Howard v. . Early

Faircloth, C. J. The plaintiff obtained a judgment against defendant on which an execution issued and was returned unsatisfied. The plaintiff tiren, on affidavit before the Clerk, obtained an order for supplemental proceedings. The third clause of the affidavit averred the return of the execution, and that the defendant had choses in action which ought *173 to be applied to bis judgment. Tbis was denied by answer of the defendants. T'bis is the only allegation of fraud in the record. His Honor, without objection, submitted this issue: “Was the transfer of the note and mortgage referred to in the pleadings made with intent to hinder, defeat, delay and defraud the plaintiff?” Verdict was recorded for the plaintiff. The plaintiff introduced no evidence. The defendant and his wife were examined, and testified that in 1893 he borrowed $500 from Burden Bros., and that he and his wife gave Burden Bros., a mortgage on Tier land to secure the same; that at the same time he promised his wife to secure her, and that she should not lose anything; that he was then solvent. They also testified that he held a note for $325, against one Morris, and that he put said note in his wife’s possession. That in January, 1897, when the husband had become insolvent, said note was formally transferred to the wife in the handwriting of one J. M. Early, which note plaintiff demands in payment on his judgment. The plaintiff demands judgment on the ground of the presumption in law of fraud arising from the confidential relation of husband and wife, especially when the husband is insolvent. In Lee v. Pearce, 68 N. C., 76, the doctrine of confidential relations is fully discussed, and several are specified, such as trustor and trustee, etc., and the Court held that such definite relations are sufficient to raise a presumption of fraud, as a matter of law, to be laid down by the Judge as decisive of the issue, unless rebutted. Although not mentioned, we think the relation of husband and wife falls within the principle of that case, and it was so held in McRae v. Battle, 69 N. C., 98. The pleadings in this case are loose and informal, and in violation of the rule that only such issues should be submit *174 ted as arise on the pleadings. Code 395. Tbe parties, however, accepted the issue without regard to such rule, and proceeded to try the real contention as implied in the issue submitted. The rule is useful and important, as it would always prevent the submission of issues presented only by the evidence. The case so much resembles a “case agreed” when allegations and issues are not important, where only a legal inference is to be drawn by the Court, that we are not disposed to disturb the judgment on that ground. The validity and bona fides of the wife’s debt, the promise of the husband to secure her, and the possession and transfer of the note to the wife are not denied by any plea nor contradicted by any evidence, nor was any dispute as to these facts made on the trial, and seemed to be admitted. It has been decided that the. oral agreement to secure his wife was valid, and that a fraudulent intent on the part of the husband to defeat his creditors will not vitiate the wife’s title, unless she participated in or had knowledge thereof. Brown v. Mitchell, 102 N. C., 347. The same principle is decided where a father, with fraudulent intent, furnished his daughters with money, being indebted to them, to purchase his land at a sheriff’s sale> they not participating in the unlawful intent. Sharpe v. Williams, 76 N. C., 87. Is the presumption of fraud in law, by reason of the relationship of his wife, rebutted? If the admitted facts were established by a verdict, it seems clear that the presumption of fraud is rebutted by the above authorities, and surely facts admitted are as efficacious as facts found by a jury.' The presumption being out of the way, it is an open contest between a creditor and an innocent purchaser for value, and we have no equitable principle for depriving either of his fruits for the benefit of the other. *175 Tbe verdict finds that the transfer of the note was made with a fraudulent intent, but it does not find that the transferee (wife) participated in or had knowledge of such intent. On this ground there was error in the judgment entered. In Nadal v. Britton, 112 N. C., 187, the facts are similar, and the issue was the same as in the present case, and the response was the same. The Court used this language on the question we are considering: “But the jury have only found that the deed was made with intent to hinder, delay or defraud creditors ; they have .not found that Mrs. King had knowledge of that fraudulent intent. Without such a finding by the jury no judgment should have been rendered against her.” There was no error in entering judgment against the defendant John A. Early, but there was error in entering judgment against the defendant G-eorgia Early, and it must be corrected in that respect. New trial.