
148 S.E.2d 1 (1966)
267 N.C. 145
VIRGINIA-CAROLINA LAUNDRY SUPPLY CORPORATION, Plaintiff,
v.
LeRoy SCOTT, Trustee, and Elizabeth M. Stanley and her husband, J. C. Stanley, Defendants.
No. 28.
Supreme Court of North Carolina.
May 4, 1966.
*2 Frazier T. Woolard, Washington, for plaintiff appellant.
Carter & Ross, Washington, for defendants appellees.
*3 LAKE, Justice.
The first question to be determined, is whether the holder of the note which the deed of trust purports to secure is a necessary party to this action. In Hancock v. Wooten, 107 N.C. 9, 12 S.E. 199, 11 L.R.A. 466, certain creditors, in behalf of themselves and all other creditors of the grantor, attacked as a fraud upon creditors a deed of assignment to a trustee to secure payment of claims specified therein. One of the creditors so preferred died. The trustee contended that her representative was a necessary party to the action. Shepherd, J., later C. J., speaking for the Court, said:
"[W]e will consider the single question here presented, to wit, whether in an action brought by a creditor to set aside an alleged fraudulent trust or assignment, it is necessary upon the trial of an issue as to the validity of the trust or assignment, that the cestuis que trustent should be made parties defendant; and whether the trustee, as a matter of right, can in all cases have them made codefendants. In Barrett v. Brown, 86 NC 556, cited by the appellants, there is a general expression favoring the affirmative of the proposition, but it will be noted that the plaintiff in that case was seeking to enforce the trust by having an account taken in order that she might have her `pro rata share of her claim,' and the court very properly decided that the trustee had a right to have each cestui que trust present in order that he might contest the claims of others and thus protect the trustee, and have a complete settlement of the whole litigation. Quite different is the case before us.
* * * * * *
"Adhering, as we do, to the principle as laid down, that the cestuis que trustent are not necessary parties in actions to set aside deeds of trust, or assignments for the benefit of creditors, we think that we are authorized, under the liberal provisions of the Code, to say that a creditor may join the cestuis que trustent in such an action, and that the cestuis que trustent may themselves apply to be made parties defendant. But, while they may thus be made parties, we do not think that the death of any or all of them, pending the suit, should be a cause of delaying the trial of the issue touching the validity of the deed, unless it appears that the trustee is not defending in good faith, or that the ends of justice will be better subserved by having the representatives present. This is addressed to the wise discretion of the court to be exercised in view of the particular circumstances attending each case."
In Moorefield v. Roseman, 198 N.C. 805, 153 S.E. 399, suit was brought to have certain conveyances of land by mortgages and deeds of trust declared void as against the plaintiff, a judgment creditor of the grantor, on the ground that they were made with intent to hinder, delay and defraud the plaintiff in the collection of his judgment. The plaintiff moved that the beneficiaries "named in the mortgages and deed of trust" be made parties defendant. The motion was allowed and the defendants demurred to the complaint. This Court said:
"There was no error in the judgment overruling the demurrer for that the facts stated in the complaint are not sufficient to constitute a cause of action, or for that several causes of action have been improperly united. The facts stated in the complaint constitute a cause of action against the defendant, R. L. Roseman [debtor grantor]; the other defendants are necessary parties for a complete determination of the action."
It will be noted the "other defendants" were joined on the motion of the plaintiff and also that they were specifically named as beneficiaries of the conveyance attacked. A holding that they were proper parties would have been equally sufficient to support the decision.
*4 In 37 C.J.S. Fraudulent Conveyances § 346(f), it is said:
"It has been held that cestuis que trust are not necessary defendants in a bill to set aside a conveyance in trust, but there is other authority to the contrary. Likewise the authorities are not uniform on the question as to whether, in an action to set aside as fraudulent a deed of trust made for the purpose of preferring certain creditors, such preferred creditors are necessary parties or not. In some decisions it is held that it is sufficient to make the trustee a party defendant, while other decisions hold that such preferred creditors are necessary parties even where the trustee is made a defendant."
In 24 Am.Jur., Fraudulent Conveyances, § 205, Supp., note 16.53, it is said:
"Where the trustee is a party defendant, he may be regarded as representing the beneficiaries and as having the right to defend the action for them, with the result that, in an action brought in opposition to the trust, or to set aside the instrument by which it was created, the suit may be maintained against the trustee alone, without making the cestuis parties defendant."
