Woodruff v. . Bowles

Sep 5, 1889

Versions:

*206 Avery, J.

— after stating the facts: In the natural order of treating the subject, the second exception should be the first considered. The plaintiffs contend that the Court erred in failing to declare that the deed executed by Calvin Bowles, Oct. 6, 1883, to his wife was fraudulent upon its face, and void in law, because the consideration cited therein was “eleven hundred and fifty dollars to him paid by said Asenath Bowles (the receipt of which is hereby acknowledged), and in consideration of natural love and affection.”

Following, and somewhat enlarging, the classification of cases of this kind, in Hardy v. Simpson, 13 Ired., 132, this Court, in Brown v. Mitchell, 102 N. C., 368, states the rule for distinguishing the cases where the duty devolved upon the Court of declaring the fraud without the aid of a jury, those cases where the admitted facts and circumstances raise a presumption of fraud, and the issues are submitted for the jury to determine whether it is rebutted by the evidence, and, third, where a number of circumstances tending to prove the fraud are in evidence, and the jury are left to say by their verdict whether they are sufficient to show, to their satisfaction, that the deed is fraudulent. The first of these propositions is as follows: “When the fraud appears so expressly and plainly upon the face of the deed as to be incapable of explanation by evidence dehors (as where it is manifest, from reading a conveyance, that it was made and intended to secure the case of a debtor embarrassed with debt at the time of its execution), there is a conclusive presumption of fraud, and the Court, without the intervention of a jury, declares the deed fraudulent.” According to the statement appended by the Judge to the plaintiffs’ assignment of errors, there was not even extrinsic evidence that Calvin Bowles owed any debt except the purchase money for the land when he made the agreement with his wife. The plaintiffs’ counsel insist that where the *207 consideration is in part good and in part bad, as where it is notes, some of which are valid and some feigned, the deed is void in toto, and this deed, in which the pecuniary consideration is coupled in conjunction with that of natural affection, falls under that condemnation. To sustain this view they cite Stone v. Marshall, 7 Jones, 300, and Johnson v. Murchison, Winston’s Law, 292. In Morris v. Pearson, 79 N. C., 253, this Court expressly overruled Stone v Marshall (and, by implication, of course, the latter case, in which the former is cited as authority as to the same principle), and approved the cases of Brannock v. Brannock, 10 Ired. 428, and McNeill v. Riddle, 60 N. C., 290, in which just the opposite rule is laid down.

We cannot conclude from the face of the deed that it was made for the ease and comfort of one embarrassed with debt. There is no internal evidence that the grantor was indebted to any person. Nor is the legal inference to be drawn that the deed is vitiated, and is to be treated as voluntary and fraudulent, because to the pecuniary consideration is added that of natural affection. Indeed, if no valuable consideration had been mentioned, the grantor could make a valid voluntary conveyance to his wife, if he retained property sufficient and available to discharge his liabilities. Taylor v. Batman, 92 N. C., 601; Worthy v. Brady, 91 N. C., 265. For the first assignment of error, we find no more support in the evidence and the law applicable to it. The issue of fraud was one for the jury, and the Court could not withdraw it from their consideration without invading their province and disregarding the right of defendants under the Constitution. Beasly v. Bray, 98 N. C., 266.

If, in the aspect of the evidence most favorable to the defendants, or upon their own showing, the deed was fraudulent in law, it was the duty of the Judge to so instruct the jury, and not otherwise. Relying upon the authority of Black v. Justice, 86 N. C., 511, and Temple v. Williams, 4 Ired. *208 Eq., 39, the plaintiffs insist that all the property and money delivered to pay the price of the land belonged, in contemplation of law, to the husband, and certainly that a portion of it was his jure mariti, and the whole consideration must, in any view, fail, because a part of it was feigned. We have already discussed the latter proposition, which is predicated upon the principle laid down in Stone v. Marshall, supra. In the two cases mentioned, this Court held that, where the wife’s land was converted into money by a judicial sale for partition before the adoption of the ('onstitution of 1868, and she suffered the husband to receive the fund due her without any stipulation as to how it should be held, it became personal property and belonged to the husband. In Giles v. Hunter, 103 N. C., 201, the Court say: “If the money arising from the sale of the land (made before the year 1868) was allowed, by her consent, to be paid to him (the husband) it became his property. If it was invested, with her consent, in other lands, and with no request on her part that the land purchased should be conveyed to her, or for her benefit, and the husband took title to himself, the land vested absolutely in him, discharged of any equity in her.” Hackett v. Shuford, 86 N C., 144. But, on the other hand, where the husband and wife joined in the conveyance of a tract of land belonging to her in the year 1842, and it was agreed, verbally, between them that he should receive the purchase money and invest it for her in other lands, and the husband bought other lands with the proceeds of sale, but took title in his own name, this Court decided that he held as a trustee for the wife. Dula v. Young, 70 N. C., 450. And, in that case, after his death, and the death of his wife, her heirs at law held the land, free from the incumbrance of the husband’s debt?, and his administrators were not allowed to subject it as assets.

