North Carolina National Bank v. Evans
North Carolina National Bank v. Evans
Opinion of the Court
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,*325 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
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.
Dissenting Opinion
dissenting.
I differ from the majority as to the significance of the consideration proven by affidavit in this case. Mr. Wooten has offered affidavits showing that legal consideration was paid for the transfer of the property. The plaintiff does not dispute by its affidavits that legal consideration was paid by Mr. Wooten. Indeed, it cannot dispute this.
Considering the affidavits of both sides, I believe there is a genuine issue as to whether there was valuable consideration. Legal consideration is not the issue.
I disagree that “adequacy” of consideration is irrelevant to the question of whether the conveyance was “voluntary” in this case. A conveyance that is fraudulent as to creditors can, nevertheless, be binding between the parties to the conveyance. Lane v. Becton, 225 N.C. 457, 35 S.E. 2d 334 (1945). Implicit in the holding in Lane v. Becton, supra, is the concept that consideration may be sufficient to support the deed between contracting parties, but not sufficient to remove the transaction from fraud.
L & M Gas Co. v. Leggett, 273 N.C. 547, 161 S.E. 2d 23 (1968), which is cited by the majority in defining “voluntary” conveyances, provides a good definition for determining if a conveyance was “voluntary.” Justice Branch writing for the Court defined “voluntary” conveyances as follows: “A conveyance is voluntary when it is not for value, i.e., when the purchaser does not pay a reasonably fair price such as would indicate unfair dealing and be suggestive of fraud.” L & M Gas Co. v. Leggett, supra at 549, 161 S.E. 2d at 25.
I believe the Court must look into the adequacy of consideration before it can properly grant summary judgment against a plaintiff on the issue of whether a conveyance was voluntary. This is an action affecting the title to real estate which is proper for a notice to be filed pursuant to G.S. l-116(a). Since a genuine material issue of fact existed as to whether the consideration paid represented a “reasonably fair price,” it was error for the trial judge to grant summary judgment in favor of defendant Wooten. I would reverse the trial judge’s order.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.