In the present case, the note which the deed of trust purports to secure is payable to bearer. The plaintiff alleges it is "a false and fictitious paper writing," and that the identity of the supposed bearer "remains unknown to plaintiff." The trustee in the deed of trust which purports to secure the payment of such note is a party to the action and has participated actively in its defense. Under these circumstances, whatever may be the situation where the holder of the indebtedness is named in the deed of trust and known, the holder of the alleged note cannot be deemed a necessary party to the action to set aside the deed of trust which purports to secure it. We do not have before us the question of the right of the trustee, or of the plaintiff, to disclose to the court the identity of such holder and to make the holder a party to the action.
We come next to the question of whether the evidence introduced by the plaintiff is sufficient to survive the motion for judgment as of nonsuit. It is elementary that upon such motion the evidence offered by the plaintiff is to be considered as true and all reasonable inferences favorable to the plaintiff are to be drawn therefrom.
If, in order to survive a motion for judgment of nonsuit in this action, the plaintiff must offer evidence sufficient in itself to show that its debtors, the defendant grantors in the deed of trust, did not retain property sufficient to pay their indebtedness to the plaintiff (no other debts being shown in the record), the judgment of nonsuit must be sustained since the only evidence offered by the plaintiff, upon this point, consisted of the tax listings by such defendants of their tangible properties in Beaufort County. Such listings tend to show that these defendants owned no land in Beaufort County, other than the land described in the deed of trust, and did not own tangible personal property in Beaufort County sufficient to pay the judgment held by the plaintiff. (There was also evidence that the value of the land described in the deed of trust is less than the face amount of the note which the deed of trust purports to secure.) Such tax listings do not negative the possibilities that these defendants, after executing the deed of trust in question, retained, and still retain, bank accounts or other intangible properties in Beaufort County or elsewhere, or tangible property, real or personal, located in another county, sufficient to pay the claim of the plaintiff and whatever other indebtedness these defendants may owe. Therefore, the evidence introduced by the plaintiff is not sufficient, alone, to show that the defendant grantors did not retain property sufficient to pay their debts when they executed the deed of trust now under attack.
*5 However, paragraph 22 of the complaint alleges, "[T]he conveyance made by the grantors was voluntary and made with the actual intent to defraud this plaintiff creditor." The answer filed jointly by the defendant grantors and the defendant trustee of the deed of trust states, with reference to this allegation:
"It is further admitted * * * that the conveyance made by the Grantors was voluntary. It is denied that said conveyance was made with intent to defraud the plaintiff. The said note and deed of trust are bona fide instruments executed in good faith for a fair consideration."
Elsewhere in their answer, these defendants allege that the deed of trust "was given in good faith to secure a bona fide indebtedness," and deny that the note is a "false and fictitious" paper writing.
The plaintiff offered in evidence, in addition to the judgment under which it claims and the deed of trust it attacks, various allegations of the complaint and the corresponding admissions in the answer. Among other things, these admissions are sufficient to support a finding that the deed of trust in question, though dated earlier, was recorded some ten days after a letter to the grantors from the plaintiff stating that if the plaintiff's claim was not settled it would be referred to an attorney for handling. Included among the portions of the answer so offered in evidence was the following excerpt from paragraph 22:
"It is admitted that the defendants Stanley occupy part of the house and lot described in said deed of trust. It is further admitted that there are no entries upon the face of said deed of trust to show that any principal or interest on the consideration has been paid, and that the conveyance made by the Grantors was voluntary." [Emphasis added.]
In their brief the defendants say:
"In making this admission, defendant was giving a lay, general or literal interpretation of the meaning of the word `voluntary,' and has not considered the legal usage of the word as being descriptive of a conveyance which is made `without any consideration whatsoever, or upon a consideration which is not substantial.'"
Language in paragraph 22 and other paragraphs of the answer, not offered in evidence, would indicate that the defendants, when preparing and verifying their answer, were not advertent to the meaning of "voluntary conveyance," as customarily used in connection with suits to set aside alleged fraudulent conveyances. However, it is apparent that the plaintiff did use the term in its technical, legal sense.
