Bank v. . Gilmer

The exceptions to the judge's remarks to the jury are without merit. Almost the same expressions were used in Osborne v. Wilkes, 108 N.C. 651, and were found unobjectionable on appeal, citing Hannon v. Grizzard,89 N.C. 115. Nor was there error in *Page 402 continuing the term to conclude the trial or to receive the verdict. This is authorized as to felonies by The Code, sec. 1229 (S. v. Adair,66 N.C. 298) and was extended to all other cases by chapter 226, Laws 1893, except that it would not apply to civil cases begun after (701) Thursday of the last week of the term. The trial of this action began on Wednesday. At common law, when the jury in a capital case did not agree during the term, they were carried to the next court where of course the business went on during their deliberations. 2 Hale P. C., 297; S. v. Bullock, 63 N.C. 570. Certainly it could in no wise prejudice the parties that while the jury were out considering their verdict, the judge opened and conducted another term at the same place. It could in no wise have benefited the parties to have had the judge idle, nor could it be expected that the public business should thus, without cause, have been suspended. The court erred in holding that the evidence offered to establish a trust in favor of the sons was sufficient to be submitted to the jury. The relation of debtor and creditor had existed between J. E. Gilmer and wife many years prior to the purchase by him of the land in 1890 for the firm of which he was the senior member. He bought the land with the firm's money and constructed the building thereon also with funds of the firm. He subsequently, in 1891, bought his partner out and took title to himself without any directions or instructions from his wife, who was not consulted. In 1892 he executed more notes to his wife and entered credits on those then existing. At the death of his wife these notes became the property of J. E. Gilmer. Code, sec. 1479. If there was any agreement between him and his wife that he, being indebted to her, was to buy a lot and build a factory, charging the cost on her notes, the property to be held in trust for his sons, it is the evidence of himself and partner that in fact the lot was bought and the factory built with the funds of the firm. The verbal agreement with his wife was executory, and the notes becoming the property of J. E. Gilmer by his wife's death, the deed thereafter to his sons was without consideration, and void as to creditors. The fourth prayer of (702) instructions asked by the plaintiff should therefore have been given, and the instruction given in lieu thereof was erroneous, being based upon a hypothetical state of facts not appearing in the evidence. But if the testimony offered for the plaintiffs was believed by the jury, there were a number of badges of fraud which can scarcely be accurately described except by so denominating them, though they are sometimes designated as circumstances calculated to excite suspicion and challenge scrutiny in order to ascertain whether a conveyance was executed with fraudulent intent. Among the evidences of fraud relied *Page 403 upon by the plaintiffs were the following: 1. That Gilmer owed a debt when he sold the goods; 2. That he sold on credit of 6, 12, 18 and 24 months; 3. That the purchaser was not worth over $500; 4. The purchaser gave his note without security; 5. Gilmer was embarrassed with debt; 6. Though not then insolvent, his embarrassment soon after resulted in insolvency; 7. The sale was to a son. In Beasley v. Bray, 98 N.C. 266, the Court held that an absolute conveyance by an insolvent debtor to an insolvent vendee, who was not fixed with a fraudulent intent, even upon a long credit and without security, was merely evidence of fraud to be considered by the jury. It will be observed that in Beasley's case it was admitted that the debtor was not only embarrassed with debt but was actually insolvent. If in this case it had been admitted that the elder Gilmer was insolvent and conveyed to a son for an insufficient consideration, such a combination of circumstances would have raised a presumption of fraud. "But father and son may deal with each other in good faith just as others not so related may do." Banking Co. v.Whitaker, 110 N.C. 345. If the conveyance to the son by an embarrassed father had been made, when only mere relatives were present, and explanation (703) had been withheld, these circumstances would have raised a presumption which could be rebutted in no other way than by a full disclosure. Helms v. Green, 105 N.C. 251. But in Bank v. Bridgers,114 N.C. 383, the Court said: "The existence of near relationship between the parties to a suspicious transaction often constitutes additional evidence of fraud for the jury," but that it was error to instruct the jury that the existence of such relationship was prima facie evidence of fraud. Had the conveyance been made by an insolvent husband to his wife, the burden would have rested upon