Webb v. Atkinson

Eueches, J. This case was before us at Spring Term/ 1898, upon a judgement of nonsuit, treated as a demurrer ore tenus, to the complaint (122 N. C., 683). Since that time the case has been tried upon the facts elicited, and is here again upon exceptions taken at the trial. It is not the practice of this Court to review its opinion rendered on a former hearing, upon a second appeal in the same case, and we do not propose to do so now. But as the brief of the learned counsel for defendants has called in question the correctness of our former opinion, we propose to notice it so far as to say that we consider it our duty to correct errors in our opinions when found, let them be presented as they may. But after a year’s reflection, we see no — 449 — error in our former opinion. It seems to us to be based upon principles of justice and sound reasoning. If tbe legal title to tbe Grabam land and tbe Von Ruck land bad been in Natt Atkinson and be bad conveyed them in fraud of bis creditors to bis wife, there could be no doubt that section 1446 of Tbe Code would apply, and that tbe plaintiff, administrator, could maintain bis action at law, and bave them sold and converted into assets. If Natt Atkinson'were living, bis creditors could not proceed to sell these lands under execution, and acquire title to them in that way, for tbe reason that tbe legal title was not in Natt, and tbe statute of 13 Elizabeth would not apply. Godwin v. Rich, 23 N. C., 553. But tbe fact that be bought and bad others to convey to bis wife is as much a fraud upon bis creditors as if be had owned tbe lands and conveyed them himself. And while for technical reasons, a Court of Law could not reach this fraud, a Court of Equity would. Goodwin v. Rich, supra. Tbe only difficulty, then, is tbe technical one that tbe fraud in one case is reached at law, under the statute of 13th Elizabeth, while in tbe other case, it is reached in a Court of Equity, or a Court exercising equitable jurisdiction. Tbe fraud upon tbe creditors is the same as if be bad conveyed the land himself. Tbe right of tbe creditors to bave them subjected to the payment of their debts is tbe same, and tbe defendant has no more right to bold this property so fraudulently conveyed to her from tbe creditors of her insolvent husband than if be bad conveyed them to her. Tbe plaintiff is so far the representative of tbe creditors of bis insolvent’s estate, under our laws as they now stand, as to authorize him to follow these lands in a Court of Equity, into tbe bands of tbe fraudulent donee, and to bave them converted into assets for tbe payment of intestate’s debts. The principles are tbe same — fraud on creditors; tbe ob — 450 — ject to be be attained is tbe same — tbe appropriation of tbe property to tbe payment of tbe debts of tbe insolvent intestate ; and sncb refinements as may bave stood in tbe way of snob actions as this, bave been removed, and bave given place to tbe demands of common sense and justice. Tbe facts disclosed on tbe trial show tbat Natt Atkinson, plaintiff’s intestate, was hopelessly insolvent in 1893; tbat be was indebted in a large amount, ranging from $15,000 to $90,-000, with available property, for tbe payment of debts not exceeding one-third of bis indebtedness; tbat bis creditors were pressing him on all sides; tbat among other debts, be owed C. II. Belvin, Cashier of a Raleigh bank, a large debt which was being pressed, and which, at March Term, 1894, of Buncombe Court, was reduced to judgment, amounting to $14,022.52. Tbe largest property the intestate owned was a three-eighths’ interest in a large tract of land lying in Swain County, known as tbe Whittier lands, and said to contain 75,000 acres. This tract of land be conveyed to two of bis sons, O. B. and E. B. Atkinson, in 1893, while so insolvent and while being pressed by bis creditors. These sons paid him nothing for the Whittier land, nor did they promise to pay him anything, nor were they able to pay him anything, though tbe consideration named in tbe deed, which bad no witness to it, was $40,667. Tbis land was incumbered to some extent when it was conveyed by Natt Atkinson to his sons, and defendants offered evidence to show tbat they promised to remove these incumbrances, and it is argued by defendants tbat this was a consideration. But we see no consideration in tbis evidence, if true. It was simply taking these lands subject to tbe incumbrances upon them. It is not shown tbat the incumbrances upon the lands were put there by Natt — 451 — Atkinson, or that be was bound for them. As they were in-cumbrances they had to be paid before a clear title could be made to a purchaser. And it is shown that C. B. and E. B. Atkinson had nothing with which to discharge these incum-brances, except the Whittier lands. Soon after the conveyance of the Whittier lands to 0. B. and E. B. Atkinson by their father, Natt 0. B. Atkinson conveyed his interest to E. B. Atkinson, his brother and co-grantee from Natt. This conveyance was without consideration. About the first of August. 