According to the testimony of the feme plaintiff, under an agreement with herself to account to her and invest for her *209 benefit, she permitted her husband to receive and sell a horse delivered in lieu of the purchase money for her share of a iract of land sold after the partition was made between her father’s heirs. The husband, in pursuance of an understanding with her, sold the horse, as her agent, for one hundred and eighty dollars, and paid that amount on the purchase money due for the land in controversy. With the same .understanding, he received and applied in the same way sixty dollars due her as her moiety of partition of the said land, and forty-two dollars received as her share of a fund arising from a sale of the interest of a deceased brother in her father’s land. The horse, given to her by her father in the year 1857, became the property of the husband, as did the money — ninety dollars — received by the husband as the distributive share of the fund arising from the sale of personal property belonging to her father’s estate. The residue of the purchase money, as she testifies, was two hundred and fifty-nine dollars — her portion of a fund of two thousand dollars, which was to be divided, at her mother’s death, among her children, and was borrowed by her husband from that fund before her mother’s death.

Instead of the instruction asked, having previously given other instructions as to the insolvency of the husband, to which we will presently advert, his Honor told the jury that-,, under the law then in force, all of Ibis property used in the purchase of the land belonged to the husband absolutely, but “ it was competent for him to agree that it should be the property of the wife, and if they had such understanding and agreement in regard to it, and it was agreed further between them that the husband should use and employ it, as his wife’s property in paying for the land, and make her a deed to the land, and he did so use it, and, in good faith, conveyed her the land in pursuance of the agreement, and, without any intent to hinder, delay or defraud his creditors, *210 the deed would not be void as to his creditors.” This instruction being preceded by tlhe statement that the voluntary deed of the husband, if he was insolvent, was void as to creditors, is sustained by the principle announced in Kee v. Vasser, 2 Ired. Eq., 553, and in Smith v. Smith, Winston’s Eq., 30. Both of these cases are cited and approved in George v. High, 85 N. C., 102, as correctly laying down the law as to gifts from a husband to his wife. In this case the Court distinctly recognizes the right of the husband, being solvent, to make valid gifts to his wife, and such gifts of property or money to her were sustained by the Courts of Equity and enforced, after the death of the husband, against his personal representative.

These cases are cited by Justice Ruffin in George v. High, “ to show the policy of the Courts of modern times in regard to this fiction as to the unity of person, and their readiness to dispense with it on account of its tendency oftentimes to defeat real justice and disappoint the most generous intentions of husbands.”

After the explicit instruction that the voluntary deed of the husband to the wife was void, if the husband was insolvent, the Judge told the jury, further, that if, being solvent, he conveyed to her for a full and fair consideration, but with intent to defraud his creditors, and"his wife knew of such intent at the time of the delivery of the deed to her, the deed was fraudulent and void as to his creditors. The •counsel on both sides cite Savage v. Knight, 92 N. C., 493, in support of their respective views, and thus we are again confronted with the question, “ What is the difference in the rules of evidence applicable to absolute deeds, assignments for the benefit of creditors and mortgage deeds, when attacked for fraud?” As an apparent conflict of authorities may be satisfactorily explained by drawing the lines between them, we deem it pertinent to do so.

*211 1. An assignment by a debtor of all his property, or what purports upon the face of the deed to be the whole of his property, ostensibly to provide for the payment of debts due to a portion or all of his creditors, but with intent to hinder, delay or defraud his creditors, or any of them, is fraudulent and void, though neither the trustee nor cestue qui trust had any knowledge of the corrupt intent.

2. A mortgage deed, executed to secure the payment of money loaned, or of a valid pre-existing debt, but also with the intent, on the part of the mortgagor, to hinder, delay or defraud his creditors, will, nevertheless, be deemed valid, and enforced by the Courts as against the claims of creditors other than the mortgagee or cestue qui trust, unless the beneficiary under the deed had knowledge of and participated in the fraud.

