Teague v. Howard Grocery Co., 175 N.C. 195 (1918)

March 13, 1918 · Supreme Court of North Carolina

175 N.C. 195

D. B. TEAGUE, Trustee of DIXON & STEWART, v. HOWARD GROCERY COMPANY.

(Filed 13 March, 1918.)

1. Assignments for Benefit of Creditors — “Property”—Contracts—Statutes.

Our statutes requiring the trustee in a general assignment for creditors to recover property “conveyed or transferred by the grantor or assignor” in preference, within the four months period, includes within their meaning both real and personal property, and the general methods by which the title is passed or interest therein created, and extends to an executed contract of sale. Revisal, sec. 967 et seq. 1 Greg. Sup., pp. 109-110.

2. Same — Preference.

Our statutes regulating general assignments for creditors prohibits and avoids, as a wrongful preference, any and every disposition of real or personal property, absolute or conditional, by which a creditor, .in consideration of an existent or antecedent debt, within four months of a general assignment by his debtor, acquires title to such debtor’s property, or any interest therein or lien thereon, when he knew or had reasonable grounds to believe that his grantor or assignor was insolvent at the time the transfer or conveyance was made. Revisal, sec. 967 et seq. 1 Greg. Sup., pp. 109-110.

3. Same — Possession Retained — Contracts—Title.

It is not required that possession of specific personal property be given the purchaser in order to make an executed contract of sale, for the title passes according to the intent of the parties as expressed in the contract between them; and, in the absence of specific agreement, the presumption is that the title passed at the time of the purchase without such delivery.

4. Same — Instructions:—Appeal and Error.

Where the trustee in a general assignment for creditors brings his action to set aside as a fraudulent and void preference a transfer of the assign- or’s property for an antecedent debt, made within the four-months period, wherein the assignor retained possession until a later time, and the evidence is conflicting as to whether it was then agreed between the parties that the title should xDresently pass, it is reversible error for the trial judge to instruct the jury that the transaction was void within the meaning of the statute, if the creditor had knowledge of the insolvency of his debtor at the time the goods were delivered to him. Revisal, sec. 967 et seq. 1 Greg. Sup., pp. 109-110.

Civil actioN, tried before Allen, J., and a jury, at September Term, 1917, of Lee.

Tbe action was to recover certain personal property, a buggy and harness, an automatic oil can, and a safe, or tbe value thereof, which plaintiff trustee, in a general assignment or deed of. trust for creditors by Dixon & Stewart, alleged had been sold and delivered to defendants in payment of an existent debt within two weeks of the assignment and under circumstances constituting a wrongful preference witbin tbe meaning of tbe statute.

It was admitted tbat on 2 December, 1915, tbe firm of Dixon & Stewart, doing a general retail business in tbe county,‘made a general assignment for tbe benefit of creditors, designating plaintiff D. B. Teague as trustee, and there was evidence on tbe part of plaintiff tending to sbow tbat about two weeks before making said assignment sucb firm bargained and sold to defendant, a corporation doing business in Sanford, N. C., for an existent debt, tbe personal property in question,, and wben tbe defendant knew or bad reasonable ground to believe tbat tbe firm of Dixon & Stewart was insolvent; that said property was not delivered at tbe time it was bargained for, but tbe buggy and harness a day or two after tbe sale and tbe oil can and safe about ten days thereafter, to wit, on Friday before tbe following Wednesday, tbe latter being tbe day of tbe assignment.

Defendant corporation, admitting tbat it bad acquired title to part of tbe property about two weeks before tbe assignment and for an existent debt, alleged tbat tbe same was purchased and acquired by them at tbe time specified in good faith and for full value • and without notice or knowledge or any reason to believe tbat tbe assignees or any of them were insolvent.

There was also testimony on tbe part of defendant permitting tbe- inference tbat, as to tbe buggy and harness, defendant bad acquired title to that some eight or nine months prior to tbe assignment.

There was evidence on tbe part of defendant tending to support these averments of their answer and in order to a proper presentation of their position defendant company, in apt time, tendered an issue as follows: “1. Did tbe Howard Grocery Company, at tbe time it purchased tbe property or any part thereof described in tbe complaint and agreed to credit tbe account of Dixon, & Stewart with tbe value thereof, know or have reasonable grounds to believe tbat said firm was insolvent?” together with two other issues identical with tbe second and third issues submitted by tbe court.

Tbe first issue as presented by defendant was refused by tbe court and tbe cause submitted on issues as follows:

1. Did tbe Howard Grocery Company, at tbe time they received tbe property or any part thereof described in tbe complaint and agreed to credit tbe account of Dixon & Stewart with tbe value thereof, know or have reasonable grounds to believe tbat said firm was insolvent ?

2. If a part, what part ?

3. What was tbe value of sucb property so received with sucb knowledge or reasonable grounds of belief?

Tbe change in tbe first issue being tbat bis Honor substituted tbe “time wben tbe goods were received for tbe time wben tbe goods were purchased” as tbat wben tbe knowledge of insolvence by tbe purchaser should affect tbe result, and defendant excepted.

