Court Opinion

ID: 9811056
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:07:00.245348+00
Date Added: 2024-06-11T13:40:25.087124
License: Public Domain

Montgomery, J.:
This action was commenced by the plaintiffs against the defendants as partners to recover the amount due on a promissory note. No denial of the debt was made, and a judgment for the indebtedness claimed was entered up in favor of the plaintiffs against the defendants without objection. The appeals by both defendants in the case are not from the judgment deelarv ing the debt, but from the order made in reference to the ancillary remedy of arrest and bail which the plaintiffs had availed themselves of to better secure the fruits of their recovery. The order of arrest was issued upon affidavit made by the plaintiffs’ agent under Subsection 2 of Section 291 of The Code, and it would seem under Subsection 5 also. This Court has declared in repeated decisions that the vendees in contracts of sale which contained provisions similar to the ones executed between the parties to this suit occupy a fiduciary relation, a relation of trust and confidence, to the vendors in respect to the property in the possession of the vendees for the benefit of the vendors, and that such agent and trustees are subject to arrest if they commit a breach of the trust by converting to their own use the property so held by them. Travers v. Deaton, 107 N. C., 500; Boykin v. Maddrey, 114 N. C., 89; Guano Co. v. Bryan, at this Term. Upon the trial of the issue of fraud the jury found that the defendant Little had assigned and disposed of his property with intent by such *818•! assignment to defraud his creditors. Upon this finding, bis Honor continued tlie order of arrest from wbicb Little appealed, and we will first take up and dispose of bis appeal.
The affidavit of the plaintiff charges Little with conveying his real estate of considerable value to some persons who had formerly been his apprentices, with intent to defraud his creditors, individual and partnership. There was no allegation that he had removed or disposed of his personal property with intent to defraud his creditors, nor was' there fraud alleged in the contraction of the debt. The testimony tended to prove that the defendant had made fraudulent -conveyances of his real estate, and his Honor instructed the jury to find the issue of fraud against him if they' believed all the testimony. There was no error in the instruction of the court. The conveyance of real estate by a debtor to defraud his creditors does subject him to arrest. Subsection 5 of Section 291 of The Code applies to real as well as personal property.' Code, Sec. 3765 (6). We are not inadvertent to the case of Bridgers v. Taylor, 102 N. C., 86. But the decision there, made before Subsection 2 of Section 291 of The Code was amended, was upon the meaning of the words “ taking, detaining and converting property,” the Court deciding that they embraced personal property only. The words “ removed or disposed of,” used in Subsection 5 of the same Section, are words different and of broader meaning from those used in Subsection 2, and are broad enough to comprehend real estate.
The affidavit upon which the order of arrest was issued contained allegations of fraudulent misappropriation by both of the defendants of the goods and money and notes of the plaintiff which the defendants had in their possession. The law presumes that Little had knowledge of the con*819tract, and, asa consequence, of tbe fiduciary relation which it'created between both of the defendants and. the plaintiff as to the property the defendants had in their hands for the plaintiff’s benefit, although Little did not sign it or know of its execution. If he had known or connived at the misappropriation of the property, which the jury found Hasty had been guilty of, such knowledge or connivance would have made Hasty’s act his act as well, although in fact he did not execute the contract with Hasty. Of course, if Little had had knowledge at the time he executed with Hasty the assignment to Marsh that the latter was to receive tbe property which belonged to the plaintiff, and to apply it to other creditors than the plaintiffs, he subjected himself to arrest for the fraud. On the trial the defendant testified : “ I am a farmer, was lately engaged in business at Beaver Dam under the style of L. M. Little & Oo.; live four miles from there; was a partner but had nothing to do with its management; Hasty was managing partner; I did not sign contract or know anything about it till I was arrested ; knew nothing of the condition of the concern ; thought it was in good condition ; the understanding was that it should be run on a cash basis ; knew nothing of its bad condition until I returned from States-ville about December, 1894; knew7 nothing of books, nor made entries, nor examined books; bought no goods, made no orders, was not present at taking of stock ; knew they were selling guano but did not know what disposition was made; I handled none of the proceeds of it; thefinn made an assignment; Hasty and I signed the assignment; at the date of this I had no knowledge of debts held in trust by the firm, nor of guano held in trust by the firm ; I bought guano as any other customer; I ginned cotton for the firm sufficient to pay for the guano; don’t recollect having a conversation with Hayes;, don’t think I ever saw Hayes *820before yesterday.” There was no testimony introduced contradictory or inconsistent with that of the defendant.
