Wachovia Loan & Trust Co v. Forbes

• Decision Date: 06 April 1897
• Citation: 27 S.E. 43,120 N.C. 355
• Court: North Carolina Supreme Court
• Parties: WACHOVIA LOAN & TRUST CO. v. FORBES et al.

27 S.E. 43

120 N.C. 355

WACHOVIA LOAN & TRUST CO.

v.FORBES et al.

Supreme Court of North Carolina.

April 6, 1897.

Fraudulent Conveyances—Intent—Burden of Proof—Evidence—Instructions.

1. In an action to vacate a sale as in fraud of creditors, plaintiff must prove a fraudulent intent, where no presumption of fraud is raised by any relation between the parties to the sale.

2. In reciting the several grounds on which the jury might find a sale void as in fraud of creditors, the court inadvertently used the conjunctive "and, " but further on in the charge stated the grounds, properly connecting them with "or." Held, that the error was cured.

3. Where defendant has the burden of proving the good faith of a transaction, he may rely on evidence introduced by plaintiff, from which, if sufficient, the jury may find that the transaction was bona fide, though no evidence was introduced by defendant.

4. A difference of $1,430 between the actual value as found by the jury ($8,500) and the purchase price ($7,070) of corporate stocks aggregating at par $21,000, but which had no market value, does not alone constitute legal fraud in a sale by a debtor to a creditor.

Appeal from superior court, Forsyth county; Brown, Judge.

Action by the Wachovia Loan & Trust Company, receiver of the property of J. W. Alspaugh, against W. S. Forbes and another, to vacate a sale of stocks. From a judgment in favor of defendants, plaintiff appeals. Affirmed.

Jones & Patterson and A. E. Holton, for appellant.

Watson & Buxton. Glenn & Manly, and H. R. Scott, for appellees.

FURCHES, J. This case discloses these facts: That the defendant Alspaugh, being in debt to the defendant Forbes, had in 1893 executed to Forbes a mortgage deed on real estate for $10,000, which mortgage had not been registered on the 9th of February, 1894; that prior to the 9th February, 1894, the defendant Alspaugh had borrowed of defendant Forbes other sums of money, not embraced in the $10,000 mortgage, to the amount of $7,000; that, as a security for this last-mentioned sum, the defendant Alspaugh had pawned with the defendant Forbes certificates of stock which he owned in the Empire Plaid Mills, in the A. H. Motley Tobacco Company, and the Cumberland Mills Company, three corporated companies under the above names, amounting in the aggregate to over $21,000 par value; that on the 9th day of February, 1894, the defendant Alspaugh sold these stocks to the defendant Forbes for the sum of $7,000, or, in other words, in payment of the debt for which they were pledged. Alspaugh was badly insolvent at this time, of which fact the defendant Forbes had notice, and on the next day (February 10th) Alspaugh made a general assignment to D. Schenck, as trustee. The plaintiff, as receiver, appointed at the instance of judgment creditors, institutes this action to vacate this sale of stock by defendant Alspaugh to defendant Forbes, upon the ground of fraud. The defendant Forbes answers, and denies the allegations of fraud; but he admits in his amended answer that on the 9th day of February, 1894, and for a long time before that, he had in his possession the stocks mentioned, which he held as security for $7,000, loaned to the defendant Alspaugh; and on that day it was agreed between him and Alspaugh that he should become the absolute owner of them, and he "thinks" he surrendered to Alspaugh the notes he held as evidence of this $7,000 indebtedness. On the trial, the defendants offered no evidence; but plaintiff offered in evidence a deposition of defendant Forbes taken in another action, as declarations and admissions of said Forbes. This deposition furnished evidence tending to show knowledge of Alspaugh's insolvency on the 9th of February, 1894, and that Forbes took the stocks in satisfaction of the debt for which they were pledged, and that he did not know the value of said stock, and made no inquiry of Alspaugh nor any one else as to their value. But it also tended to show the bona fides of the transaction, and that he had paid $7,000 for them, which he alleges was a fair and reasonable price for these stocks.

The court submitted, without objection, the following issues to the jury: (1) "Was the sale and transfer of the stocks described in the complaint, made on February 9. 1894, by J. W. Alspaugh to W. S. Forbes, fraudulent and void as to the creditors of Alspaugh?'' Answer: "No." (2) "At the date of the said sale, to wit, February 9, 1894, and prior thereto, did defendant Forbes hold the said stock in his possession as collateral security for a debt then due to Forbes by Alspaugh, as alleged in defendant's answer?" Answer: "Yes." (3) "If so, what sum was actually due and owing on said debt by Alspaugh to Forbes, February 9, 1894?" Answer: "$7,-

070." (4) "What was the actual value of said stock at the time of said sale?" Answer: "$8,500."

In the charge of the court, the burden of proof upon the first issue (as to the fraudulent intent) was put upon the plaintiff; but upon the second issue (as to the transfer of the pledged stock by Alspaugh to Forbes) the court put the burden as to the bona fides and full and fair consideration on the defendants. The plaintiff complains of this division of the subject by the judge, and insists that the burden of both issues should have been put upon the defendants. We do not think so. The two issues were as distinct as if they had been in separate actions, and were governed by...