Michael v. Moore

• Decision Date: 20 December 1911
• Citation: 73 S.E. 104,157 N.C. 462
• Parties: MICHAEL v. MOORE et ux.
• Court: North Carolina Supreme Court

73 S.E. 104

157 N.C. 462

MICHAEL v. MOORE et ux.

Supreme Court of North Carolina

December 20, 1911

Appeal from Superior Court, Catawba County; Long, Judge.

Action by P. W. Michael against J. O. Moore and wife. Judgment for plaintiff, and defendants appeal. New trial.

Where pending suit against defendant for malicious prosecution, he mortgaged certain land belonging to him and gave the proceeds to his wife with which to improve her separate property, so that on recovery of a judgment against him there was no property on which to levy an execution, the judgment creditor could follow the proceeds of the mortgage into the improvements under the doctrine of unjust enrichment.

The plaintiff, at May term, 1908, of Catawba superior court obtained a judgment against J. O. Moore, one of the defendants, for $300 and costs in a suit for damages for malicious prosecution. At the time the judgment was taken the defendant J. O. Moore owned a tract of land in Alexander county. He gave notice of appeal from the said judgment to this court, being allowed time within which to perfect such appeal, which appeal was not, in fact, prosecuted. Before the time for perfecting said appeal had expired, and before the plaintiff caused a transcript of said judgment to be docketed in Alexander county, the defendant J. O. Moore and his wife Dora Moore, joining him, executed a mortgage on the land in Alexander county to secure the payment of $2,000 borrowed from the mortgagee. The defendants, with the $2,000 so borrowed, erected a residence on a lot in the city of Hickory, the title to which was in the defendant Dora Moore. The feme defendant had actual notice of the suit, and of the judgment taken therein, before the execution of the mortgage and the use of the $2,000 in the erection of the dwelling house on her lot. At the time of the transaction the defendant J. O. Moore was insolvent. After plaintiff had exhausted his legal remedies by execution and supplemental proceedings, he instituted this proceeding for equitable relief. The jury returned the following verdict: "(1) Did defendant J. O. Moore dispose of all of the lands owned by him and expend the bulk of the proceeds therefrom in the erection of permanent improvements on lands of the defendant Dora Moore, for the purpose of defeating or delaying or defrauding the payment of the plaintiff's judgment against him, referred to in the complaint? Answer: No. (2) If so, did the defendant Dora Moore have knowledge of such purpose on the part of her husband and participate in the alleged fraud of her husband, as set out in the first issue? Answer: No. (3) What is the value of the lot of land owned by Dora Moore, independent of the improvement placed on it by the money of her husband? Answer: Six hundred dollars. (4) What amount of money of J. O. Moore, referred to in the first issue, was expended upon the lot of Dora Moore with her consent? Answer: About $2,000." Upon the verdict, the court rendered the following judgment: "This cause coming on before the undersigned and a jury, and the jury having found the third and fourth issues in favor of the plaintiff, and the male defendant, as it appears from the record, being indebted to the plaintiff in the sum of $300 and costs $48.15, it is, therefore, upon the whole record, considered and adjudged that the plaintiff recover of the defendant J. O. Moore $348.15 and the costs of this suit. It is further considered and adjudged that the value of the lot owned by the defendant Dora Moore in her own right, independent of the interests of her husband in the house and lot, is $600. It is further considered and adjudged that the interest of the defendant J. O. Moore in the house and lot described in the complaint is $2,000, and that said sum was expended by J. O. Moore on the said lot of his wife, with her consent, in making improvements thereon, from his own moneys, and the said wife holds her said lot, subject to the equity in the same of her husband, in the sum of $2,000, to be pursued by the plaintiff as he may be advised." Defendants appealed.

Councill & Yount, for appellants.

W. A. Self and A. A. Whitener, for appellee.

WALKER J. (after stating the facts as above).

We entertain no doubt as to the plaintiff's right to follow the fund invested by his debtor in improvements upon his wife's land. No principle is better settled by our decisions than the one that an insolvent debtor cannot withdraw money from his own estate and give it to another to be invested by him in the purchase or improvement of his property, and, when it is done, creditors may subject the property so purchased or improved to the payment of their claims. Guthrie v. Bacon, 107 N.C. 338, 12 S.E. 204 and cases cited; McGill v. Harman, 55 N.C. 179; Gentry v. Harper, 55 N.C. 177. The doctrine is well stated and applied in Burton v. Farinholt, 86 N.C. 260, by Justice Ruffin, as follows: "The life policy in question was the property of the plaintiff's intestate. As soon as delivered, it vested in him, and, like any other chose in action, became an integral part of his estate, subject to every rule of property known to the law. Being indebted to a state of clear insolvency at the time of its voluntary assignment to his daughters, his act was fraudulent as to his creditors and void in law, whether made with an intent actually fraudulent or not. It is a principle of the common law, as old as the law itself, and upon which the preservation of all property depends, that, except so far as the same may be exempt by positive law, the whole of every man's property shall be devoted to the payment of his debts. He cannot gratuitously give away any part of it; the law meaning that he shall be just to his creditors before he is generous to his family. From the fact that he was at the time insolvent, and that his transfer to his daughters was without valuable consideration, it results, as a conclusion of law, that the assignment was void as to his creditors. As said in Gentry v. Harper, 55 N.C. 177, it is against conscience for debtors to attempt in any way to withdraw property or effects from the payment of debts, and, if the courts of law cannot reach the debtor's interest, a court of equity will." More apposite is the case of Pender v. Mallett, 123 N.C. 57, 31 S.E. 351, in which the present Chief Justice says: "If she were not a free trader, the action concerns property she claims as her separate property, and she can be sued in regard thereto, no matter when she acquired it; her husband being joined with her as defendant. Code, §§ 178, 424 (4). It cannot be allowed that when an insolvent husband (or his firm, as here charged) makes over his property to his...