Defendant Hasty’s appeal: The order of arrest, so far as the defendant Hasty is concerned, ought to have been continued for the reason that bis counter-affidavit, purporting to meet the facts alleged against him in the affidavit of the plaintiff’s agent upon which the order of arrest was issued, did not contain a denial of the facts and charges set out against him in the plaintiff’s affidavit. Section 3 of defendants’ affidavit and answer is a confession that the facts stated in the affidavit of the plaintiff’s agent were true. The defendants’ denial, such as it was, was simply a legal construction by himself of the meaning and effect of the acts charged against him. The facts alleged in the affidavit of the plaintiffs’ agent were sufficient, if true, to warrant the issuing and continuation of the order of arrest, and the construction as to the legal effect of these acts and charges put upon them by the defendant was an erroneous one. Guano Co. v. Bryan, at this Term. However, no inotion was made by the plaintiff to dismiss the motion of the defendant to set aside the order of arrest, and the parties went to a trial of the issue of fraud. The plaintiff tendered the following issues (with others not necessary in this connection to mention): “Have the defendants or either of them, and if so which one, appropriated to their own use property held by them in trust for the plaintiff, or held by them as agents for the plaintiff, under the contract between the plaintiffs and the defendants, and applicable to the plaintiffs’ debts ? ” The defendants tendered an issue in the same language as the one offered by the plaintiff, except with the words “ with intent by such appropriation to hinder, delay and defraud their creditors” substituted for the words in plaintiffs’ issue “ and applicable to the plaintiffs’ debts.” The issue *821tendered by the defendants was rejected and the one tendered by the plaintiff accepted. The defendants excepted. The jury rendered their verdict in favor of the plaintiff, and thereupon his Honor continued in force the order of arrest, and the defendant appealed.
His Honor committed no error in submitting the issue tendered by the plaintiff and in rejecting the one tendered by the defendants. In Boykin v. Maddrey, supra, it is held that the intent with which the trustee or agent commits a breach of trust is immaterial to be proved. A misappropriation carries with it a fraudulent purpose and intent as a matter of law. The learned judge who delivered the opinion of the Court in that case said : The law gives to a plaintiff, whose money or property has been put beyond his reach by his agent or trustee by an act in violation of his duty, the remedy of arrest and bail that he may the better compel his unfaithful agent or trustee to make amends for his unfaithfulness, and it £ turns a deaf ear ” to one who would excuse himself by asserting that he did not mean to do wrong when consciously doing that which was a breaeh of the trust reposed in him_ Good intentions do not at all lessen the wrongfulness of a breach of trust, or, rather, the law will not allow one to say that he violated its plain precepts with good intentions.” The defendant did not introduce a particle of evidence calculated to show any cause or reason for the vacating the order of arrest. The testimony of the plaintiff, none of which was objected to by the defendant, Hasty, all tended to show that he had committed a breach of the trust reposed in him by the plaintiff by wrongfully misappropriating and converting to his own use, as their agent and trustee, the plaintiff’s property. The defendants asked the court to instruct the jury that the deed of assignment from the defendants to Marsh did not upon its face convey *822the property of the plaintiff held in. trust by the defendants for the plaintiff. His Honor refused to give the instruction and the defendants excepted. There was no error in the ruling of the court. Whether or not the deed of trust conveyed the property of the plaintiff upon its face, as a matter of law, is immaterial so far as the investigation before the court was concerned. As a matter of fact, undisputed, the defendant, Hasty, actually turned over to Marsh the notes and guano which belonged to the plaintiff. There was no error in his Houor’s continuing and keeping in force the order of arrest as to both defendants.
No Error.