Morehead Banking Co. v. Whitaker

Merrimon, C. J. afier stating the facts: The deed of trust in question upon its face purports by its terms and effect to convey all the property of the defendant debtor to his co-defendant trustee, reserving to the former his right of homestead and personal property exemptions from execution for the benefit of his creditors as therein classified. The trustee is required to take possession of the property, sell it, collect the rights and credits as rapidly as practicable, haying in view the best advantage of the creditors, and to pay their debts as fast as he shall realize money for the purpose. The debtor had the right to so classify and prefer his creditors by paying one or more of them before others. He did not reserve to himself any advantage or provide for any delay or hindrance to his creditors, except that he reserved his rights of property exemptions as allowed by the Constitution and laws. Such reservation does not imply fraud or fraudulent purpose, it withholds nothing from his creditors that they are entitled to have — nothing that they could sell under execution, if the deed had not been made. The deed in no way helped the debtor to claim and have his exemptions — these the law secured to him in any case — they afforded no motive, fraudulent or otherwise, to make the deed. The mere fact that the debtor provided in the deed that he might take money in lieu of articles of property did not prejudice the creditor, this provision did not help him to any advantage to the prejudice of the plaintiffs. In any *348 case he could only get five hundred dollars, and the leading and declared purpose is to get only the exemption allowed by law. The reservation, therefore, did not render the deed presumptively fraudulent upon its face, nor was it evidence of fraud or fraudulent purpose. Eigenbrun v. Smith, 98 N. C., 207. It appeared on the trial that E. A. Whitaker, Jr., a creditor of the third class provided for, is a son of the defendant debtor, and the plaintiffs requested the Court specially to instruct the jury that on account of such relationship the law presumed his debt to be fraudulent, subject to the right of the defendants to rebut such presumption, The Court declined to do so, and the plaintiffs excepted. The mere fact of such relationship and the indebtedness of the father to the son, did notraisdthe presumption that such indebtedness was fraudulent, and hence the plaintiffs -were not entitled to the instruction asked for. Father and son may deal with each other in good faith just as others not so related may do. Where interested parties bring their mutual dealings into question, the mere relationship gives rise to suspicion, and it becomes evidence of fraud. Other like attending evidence may raise the presumption of fraud, subject to be rebutted. Thus, if the father be insolvent and sell his property to his son for less than its reasonable value, the presumption of fraud would arise where explanation is withheld, but such presumption might be rebutted. When such presumption arises, the jury, under proper instructions from the Court, must find the fraudulent intent, unless it shall be rebutted by proof satisfactory to them. Winchester v. Reid, 8 Jones, 377; McCanless v. Flinchum, 89 N. C., 373; Helms v. Green, 105 N. C., 251. The Court having reference to the instruction prayed for above mentioned told the jury that “it is a rule of law, says an eminent Judge, that when a debtor much embarrassed conveys property of much value to a near relation, and the *349 transaction is secret, and no one pi’esent to witness the transaction but mere relations, it is to be regarded as fraudulent; but when the relations are made witnesses in the cause and depose to the fairness and bona fides of the transaction, and that 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 view of the evidence, this instruction was all the plaintiffs were entitled to have. Although it was not directly appropriate, it gave the jury to understand that if the defendant father -was insolvent, and he became largely indebted to his son, a preferred creditor, such indebtedness would “be regarded as fraudulent,” unless it should appear to them otherwise from evidence referred to before them. The instructions of the Court to the jury were intelligent and very fair, rather favorable to the plaintiffs, and they have no substantial grounds of complaint. The jury rendered their verdict adverse to them, and there ivas evidence upon which they might do so. There are other unimportant exceptions, but we need not refer to them further than to say thatjtheyare without merit and cannot be sustained. Affirmed.