Bobbitt v. . Rodwell

AvKR'r, J. after stating the facts: The defendant contends that the deed appears, upon its face, to have been made and intended to secure the ease and comfort of the debtor, and that, therefore, there was no error in the ruling of the Court below that the plaintiff, who, as the assignee, claimed under it, could not recover. It is insisted that the provision that the assignee should be empowered to sell the goods on a credit was evidently intended to hinder, delay and defraud creditors, and that the clause reserving “the sum of five hundred dollars as exemption” was clearly inseited for the ease of the debtor. If it is manifest, upon reading the instru-. ment, that though it. was apparently executed with a fraudulent intent, still some explanation might be given and a different purpose shown, by evidence aliunde. The case belongs to the class that must be submits d to the jury to determine whether the presumption of fraud is rebutted, but where the facts set forth in the case agreed, and apparent from reading the deed of assignment, are not sufficient to raise a presumption of fraud, if the intent is not found as a part of the case agreed, then all the circumstances should be left to the jury, without instruction as to their weight, to determine whether the fraud was proven to their satisfaction. Brown v. Mitchell, 102 N. C., 364; Berry v. Hall *243 decided at this term); Hardy v. Simpson, 13 Ired., 132; Bump, on F. C., ch. 4; Hodges v. Lassiter, 96 N. C., 351; Frank v. Robinson, 96 N. C., 28. This was a voluntary assignment, and therefore it was not necessary to show that the assignee participated in the fraudulent intent. Savage v. Knight, 92 N. C., 493; Woodruff v. Bowles, 104 N. C., 197. The defendant’s counsel cites and relies upon Waite on F. C., § 332, to sustain his position. The author adopts, as correct, the rulings of the Courts of New York, which have been followed in at least four or five other States. But the weight of authority, and reason as well, lead to the conclusion that the highest duty of a trustee is to look to and protect the interest of all the creditors whom he represents, and when he is left free to fix the terms of sale, it often proves prejudicial to their interests to refuse to extend credit, when thereby he can realize a better price for the property. Johnson v. McAlister, 30 Mo., 337; Dance v. Seaman, 11 Grattan, 778; Scott v. Alford, 53 Ala, 82; England v. Reynolds, 38 Ala., 370; Conkling v. Comrad, 6 Ohio St., 611; Wright v. Thomas, 1 Fed. Rep, 716; Farquharson v. Eichelberger, 15 Md., 63; Gimell v. Adams, 11 Hump. (Tenn.), 283. If the trustee, clothed with such power, can often exercise it for the benefit of the ceshtfs que trust, the Courts must act upon the hypothesis that, as a rule, a fiduciary agent will act in good faith, and where, on account of his insolvency, or suspicious conduct, there is reason to 'apprehend that he will prove false to his trust, he may be removed. ' Bump, (in his work on Fraudulent Conveyances, p. 416), says: “If the instrument is wholly silent as to the manner or terms of sale, the authority of the assignee to exercise a discretion in regard to a sale for cash, or a reasonable credit, is unquestionable upon the ordinary principles which govern the duties of trustees. An express provision, therefore, for that which would be implied by law7, if it were absent, will not vitiate the assignment.” Hoffman v. Mackall, 5 Ohio St., 124. *244 So far from admitting that the clause allowing Bobbitt to sell on a credit raises per se a conclusive presumption of fraud, it seems to be consistent with perfect good faith, and falls so far short of giving rise to a presumption of fact against the validity of the deed that it can be considered even a badge of fraud. In some instances, on express provision in a deed of trust for delay in selling the goods conveyed, or for an unreasonable extension of credit, have been held to shift the burden upon an issue involving the question of parol to the party seeking to uphold the deed, while slightly variant limitations upon the power or liability of the trustee have been held to be circumstances to be submitted to the jury to determine their weight, as tending to show the fraud. Hardy v. Skinner, 9 Ired, 191; Moring v. Little, 98 N. C., 472; Eigenbrun v. Smith, 98 N. C., 207; Frank v. Robinson, supra. In the case of Eigenbrun v. Smith, supra, this Court held that the fact that a debtor in a deed conveying bis property for the benefit of creditors reserves to himself the “personal property exemptions allowed him by the Constitution and laws of the Stale does not, in any manner, affect the validity of the deed, and is no evidence of a fraudulent intent or a purpose to hinder or delay his creditors.” See also Burrill on Assignments, § '202. After the description of the property conveyed in the deed, the language is as follows: “First reserving therefrom the sum of $500, being the personal property exemptions exempted and allowed by the Constitution and laws of North Carolina, to him.” It is evident that, while the instrument is not very carefully written, the only fair interpretation that can be given it is, that the assignee, Bobbitt, was to reserve the sum of five hundred dollars in goods (he having received no money), and especially as the reservation is made by the terms of the deed synonymous with the amount allowed by law, which is “ personal property to the value of five hundred dollars, to be selected by the party.” Without a forced con *245 struction, we can find no requirement in the conveyance that the trustee shall first convert the property into money and then pay over the proceeds to the debtor, and, therefore, the question whether the attempt to reserve money instead of property would be a provision for the debtor’s ease, and would make the deed fraudulent upon its face, is not presented. If, therefore, the ruling of his Honor rested upon the idea that the deed wTas fraudulent in law, it was erroneous. The facts constituting the case agreed are, substantially, that the debtor purchased goods worth six hundred and fifty dollars in the earlier part of the Fall before making the assignment; that he executed the conveyance on the 28th day of November to the plaintiff, who was then, and is now, insolvent, and that the Sheriff levied upon and sold the remnant of the goods, inventoried at $115, left after the debtor selected those allowed him as an exemption, and realized from the sale at public auction fifty dollars. His Honor could not upon the facts found, therefore, declare that the deed was made with an intent to defraud creditors, unless he was at liberty to adjudge it fraudulent upon its face. It was the exclusive right of the jury to determine whether it was executed in good faith, and a case agreed could not subserve the purpose of a verdict and enable the Court to proceed to judgment, while the issue upon which the whole controversy hinged remained unanswered. Phifer v. Erwin, 100 N. C., 59; Perry v. Hardison, 99 N. C., 21; Hodges v. Lassiter, 96 N. C., 351. In Beasley v. Bray, 98 N. C., 266, Chief Justice Smith, delivering the opinion of the Court, says: “The Court, therefore, committed error in not submitting an issue as to the intent to the jury, which they, not the Court, must draw in ascertaining the presence of fraud. * * * We see no reason why an insolvent debtor may not sell to another, who, if he has not the present means to pay for his purchase, is also free from other debts.” The *246 insolvency of Bobbitt was, at most, only a circumstance to be submitted bearing upon the issue of fraud. If he is honest and competent, that fact does not necessarily disqualify him to act or show bad faith on the part of the maker of the deed in the assignment to him. There must be a finding either by a jury, or, if a jury trial is waived, or the parties agree to another mode of finding the facts, it must be ascertained and declared as a fact in some manner authorized by law, either that the deed was or was not executed with intent to defraud creditors, before the Court can proceed to judgment. There was error, for which a new trial must be awarded. Error. 'New trial.