Case ID: nc_172/html/0728-01.html
Source: Caselaw Access Project
Author: {"author": "ClaRK, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

P. H. THRASH and Wife v. J. W. OULD et al.
    (Filed 19 December, 1916.)
    1. Instructions — Verdict, Directing — Admitted Facts.
    In a suit to cancel a mortgage, the defendants set up as a counterclaim an amount due by a bankrupt corporation in the hands of a receiver for goods sold it by the defendant under plaintiff’s letter of credit, for the payment of which the plaintiff thereafter executed the note secured by the mortgage sought to be canceled as additional security and not in ex-tinguishment of the original obligation, after deduction for estimated dividends expected to be paid by the receiver. The estimated dividends were in excess of those actually paid, and there being no evidence that the note and mortgage were procured by fraud, and the amount of such dividends and the amount of the original debt being admitted, an instruction by the court that the jury should find that defendants recover on their counterclaim, in a stated sum, the amount of the debt due, less the receiver’s dividends paid thereon, was a proper one.
    2. Trials — Evidence—Letter of Credit — Payment—Burden of Proof.
    Where in an action to cancel a note and mortgage the defendants set up as a counterclaim an amount due under plaintiff’s letter of credit for goods sold and delivered to another, which letters the plaintiffs admit, but plead payment, the burden of proof is on the plaintiffs to show that the alleged payments had been made.
    3. Contracts — Married Woman — Separate Property — Statutes—Judgments.
    The plaintiff and his wife were controlling owners ■ of a private corporation to whom defendant sold goods, with plaintiff and his wife as guarantors of payment under their letter of credit, given and accepted in good faith. SeM, it was not necessary that the feme plaintiff should specifically have charged her separate property in order to enforce a judgment rendered according to the terms of the guarantee. Ch. 109, Laws 1911.
    Aepeal by plaintiffs from Harding, J., at March Term, 1916, of BUNCOMBE.
    
      Fortune & Roberts for plaintiffs.
    
    
      Merrimon, Adams <& Johnston for defendants.
    
   ClaRK, C. J.

This action was brought to have a note and deed referred to in the pleadings canceled. The defendant Quid Company set up as a counterclaim against tbe plaintiffs, tbe debt evidenced by tbe uote in question and an open account due tbe defendants by tbe Peerless Fashion Stores Company for goods sold them by tbe defendants upon a letter of credit which tbe plaintiffs bad given as security,, and asked judgment therefor.

At tbe close of tbe evidence it was agreed that tbe first issue as to tbe amount of indebtedness by tbe Stores Company to tbe Ould Company at tbe time the former went into bankruptcy was $1,778.95. Tbe response to tbe second issue was that tbe defendants bad been paid as dividends in bankruptcy on said indebtedness tbe sum of $419.65. Tbe third issue, as to what amount tbe plaintiffs were indebted to tbe Ould Company “by reason of their guarantee set out in a letter of credit,” tbe judge directed the jury to answer $1,359.30, which is tbe difference between these two amounts.

Tbe appeal questions tbe correctness of this instruction. The plaintiffs admitted tbe execution of tbe letter of credit, but contended that tbe Stores Company had paid tbe Ould Company for all goods covered by said letter of credit; that it was only given for goods to tbe amount of $5,000, and contended that they were not liable for goods sold in excess of $5,000. J. W. Ould testified that tbe letter of credit covered balance due on goods sold, regardless of tbe amount of sales and. payments, and the defendants contended that tbe plaintiffs were liable for any balance due by tbe Stores Company up to an amount not exceeding $5,000 at any and all times,'and as it was admitted that tbe Stores Company was indebted to the defendant company in tbe sum of $1,778.95 at the time tbe Stores. Company were adjudged bankrupt, the plaintiffs were liable for this balance, less tbe dividends in bankruptcy. These amounts were ascertained without exception in response to the first and second issues.

The letter of credit signed by tbe plaintiffs and directed to tbe Ould Company was as follows:

GeNtlemeN: — You are hereby authorized to sell tbe Peerless Fashion Stores Company, Asheville, N. C., dry goods and notions to tbe amount of $5,000, same to be charged to tbe said Peerless Fashion Stores Company from time to time; with tbe understanding and agreement, however, that at no time shall tbe amount of their purchase exceed tbe amount named, namely, $5,000. In tbe event tbe said Peerless Fashion Stores Company should fail to °pay any bill or bills when due, we hereby waive any right of legal notice as to this debt and agree and bind ourselves to pay same.

Witness our signatures, this 11 January, 1913.

P. II. Thrash,

Witness: W. M. Jones. Olivr B. Thrash.

It was in evidence that on 4 February, 1914, just prior to tbe adjudication in bankruptcy of tbe Stores Company, J. W. Ould, president of tbe defendant company, came to Asheville to secure payment of tbe indebtedness, and as a result tbe plaintiffs executed tbe note and deed in trust wbicb they are now seeking to have canceled. Tbe amount of tbe note was ascertained by estimating that tbe Stores Company might-pay creditors 30 per cent, which was deducted from the amount due tbe Ould Company at that time, but without releasing tbe claim for the balance due above tbe note. As tbe bankrupt estate paid less than 30 per cent, tbe balance due was $1,359.30 and interest, as found in response to tbe third issue, being somewhat more than tbe face of tbe note. There was no evidence of fraud on tbe part of tbe defendant in procuring said note and trust deed, and tbe court properly instructed tbe jury to answer tbe fourth issue, on tbe question of fraud, in tbe negative. To this there is no exception.

Tbe action was evidently brought upon tbe allegation of fraud in procuring tbe note and mortgage, but tbe jury have negatived this, and counsel for defendant stated on tbe trial that tbe note and deed of trust were only security for a certain amount of plaintiffs’ indebtedness under tbe letter of credit and not in any way an extinguishment thereof, and consented that they should be canceled. Tbe burden was on tbe plaintiff to show payment of tbe $5,000 guarantee, and this was not done, even if tbe letter of credit extended only to $5,000 of purchases and not to that amount of balance after payments made.

Tbe plaintiffs contend under exception 3, that Olive B. Thrash (who alone is solvent, her husband being insolvent), being a married woman, it was error to render judgment against her for the amount of tbe indebtedness found due on tbe third issue, because she bad not charged her property specifically with tbe debt, and tbe judgment cannot be enforced against her by execution. It appears that P. H. Thrash was president and bis wife, Olive B. Thrash, was secretary and treasurer of tbe Stores Company, and virtually owner of tbe whole of its capital stock, and that tbe defendant Ould Company refused to ship tbe goods unless tbe plaintiffs would personally guarantee any indebtedness created, and in consequence tbe letter of credit above set out was signed by both of them and tbe sales and shipments to tbe Stores Company were made in faith thereof.

It was enacted, Laws 1911, eb.. 109, as follows: “Every married woman shall be authorized to.contract and deal so as to affect her real and personal property in tbe same manner as if she were unmarried.” It was held in Lipinsky v. Revell, 167 N. C., 508, Brown, J., construing this statute, that judgment could be rendered against a married woman upon her contracts and enforced by execution, though she bad not specifically charged her property with payment thereof. In Royal v. Southerland, 168 N. C., 405, it was held that under this statute a judgment could be rendered against a wife upon her obligation as surety to her hüsband.

These decisions were both affirmed in Warren v. Dail, 170 N. C., 406, and it is no longer an open question, but is settled, that a married woman is liable upon her contracts, by the express wording, of the statute, “in the same manner as if she were unmarried,” and that under execution issued upon said judgment her property, real and personal, can be sold to the same extent as if she had remained single, though the debt has not been charged thereon by her.

No error.