S. S. Farrar & Bros. v. Redwine, 51 N.C. 143, 6 Jones 143 (1858)

Dec. 1858 · Supreme Court of North Carolina

51 N.C. 143, 6 Jones 143

S. S. FARRAR & BROTHERS v. ABRAM REDWINE.

Where, to a schedule filed by an insolvent debtor, a creditor alleged in his specifications, that two notes had been fraudulently transferred to secure a feigned debt, and the jury found these allegations to be true, whereupon the debtor filed a new schedule, admitting that the debt, secured, was feigned, but to acquit himself of the fraud, alleged that the trustee had run away with the funds, and he surrendered all his claim upon the trustee; it was Held that the creditor was entitled to make suggestions of fraud, and to have an issue as to all the matters set out in the new schedule concerning the fraudulent transfer of these notes.

This was an application to take the insolvent debtor’s oath, before MaNly, J., at the last Eall Term of 'Union Superior Court.

The defendant, Redwine, who is the applicant in the case, had filed a schedule, in which, among other things, is this clause : “ 4th, a claim against "Wyatt Austin, for the surplus remaining in his hands after satisfying the trust, executed to him by A. Redwine, on the 16th of August, 1857, amounting to about $2930,40. The circumstances of which, are as fo'l-lows : A. Redwine, to secure the payment of the following notes against him : one note in favor of A. Goss, for $3500, to which Wyatt Austin was security, &c., conveyed on the 16th of August, 1856, in writing, by deed, in trust to the said Wyatt Austin, the following property and choses in action : 1st. One horse and buggy, household and kitchen furniture ; one note on JohnM. Cocheram and Thomas Boyington, for $2,343, due the 1st of January, 1858, with interest from the 1st day of October, 1856 ; a second note on the same, for $2,017,40, d-ue 1st day .of January, 1859, with interest from 1st of Octo-" ber, 1856 ; one note- on E. L. Staton, for $40, cine 1st of October, 1856 ; one note on Alexander Jones, for $20, due 1st of January, 1857. The said Austin paid out of the fund, conveyed to him in trust, to J.. Ii. "Woodward $190, to A. Goss, in notes, $272, and was entitled to retain, as due himself, $300, with interest. He paid II. M. Houston, ageut of Dewing, Thayer & Co., a debt due the said firm, of about $630, which last debt was not provided for in the said trust, and was paid without any authority from said Redwine. The foregoing is all that the said Austin ever paid on account of the said Red-wine. The said Austin, shortly after the execution of the said trust, sold the $2,343 dollar note to Daniel M. Fesperman, and the other note on the same, for $2,017,40, to H. M. Houston. The said Austin agreed, with said Redwine, to satisfy the debt due to Goss, and apply the remainder to certain judgments obtained against him in the County Court of Union. On the 28th February, 1857, said Redwine had a settlement with Goss, and after allowing credit for all the said Redwine had paid, as well as $272 paid by the said Austin, there was a balance clue on-said note of between $800 and $900, for which balance, the said Redwine gave his own note and took up the old note. With the exception of the $272, Austin never paid a cent to the said Goss, the said Redwine having made all the other payments himself — the whole, in truth, is now, and has been, since the 28th of February, 1857, satisfied.”

Upon this schedule being filed in the County Court of Union, suggestions of fraud and concealment were filed by the plaintiffs, and an issue made to try the same, upon which the jury rendered the following verdict: “They find that the defendant, A. Redwine, is guilty of fraud in the two Georgia notes, and that after deducting the amount of the $1,392, which he paid to his creditors, which leaves a balance of $2,867 of said notes, fraudulently conveyed away.” "Whereupon it was adjudged by the County Court, “ that the said Redwine be imprisoned until a full and fair disclosure of all the moneys, property or effects, be made by the said Red-wine.” This- was at April Term, 1858, of- the- County Court.:

