Young v. Booe, 33 N.C. 347, 11 Ired. 347 (1850)

Aug. 1850 · Supreme Court of North Carolina
33 N.C. 347, 11 Ired. 347

THOMAS M. YOUNG vs. MARTIN BOOE & AL.

When a deed of trust for the payment of debts conveys a cotton factory &c., and in the deed are provisions, that the maker of the deed shall retain possession for eleven months and during that time his family may be supported out ofthe proceeds of the factory, Held, that these provisions did not make the deed fraudulent in law, upon its face, but, as the provisions might have been for the benefit of the creditors, as well as of the debto", the question of fraudulent intent was one, upon which the jury must decide under all the circumstances.

Appeal from the Superior Court of Law of Davie County, at the Spring Term 1850, his Honor Judge Dios presiding.

*348This action is trover for a parcel of blacksmiths’ tools, and the plea “ not guilty.” The plaintiff claims under a deed of trust made to him by Thomas McNeily, on the 2d of February 1849, and registered the same day. The deed conveyed to the plaintiff a piece of ground near Mocksville, containing lt> acres, known as the factory lot, on which are situated, the cotton factory building and qthei* out buildings,together with thesteam engine, grist mill, three wool carding machines, and all the cotton machinery,.consisting of four cotton cards, pickers, drawing frames'; two speeders, one card grinder, four frames containing 504 spindles, four reels, one banding machine, one yarn press and all the battins, one turning lathe with all its tools, and a variety of other tools, all the raw cotton on hand, and ail the factory wood on hand : also a lot adjoining,containing one acre : also another lot, on which there is a blacksmith’s shop, with all the smith’s tools and one new wagon partly ironed: one house and lot, wherein McNeily resided, and his store house and lot, and all his household and kitchen furniture and library, and three horses and another wagon and gear, four head of cattle, all his corn, wheat, oats, hay, and fodder and four slaves: and the deed further assigned to the plaintiff all debtsowing to McNeily by bond, note,account or otherwise, and all other property whatsoever, whether real or personal, to which the grantor was in any wise entitled : Upon trust, that the whole or such parts of the property, as should remain undisposed of, on the 1st day January 1850, should, after due notice, be sold by Young at public auction to the highest bidder upon a limited credit, and, that, in the mean while, any part of the property might be sold at private sale, should a reasonable price be offered : and that, until such public sale, McNeily should remain in the possession and management of the property, as the agent of the trustee, and might als.o make private sales thereof as aforesaid, and that he should, “as *349early as practicable,” make out a complete list of all the judgments, bonds, notes and other debts of every description belonging to him, for the said Young: and that, out of the proceeds of such sales and with the sums collected on the debts, all necessary expenses of executing the trusts should first be paid by the said Young, and then certain enumerated debts, for which persons were bound as sureties: and thirdly’, certain other debts specified,- and also all others, which the said McNeily then owed, whether particularly mentioned therein or not — the said debts to be fully paid, if the fund should be sufficient therefor, and, if not, they should be paid pro rata. The deed then adds, “ It is understood and agreed that the said McNeily is to support his family upon the property here- • by conveyed, until this trust is closed by a sale of the property.”

A short time after the execution of the deed, a judgment was rendered by a justice of the peace for one of "the debts mentioned in the deed, and an execution issued thereon, under which the defendant purchased the tools for which the action is brought. The question on the trial was, whether the deed of trust was fraudulent, as against the creditors of McNeily existing at the time.— It was admitted by the defendant, that the debts mention, ed in the deed were just and true, and that the property and effects assigned were not sufficient for their discharge, and also that there was no evidence of any actual fraud in the object of the deed: but it was insisted^ on the part of the defendant, that the deed was fraudulent in law, from the stipulations on its face. By the agreement of the parties, a verdict was thereupon rendered for the plaintiff, subject to the opinion of the Court upon the question, as a point reserved, whether the' deed was or was not thus fraudulent. The Court afterwards set aside the verdict and gave judgment of non suit, and the plaintiff appealed.

*350 Osborne, for the plaintiff.

J. G. Bynum and Avery, for the defendant.

Ruffin, C. J.

