Wharton on Ev., §§1266 to 1269. This is consistent with the rules as to the quantum and quantity of proof requisite upon issues of fraud heretofore laid down by this Court. Brown v. Mitchell, supra; Harding v. Long, 103 N. C., 1; Berry v. Hall, at this term.

The defendant cannot demand that this Court, under a general exception to the charge, should follow him in a search for error in every part of it. We can go no further than to review7 the portion of the charge substituted for the special instruction asked. McKinnon v. Morrison, 104 N. C., 354.

There is no error. Affirmed.

Case Details

Case Name: Helms v. . Green

Court Name: Supreme Court of North Carolina

Date Published: Feb 5, 1890

Citations: 105 N.C. 251; 11 S.E. 470

Court Abbreviation: N.C.