“A voluntary assignment means an assignment of all the debtor’s property in trust to pay debts, as contradis-tinguished from a mere sale thereof, or pledge or hypothecation of the property to. a particular creditor, as a mere security in the nature of a mortgage.” Deas v. Barchard, 10 Paige, ch. R., 41. See, also, Lavender v. Thomas, 18 Ga., 668; Battle v. Mayo, 102 N. C., 440; Dowd v. Means, 128 U. S., 278; Rathburn v. Patner, 18 Barb. (N Y.), 272; Wilson v. Forsythe, 24 Barb. (N. Y.), 120; Barker v. Hull, 13 N. H., 293; Hewitt v. Hollins; 11 Penn. St. (1 Jones), 27. A mortgage deed differs from assignment, in that it contains a clause of defeasance under which the property conveyed may revert to the mortgagor, while under an assignment the property transferred to the assignee is to be sold at all events. Morden v. Babcock, 2 Metcalf, 204. Moreover, a mortgage with power of sale in the mortgagee, or a self-executing mortgage, with the same power vested in a trustee, provides that the sale is to be made, if either a certain sum of money, or one which the instrument indicates' the means of making certain, shall not be paid within a given time. So that it appears, from the face of the deed, that the amount of the *212 incumbrance is definitely determined, or is ascertainable, by resorting to a source of information indicated by its terms. Hinsham v. Sumner, 25 Pickering R., 446. If the same rale were applied to mortgage deeds as to voluntary assignments, it would result inevitably in injury to credit, and thus seriously interfere with commercial transactions, because it would prove perilous to loan money on real estate as security if the borrower were involved in debt, though the creditor could look only to recorded deeds and liens appearing of record for information as to the pecuniary condition of the former. The recent amendment to our registration laws, shows the legislative view that it would facilitate the negotiation of loans on such security, to afford the means of tracing title with chances of greater accuracy after the passage of the act.

3. When the grantee in an absolute deed pays a valuable consideration, he gets a good title, though the grantor may have executed the deed with intent to defraud his creditors, if the grantee had no knowledge of the fraudulent intent when it was executed.

As a reason for this difference between absolute conveyances and assignments, this Court, in Savage v. Knight, supra, said: “ A voluntary deed is the result of the operation usually of but one mind — that of the grantor — but a deed, purporting to convey the estate absolutely, is a contract, and requires the concurrence of the minds of both the grantor and grantee.” In the case at bar, we are dealing with a conveyance absolute upon its face, and, therefore, the Court properly instructed the jury that it was necessary to show participation on the part of the grantee in the fraudulent intent of the grantor (if they found the latter was not acting in good faith) before the jury could find, or the Court could declare, the deed fraudulent.

In Morris v. Pearson, supra, Justice Rodman says, in substance, that the apparent conflict of authorities upon the subject of declaring deeds void because a part of the *213 consideration is shown to be erroneous, has grown out of the habit of confounding the consideration with the intent. Upon this idea we may readily reconcile with the views we have announced the authorities relied on by the plaintiff to establish his contention. The principles we have laid down will, at a glance, mark the line between this case and any others in which the conveyance attacked was a voluntary assignment.

It is certain that the plaintiff had no just cause to complain of the. instruction, numbered four, given by the Court, for, assuming Bowles to be solvent, the Court did not tell the jury that the relationship of the parties to the deed, and the inadequacy of the price, if that paid was not a fair one, were badges of fraud or circumstances to be considered in connection with the testimony tending to show the deed was fraudulent, but instructed them that both the failure to pay an adequate price and the fact that the parties were husband and wife, raised a presumption of fraud and cast upon the defendants the burden of rebutting it by the evidence. Bump, on Fraudulent Con., 86; Brown v. Mitchell, supra; Bigelow on Fraud, 136.

While we have not mentioned, specifically, each assignment of error filed by the plaintiffs — and, indeed, some of them are inconsistent with the statement of the case made by the Court — we have considered and discussed every point properly raised by the exceptions to the charge of the Court, and we find no error that should entitle the plaintiffs to a new trial.

It seems difficult to dispel from the minds of parties and counsel the idea that, in actions like this at bar, the appellate Court can, in some way, vacate the finding of a jury that they think is plainly against the weight of testimony. The jury have decided the issue in this case in the light of a full and fair exposition of the law by the learned Judge who presided, and their verdict must stand.

Affirmed.