1894., this Whittier land was sold to a corporation engaged in the lumber business for the sum of $144,000, out of which the Atkinsons realized the sum of $15,000 over and above the liens upon the property,, and in addition to this the sum of $6,000 as commissions, of which last sum it seems that Natt was entitled to two-thirds and E. B. Atkinson to one-third. This $15,000 was paid to Natt or paid into bank and placed to his credit. On the 14th of August, 1894, he paid the Oartmell mortgage of about $4,000 out of the Whittier land money. This debt was a part of the price of the land when bought of Graham, and deed made to Mrs. Atkinson — was her debt and her mortgage that was discharged, leaving the legal title in her. On the 15th of August, 1894, the intestate, Natt, bought what is called the McGrew tract from Von Ruck, for which he paid out of the Whittier land money $5,097, and had the deed made to Mrs. Atkinson; and on the 29th of August, 1894, the intestate died, and soon thereafter the plaintiff was appointed and qualified as his administrator. The balance of the Whittier land money, not paid out on the Cartnell debt and to Von Ruck for the McGrew place was left in the hands of the defendant Harriet Atkinson; and on the 15th — 452 — of September, 1894, sbe bought what is called the Ballard lot in the City of Asheville, for which she paid $1,175 out of the Whittier land money and took title to herself. On or about the first of November, 1894, she bougt a lot or an interest in a lot from M. E. Carter in the City of Ashe-ville, for which she paid him $2,000 out of the Whittier land money, and took the title to herself; and the balance of the Whittier land money the jury find she still has in her hands, amounting to $5,000. Taking these facts to be true, and the jury have found them to be true, they develop and uncover a most palpable fraud. But defendants complain of the charge of the Court and file many exceptions, in which it is contended that the charge contains erroneous propositions of law; that it expresses opinions upon questions of fact, and that it decides issues of fact which should have been left to the jury and have been decided by -them. While the charge was heroic, we are of the opinion that it was fair to the defendants. It was given in a trial demanding heroic treatment and should not be condemned on that account if it was fair to the defendants. Tire Court directed the jury, if they believed the evidence, to find the first issue, “Yes” and the second issue, “No.” The defendants complain of this charge. But if it be true, as the jury found it to be, that Natt Atkinson, being notoriously insolvent, with his creditors pressing him, conveyed the principal part of his estate to two insolvent sons without consideration; that one of these sons soon thereafter conveyed to the other without consideration; and that soon thereafter a sale of this property was effected, by which $15,000 or $20,000 was realized, and this money, soon after its receipt, was paid over to Natt Atkinson or placed in bank to his credit, and that he used and dealt with it as his own, we can see no — 453 — ground for complaint. There was no. evidence — none that could have been submitted to a jury — controverting these facts. Wittowsky v. Wasson, 71 N. C., 451; Spruill v. Ins. Co., 120 N. C., 141; Cable v. R. Co., 122 N. C., 892; State v. Gregg, Ibid, 1082. Had E. B. Atkinson, the fraudulent grantee, held on to the Whittier land money, the fraudulent grantor Natt could not have recovered it out of him; but the creditors of Natt, who were thereby defrauded might have done so. But this question is not involved in this action, as the fraudulent grantee, recognizing the fact that the money was not his but that it was the money of the fraudulent grantor (his father), turned it over to him. It seems to us that the plaintiff’s case might have rested here. The money being back in the hands of Natt, the insolvent debtor, and recognized as his by the fraudulent grantee, it then became a question as to whether he could give it to his wife or not. As the payment of the Cartmell debt was in fact a gift to her of that amount, the purchase of the Von Ruck or McG-rew place by him and having the title made to his wife, was a gift to her. The balance of this Whittier land money, left in her hands, belonged to her insolvent husband, and she has no right to hold it from his creditors. She had no right to invest this money in the Bland lot or the Garter lot, and as the money, with which she paid for them belongs to her husband’s estate, the equitable title vested in his heirs for the benefit of his creditors and made her a trustee. But the Judge told the jury that if Natt Atkinson, being insolvent or greatly embarrassed with debt, made a conveyance of the Whittier lands to these two sons without consideration, the law would presume fraud. Defendants complain of this instruction, but we think it sound law. Ardmond v. Chandley, 119 N. C., 575. The Court allowed the plaintiff to offer evidence of the — 454 — general reputation of Natt Atkinson’s insolvency, and tbe defendants excepted. But tbe ruling of tbe Court in allowing tbis evidence seems to be well supported by authority. Leak v. Covington, 99 N. C., 559, and many other cases. Tbe Court allowed declarations of tbe daughters (who are also parties-defendant) made in tbe presence and bearing of their mother, to be offered in evidence, and tbe defendants excepted. But tbe Court seems to be sustained by Merrill v. Whitman, 110 N. C., 367; State v. Suggs, 89 N. C., 527; Tobacco v. McElwee, 96 N. C., 71. Tbe Court allowed in evidence declarations of Natt Atkinson made in tbe presence of E. B. and C. B. Atkinson, and tbe defendants excepted. But tbe Court seems to be supported in ibis ruling by Ward v. Sanders, 23 N. C., 382, and by tbe authorities cited above. It does not seem to us that any of tbis evidence objected to did or could have affected tbe merits of tbe case. But we have considered it as if it could. Tbe whole defence has been made upon technical grounds, and we are sure that tbe defendants have no reason to complain at tbe manner in which tbis defence has been made. And tbis is intended, not as a reflection upon, but as a compliment to the able management of tbe defence. But when tbe case is stripped of these technical objections it leaves exposed to view a most palpable fraud. Tbe judgment must be affirmed.