Opinion · Supreme Court of North Carolina

Jessup v. . Johnston

Jessup v. . Johnston, 48 N.C. 335 (N.C. 1856)

Type: Opinion
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Date: 1856-06-05
Topic: general

Pearson, J. “ What constitutes fraud is a question of law. In some cases, the fraud is itself evident, when it is the province of the Court so to adjudge, and the jury has nothing to do with it. In other cases it depends upon a variety of circumstances, arising from the motive and intent. Then, it must be left, as an open question of fact, to the jury, with instructions as to Avliat in law constitutes fraud. And in other cases there is a presumption of fraud which may be rebutted.

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JESSUPv. JOHNSTON,48 N.C. 335(1856)

JOHN M. JESSUPvs. ALEXANDER JOHNSTON.

Supreme Court of North Carolina

(June Term, 1856.)

The fact that a father, finding himself overwhelmed with debts, conveys to his son negroes and other property worth $6000, in consideration that the son will undertake to pay debts amounting to only $4000, is of itself a presumption of fraud; and when there was no rebutting circumstance it was the duty of the Judge so to tell the jury.

ACTION of TROVER, tried before his Honor, Judge CALDWELL., at the Spring Term, 1856, of Cumberland Superior Court.

The action was brought to recover the value of a slave by the name of Pompey, which the plaintiff claimed title to under a deed executed by his father, Jonathan Jessup, on the 2nd day of January, 1851. This deed recites that "whereas Jonathan Jessup, the party of the first part, is indebted by several promissory notes, negotiable and payable at the bank in Fayetteville, amounting in all to the sum of $4060, which notes are endorsed by Amos Jessup, c., (naming others,) and are now held by the Banks, in which they were respectively discounted, and whereas, the said Jonathan Jessup, being now in feeble health, is desirous to retire from business, and whereas,Page 336John M. Jessup, the party of the second part, hath assumed the payment of the said notes, and agreed to substitute his own notes in discharge of those made at Bank by the said Jonathan," and for no other consideration expressed on the face, conveys the slave in question and seven other slaves, and some real property to the plaintiff. The value of this property was, at the time of this transfer, $6000. The plaintiff was between twenty-one and twenty-two years of age; was a clerk in the store of his father, and was not the owner of any property. The subscribing witness testified that the father and son came to him and acknowledged the execution of the deed, and that nothing more was said.

OneTaylor, who was one of the endorsers for the elder Jessup, testified, that a short time previous to the execution of the deed, the health of the elder Jessup became bad, and that he, with other of his endorsers, called on him and insisted that he should execute a deed or mortgage, conveying his negroes and real estate to secure them; that he agreed to do so, and this deed was made for that purpose. The elder Jessup, at the time of making this deed, was much involved in debt to the Banks, as well as to individuals. All the negroes conveyed remained in possession of the father, until after Pompey was sold by the defendant, and until about fifteen months before the trial.

The value of the property was something over $6000, and the debts to the Banks about $4000 when this deed was made.

The notes falling due in April, May, June and July, were renewed in the name of the elder Jessup, with the same endorsers; after that, they were renewed in the name of the plaintiff, with the same endorsers. When this substitution took place the notes were reduced to $2,700. The plaintiff had acted as his father's agent in renewing his notes before the deed was made, and he attended to the renewal of those in the months mentioned above; but who provided the funds for such renewal, whether the father or the son, did not appear. It appeared in evidence that three of the slaves conveyed in the deed had sold for $2,100, and the proceedsPage 337applied to the bank debts. The residue of the slaves and the real estate were still unsold, though all the bank debts had been paid off, or nearly so.

It was proved that the elder Jessup was engaged in merchandise at the execution of the deed, and some time in 1851 he had the whole stock sold at auction, which brought $1,350; notes were taken on these sales, and a part of them handed to the plaintiff, and a part to the father; but in what proportion did not appear. The money which was collected was handed to the plaintiff, who gave a receipt, as clerk for his father.

