Wright v. Cotten
| Decision Date | 15 November 1905 |
| Citation | 52 S.E. 141,140 N.C. 1 |
| Parties | WRIGHT v. COTTEN. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Stanly County; Bryan, Judge.
Action by J. C. Wright, trustee, against J. F. Cotten. From a judgment in favor of plaintiff, defendant appeals. Affirmed.
In the submission of issues it is only requisite that the court submit issues in such form as, when decided either way, they may be the basis for its judgment.
The following issues were submitted: From the judgment rendered the defendant appealed.
Theo. F. Kluttz and J. R. Price, for appellant.
John N Wilson and King & Kimball, for appellee.
The plaintiff sues to recover $3,000, which he alleges that C. L. Cotten, a bankrupt, at the time insolvent, and within four months of the filing of the petition in bankruptcy against him, paid to John F. Cotten, his father, in money, and that at the time John F. Cotten had knowledge that C. L. Cotten was insolvent, and intended thereby to give him an unlawful preference, and that his purpose in making said payment was to hinder, delay, and defraud his creditors. The defendant, administrator of John F. Cotten, denied the several material allegations of the complaint, but admitted that the $3,000 was paid to John F. Cotten by C. L. Cotten in payment of a debt, and within the four months as alleged. The evidence discloses the following uncontradicted facts: On March 27, 1901, the bankrupt's store at Albemarle was destroyed by fire. His goods were insured in the sum of $8,000--$2,000 in the North Carolina Home, $4,000 in the Traders' Insurance Company, and $2,000 in the Virginia State. On February 21, 1902, he compromised the policy in the North Carolina Home for $1,000 cash. On February 13th, previous, his attorney compromised the $4,000 Traders' policy and received $2,500. The attorney retained $500 for services and paid the bankrupt $2,000, which money or check for the same he deposited in the Cabarrus Savings Bank of Albemarle on February 19, 1902, to the credit of John F. Cotten and in his name. The cash the bankrupt received from the North Carolina Home he deposited in the Davis-Wiley Bank, Salisbury, on February 22, 1902, in the name of and to the credit of John F. Cotten. On April 7th an involuntary petition in bankruptcy was filed, and on April 25th he was adjudged a bankrupt and the plaintiff elected trustee in bankruptcy. There are several exceptions appearing in the record, which we have carefully examined, but deem it unnecessary to notice, except to say that they are without merit.
The only exceptions we desire to notice more at length are those relating to the issues and the burden of proof. We think the issues submitted are more than sufficient to develop the whole case and give plaintiff and defendant full scope to present to the jury evidence upon every issue raised by the pleadings. Issues arise upon the pleadings, and not upon evidential facts. All that is requisite is that the court shall submit issues in such form as when, decided either way, they may be the basis for its judgment. Cumming v. Barber, 99 N.C. 332, 5 S.E. 903. In his very able argument, as well as in his brief, Mr. Kluttz, counsel for defendant, laid almost entire stress upon the alleged errors of the trial judge in charging upon the burden of proof in respect to the first and fourth issues. In the view we take of this case it is unnecessary to consider the charge in detail in reference to the three issues. The bankrupt act (Act Cong. July 1, 1898, c. 541, § 60, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445]) defines a preference (a) to consist in the payment by a debtor to one creditor of a greater percentage of his debt than he is able to pay to all other creditors of the same class; and (b) the same section denounces the penalty imposed on the giving of a preference to be that if such preference has been made, and the person receiving it or his agent acting in the matter for him had reasonable cause to believe that a preference was intended, then the same is voidable and made recoverable by the trustee. From the reading of this section it is clear that the making of the preference and incurring its penalty are wholly independent of any idea of fraud whatever, the statutes simply saying in plain terms what a preference is, and in terms equally plain the penalty of it.
A payment of money is a transfer of property under the definition of the word ""transfer" as used in the sections of the bankrupt act. Pirie v. Trust Co., 182 U.S. 438, 21 S.Ct. 906, 45 L.Ed. 1171; In re Fixen, 102 F. 295, 42 C. C. A. 354, 50 L. R. A. 605; Sherman v. Luckhart (Mo. App.) 70 S.W. 388. To make a transfer voidable within the provisions of the act, it is necessary to establish four facts: (1) The insolvency of the transferror; (2) the obtaining by the creditor of a larger percentage of his debt than any other creditor of the same class; (3) the giving of a preference within four months before the filing of a petition in bankruptcy; (4) reasonable cause upon the part of the creditor to believe that a preference was intended. Sebring v. Wellington, 63 A.D. 498, 71 N.Y.S. 788. We think his honor should have...
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