Stoneburner v. . Jeffreys

The contention of the plaintiffs' counsel upon which he mainly rested his argument was that the court below erred in refusing to charge the jury that the deed of assignment was fraudulent in law. It is like threshing over old straw to draw at length the distinctions between an assignment that is void upon its face — one, the language of which raises a presumption of fraud, and one of the third class, when, there being nothing in the instrument itself to so suggest fraud as to demand explanation, the presumption of law in favor of good (83) faith sustains the instrument till proof is offered to rebut it.Bobbitt v. Rodwell, 105 N.C. 236; Woodruff v. Bowles, 104 N.C. 197;Brown v. Mitchell, 102 N.C. 368. It was insisted the deed should be declared void upon its face, first, because the trustee was not in express terms restricted as to the time or manner of disposing of the property committed to his care, but was left to "sell and dispose of the same in such manner as he may deem most beneficial to the interests of all concerned." Where the deed is silent as to the manner or terms of sale, the law presumes until the contrary appears that the fiduciary will act in good faith, will be guided by the paramount desire to promote and protect the interests of the creditors, and with that end in view will exercise his best judgment in determining whether it is advisable to sell publicly or privately or to extend or withhold credit. Bobbitt v. Rodwell, supra.

The language of the instrument which gives rise to the contention of the plaintiff can be most safely construed by considering the connection in which it is used, and by giving weight to every word or clause that may qualify or explain it. The words upon which the plaintiff relies to sustain his view of the meaning and proper construction of the assignment will be found embodied in the following paragraph of it: "In special trust nevertheless, and to and for the uses, interest and purposes following, viz.: that the said party of the second part shall at once take possession of the property hereby assigned, and with all reasonable diligence sell and dispose of the same in such manner as he may deem most beneficial to the interest of all concerned and convert the same into money, and shall also with all convenient speed collect, get in and recover all the said debts, dues, bills, bonds, judgments, (84) mortgages, claims and demands hereby assigned, and with the proceeds of said sales and collections, that the said party of the second part shall first pay all just and reasonable expenses, costs and charges attending the drawing and due execution of this instrument, all legal and clerical services which the execution of the same may require, and the carrying into effect the trust hereby created; and to this end the party of the second part shall have authority to employ such clerks and servants as may be required to replenish by purchase the said stocks of merchandise, to pay for the same out of the said sales and collections, if the party of the second part shall deem such to be for the best interest of the creditors herein," etc.

The next question presented in the well considered and exhaustive argument of counsel was, whether the insertion in a deed of assignment of the power to replenish a stock of goods with the money arising from the sales of the property conveyed, is proof conclusive of a fraudulent intent, or, what is equivalent, of a plain purpose to hinder or delay the creditors in the collection of their claims. Authority is given to the trustee to employ clerks and servants, and to replenish by purchase, etc. (if he "shall deem such to be for the best interest of the creditors herein"), the stock of goods, and this grant of power is preceded by the qualification that it is to be exercised with a certain end in view ("and to this end"). Looking to the language that precedes these words, for an interpretation of their meaning, it is manifest that the maker of the deed has given expression not to a purpose or desire that the trustee should manage the property for the benefit, ease or comfort of the debtor, but to the wish and direction that the trust should be executed for the benefit of all, for whom the trustee should act as fiduciary, by selling the property in the way best calculated to promote their interests, and collecting and disbursing the proceeds of sale as speedily as (85) possible. Such deeds have been pronounced void in law only where the debtor appeared in express terms to be providing for his own case, comfort or benefit to the possible detriment or delay of creditors. And even where prima facie the deed must be construed as reserving to the debtor some unconscionable benefit or as subjecting the creditor to some unjust hindrance or delay, if it appear upon the face of the instrument that the language of the deed is susceptible of such explanation, by evidence aliunde, as will make it consistent with good faith, it is held that the issue of fraud must be submitted to the jury to determine whether such extrinsic testimony as may be offered is sufficient to rebut the presumption of mala fides raised by the deed. Hardy v.Skinner, 31 N.C. 191; Cannon v. Peebles, 24 N.C. 449; Young v.Booe, 33 N.C. 347. The instruction asked by the plaintiff did not suggest the question whether the deed was prima facie fraudulent, but we are of opinion that upon its face there is nothing to destroy the usual intendment in favor of honesty in its execution. We can conceive of many cases in which it might be advisable, and in some in which it would be essential in order to achieve the best results in the disposition of the trust property to make new purchases. The maintenance of something like a full stock of merchandise must tend sometimes to hold the trade of customers, while it may often become essential to the fulfillment of contracts to supply farmers, who have given agricultural liens to the assignor, that the trustee should keep a supply of such articles as the trustor had agreed to furnish. Burwell on Assignment, sec. 182, p. 242;De Woffe v. Mining Co., 49 Conn. 282, 326. The grant of powers to a trustee, which, if exercised honestly and with good judgment, must often prove a boon both to creditor and debtor, is neither fraudulentper se nor does it raise a presumption which shifts the onus of (86) sustaining the deed on the maker. Where there is evidence of the incompetency or dishonesty of the trustee or of injury caused by his negligence, the remedy, as suggested in Bobbitt v. Rodwell, supra, is an application to the court for his removal. Not only is there no sufficient internal evidence of bad faith to raise even a presumption against the validity of the instrument, but it is somewhat exceptional in that the assignor appears to have turned over all his property, reserving neither homestead nor personal property exemptions, which he might lawfully have done. Egerton v. Smith, 98 N.C. 207; Adams v. Smith, supra, Bobbitt v.Rodwell, supra.

The omission by the copyist of the claim of a single creditor in the copy of the deed registered in Edgecombe County falls far short of sufficiency to shift the burden of proof on the issue of fraud. At most it was only competent as a circumstance to be considered with other evidence tending to show bad faith. The burden of proof is sometimes shifted in the progress of the trial, but it is only by the introduction of testimony which the law has declared to be prima facie proof of fraud but which may be rebutted by evidence deemed by the jury sufficient to explain such suspicious circumstances and thereby overcome the artificial weight that the law has attached to them as evidence. McLeod v. Bullard,84 N.C. 515; Lee v. Pearce, 68 N.C. 77.

The issue of fraud was properly submitted to the jury. To have pursued any other course would have been an invasion of the province of the jury.Beasley v. Bray, 98 N.C. 266. There was no error, and the judgment is

Affirmed.

Cited: Bank v. Gilmer, post, 704; Redmond v. Chandley, 119 N.C. 579;Commission Co. v. Porter, 122 N.C. 697.

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