those who claimed under it to rebut the presumption of fraud raised by those circumstances. Peeler v. Peeler,109 N.C. 628; Brown v. Mitchell, 102 N.C. 347. This Court has recently held that mere inadequacy of price, however gross and whether considered alone or in connection with other suspicious badges, was only a circumstance tending to prove fraud. Berry v. Hall,105 N.C. 154; Orrender v. Chaffin, 109 N.C. 422. In Berry v. Hall, supra, following Ferrell v. Broadway, 95 N.C. 551, the Court held that a trial judge "was not at liberty to say to the jury that any fact proved or admitted, that does not in law raise a presumption of the truth of the allegation of fraud, is a strong circumstance tending to establish it." In the same opinion, referring to the reasons assigned by the judges when acting as chancellors and passing upon the facts, the Court said: "The reasons assigned in these opinions for giving more or less weight to any testimony were not intended to be, *Page 404 and cannot, without invading the province of the jury by violating The Code, section 413, be adopted as rules to be laid down in the charge of the court for their guidance." In Stoneberger v. Jeffreys, ante, 78, the Court has held that (704) "the burden of proof is sometimes shifted in the progress of the trial, but it is only by the introduction of testimony which the law has declared to be prima facie proof of fraud, but which may be rebutted by evidence deemed by the jury sufficient to explain such suspicious circumstances, and thereby overcome the artificial weight which the law has attached to them, as evidence. McLeod v. Bullard, 84 N.C. 515;Lee v. Pearce, 68 N.C. 77." It thus appears that in recent cases every single circumstance admitted in this case has been declared only a badge of fraud of itself, or where it has been associated with others of the number, the same conclusion has been reached. The application of the abstract proposition (in Brown v. Mitchell, 102 N.C. 347), which it is proposed to so apply as to make every new issue of fraud that may arise a law unto itself, was made with reference to the rule that where the husband transfers property to his wife in payment of an alleged debt, the rule is different from the case of father and son, and that circumstance, in combination with his insolvency, shifts the burden upon the wife to show abona fide indebtedness from the husband. But I can imagine nothing that could introduce greater uncertainty into the law than the proposition that some indefinite combinations of the hundreds of circumstances which are deemed sufficient to throw suspicion upon a business transaction, will hereafter be held to raise a presumption of fraud. In the case at bar, we have eight suspicious circumstances grouped together, and it is proposed to declare them sufficient, as a rule of evidence, to amount to prima facie proof of fraud. Suppose we take these eight badges of fraud and a dozen additional ones, making twenty in all, that have never been heretofore held to be more than suspicious circumstances challenging scrutiny by the jury, and see how many hundreds of different combinations (705) may be made and presented to this Court, and we will be able to form some faint conception of the sea of uncertainty upon which we would embark, were we to make such a vague application of the abstract proposition referred to. Upon the testimony tending to prove all these suspicious circumstances, however, the duty devolved upon the court, in view of the request made by counsel, to speak of them, not as evidential facts bearing upon the issue, but as badges of fraud to be considered by the jury in passing upon the issue involving the fraud. The prayers in which the plaintiffs asked the court to tell the jury that certain *Page 405 evidence, if believed, raised a presumption of a fraudulent intent in the execution of the deed were properly refused by the court, but they demanded, in lieu of what was asked, some more specific instruction to the jury in order to enable them to comprehend the bearing of the circumstances proved, upon the findings. Parties who seek to set aside deeds are required not only to allege the existence of facts which constitute fraud, but to prove what they allege. Where a plaintiff charges the fraud according to the prescribed practice, and an issue, involving it, is framed and submitted, he has a right to insist that circumstances, which his testimony tends to prove and which the law denominates badges of fraud, shall be so called, and that scrutiny upon the part of the jury shall be invited by bestowing upon them their proper designation. Whenever a charge is excepted to, and it appears to the Court that it was calculated to mislead instead of enlightening the jury, a new trial should be granted. It would have necessitated the presence of a jury of lawyers in the box in order to comprehend fully what was the fact in issue, and the evidential facts tending to support the affirmative or the negative