Peeler v. . Peeler

14 S.E. 59, 109 N.C. 628

• Court: Supreme Court of North Carolina
• Decided: September 5, 1891
• Status: Published

Opinion

Avery, J.

after stating the case, proceeded: Where an insolvent husband has conveyed land to his wife, and a preexisting creditor brings an action to impeach the deed for fraud, the onus is upon her to show that a consideration actually passed in the shape of money paid, something of value delivered, or the discharge of a debt due from the husband to her. Brown v. Mitchell, 102 N. C., 373; Bump, on F. C., pp. 6, 318; Stephenson v. Felton, 106 N. C., 120; Osborne v. Wilkes, 108 N. C., 669; Woodruff v. Bowles, 104 N. C , 213; Bigelow on Fraud, 136. To this extent she is required to assume a burden not placed upon other grantees. Helms v. Green, 105 N. C., 257.

When she offers testimony sufficient to satisfy the jury of the existence, validity and discharge of such previous debt by the conveyance, or shows in some other way that the deed was founded upon a valuable consideration, the burden shifts again and rests upon the plaintiff to show to the satisfaction of the jury the fraud which he has alleged as the ground of the relief demanded. Brown v. Mitchell, supra; McLeod v. Bullard, 84 N. C., 515.

But if, after turning the laboring oar over to the creditor, the jury are satisfied, upon a review of the testimony, that the husband executed the deed to her to hinder, delay or defeat a creditor, in the collection of his debt, and that she participated in his purpose, or knew of his intent at the time, though the consideration may have been a valid pre-exist-ing debt due to her, it is their duty to find that the conveyance was made to defraud creditors.

In the last clause of the statute (The Code, § 1545, 13 Eliz., ch. 5, § 2) it is provided that as against a person whose debt, etc., “shall or might be in anywise disturbed, hindered, delayed or defrauded” by the covinous and fraudulent practices previously mentioned in the same section, viz., by conveyances executed “to the purpose and intent to delay, hinder and defraud creditors,” such conveyance shall be void.

Counsel contended that the charge of the Court was erroneous, in .that the jury were told that if the husband conveyed the property in payment"of her debt, but with intent “to hinder, delay or defeat plaintiff in the recovery of his debt, and the wife participated in the purpose or knew it was being done by him to hinder or delay the plaintiff in the collection of his debt,” they would answer the first issue “Yes,” and that they were not instructed .in lieu of the charge given that the burden was upon the plaintiff to show to their satisfaction that the husband executed the deed for the purpose of defrauding the creditor as well as hindering, delaying or defeating the collection of his claim, and that the wife participated in the purpose on his part to defraud. We do not think that it was essential to follow the statute in the use of the word “defraud” and to couple it by the conjunctive with “ hinder and delay,” if the language used was not such as to lead to misinterpretation of the statute by the jury. In Helms v. Green, 105 N. C., 262, it was held that where one conveyed his land in order to evade the payment of any judgment that might be recovered,in an action for slander, then pending against him, the deed was fraudulent as to existing creditors of the bargainor in the deed. Whether the intent in the mind of the grantor be to hinder, delay or defeat, it is a fraudulent purpose, and comes within the meaning of the statute, which was evidently intended to make any covinous alienation of one’s property of any kind, either to defeat the recovery entirely and thereby defraud the creditor of his whole debt, or to embarrass him by hindrances and delays, such as would drive him to litigation or give him other serious trouble in the recovery of what is due him. Indeed, the language of the statute is fairly susceptible of the construction that the conveyances, etc., described are to be deemed void as against creditors, not only when they are executed with intent to hinder or delay, but also when executed to defraud them by preventing the recovery of any part of the debt. If the husband had declared his purpose to be to embarrass and hinder the plaintiff in realizing his debt in order to induce him reluctantly to accept by way of compromise one-half of the debt in lieu of the whole, his purpose would have been manifestly fraudulent. If he could have accomplished this end, he would unquestionably have succeeded in perpetrating a fraud, but the fraud would have consisted in the intentional delay and hindrance, by which the creditor -was induced to enter into an agreement favorable to the debtor’s interests. A deed executed for the purpose of defeating the recovery of a just debt, due from the grantor, is a species of fraudulent conveyance. It is defined with sufficient accuracy by this description without expressing more specifically the idea that there must exist in the mind of the maker of the instrument, at the time of its execution, an intent to defraud.

Where a husband’s conveyance to his wife is executed with a fraudulent intent, and the wife, with a knowledge of his purpose, accepts the benefit of the act and claims under it, she puts herself beyond the pale of the protection offered to innocent purchasers by the statute (The Code, § 1548; § 6, ch. 5, 13 Eliz.). The law recognizes no disability on the part of married women which gives them the fruits of a fraud on the ground they are not, like persons sui juris in all respects, affected by actual notice of its perpetration. The instruction upon this point is substantially the same as that given in Brown v. Mitchell, 102 N. C., 364, and in Woodruff v. Bowles, 104 N. C., 210, that even where the wife pays a fair consideration for property conveyed to her by her husband, the conveyance is fraudulent in law, if at the time of its execution the wdfe knew that the husband’s purpose was to put the property beyond the reach of a creditor and thereby defraud him.

The fact that the wife appeared to be the purchaser Rom the husband when he owed another debt to the plaintiff, for the payment of which he had made no provision, still threw such suspicion on the transaction as to call for close scrutiny, as would evidence of any other badge of fraud, notwithstanding the husband and wife may have come upon the witness stand, offered their explanation of it, and thereby removed the presumption that would have arisen from the suppression of evidence wdthin their peculiar knowledge. Helms v. Green, 105 N. C, 251.

The defendants did not abandon, though they did not argue, the point raised by the second assignment of error. That there was testimony which threw suspicion upon the transaction and warranted the jury in finding that it was fraudulent, is manifest from a glance at the evidence sent up. The male defendant was not worth more than five hundred dollars apart from his interest in the laud in controversy. His father, after indulging him for years as to the payment of the purchase-money, and permitting him to renew the original by substituting a number of notes falling due in successive years, notified the son in February, 1889, that payment must be made of the notes due, whereupon there was an agreement to arbitrate. But before the day appointed for a settlement in this way, the male defendant conveyed to his wife, without reserving property available and sufficient, according to the evidence, to discharge the debt to the plaintiff. This testimony, without going further, was sufficient evidence of fraud to be submitted to the 5ury. His Honor left the question whether the transaction was. explained by the defendants, and shown to be a sale by the husband to the wife for a valuable consideration, to the jury with a full, fair, able and explicit statement of the law bearing upon the evidence. It would have been error to charge the jury that, upon the whole evidence, the issue should be found for the defendants, and they had no right to demand that the Court should tell the jury, if they believed the testimony of the defendants, or either of them, the transaction was not fraudulent. The instruction was such as to give the defendants the full benefit of any explanation they had made, and they had no right to insist upon additional instruction, or prescribe the terms in which it'should, be expressed.

When the feme defendant was being examined as a witness in her own behalf, her counsel proposed to prove by her that after her husband executed the deed to her they proposed to convey to the plaintiff, by way of compromise, forty acres of the land in dispute and fifty acres owned by the husband in his own right, in satisfaction of his debt. On objection, the testimony was held to be irrelevant and inadmissible. This ruling was unquestionably correct. Sutton v. Robeson, 9 Ired., 380; 1 Greenleaf, § 192.

After careful scrutiny of the evidence and a consideration of all the exceptions, we think there was no error in the rulings of the Court complained of.

Affirmed.