Afterwards, viz., at July Terra, the defendant, A. Redwine, filed a new schedule, which, in a great many respects, is identical with that previously filed ; but with respect to the matters referred to in the verdict of the jury, the schedule is as follows : 4th. “The following notes and property, or the proceeds and surplus thereof, remaining in the hands of Wyatt Austin, to whom they were conveyed by the said A. Redwine,. by a deed in trust, executed to the said Wyatt Austin, on the 10th day of August, 1856, one note on Oocheramand Boying-ton, due on the 1st of January, 1858, &c., (describing them as in the former schedule). The facts, touching which said notes- and property, are as follows, viz., by the said deed in trust, the said Redwine conveyed to the said Austin the notes, &c., to secure the payment of a debt, due from A. Redwine to A. Goss, for $3,500, due in July, 1855, to which Wyatt Austin is surety. Yet, in fact, the said Redwine owed the said Goss no such amount, but only about $272 with interest.” * * * * “ The two notes on Cocheram and Boyington, as the said Red-wine is informed, the said Austin, without the knowledge of the said Redwine, sold and disposed of greatly under their-value — the one of $2,343, to Daniel M. Fesperman ; the $2,-017,40 to Hugh M. Houston, as the said Redwine has been informed, for $700 cash, $500 in notes, and about $630 in a note from Redwine to Dewing, Thayer & Co. * * * * “ Upon being informed that the said Austin had sold the Coch-eram and Boyington notes, and becoming dissatisfied with his management of the fund, he called upon him in the month of February, 1857, when Austin sent certain notes to A. Goss, to satisfy his debt, amounting to about $272, and promised, at July Term, 1857, of Uniou County Court, to pay all the judgments, pending in the said Court, against the said Red-wine. But some time after this, about the middle of April, 1857, Austin absconded from the county, without ever accounting to him for any part of the effects conveyed to him, except as above described.” These exceptions as credits, are enumerated, and amount to $1,392. The schedule then proceeds, “ and after deducting which, he is indebted to him for all the balance of the effects conveyed. The said Red-wine therefore surrenders, not only the effects so conveyed in said trust, but all the proceeds, balance and surplus thereof, and all the property and effects that may have been substituted therefor, and all the claim, interest, demand, action, and right of action, either at law or in equity, which lie, the said Redwine, may have on account of the same against the said Austin, or any other person.”

To this schedule, the plaintiffs’ counsel made specific suggestions of fraud and concealment; amongst others, as follows: “ that the defendant has money to the amount of more than ten dollars, as part of the proceeds of the sale of the Cocheram and Boyington notes, to II. M. Houston, piaid him by Wyatt Austin.”

“ That he has notes and effects concealed in the hands of Alex. Goss.”

“ That he has money concealed in the hands of Alexander Goss to the amount of $50, or more.”

“ That he has not surrendered and produced the notes received. by the trustee, Wyatt Austin, for the Cocheram and Boyington notes, sold to H. M. Houston.”

“ That he has not surrendered and produced the notes to the amount of about $1400, which his trustee, Wyatt Austin, received from Joseph Smith for the Eesperman tract of land, for which, the Cocheram and Boyington debt of $2,017, was given to Fesperman.”

Upon these suggestions, the plaintiffs demanded an issue to be tried by a jury, but the County Court held that the plaintiffs had no right to make up an issue on the schedule, whereupon it was adjudged by the Court, that Redwine be permitted to swear to his new schedule and be discharged. From which judgment the plaintiffs prayed an appeal to the Superior Court.

In the Superior Court, his Honor, after examining the new schedule filed by the defendant, and the suggestions of fraud made by the plaintiffs, was of opinion that the plaintiffs had no right to tender such issues, or any of them, because the new .schedule did not involve any allegation of fact, justify-. ing the new issues tendered. His Honor was of opinion, that if the amendments of the debtor’s schedule involve any allegation of fact, upon which an issue could be raised, the creditor had a right to tender him such issue, but not to tender new issues outside, and irrespective of such allegations.

Within these limits, his Honor said the parties respectively should be allowed to tender, and must accept issues, under the direction of the Court.

Whereupon, his Honor ordered that the defendant be permitted to take the oath prescribed for insolvent debtors, and the plaintiffs appealed to the Supreme Court.

Osborne and Jones, for the plaintiffs.

Wilson and Fowle, for the defendant.

Pkaesok, C. J.

If we correctly apprehend the opinion of his Honor, it is in substance, this : where a debtor files a schedule and an issue of fraud or concealment, in respect to one item, or subject matter set out, is found against him, and he, thereupon, files an amended schedule, the creditor in his suggestion of fraud or1 concealment, for the purpose of another issue, is confined to the amended schedule, and is not at liberty to take exceptions to any item or subject matter, set out in the original schedule, other than that in respect to which the fraud or concealment was found.