view of the proposition, because the language was technical. Such philosophical discussions (706) are addressed, in opinions of courts, to the bar, but instructions to juries are intended, in contemplation of law, to enable men of fair intelligence but without any technical learning to apply the law to the evidence. The portion of the instruction which we think amenable to the charge that it was not responsive to the requests and was calculated to mislead the jury, is as follows: "In a case of circumstantial evidence there are two inquiries for the jury, First, the evidential facts, that is, the facts relevant to the issue — are they true? Second, do you infer from such facts that the fact in issue exists? For example, in regard to the 6th issue, the fact in issue (alleged by plaintiffs and denied by defendants) is, that the goods were sold on 1 July, 1893, by J. E. Gilmer to John L. Gilmer, with intent to defeat or to hinder, or to delay the creditors of J. E. Gilmer or some one or more of them; or, putting this in other words, that his purpose or some part of his purpose in making this sale was to promote his own ease and favor, at the expense of, or to the prejudice of the rights of his creditors. The evidential facts on which the plaintiffs rely and which the defendants do not contradict, are the following." Then follows the judge's enumeration of the circumstances already mentioned, which counsel had insisted either established or raised a presumption of the fraud, but which the court nowhere calls by the comprehensible designation of badges of fraud, or circumstances tending to show fraud, or that call for scrutiny in the consideration of their findings in *Page 406 response to the particular issue. When the plaintiffs took the burden, which the law imposes, of proving the fraud alleged, the court, having refused the instruction that the testimony in any aspect raised a presumption of fraud, should have told the jury, in language calculated to be understood by laymen, the nature and the bearing of the evidence relied upon by the plaintiffs to establish the (707) affirmative of the issue. It was error in lieu thereof to recite these admitted facts and the explanatory evidence offered by the defendants and merely instruct the jury, "The question is whether these facts are true and then whether from the whole evidence you infer the existence or non-existence of the fact in issue, remembering that on the whole case the burden of proof is on the plaintiffs." Nowhere in the charge is there an instruction that any of the facts proven or admitted was a badge of fraud and that evidence explanatory of such badge "must be scrutinized with care." Laws 1893, ch. 453, does not prohibit bona fide mortgages to secure one or more preexisting debts, but when as here, a mortgage is made of the entirety of a large estate for a preexisting debt, omitting only an insignificant remnant of property, such mortgage is in effect an assignment for the benefit of the creditors secured therein. To hold otherwise would be in effect to nullify the act. The court erred therefore, after the grantor's admission of the above fact, in refusing to grant the plaintiffs' motion to declare the deed of trust void as inconsistent with the Act of 1893 regulating assignments and deeds of trust, and void on the admitted fact that the grantor had not complied with the said act. Chapter 453, Laws 1893, is not a mere recommendation from the Legislature to insolvents as to the form of assignments and proceedings thereunder, but in its very nature the act is imperative. If not complied with by the assignor by filing schedule as required, the assignment is invalid. The fact that the failure to observe any of its provisions makes the assignee indictable, of itself indicates that the requirements of the act are mandatory. The assignor is not indictable. The assignment is simply invalid if he did not follow the act. (708) No authority is necessary for this proposition, but there are precedents to support it. Julian v. Rathbone, 39 N.Y. 369 (where the statute is almost identical with ours); Jeffrey v. McGehee,107 U.S. 361; French v. Edwards, 18 Wall., 506; Southerland Stat. Const., sec. 459; Harkrady v. Leiby, 4 Ohio St. 602; Fetcheimer v. Baum, 43 Fed., 719. For these errors there must be a new trial. New Trial. *Page 407 Cited: Frank v. Heiner, 117 N.C. 83; Bank v. Gilmer, ib., 420; Glantonv. Jacobs, ib., 427; Wolf v. Arthur, 118 N.C. 899; Cowan v. Phillips,119 N.C. 30; Goldberg v. Cohen, ib., 67; Redmond v. Chandley, ib., 579, 580;Cooper v. McKinnon,) 122 N.C. 449; Brown v. Nimocks, 124 N.C. 419;Howard v. Turner, 125 N.C. 110; Austin v. Staten, 126 N.C. 789; Taylorv. Lauer, 127 N.C. 161; Martin v. Buffaloe, 128 N.C. 308; Sutton v.Bessent, 133 N.C. 563; Chaffin v. Mfg. Co., 136 N.C. 367; Odom v.Clark, 146 N.C. 552; Powell v. Lumber Co., 153 N.C. 57; Wooten v.Taylor, 159 N.C. 609; In re Shuford, 164 N.C. 135; S. v. Burton,172 N.C. 944; Elliott v. McMillan, 180 N.C. 233.