In reference to this first issue, the court charged tbe jury tbat if they found “from tbe evidence and tbe greater weight thereof tbat at tbe time tbe defendant received tbe articles from Dixon & Stewart they knew or bad reasonable ground to believe tbat they were insolvent,” they would answer tbe first issue “Yes.” And further, tbat “there was no sale until actual delivery; and, although tbe defendant may have agreed to purchase tbe articles as testified, and at tbat time bad no knowledge of tbe seller’s insolvency and no reasonable grounds for such belief, if tbe jury should find from tbe greater weight of tbe evidence tbat prior to tbe delivery it did acquire such knowledge or bad such reasonable grounds for belief,” they would answer tbe first issue “Yes.”

There was verdict for plaintiff, assessing value of tbe property at $125. Judgment accordingly, and defendant excepted and appealed, assigning for error: (a.) Tbe substitution of tbe first issue, (ft) Tbe portions of tbe charge excepted to.

Teague & Teague for plaintiff.

Hoyle & Hoyle for defendant.

Hoke, J.

Our statute regulating general assignments for creditors, Revisal, secs. 967 et seq., as amended by Laws 1909, cb. 918, 1 Gregory’s Supplement to Pell’s Revisal, 109-110, makes provision, among other things, tbat it shall be tbe duty of trustee in such cases to recover for tbe benefit, of tbe estate property which may have been conveyed by tbe grantor or assignor in fraud of bis creditors or which may have been conveyed or transferred by tbe grantor or assignor for tbe purpose of giving a preference. A preference under this section shall be deemed to have been given wben property has been transferred or conveyed within four months next preceding tbe registration of tbe deed of trust or deed of assignment, in consideration of tbe payment of a. preexisting debt, wben the grantee or transferee of such property knew or bad reasonable ground to believe tbat tbe grantor or assignor was insolvent at tbe time of making such conveyance or transfer. Tbe word “convey” more usually refers to real estate, “comprehending tbe general methods by which title thereto is acquired,” but it may be of even more extended meaning. Tbe word “transfer,” applying to both , kinds of property, may be held to include tbe general methods by which title thereto is passed or interest therein created, including, beyond question, an executed contract of sale. Godwin v. Bank, 145 N. C., 320, approving tbe broad and inclusive definition of the term “transfer” contained in the Bankrutcy Act, U. S. Statutes at Large, vol. 30, ch. 541, sec. 1; Vann v. Edwards, 185 N. C., 661-668.

And, on proper consideration of the present statute, its terms and purpose, it is clear that the Legislature intended to prohibit and avoid, as a wrongful preference, any and every disposition of real or personal property, absolute or conditional, by which a creditor, in consideration of an existent or antecedent debt and within four months of a general assignment by his debtor, acquires title to such debtor’s property or any interest therein or lien thereon, when he knew or had reasonable ground to believe that his grantor or assignor was insolvent at the time the transfer or conveyance was made. Wooten v. Taylor, 159 N. C., 604.

On the present record, there are facts in evidence tending to show that this transaction was an executed contract of sale, having reference to designated and specific pieces of property, and if these facts should be accepted by the jury, it is well understood that present physical delivery of the property is not necessary to the transfer of the title but that the same passes according to the intent of the parties as expressed in the contract between them, and further, that, in the absence of specific agreement on the question, the presumption is that the title passed at the time of the purchase and without such delivery. Richardson v. Insurance Co., 136 N. C., 314; Jenkins v. Jarret, 70 N. C., 255; Tiffany on Sales, pp. 82-83; Benjamin on Sales, 7th Ed., p. 728.

In the citation to Tiffany, the correct position, in both aspects of the matter, is tersely stated as follows: “When there is a contract of sale of specific goods, the property in them is transferred at such time as the parties to the contract intended it to be transferred. (2) When there is a contract for the sale of specific goods, unless a different intention appears, the property in the goods passes to the buyer when the contract is made.”

This being true, and with facts in evidence on the part of the defendants tending to show an executed contract of sale was made between these parties two or three weeks, perhaps more, before the assignment, and with delivery of a part some days thereafter, and of the remainder four or five days before the assignment, with additional evidence of insolvency disclosed after the trade, and even evidence tending to show that defendant bought the buggy and harness seven or eight months before, we are of opinion that there was error to defendant’s prejudice in restricting their knowledge of the debtor’s insolvency and their reasonable belief on that subject to the time when the goods were actually received by defendants, for, if they had no such knowledge or belief at tbe time of title acquired, tbe transaction would not constitute a preference witbin tbe meaning and purport of tbe law.

Tbe defendants, therefore, are entitled to bave tbis essential fact determined on an appropriate issue and under a proper charge concerning it and to that end a new trial is awarded.

New trial.