Opinion
June Term, 1850.
1. Under our act of Assembly a man cannot be held to be a purchaser for a valuable consideration who gives for the land not more than one-half or two-thirds of the value.
2. Although one of the debts inserted in a deed of trust to secure several creditors be fraudulent, yet the legal title passes to him, and his sale to a third person is valid.
APPEAL from the Superior Court of Law of CHATHAM, at Spring Term, 1850, Battle, J., presiding.
Haughton and W. H. Haywood for plaintiff.
No counsel for defendant.
Joseph J. Rives was seized of a tract of land, containing about 170 acres, and on 6 December, 1847, he conveyed it by a deed of trust to Samuel H. Crutchfield to secure certain sums of money therein mentioned as due from Rives to sundry persons. The deed recited that Rives was indebted to James Perry in the sum of $302.85, due upon three bonds dated 3 December, 1847; also to John McPherson in the sum of $44.13, upon a bond given 28 May, 1847; also to Marsh Co. in the sum of $38 and interest, on a judgment rendered by a justice of the peace; and to Robert Love in the sum of $16, on a judgment of a justice of the peace; and that he was desirous to secure the payment of those debts. The deed then purports, in consideration of the premises and of the sum of $1 paid to Rives by Crutchfield, to convey the land in full to Crutchfield, (90) upon trust that if the several debts should not be paid and satisfied on or before 1 January, 1848, the trustee should sell the premises at auction to the highest bidder for ready money, and out of the proceeds pay the debts or such sums as might then be due thereon. The deed was executed by Rives and Crutchfield, and was proved on the 6th and registered on 7 December, 1847.
On 13 December, 1847, Rives sold and conveyed to Harris, the lessor of the plaintiff, 100 acres of land, parcel of the above tract, at the price of $200, which Harris then paid. Evidence was given that the same was worth at the time from $300 to $400.
On 31 January, 1848, Crutchfield, in pursuance of the terms of the deed, exposed the whole tract of land for sale to the highest bidder, and the defendant became the purchaser at the price of $480.50, then paid down, and took a deed from the trustee. Evidence was given that the value thereof was $500 or $600.
The plaintiff alleged that the deed of trust was made with the fraudulent intent to delay and hinder the creditors of Rives, and was therefore void as against the creditors and the lessor of the plaintiff. In support thereof the plaintiff examined the said Rives as a witness; and he deposed that a large portion of the debt to Perry, mentioned in the deed, was not owing by him, and was inserted by an arrangement between him and Perry, with a view to save his land or a part of it for the benefit of his family; that the other debts mentioned in the deed were just, and that Crutchfield, the trustee, was not aware of the fraudulent arrangement between the witness and Perry, and was told by them that everything was fair. The plaintiff gave further evidence that just before the sale by the trustee a person stated to the defendant that the plaintiff had purchased a part of the land, but that he did not think he intended to (91) claim it.
The counsel for the plaintiff thereupon moved the court to instruct the jury that the deed of trust was fraudulent and void, and that if the jury believed the witness, the defendant had, at the time of the purchase from the trustee, such notice of the claim of the lessor of the plaintiff as prevented the defendant from acquiring the title by the sale and deed from the trustee. But the court refused the instruction as prayed for, and told the jury that, supposing the deed of trust to have been executed with the fraudulent intent imputed to it, yet, if the defendant purchased for a fair price and without notice of such fraudulent intent, the title was good; and that there was no evidence that the defendant had notice of the alleged fraudulent intent in the execution of the deed. The jury found for the defendant, and after judgment the plaintiff appealed.
There seems to have been a singular confusion of matters, entirely distinct in their nature, in the mode of stating the propositions on the part of the plaintiff at the trial. Although the lessor of the plaintiff was not a creditor and did not claim under a creditor of Rives, but was a purchaser from that person after he had made the deed of trust, yet it was insisted for the plaintiff that the deed of trust was fraudulent and void against the creditors of the maker, and, therefore, was void also as to the lessor of the plaintiff. Now, in the first instance, it does not appear that the deed of trust could have been void as against creditors, since there were no creditors, as far as we see, but those secured in the deed, and, as to them, no fraud can be inferred, as the fund was ample to (92) pay them all and produced enough for that purpose, even according to the sums set forth in the deed. In the next place, it does not follow that the deed of trust would be void as against Harris, although it might have been fraudulent as to certain creditors of Rives; for, although the same facts which make a deed fraudulent under 13 Eliz., as to creditors, may, generally speaking, render it fraudulent also under 27 Eliz., as against a purchaser, yet it is clear that a deed is not fraudulent as against a purchaser merely because it was so as against creditors. Since our act of 1840, ch. 28, that is so beyond all doubt; for by that act no person can be held to be a purchaser except he purchase for full value, and without notice of the prior conveyance, which he impeaches as fraudulent. The distinction is very material, and its existence probably accounts for the effort on the part of the plaintiff to put his lessor's claim upon the merits of supposed creditors of his vendor and not upon his own merits as a purchaser, since, however this might have been deemed a purchase at a fair price, according to the old law ( Fullenwider v. Roberts, 20 N.C. 420), it is certain that under our late act one cannot be held to be "a purchaser for the full value who gave not more than one-half or two-thirds of the value. His Honor was, therefore, not only right in not giving the directions prayed on the part of the plaintiff, but might properly have told the jury that the deed of trust was not void as against the lessor of the plaintiff, upon the ground that it was made with an intent to defeat creditors of the maker or purchasers from him, inasmuch as the plaintiff did not bring his lessor within either of those classes of persons; and therefore the deed of trust was good as against him as much as against Rives himself. That consideration alone would have put an end to the title under which the plaintiff claims, and required the verdict to be rendered for the defendant.
(93) But the Court holds that the defendant was entitled to a verdict upon the other ground, that the legal title vested in the trustee, in virtue of the separate trusts in favor of the several real creditors secured in the deed, according to the principle laid down in the recent case of Brannock v. Brannock, 32 N.C. 428, there being no imputation of collusion between them or the trustee and the other parties, Rives and Perry. That case shows that, whatever relief Harris might have in another forum, out of the fund applicable to the debt of Perry under the deed, by reason of the fraud and illegality of the trust for that debt, yet the title of the trustee was not thereby avoided at law. Consequently, the conveyance of the trustee to the defendant must likewise be effectual at law. Of course, the defendant's purchase could not be affected by notice of the claim of Harris, if there had been the most direct and sufficient evidence of notice, inasmuch as the title of Harris was intrinsically defective, being posterior to the deed of trust and not for full value, and consequently notice of it could not impart to it new validity.
PER CURIAM. Judgment affirmed.
Cited: Stone v. Marshall, 52 N.C. 303; Morris v. Pearson, 79 N.C. 258, 262; Savage v. Knight, 92 N.C. 500; Abernathy v. R. R., 150 N.C. 107.
(94)