The defendant relied for his defence on judgments and execution against Jonathan Jessup, under which, he, as the sheriff of Cumberland, made the sale in question.

The Court charged the jury "that the disparity between the value of the property conveyed and the debts to be paid, was a badge of fraud, and that the amount left after the debts had been paid, or nearly so, taken in connection with this part of the case, was a circumstance the jury ought to look at as indicative of fraud; that the remaining in the possession and enjoyment of the property by the elder Jessup, was a strong badge of fraud. The Court further charged that if the plaintiff was under age and without property, when the deed in question was executed, that this was a badge of fraud. And the Court further charged, that if it was intended and agreed at its execution to be a mere security to save harmless the endorsers, that would make it fraudulent in law." Plaintiff excepted.

The jury retired under this charge and remained out over twenty-four hours. The Court, thereupon, sent for them, and stated that "upon reflection, he charged them that, looking at the testimony in this case, if they believed that the plaintiff, being the son, was a mere clerk in his father's store at the execution of the deed in question, but little over twenty-one years of age, without property or means of any kind, in this point of view, it was fraudulent in law." Plaintiff excepted to this charge.Page 338

The jury rendered a verdict for the defendant. Judgment and appeal.

ShepherdandStrange, for plaintiff.Wm. McL. McKay, for defendant.

PEARSON, J.

"What constitutes fraud is a question of law. In some cases, the fraud is itself evident, when it is the province of the Court so as to adjudge, and the jury has nothing to do with it. In other cases it depends upon a variety of circumstances, arising from the motive and intent. Then, it must be left, as an open question of fact, to the jury, with instructions as to what in law constitutes fraud. And in other cases there is a presumption of fraud which may be rebutted. Then, if there is any evidence tending to rebut it, that must be submitted to the jury. But if there is no such evidence, it is the duty of the Court so to adjudge, and to act upon the presumption."Hardyv.Simpson, 13 Ire. 132.

In our case the substance of the charge was, that the evidence raised a presumption of fraud; that there was no evidence to rebut the presumption; and it was the duty of the jury to find for the defendant, if they believed the evidence.

The fact that a father, finding himself overwhelmed with debts, conveys to his son negroes and other property worth $6000, in consideration that the son will undertake to pay debts amounting to $4000 only, of itself raised a presumption of fraud; for it is neither more nor less than a fraudulent gift, by an insolvent father to his son, of $2000, at the expense of his creditors; to say nothing of the other facts, that the son was only twenty-one or two-years of age; had no property of his own; the debts were reduced to $2,700 before the name of the son was substituted for that of the father on the notes in Bank, and that the negro in controversy, and other property which had been conveyed by the father to the son, was still in hand, after the Bank debt was discharged. As there was no evidence to rebut this presumption, it was the duty of the Judge to instruct the jury that, if they believed the evidence,Page 339the conveyance was fraudulent and void as against creditors. So, inMcCorklev.Hammond, 2 Jones' Rep. 444, the fact that a father, being about to fail, conveyed a stock of goods to a son, who was under age, in consideration of his son's notes for a sum which was a fair price for the goods, was held to amount to fraud; the fact that the father had included the son's notes in an assignment, which he soon thereafter executed in favor of certain of his creditors, being no evidence to rebut this presumption, inasmuch as the son could not be compelled, either in Law or Equity, to pay the notes.

These cases all range themselves under the same head, that is, where there is a presumption of fraud and no evidence to rebut it.Leev.Flannigan, 7 Ire. Rep. 741;Youngv.Booe, 11 Ire. Rep. 347, are instances of another class, where the presumption of fraud is rebutted by evidence explaining the circumstances, and showing that there was no fraud.

The second charge of his Honor superseded what he had said in his former charge by taking higher ground against the defendant; and as we sustain him in that, of course it is not necessary to notice his former charge; and the fact that it was liable to exception, as being too vague, and as assuming that the son was under the age of twenty-one, which was contrary to the evidence, can make no sort of difference.

PER CURIAM. Judgment affirmed.