Opinion
(December Term, 1851.)
Where A., being in embarrassed circumstances, purchased a tract of land from B. and paid for it, and then caused a deed to be made from B. to A.'s sons, with a view of defrauding his creditors: Held, the personal estate being exhausted and debts remaining unpaid, that A.'s administrator could not obtain a license from the court, under the act of 1846-47, to sell the said land for the payment of the debts, because the fraudulent conveyance was not made by the intestate himself, and the trust in the sons was one which could not have been sold by fi. fa. or attachment in the lifetime of A., nor could a court of equity interfere to enforce the performance. The only remedy for the creditor was by a suit in equity, founded not on the trust, but on the fraud, by which the property of A. had been withdrawn from the payment of A.'s debts.
APPEAL from Bailey, J., at Spring Term, 1850, of ONSLOW.
The case is stated in the opinion of the Court.
James W. Bryan for petitioner.
No counsel for defendants.
This is a petition by the administrator of William Tull for license to sell the real estate under the provisions of the act of 1846, ch. 1.
The petition shows that the personal estate has been exhausted, and there are debts unpaid to a large amount. It sets forth that the intestate, a short time before his death, being much in debt, purchased of one Foy a tract of land at the price of $3,250, paid the purchase money, and for the purpose of defrauding his creditors caused the title to be made to two of his sons, who with the other children are made parties defendant. The defendant demurred, and the demurrer was sustained by the court, the petition dismissed, and the plaintiff appealed.
The demurrer raised the question, Does this case come within the operation of the act of 1846?
This statute makes an important change in the law relative to the real estate of deceased debtors. It evidently was the intention of the Legislature to give it a very comprehensive operation. This being the first case calling for its construction, we have devoted to it much consideration, with a desire fully to carry out the intention, and to avoid all difficulty hereafter, by taking a fair start.
(60) Section 11 enacts: "The real estate liable to be sold under this act shall include all rights of entry and rights of action, and all other rights and interests in lands, tenements and hereditaments which by law descend to the heirs of the deceased; and all lands which the deceased may have conveyed with intent to defraud his creditors: Provided, that only such land shall be liable to be sold as would have been liable to attachment or execution by a creditor of the grantor in his lifetime."
The case before us is not embraced by either clause of this section. No right or interest, legal or equitable, descended to the heirs of the deceased. His two sons acquired the lands by purchase and not by descent; it was conveyed to them in trust for their father, with an intent to defraud his creditors. This trust was not fit to be enforced by a court of equity, and neither the father nor the other children could be allowed to set it up. In fact, it could not as a trust be recognized in favor of any person; a court of equity could not recognize and enforce it as a trust, even in favor of a creditor. The equity of a creditor for relief would not be based on the idea of such a fraudulent and corrupt trust, but upon the distinct ground of the fraudulent intent to withdraw the estate of the debtor from the payment of his creditors. As there was no trust which a court of equity could recognize, the administrator cannot under this clause entitle himself to the license to sell by claiming to represent the deceased debtor or his heirs, for in contemplation of law he had no right or interest, and of course nothing could descend to them.
The other clause of the section gives the administrator a right to a license to sell all land which the deceased may have conveyed with intent to defraud his creditors, under the idea of his representing them. We have noticed the fact that by this clause the personal representative has more power over land than he possesses over a chattel; (61) he is bound by the gift, and creditors can only impeach it by an action against the donee, as executor de son tort. This would be a strong argument in favor of allowing this clause to embrace any and every case of fraud in regard to land, but for the restriction which is put on such a latitude of construction by the proviso. This confines it to such land as would have been liable to attachment or execution by a creditor of the grantor in his lifetime. Here it is seen that the land contemplated is such as the deceased had conveyed as grantor, and such as a creditor could have reached by attachment or execution. The land in question is, necessarily, excluded from the operation of the statute on both these grounds. It was not conveyed by the deceased as grantor, nor was it liable to attachment or execution by a creditor, because the statute 13 Eliz. does not apply to it, for this plain reason: if the conveyance to the sons is treated by the creditors as a nullity, the title is still in Foy, the original owner.
But it is said, although the land in this case could not have been sold by execution under the statute of Elizabeth, yet there was a trust in favor of the deceased debtor which could have been sold by execution under the act of 1812, Rev. Stat., ch. 45; and, as the administrator is intended to represent creditors, a liberal construction which is called for by the manifest intention to give the statute an extended operation, will include all lands which the deceased had conveyed or caused to be conveyed, with an intent to defraud creditors: Provided, it could have been reached by execution in the lifetime of the debtor.
To this view there are two fatal objections: First, the words of this clause evidently confine it to land which had been conveyed by the deceased and which would have been liable to be sold as land under (62) an execution by the creditors of the grantor. Secondly, the land being, by the direction of the deceased, conveyed to his two sons in trust for himself, with an intent to defraud his creditors, was an attempt to create a trust, which failed because such a trust could not be enforced in a court of equity, as explained above, and, consequently, it was not such a trust as was liable to be sold by the act of 1812. That act includes only such trusts and equitable interests as are recognized and can be enforced by courts of equity. The purchaser comes in under the cestui que trust and acquires from him the trust, which draws to it the legal estate in the same way as if a court of equity had decreed a conveyance. Of course, it cannot apply where there is no trust which that court recognizes or will execute, even in favor of a creditor upon the footing of a trust. In this the operation of the act of 1812 differs from that of the statute of Elizabeth; there the land is sold and the purchaser takes title above, and in spite of, the fraudulent donee, the conveyance of the debtor being treated as a nullity, whereas, under the act of 1812, the trust is sold and is treated throughout as a valid, subsisting right, which may be set up and enforced.
In our case there is no such valid, subsisting trust, and the creditors must go into equity, not on the motion of a trust, but because the estate of the debtor has been put into the hands of third persons by a fraudulent contrivance.
PER CURIAM. The decree sustaining the demurrer affirmed.
Cited: Page v. Goodman, 43 N.C. 16: Parris v. Thompson, 46 N.C. 59; Morris v. Rippy, 49 N.C. 535; Taylor v. Dawson, 56 N.C. 90; Smitherman v. Allen, 59 N.C. 19; Haskill v. Freeman, 60 N.C. 588; Wall v. Fairley, 73 N.C. 467; Worthy v. Caddell, 76 N.C. 84; Wall v. Fairley, 77 N.C. 107; Greer v. Cagle, 84 N.C. 388; S. c., 87 N.C. 379; Efland v. Efland, 96 N.C. 493; Thurber v. LaRoque, 105 N.C. 319; Guthrie v. Bacon, 107 N.C. 338.
(63)