#### J. B. GILLAM v. JAMES S. CHERRY, ANNIE L. CHERRY, and HENRY CHAVIS.

(Filed 22 September, 1926.)

1. Judgments — Pleadings—Default—Lands—Title—Fraud — Statutes — Admissions.

Where tbe complaint in an action is to subject land fraudulently conveyed to tbe payment of a judgment, and it is alleged that pending tbe action tbe defendant bad conveyed tbe *locus in quo*to tbe codefendant in fraud and without consideration, who with knowledge of tbe fraud bad accepted tbe conveyance, upon judgment by default for tbe want of an answer, such allegations will be taken as true.

2. Same — Default Final — Default and Inquiry — Damages—Appeal and Error.

Where tbe plaintiff is entitled to judgment by default in an action involving tbe title to lands, and an inquiry as ,to tbe amount of damages is dependent upon this question alone, be is entitled to judgment by default final, and judgment by default and inquiry is erroneously entered.

Appeal by plaintiff from *Midyette, J.,*at January Term, 1926, of Beetle. Error.

Tbe material facts setting forth the controversy were found by the court below and judgment rendered as follows:

“Summons issued in this action on 17 September, 1925, and plaintiff filed his verified complaint in this court on that date. The summons were returnable on 30 September, 1925. The summons and complaint were duly served upon the defendants, James S. Cherry and Annie L. Cherry on 19 September, 1925, by the sheriff of Bertie County, such service being made by the reading of the summons to the said defendants, and by leaving copies of said summons and said verified complaint with the said defendants. The sheriff made his return on the said summons, showing service of both complaint and summons on said defendants, and the clerk of the Superior Court of Bertie County entered such return upon the summons docket. The said defendants failed to file answer or mother pleadings or defense bond, within twenty days after the service of said summons and complaint upon them. On 12 October, 1925, after twenty days from the service and complaint upon said defendants, the plaintiff appeared before the clerk of the Superior Court and moved for judgment by default final against the said defendants upon the cause of action set out in the complaint. This motion was refused by the clerk of the Superior Court who allowed the defendants until 20 October, 1925, in which to file their answer; and the plaintiff appealed therefrom to the judge of the Superior Court. *196Afterwards,'on 29 October, 1925, tbe defendants, James S. Cberry and Annie L. Cberry, served notice upon tbe plaintiff that they would move before tbis court for additional time for tbe filing of tbe answer to-tbe complaint, sucb notice being given while sucb appeal was pending before tbis court. It further appears to tbe court that tbe plaintiff used all diligence in moving for sucb judgment and was not guilty of laches. It further appears that tbe plaintiff, J. B. Gillam, brought an action against tbe defendant, James S. Cherry, in tbe Superior Court of Bertie County, on 16 March, 1922, sucb action being brought to recover tbe sum of $838.77 and interest thereon from 5 March, 1921, sucb sum being due on contract, and that tbe plaintiff recovered judgment on said debt against tbe said Cherry at February Term, 1925, of said court, sucb judgment being docketed in tbe office of tbe clerk of tbe Superior Court in Book of Judgments ., page. That at tbe commencement of sucb action tbe defendant, James S. Cherry, was tbe owner of tbe lands described in tbe complaint, but pending said action, tbe said James S. Cberry, on 8 February, 1923, without any consideration and with tbe intent and purpose of hindering, delaying and defrauding tbe plaintiff out of tbe collection of bis debt, and also with a like purpose to defraud other creditors, conveyed tbe said lands to bis step-mother, Annie L. Cberry, with whom be then resided, and that tbe said Annie L. Cberry received and accepted said deed with full knowledge of sucb intent and purpose of said James S. Cberry, and at sucb time, and now, tbe said James S. Cherry owned no other real estate; and is now insolvent. It appears that tbe facts stated in tbe complaint are true, and that tbe defendants have not a meritorious defense to tbe plaintiff’s cause of action; and that tbe plaintiff is entitled to tbe relief demanded in tbe complaint; but tbis court is of tbe opinion that tbe plaintiff is not entitled, as a matter of law, to a judgment by default final, but only to a judgment by default and inquiry. It is, now, therefore, ordered and adjudged that tbe motion of tbe defendants for time in which to file answer to said complaint be and tbe same is hereby refused and denied; and that tbe order of *W.*L. Lyon, clerk of tbe Superior Court of Bertie County, refusing tbe motion of tbe plaintiff for judgment and allowing said defendants additional time in which to answer is vacated and set aside. It is further ordered and adjudged that tbe plaintiff recover judgment against tbe said defendants upon tbe cause of action set out in tbe complaint by default and inquiry, with tbe effect provided by law, and that tbe said cause be transferred to tbe civil issue docket in order that sucb inquiry may be bad.”

Tbe plaintiff excepted and assigned as error tbe refusal of tbe court below to grant bis motion for judgment by default final against tbe *197defendants, James S. Cherry and Annie L. Cherry, upon tbe causes of action set out in said complaint, and upon tbe facts appearing in tbe case and found by tbe judge in tbe said judgment and order, and appealed therefrom to tbe Supreme Court of North Carolina. This is tbe only exception and assignment of error in tbe record, and tbe only one to be beard on this appeal. Tbe defendant, Henry Chavis, was not served with process and pleading and no relief asked against him.