We concur in the opinion ; and believe this to be the proper construction of the statute ; for if the creditor is at liberty to take the original schedule by piece meal, and make up issues of fraud upon one item after another, the debtor might be subjected to a longer imprisonment than the statute seems to contemplate ; and to avoid this consequence, all exception must be considered as waived except as to the items or subjects in regard to which issues are made up at the outset. This is in strict analogy to the rule, that upon a sci. fa. to revive a dormant judgment, no cause can be shown, which would have been a matter of defense to the original action, and u¡.)on a sei. fa. suggesting a further breach on the conditions of a bond, upon which judgment has been rendered, no matter can be suggested, in respect to which, a breach could have been assigned in the original proceeding ; the principle, in all such cases, being, that “ good matter must be taken advantage of in apt time,” and an omission to do so, is considered as a waiver, to prevent protracted litigation.

But although we agree with his Honor as to the construction of the statute, we differ with him as to its application to the case now under consideration. Here, too, owing to the very succinct manner in which the statement of the case is made, and to the voluminous documents sent as explanatory thereof, this Court has had great difficulty, and been subjected to much trouble in finding out the point which the case intended to present.

The jury find fraud and concealment in respect to two notes of considerable amount, called in the verdict the u Georgia notes,” upon John M. Cocheram and Thomas Boyington— one for $2,343, due on the 1st January, 1858, with interest from the 1st of October, 1856; the other for $2,017,40, due on the 1st of January, 1859, with interest from 1st of October, 1856.

The original schedule states that these two notes, with other notes, and certain articles of personal property, had been conveyed, by deed, dated 16th of August, 1857, to Wyatt Austin in trust, to secure, among others, a debt due to one A. Goss, for $3,500, to which said Austin is surety, drawn in July, 1855; that Austin sold the note for $2,343, to one Fesperman, and the note for $2,017,40 to one Houston, and agreed to satisfy the debt of $3,500 due to Goss, and account for the balance of the trust fund; but, in fact, Austin had not paid the debt due to Goss, and Redwine himself had made large payments thereon, and “ took up the old note” by giving his note for the balance, viz., $800 or $900, and thereupon the schedule sets out “ a claim against Wyatt Austin for the surplus in his hands, after satisfying the trust.”

The amended schedule gives an entire different version of this transaction ; for it discloses this fact, “ although the deed in trust (to Austin) represents tire debt, due to Goss, to be $3,500, yet, in fact, the said Redwine owed the said Goss no such amount, but only about $272.” It further sets out that Austin sold the twenty-three-hundred-and-forty-three dollar note to Eesperman, at an under value, but does not state what he received therefor, and that he sold the twenty hundred and seventeen dollar note to Houston for $700, cash, $500 in notes, and $630 in a note, due from Redwine to Dewing, Thayer & Co., and that Redwine, being dissatisfied with his management of the fund, called upon him for an account, and he promised to make certain payments upon the judgments, which had been obtained against Redwine, but “ about the middle of April, 1857, said Austin absconded from the county, without ever accounting to him for any of the effects conveyed, &c.”

That this is not a full and fair disclosure, is almost so apparent upon its face, as to have justified the Court in so ruling, without submitting issues to the jury; but, most certainly, the creditors ought to have been permitted to test its truth and fairness, by the issues which were tendered in respect to it, and which, as it seems to us, were not “ outside and irrespective” of the allegation of fraud before made, but, were directly relevant and tended to show that the new schedule was not a full and fair disclosure, in this: that it did not show what had become of the large amount paid by Redwine to Goss on the feigned debt, or of the funds received from Fes-perman, or of the $700 cash, and $500 in notes, received of Houston, except by the naked averment of Redwine, that Austin had “ absconded without accounting with him for any part thereof;” and surely, after the admission, that the debt of $3,500 to Goss was feigned, except as to a small amount, and inserted in the deed of trust by covin between Redwine and Austin, with an intent to enable Redwine to defraud his creditors, they ‘ought not to have been required to take his statement that Austin had paid over to him no part of the fund, as true, and should have been allowed to tender any issue or issues calculated to eviscerate the truth, and if the facts warrant it, to frame an issue, so as to raise the question, whether a debtor, who had wilfully and fraudulently, put his effects in the hands of an accomplice, with an intent that he should abscond and take them beyond the reach of the law, with the further intent, afterwards, to join him and share in the spoils, has not excluded himself from the benefit of the laws passed for the relief of insolvent debtors. Why require a full and fair disclosure, if the property cannot be restored and put within the reach of the law ? Under this state of facts, how can the debtor take the oath which the act prescribes ? There is error.

Pbk Cubiam, Judgment reversed.