North Carolina National Bank v. Evans

HEDRICK, Judge.

Plaintiff assigns as error the order of the trial court granting summary judgment in favor of defendant Wooten, arguing “that there exists a genuine issue as to the material fact as to whether the conveyances from the defendants Evans to the defendant Wooten were voluntary and without adequate consideration . . . .”

A conveyance with intent to defraud creditors is void in North Carolina. G.S. 39-15. The foundation of a claim seeking to set aside a deed as a fraudulent conveyance can be established in accordance with principles clearly set forth in the landmark case of Aman v. Walker, 165 N.C. 224, 81 S.E. 162 (1914). The Supreme Court in Aman discussed five possible applications of the rules regarding fraudulent conveyances:

(1) If the conveyance is voluntary, and the grantor retains property fully sufficient and available to pay his debts then existing, and there is no actual intent to defraud, the conveyance is valid.

(2) If the conveyance is voluntary, and the grantor did not retain property fully sufficient and available to pay his debts then existing, it is invalid as to creditors; but it cannot be impeached by subsequent creditors without proof of the existence of a debt at the time of its execution, which is unpaid, and when this is established and the conveyance avoided, subsequent creditors are let in and the property is subjected to the payment of creditors generally.

(3) If the conveyance is voluntary and made with the actual intent upon the part of the grantor to defraud creditors, it is void, although this fraudulent intent is not participated in by the grantee, and although property sufficient and available to pay existing debts is retained.

(4) If the conveyance is upon a valuable consideration and made with the actual intent to defraud creditors upon the part of the grantor alone, not participated in by the grantee and of which intent he had no notice, it is valid.

(5) If the conveyance is upon a valuable consideration, but made with the actual intent to defraud creditors on the part of the grantor, participated in by the grantee or of which he he [sic] has notice, it is void.

Aman v. Walker, supra at 227, 81 S.E. at 164. Plaintiff seeks to bring his claim within the application in paragraph (2) or (3) above. Thus, plaintiff’s claim against defendant Wooten under either of these principles is grounded on the allegation that the conveyances by defendants Evans to defendant Wooten of property described in the complaint were “voluntary.”

A conveyance of real property is said to be “voluntary” when it is effected without consideration. Blacks Law Dictionary 403, 1747 (4th Ed. 1968); L & M Gas Co. v. Leggett, 273 N.C. 547, 161 S.E. 2d 23 (1968); Wilson v. Crab Orchard Development Co., 5 N.C. App. 600, 169 S.E. 2d 50 (1969). Legal consideration “consists of some benefit or advantage to the promisor, or of some loss or detriment to the promisee.” Stonestreet v. Oil Co., 226 N.C. 261, 263, 37 S.E. 2d 676, 677 (1946). See also Carolina Helicopter Corp. v. Cutter Realty Co., Inc., 263 N.C. 139, 139 S.E. 2d 362 (1964).

A motion for summary judgment pursuant to Rule 56 carries with it the burden of offering evidence sufficient to “show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” G.S. 1A-1, Rule 56(c). “When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleadings, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Rule 56(e). Defendant Wooten supported his motion for summary judgment with evidence tending to show that as consideration for the conveyances he assumed defendants Evans’ indebtedness to the First Federal Savings & Loan Association secured by a deed of trust on the property, and defendants Evans’ indebtedness to Planters National Bank evidenced by an unsecured promissory note. Thus, in the face of defendant Wooten’s motion for summary judgment supported by evidence that the conveyances were not voluntary, the plaintiff could not rest on the conclusory allegation in its complaint made on information and belief that the conveyances were “voluntary.” It was incumbent upon the plaintiff in response to the motion to offer evidence of specific facts that the conveyances were made without a valuable consideration flowing between the defendants Evans and defendant Wooten. Rather than offering evidence that the conveyances were “voluntary,” plaintiff’s own affidavits tended to show that the defendant Wooten paid a valuable consideration to the Evanses for the property.

Plaintiff argues, however, that the defendant Wooten’s affidavits do not establish that he paid adequate consideration for the property involved. Since the plaintiff has failed to allege or raise an issue of defendant Wooten’s participation in the alleged fraud, it is not necessary to consider whether the consideration paid is so deficient as to suggest fraud on his part. In the setting of this case “adequacy” of consideration is irrelevant to the question of whether the conveyance was “voluntary.” See Weyerhaeuser Co. v. Light Co., 257 N.C. 717, 127 S.E. 2d 539 (1962).

In light of our holding, it is not necessary that we discuss plaintiff’s other assignments of error. On this record the defendant Wooten is entitled to summary judgment as to plaintiff’s claim to have the deeds conveying the property described in the complaint set aside as fraudulent conveyances.

The judgment appealed from is affirmed and the cause is remanded to the District Court for further proceedings.

Affirmed and Remanded.

Judge Britt concurs. Judge WEBB dissents.