*Gillam & Davenport for plaintiff.*

*Craig & Pritchett for defendants.*

ClarKSON, J.

Freeman on Judgments, 3rd vol., 5th ed. (1925), part sec. 1282, says: “Tbe effect of a default as an admission and as dispensing with proof of tbe facts varies somewhat with tbe statutes governing tbe matter. *Generally, however, a default admits all of the material traversable allegations of the declaration, complaint or petition.*(Italics ours) It admits tbe facts alleged as to tbe cause of action and precludes any showing of defensive matters, though as to tbe damages, except in those cases where tbe clerk or tbe court is authorized to enter judgment for tbe amount claimed, there is no admission, but proof is required. Though an allegation be defective in form it is nevertheless admitted. When title or ownership is a material allegation, as in an action of ejectment or other action to try title, a default admits it. This is true as to tbe title of a personal representative as such, and bis default admits that be has sufficient assets to meet tbe claim alleged. So an alleged trespass is admitted, as is fraud, in some states. But tbe admission by a default extends only to those material matters which would be admitted by a failure to deny or traverse them in an ordinary case, and therefore does not extend to allegations which are mere conclusions of law.” 15 R. C. L., sec. 117, p. 667; 34 C. J., sec. 386, p. 173; *Mitchell v. Express Co.,*178 N. C., p. 235; *Mfg. Co. v. McQueen,*189 N. C., p. 312.

C. S., 595, subsections 1, 2, 3 and 4, set forth when judgments by default final may be bad on failure of defendant to answer, etc.

C. S., 596, is as follows: “In all other sections, except those mentioned in tbe preceding section, when tbe defendant fails to answer and upon a like proof, judgment by default, and inquiry may be bad as provided in tbe last section but one, and inquiry shall be executed at tbe next succeeding term. If tbe taking of an intricate or long account is necessary to execute properly tbe inquiry, the court, at tbe return term, may order tbe account to be taken by tbe clerk of tbe court or some other fit person, and tbe referee shall make bis report at tbe next *198succeeding term; in all other cases the inquiry shall be executed by a jury, unless by consent the court is to try the facts as well as the law.”

*Justice H. G. Connor,*writing for a majority of the Court, in *Junge v. MacKnight,*137 N. C., p. 285 (this case is reported in 135 N. C., p. 105, petition to rehear in which the first decision was reversed, *Justice Connor*in former opinion dissenting), it was held: “In an action to determine conflicting claims to real property, the failure of the defendant to answer at the return term entitled plaintiff to a judgment by default final in accordance with the facts stated in the complaint, without inquiry or proof of such facts.”

In the *Junge cases, supra,*the effect of C. S., 595-6, was thoroughly discussed, and we need not go into'the controversy as a majority of the Court, in the last case, held that a judgment by default final was the correct procedure. *Montgomery, J.,*concurring in the last case, said (p. 292) : “I conclude, therefore, that judgment by default and inquiry in sec. 386 of The Code (C. S., 596), has reference only to actions sounding in damages.”

In *Jernigan v. Jernigan,*178 N. C., p. 85, it is held: “This was a proceeding to set aside a judgment by default final on the ground of irregularity and excusable neglect. *The action was to declare certain deeds void and the plaintiff the owner of the lands in fee simple.*

The complaint was duly verified and filed 3 July, 1916, and judgment by default final entered at September Term, no answer having been filed. The summons was issued returnable to the May Term, and was served on 11 May, 1916. *The judgment by default final was regular*(italics ours). Rev. 556 (4); *Junge v. MacKnight,*137 N. C., 285; *Stelges v. Simmons,*170 N. C., 44; *Lee v. McCracken, ibid.,*576.”

In *Greeley v. Sample et al.,*22 Iowa Reports, p. 338, the principle is recognized: “Where default is made to a petition which alleges that defendant holds certain real estate fraudulently and in trust for another, such allegations will be taken as true.”

*Armstrong v. Asbury,*170 N. C., p. 160, cited by defendant, is not in conflict with the position here taken. In that case it is said, at p. 162: “In other words, the cause of action alleged against the defendant McRae is his liability upon the agreement between the stockholders, and his complaint is that he was not permitted to prove that he was not a party to the agreement. This he could not do, because he is precluded by the judgment by default and inquiry, which establishes the cause of action, that is, that he was a party to the agreement, and only leaves open the amount of the recovery. *Banks v. Mfg. Co.,*108 N. C., 282; *Blow v. Joyner,*156 N. C., 142; *Graves v. Cameron,*161 N. C., 549. The concluding sentence of the authority, relied on by the defendant *199*(Allen v. McPherson,*168 N. C., 436) is that ‘It (a judgment by default and inquiry) establishes merely that the plaintiff has a cause of action,’ and this brings it in harmony with the other cases.”

*We*are of the opinion that plaintiff’s assignment of error should be allowed and judgment by default final rendered. For the reasons given, there is

Error.