Court Opinion

ID: 3647370
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:03:08.827045+00
Date Added: 2024-06-11T12:08:58.449892
License: Public Domain

The defendant in this case resists the granting a new trial on two grounds. First, because the paper under which the lessor of the plaintiff sets up title to the land, is not a deed, but a testamentary writing, and should have been proven, as wills which pass real estate are required by law to be proven. Secondly, that if the Court should consider it a deed; it was fraudulent as to the persons who were creditors of Henry O'Daniel at the time of its execution, and being declared fraudulent as to them, the law will make it fraudulent and void, as to subsequent creditors, and those who claim under them. I do not think the paper can be considered testamentary. I admit the form of the instrument is an immaterial circumstance, if the Court can collect from the writing that the maker intended it should be testamentary. (I Phil. 1.) But I am unable to discover such an intention in the maker of the instrument. The maker has reserved to himself a life-estate in the land — a circumstance         (212) which strongly repels anything like an intention to make the instrument operate as a will. No executor is appointed, there is in it a consideration mentioned, and the maker in person acknowledged the instrument in open court to be his deed. I am of the opinion that the instrument is not a will, but a deed; a covenant to stand seized, which will pass the land to the remaindermen, under and by the statute of uses, if it is not a fraudulent transaction.
The second point to be discussed, is whether the deed was fraudulent as to the creditors of the grantor. H. O'Daniel had two creditors at the time the deed was by him executed, the sum due to one of them was £ 12 10; the sum due to the other is not known. *Page 174 
Fraud is a compound question of law and fact — the judgment of law on facts and intents. If the conveyance was made with an intent, and for the purpose to delay, hinder or defraud debts and accounts, then the law declares the conveyance fraudulent and void (Laws 1715, c. 38). This act is nearly a copy of the statute of 13 Elizabeth. Whether a conveyance was made with the intent to hinder, delay or defraud creditors is a question of fact, and in a court of law is to be determined by the jury. If the jury find the intent of the maker to have been fraudulent, the deed then becomes void in law. It is not an irresistible inference or conclusion of law, that the indebtedness of the donor or grantor, at the time of executing the conveyance, makes it fraudulent and void; no, not even for the debts then in being; but it is only a badge or argument of fraud which may be repelled by other evidence. Let us inquire how the law stands upon this subject as to creditors at the time of conveyance.  First, in the courts of law where the jury find the fact of intent or purpose, and the Court pronounces the law upon the fact so found by the jury. Secondly, in a Court of Equity, where the Chancellor pronounces both upon the fact, and the law. I think it will be found that the decisions in both Courts have been substantially the same. If there is any difference of opinion, it arises from the manner the cases have (213) been reported. In Twyne's case (3 Coke, Rep. 80) the Court said, "when a man being greatly indebted to sundry persons, makes a gift to his son, or any of his blood, without consideration," that would be fraudulent. Cadogan v. Kennet (Cowp. 432), Lord Mansfield says, that a man being indebted at the time of a voluntary conveyance, is an argument of fraud. In Doe v. Routledge, Cowp. 711, LordMansfield says again, "one great circumstance which should always be attended to in these transactions is, whether the person was indebted at the time he made the settlement, if he was, it is a strong badge of fraud." His Lordship does not pretend to say it is per se fraudulent. In the same case, page 708, he remarks that the statute does not say a voluntary settlement shall be void. To be sure it is very difficult against fair, honest creditors to support a voluntary settlement. It is laid down in a case by Hale, that a voluntary settlement may be good. In Salmon v. Bennet, 1 Day, 527, the Supreme Court of Errors of Connecticut, declare the rule, that mere indebtedness at the time will not in all cases render a voluntary conveyance void as to creditors. That an actual or express intent to defraud, need not be proven, for this would be impracticable in many instances, when the conveyance ought not to be established, and it *Page 175 
may be collected from the circumstances of the case. In this case a voluntary conveyance to a child was held valid against existing creditors; the grantor having left at the time ample funds, unincumbered for the payment of his debts. But if the grantor be considerably indebted and embarrassed, or if the gift be unreasonably disproportioned to his property, and leaving scanty provision for his debts, the conveyance would be void. In the Courts of Equity where the Chancellor finds the facts and applies the law, it has nearly become an invariable rule to consider a man actually indebted and conveying voluntarily, always means to defraud existing creditors. Lord Hardwicke
expressed himself to that effect in the case in Townsendv. Windham, 2 Ves. 1. The rule seems to have been strictly followed until the case of Lush v. Wilkison, 5 (214) Ves. 384. This was a fishing bill filed by a subsequent creditor against the executor and widow of ______ Cawood, praying an account of the personal estate, debts, etc., and that the deed of settlement made by Cawood for the benefit of his wife, might be declared fraudulent and void, as against creditors being voluntary. The bill charged that the deed of settlement was subsequent to the marriage, and that Cawood was then in insolvent circumstances, or was then indebted to several persons. The widow by her answer, stated that the deed was openly and bona fide executed. She denied her husband was insolvent at the time of executing it, or at any other time; she stated, that beside two debts (which the property included in the deed, sought to be set aside was mortgaged to pay), that her husband did