North Carolina National Bank v. Johnson Furniture Co. of Mount Airy, Inc.

ARNOLD, Judge. Defendants argue that the trial court erred in granting plaintiff’s motion for summary judgment. In support of their argument, defendants make two contentions, one of which is that defendant Donna Lee Johnson was not, on the date of the conveyances, a debt- or of plaintiff. This contention is based on the assumption that defendant Donna Lee Johnson, when she signed the agreement with the plaintiff, became a guarantor of payment so that her liability for the debt would begin only at maturity when the primary debtors did not pay. Defendants’ assumption is not correct. Donna Lee Johnson was not a guarantor of payment by Johnson Furniture Co. since by the terms of the agreement defendant Donna Lee Johnson was primarily liable to the plaintiff: “This obligation and liability on the part of the undersigned shall be a primary and not a secondary obligation and liability, payable immediately upon demand without recourse first having been had by you against the Borrower or any person, firm or corporation; and the undersigned hereby waives the benefits of all provisions of law for stay or delay of execution or sale of property or other satisfaction of judgment against the undersigned on account of obligation and liability hereunder until judgment be obtained therefor against the Borrower and execution thereon returned unsatisfied, or until it is shown that the Borrower has no property available for the satisfaction of the indebtedness, obligation and liability guaranteed hereby, or until any other proceedings can be had.” [137] Although the agreement is captioned “GUARANTY,” the clear language of the contract establishes Donna Lee Johnson as a primary debtor of the plaintiff on 23 August 1974. The second contention of defendants is that plaintiff failed to establish an intent by defendant Donna Lee Johnson to defraud her creditors. G. S. § 39-17 reads as follows: “No voluntary gift or settlement of property by one indebted shall be deemed or taken to be void in law, as to creditors of the donor or settler prior to such gift or settlement, by reason merely of such indebtedness, if property, at the time of making such gift or settlement, fully sufficient and available for the satisfaction of his then creditors, be retained by such donor or settler; but the indebtedness of the donor or settler at such time shall be held and taken, as well with respect to creditors prior as creditors subsequent to such gift or settlement, to be evidence only from which an intent to delay, hinder or defraud creditors may be inferred; and in any trial shall, as such, be submitted by the court to the jury, with such observations as may be right and proper.” Under interpretations of G.S. § 39-17 by the North Carolina Supreme Court, actual intent of the donor, here the defendant Donna Lee Johnson, to defraud her creditors need not be shown. In Garland v. Arrowood, 177 N.C. 371, 374, 99 S.E. 100, 102 (1919), the Court stated: “[I]f the defendant, the donor of the gift, failed to retain property fully sufficient and available for the satisfaction of his then creditors, the gift was void in law, without regard to the intent with which it was made.” The ultimate burden of proof rests upon the plaintiff to show either actual intent by the defendant grantors to defraud their creditors or failure by them to retain property sufficient to pay the then existing debts. Supply Corp. v. Scott, 267 N.C. 145, 148 S.E. 2d 1 (1966). Review of the record shows that plaintiff met this burden of proof by uncontroverted evidence that immediately after the conveyances in question, defendant Donna Lee Johnson owed plaintiff $56,000, and that she had property worth only $300. There being no material facts at issue the trial court properly granted plaintiff’s motion for summary judgment. [138] Affirmed. Chief Judge BROCK and Judge MARTIN concur.