Mooring v. . Little

By consent of the parties, the findings of fact by the referee have the effect of a special verdict, and must be so treated. It is not found that the sale of the land in controversy under the first mortgage mentioned in the pleadings and the report of the referee, or any transaction in connection therewith or growing out of the same, was fraudulent in fact.

The referee found as a conclusion of law arising upon the facts, that the sale first mentioned was fraudulent and void, and upon exception thereto, the court sustained this principal finding. So that the main question before us is as to the correctness of this decision.

We cannot concur in the view the court took of the law arising upon the facts found. In our judgment, they do not of themselves necessarily imply fraud, nor do they raise a presumption of fraud that may be rebutted, nor does the law draw the conclusion that the debts secured by the mortgages and the sales of the land under and in pursuance of them were fraudulent and void.

The debt secured by the first mortgage, the mortgage itself, the assignment thereof to the persons named, and the right of the latter, in the exercise of the power of sale contained in it, to advertise and sell the land embraced by it — that in controversy — are not questioned in any respect. The assignees of the mortgage did advertise and sell. The sale, so far as appears, was duly advertised; it was fairly open to all persons who, for any reason desired to do so, to bid for or purchase the land. There was neither shift, nor subterfuge, nor device to prevent the creditors of the mortgagee or others from doing so. They had fair opportunity to make the purchaser, whoever he might be, pay the full value of the land — indeed, it seems it was sold for nearly, if not quite, its reasonable value.

The mortgagor, Little, though largely in debt and insolvent, (478) had the right in good faith to ask the owner of the mortgage, Sugg, to delay the sale for a reasonable period; and the latter had the right, in good faith, to grant such indulgence, and also to require the payment of a part of the mortgage debt and, as well, security for the docketed judgments he controlled as counsel. That Sugg, under the circumstances, suggested to Little that it would be wiser to sell the land — not covertly — but at open, fair sale — at such fair sale as was made, so far as appears, let the latter's wife buy it and secure the debts due Sugg and the docketed judgments of his clients by a fresh mortgage of the land, was not of itself dishonest; and if the suggestion was acted upon in good faith, this was not dishonest or fraudulent. Such fair sale to the wife of Little did not — certainly of itself — deprive the creditors of Little of any right or remedy they had, or might justly have, against him in respect to the land. They had fair opportunity to make the land pay the debts of Sugg and his clients (these were prior liens) and their own, if the lands were, in their judgment, worth so much. The wife of Little had the right to buy the land, although she had no property, if Sugg were willing to take her note, secured by a mortgage of the land, in payment and discharge of his debt; and although she was not present at the sale, and did not direct that the land be purchased for her yet if she afterwards ratified the bid for her took a deed for the land, executed her note for the purchase money and a mortgage of the land to secure it, as she did, this rendered the sale to her effectual. Nor did the fact that Mooring supplied four hundred dollars of the money, which Sugg required to be presently paid, and took the note of the wife of Little and a second mortgage of the land to secure it, necessarily render the transaction fraudulent as to creditors of Little, the husband. These facts might be evidence of a fraudulent purpose, (479) but of themselves they do not constitute fraud — they may well consist with honesty and fair dealing; their weight, as such evidence, would be greatly impaired by the fact that the sale of the land at which the wife purchased was fair, and the two debts — not questioned — secured by the two mortgages of the land by her, amounted to more than thirteen hundred dollars, a sum not much short of the reasonable value of the land at the time she purchased it.

Much stress is laid on the suggestion of Sugg to Little, the husband debtor, that it would be wise to let the land be sold and his wife buy it, as indicated — that to do so, "would rid the land of subsequent judgments and put it beyond the reach of his creditors." While this suggestion, in connection with other facts, might be some evidence of a fraudulent purpose, it might, in view of the circumstances, be perfectly consistent with an honest purpose. It might be said, not unfairly, that he meant no more than that the land was not worth more than the debts he controlled, that constituted prior liens upon it; that it would be expedient to let it go to sale, the wife of the debtor buy it, and he would take her note secured by a mortgage of the land for the purchase money, and thus put it beyond the reach of creditors of the husband; that, however, he did not mean that this should be done covertly and fraudulently, but openly and fairly. The sale, as made, so far as appears, did not contravene this view — it appears that it was fair and open to every person. If the suggestion was intended as a contrivance to enable the husband debtor himself to pay the debts so due to and controlled by Sugg, and have the title pass to the wife, and thus shield the land from his creditors, then it was not honest; and if the sale and conveyances to and from the wife were in execution of such purpose, then they and the whole transaction were fraudulent and void as to creditors, because the purpose was to prevent, hinder and delay the creditors of the debtor, Little, from reaching and subjecting to the payment of (480) their debts such of his property as ought justly to be applied to the payment of the same, and Sugg would be affected, because he was a party to the fraudulent contrivance.

But it was not found as a fact that there was such fraudulent purpose; and the findings of fact do not disclose such relations of the parties or such transactions as in their nature necessarily imply fraud — they are not such of themselves as the law treats as fraudulent, and the court must so declare whenever its authority is invoked. The court will not declare a transaction to be fraudulent in law, unless it be such as in its nature, or necessary relations, implies fraud; nor does the legal presumption of fraud arise, unless the acts or acts complained of are prima facie fraudulent. When the acts done, and their purpose are fraudulent but are not such in their nature, the fraudulent purpose must be found as a fact, and the law will be applied declaring the transaction void.

We are therefore of opinion that the defendants, husband and wife, are estopped by their deeds respectively, and that the defendant Skinner, as appears by the findings of fact, got no title by his purchase at the sheriff's sale, under which he claims. We may add, that if he had obtained title as he alleges, long after the action began, he could not avail himself of it in this action — certainly, not without a proper pleading, allowed upon just terms.

There is error. The judgment must be reversed and judgment entered in favor of the plaintiff for the possession of the land, and for rents, according to the report of the referee.

To that end let this opinion be certified to the Superior Court.

Error.

Cited: Bobbitt v. Rodwell, 105 N.C. 244.

(481)