not owe above a hundred pounds, and that his personal property considerably exceeded what he owed. No evidence was produced by the plaintiff. Lord Alvanly, Master of the Rolls, said he had great doubt whether the plaintiff had a right to come without proving any antecedent debt, (he then reflects and recollects the widow admitting in her answer, he owed debts to the amount of £ 100). He then says a single debt will not do. Every man must be indebted for the common bills of his house, though he pay them every week. It must depend upon this, whether he was in insolvent circumstances at the time. The bill was dismissed. InMontague v. Lord Sandwich, 12 Vesey 136, younger children brought the bill, and not creditors. Lord Roslyn declared that post-nuptial settlements were void, as to those who were creditors prior to the date of the deed. He directed an inquiry whether the maker was indebted previously to the making of the deed, and to what amount. In Kidney v. Cousmaker, 12 Vesey 155, the question arose whether a voluntary settlement after marriage, *Page 176 
was fraudulent as to creditors. Sir William Grant, Master of the Rolls, said, "though there had been much controversy, and a variety of decisions upon the question whether such a settlement is fraudulent as to any creditors except such as (215) were creditors at the time, I am disposed to follow the latest decision, that of Montague v. Lord Sandwich, which is that the settlement is fraudulent only as against such creditors at the time." The Master of the Rolls did not reflect that if the deed was fraudulent and void under the statute of 13 Elizabeth, it necessarily must be so altogether; for if a part be void by virtue of the statute, the rule is that the whole is void; neither did he remark that the bill in the case that governed him, was not filed by creditors. In Reade v.Livingston, 3 ch. (N. Y.) 481, the Chancellor of New ork has collected and remarked on all the cases, both at law and in equity, up to the time of that decision. He brought his mind to the conclusion that a voluntary conveyance made by a man indebted at the time, was in law, fraudulent as to those who were creditors at the time, but only presumptive evidence of an intent to defraud as to subsequent credits. He says, that as to prior creditors, "the presumption of law in this case, does not depend upon the amount of the debts, or the extent of the property in settlement, or the circumstances of the party." I think Chancellor Kent stands alone upon the aforesaid doctrine. My opinion is the same as that given by the Master of the Rolls, in the case of Richardson v. Smallwood, 1 Jacobs. 552. He there says being indebted is only one circumstance from which evidence of thefraudulent intention may be drawn.
The question is whether the Court is satisfied that the deed was within the purview of the statute, that it was made to hinder and delay his creditors by placing the property out of their reach; if it was, then the deed is void by the statute. The Master of the Rolls goes on then further to remark, "and if it be once shown that it is a deed which as against any of the creditors cannot stand, then the property becomes assets and is applicable to the payment of debts generally; all the creditors come in at whatever times their debts may have arisen; that," he says, "is decided." Ibid., 558. The foregoing (216) decision was made in the year 1822, and is the last on the subject I have seen in the Chancery Reports. To make void a voluntary conveyance it must appear to have been executed for the purpose of defrauding creditors. Wrixon v. Cotter, (1 Chitty's Digest, 300, who quotes Ridgw. P. C. 295.) The principles contained in the case of Richardson v. Smallwood, are in accordance with those delivered by Lord Mansfield *Page 177 
in Cadogan v. Kennett. These rules are approved of by LordManners in Grogan v. Cooke, 2 Ball and B. 234. This opinion will not run in conflict with that of Doe v. Manning, 9 East., 59. That was the case of a purchaser, and the decision was not under the statute of the 13th of Eliz., but under the 27th Eliz. Even in that case Lord Ellenborough said that nothing but the decisions that had been previously made governed him, for if it was res integra he probably would have come to very different conclusions. This opinion does not clash with McCreev. Houston, 7 N.C. 429, for that was a decision upon our act of 1784, (Rev., c. 225.) I understand the Judge who tried the case now before us, to have charged the jury, that a voluntary deed which would be good against existing creditors, might become void as to the same creditors if the property reserved by the donor should happen to be destroyed by casualty or accident, when there had not been any delay in the creditors in endeavoring to obtain their debt. I think he erred in this part of his charge, for if the deed was not fraudulent and void as to the creditors, at its execution, no subsequent casualty or accident could make it void. In Doe v. Routledge, Cowp. 710, Lord Mansfield says, "a custom has prevailed and leant extremely to construe voluntary settlements fraudulent against creditors." But if the circumstances of the transaction show it was not fraudulent at the time, it is not within the meaning of the statute though no money was paid. O'Daniel was possessed of personal property of the value of five or six hundred dollars at the date of the conveyance and he reserved to himself a life estate in the land; he owed two small debts — and must we say from these facts that he made the conveyance for the intent and purpose "to hinder and delay"         (217) these two creditors? Policy may call for such a decision, but I cannot bring my mind to believe it is within the meaning of the Legislature which passed the statutes. My associates think otherwise and the law upon this point may now be considered as settled. I think a new trial should be granted.
PER CURIAM.                        Judgment affirmed.
Cited: Jones v. Young, 18 N.C. 354; Arnett v. Wanett, 28 N.C. 42;Smith v. Reavis, 29 N.C. 343; Houston v. Bogle, 32 N.C. 505; Kissam v.Edmundson, 36 N.C. 182; Thacker v. Saunders, 45 N.C. 146; Pullen v.Hutchins, 67 N.C. 432; Clement v. Cozart, 109 N.C. 180.
Overruled: Worthy v. Brady, 91 N.C. 267. *Page 178