Cowan v. Phillips

• Decision Date: 13 October 1896
• Citation: 25 S.E. 711,119 N.C. 26
• Court: North Carolina Supreme Court
• Parties: COWAN et al. v. PHILLIPS et al.

25 S.E. 711

119 N.C. 26

COWAN et al.

v.PHILLIPS et al.

Supreme Court of North Carolina.

Oct. 13, 1896.

Fraudulent Conveyances—Evidence to Rebut Presumption of Fraud—When Conveyance Operates as Assignment.

1. A chattel mortgage given by a husband and wife on a stock of goods to secure a prior indebtedness of the husband for the purchase of a half interest in the stock, the wife being owner of the other half, which contained a provision that the husband should conduct the business as agent for the mortgagee, retaining a certain sum per week for expenses, and not being required to pay over any money to the mortgagee until the maturity of the debt, while not fraudulent on its face, as a matter of law, is presumptively so; and the presumption cannot be rebutted by the testimony of the parties simply that it was made in good faith, and not to defraud creditors.

2. Where a debtor executed a chattel mort-gage to secure an antecedent debt, but at the time owned other property nearly or quite equal in value to that mortgaged, though he was insolvent, such mortgage did not operate as a general assignment, and was not rendered void by the fact that the mortgagor did not file a schedule of his assets, as required by Laws 1893, c. 453.

Appeal from superior court, Beaufort county; Graham, Judge.

Action by Andrew Cowan and others against George A. Phillips and another. Judgment for defendants, and plaintiffs appeal. Reversed.

W. B. Rodman, for appellants.

Chas. F. Warren, for appellees.

FURCHES, J. This is an action brought by plaintiffs, who are creditors of the defendant T. E. Warren, against said Warren and George A. Phillips, mortgagee, to set aside the mortgage upon the ground of fraud. The defendant Phillips and M. A. Warren, wife of T. E. Warren, were partners in the harness business from 1890 to the 14th of January, 1893, when the defendant Phillips sold his interest in the business to the defendant T. E. Warren at the price of $1,250, when the defendant T. E. Warren executed six notes, as the consideration of the purchase, —five for $200 each, and one for $250, —payable to the defendant Phillips, one of said notes falling due on the 14th day of January of each succeeding year, making the last, which was for $250, fall due on the 14th January, 1899. On the 21st of November, 1894, the defendant T. E. Warren executed a mortgage to the defendant Phillips on the stock of goods in his harness business, to secure the payment of the six notes mentioned above. Among the conditions contained in this mortgage were these: That said Warren was to pay said notes as they became due, and in default of said payments the mortgagee, Phillips, was authorized to foreclose. Another condition was that the defendant Warren was to remain in possession of the goods so mortgaged until these notes were paid; was to carry on the business, to buy and sell for cash only; and was to receive from the business, for his services, and to cover running expenses, such as rents, taxes, etc., $25 per week. The plaintiffs then produced evidence showing that defendant Warren was the owner of a house and lot in the town of Washington, which was under mortgage, which had since been foreclosed by sale, and only brought the amount of the mortgage debt; that he claimed to own another small tract of land, worth some $400 or $500, and that he owned between $400 and $500 worth of personal...