Without the admission on the part of the defendant, that there was no actual fraud intended in the execution of the deed, the Court would hold the judgment to be erroneous. It is exceedingly difficult to find fraud, as a matter of law, unless it be so plain and express in the deed, as to constitute fraud in itself, without any inference of one fact from another, and thus appear so distinctly, as to admit of no explanation from extraneous circumstances. Where the conveyance is in trust for the maker, merely, or, upon no valuable consideration, in trust for his family, it has always been considered as constituting fraud ; thus incapable of explanation. Slurdevant v. Davis, 9 Ire. 365. But where the provisions are, in the nature or under the circumstances of the particular case, equivocal, that is, may have been introduced for bad or good ends, taken as a whole, then the law cannot justly infer the dishonest intent, in order to 'avoid the instrument, but ought rather to presume good faith.' Hence in such cases, the actual intent is a subject of enquiry by a jury and not of decision by the conrt. Cannon v. Peebles, 4 Ire. 204. It is argued, however, upon this deed, that it reserves to the debtor, himself the management and power of disposition of the property for nearly a year, and also that one of the trusts is for his ,own support and that of his family for the same period ; and that the provisions establish a fraud. It may be yielded, that those parts of the deed afford just grounds of suspicion, but, certainly, they are not conclusive, of an intent to the prejudice of the creditors in the actual state of things, and, under which the deed would appear to have been made. A man, justly indebted beyond the value of his property, and indeed, in very large sums as stated in the deed, finds himself unable to meet his en*351gagements and go on with his business, and makes an assignment of every thing he has on earth — not reserving even the lawful allowance to insolvent debtors; and the principal part of the effects conveyed consists of a steam cotton factory and stock of cotton and wood. Now every one must know several things concerning such property in this part of the world — that its value is materially impaired by suspending its operations, and that there are but few persons among us, with skill and experience lor its judicious management : and particularly, that there is no ready sale for such establishments, and a forced, public and immediate sale could, probably.be only made at a great, sacrifice. Therefore, it may have been with no intent to his own benefit, or to reserve to himself any wrong power, but with an eye single to the interest of his creditors in the mass, that the debtor here deferred the period, at which the sale should be made publicly, at all events for eleven months, and provided for fair sales in the meanwhile by private contract. He does not reserve that power to himself. That is not the fair construction •of the deed. It is legally vested in the trustee by virtue of his estate, and the debtor was to act as "the agent of the trustee,” and subject, therefore, to his approval of the contracts and receipt of the price got. It may have been, rather a stipulation for services by the debtor, than the reservation of a privilege or dangerous power for him. For, as he had conducted the business of the factory and a profit might result from working up the stock on hand, and other competent managers might not be readily procured hereabouts, it might have been important to the proper care and disposition of the trust fund, that this person should attend to the factory or seek purchasers either at home or abroad, and preserve and show the property. II those were the purposes of the agency to be performed by McNeilv, they were beneficial, not to him, but to his creditors, to whom alone the fund belonged.— That they were, is rendered probable by the considera*352tion, that there is no allegation, that the debts were in judgment or even suit; and hence, it would have been almost entirely in the power of the debtor, if that had been his object, to have retained the possession and use of all the property for nearly that period by pleading to suits brought against him. As that provision, might, then, have been innocent, it must be so taken — as fraud is not to be presumed. Thus regarding that part of the deed, it affords evidence rebutting, or tending to rebut, the presumption of fraud, arising out of the provision in the conclusion of the deed for the support of the debtor’s family out of the property. That provision, simpliciler, is undoubtedly fraudulent. But it is not, in this case, an isolated stipulation, by which a benefit is secured to the debtor in spite of the creditors, and without just compensation to them therefor. The support of the family is to be for the Same period, for which the debtor was to serve the trustee, and it may be fairly concluded, that the former was in remuneration for the service. We are not informed, what were McNeily’s qualifications for the business, nor what would be fair wages for him, nor the amount required for their support; and, if we were, the Court could not pass upon their weight, as they belong, important as these circumstances are, to the jury exclusively. It is apparent, therefore, that the questions, on which the validity of the deed depends, are questions of actual intent, and that the provisions of the deed, by itself, do not enable the Court to pronounce against it, but are proper for the jury in connexion with such facts dehors, as the parties may be able to adduce. If, however, that were otherwise, the admissions in the case, of the value of the property, the justice of the debts and that there was no actual fraud intended, are conclusive for the plaintiff. Hardy v. Skinner, 9 Ire. 191.

Ter Curiam. Judgment reversed and judgment upon the verdict for the plaintiff according to the agreement.