In McCaskill v. Walker, 147 N.C. 195, 61 S.E. 46, this Court held that a plaintiff, over objection by the defendant, may not introduce in evidence a portion of an allegation in the answer when such portion, considered alone, will not enable the jury to see, by reasonable interpretation, what the defendant intended to say. However, in the present case, the defendants did not object to the introduction in evidence of only a portion of their statement. They made no effort to amend their answer. The result is that the plaintiff's evidence in the present record contains an unqualified admission by the defendants that the deed of trust under attack was "voluntary." Interpreting this evidence in the light most favorable to the plaintiff, and drawing therefrom all inferences reasonable to it, as we are required to do in reviewing a judgment of nonsuit, we are brought to the conclusion that the plaintiff's evidence is sufficient to support a finding that the deed of trust was a voluntary conveyance in the technical sense.
G.S. § 39-17 reads as follows:
"Voluntary conveyance evidence of fraud as to existing creditors.No voluntary gift or settlement of property by *6 one indebted shall be deemed or taken to be void in law, as to creditors of the donor or settler prior to such gift or settlement, by reason merely of such indebtedness, if property, at the time of making such gift or settlement, fully sufficient and available for the satisfaction of his then creditors, be retained by such donor or settler; but the indebtedness of the donor or settler at such time shall be held and taken, as well with respect to creditors prior as creditors subsequent to such gift or settlement, to be evidence only from which an intent to delay, hinder or defraud creditors may be inferred; and in any trial shall, as such, be submitted by the court to the jury, with such observations as may be right and proper."
In Hood ex rel. Pinetops Banking Co. v. Cobb, 207 N.C. 128, 176 S.E. 288, this Court held that even though it was shown that a conveyance by a debtor was voluntary (that is, not for value), the burden of proof is nevertheless, upon the plaintiff to show that the grantor did not retain property sufficient to pay his debts. Speaking through Schenck, J., the Court said:
"The effect of this statute [G.S. 39-17] is to destroy any presumption of vitiating fraud in the making of a voluntary gift or settlement solely from the indebtedness of the donor or settler, and to make the failure to retain property fully sufficient and available for the satisfaction of creditors a requisite of such presumption. Hence it was necessary for the plaintiff to allege, as he did allege, not only that the male defendant was indebted, but also that said defendant, the grantor in the deed attacked, failed to retain such sufficient and available property. The allegata being a requisite, it follows that the probata was also a requisite."
In Shuford v. Cook, 169 N.C. 52, 85 S.E. 142, Clark, C. J., speaking for the Court, said:
"[T]he Act of 1840, now Revisal, § 962 [G.S. 39-17], provides that the court, where there is any evidence tending to show that at the time of the alleged fraudulent conveyance the grantor retained property fully sufficient and available for the satisfaction of his then creditors, shall submit the question to a jury `with such observations as may be right and proper.' The presumption formerly arising from a voluntary conveyance made by a party indebted is thus removed, and the indebtedness in such case is to be taken and held, in the language of Revisal, § 962 [G.S. 39-17], `to be evidence only from which an intent to delay, hinder or defraud creditors may be inferred.'"
In Hood ex rel. Pinetops Banking Co. v. Cobb, supra, the Court also said:
"C.S. 1007 [G.S. 39-17], continues: `* * * But the indebtedness of the donor or settler at such time shall be held and taken, as well with respect to creditors prior as creditors subsequent to such gift or settlement, to be evidence only from which an intent to delay, hinder or defraud creditors may be inferred; and in any trial shall, as such, be submitted by the court to the jury, with such observations as may be right and proper.' Pursuant to this latter provision of the statute, under the third issue [intent to defraud], the court submitted, with proper observations, to the jury the admitted indebtedness of the male defendant as evidence tending to show an intent to delay, hinder, and defraud creditors. There was no exception taken to the charge as it related to this issue."
Earlier decisions of this Court are to the effect that, notwithstanding this statute, there is a presumption of fraudulent intent in the case of a voluntary conveyance by a debtor and the burden rests upon the party seeking to uphold the voluntary conveyance to show retention by the grantor of property sufficient to pay his then debts. Hobbs v. Cashwell, 152 N.C. 183, 67 S.E. 495; Brown v. Mitchell, 102 N.C. 347, 9 S.E. 702; McCanless v. Flinchum, 89 N.C. 373; Warren v. Makely, 85 N.C. 12. These cases *7 may no longer be regarded as correct statements of the law of this jurisdiction with regard to the question of which party must ultimately bear the burden of proof upon the question of retention by the grantor of sufficient property to pay his then existing debts. Hood ex rel. Pinetops Banking Co. v. Cobb, supra, places that burden upon the party attacking the conveyance. However, in Garland v. Arrowood, 177 N.C. 371, 99 S.E. 100, Walker, J., speaking for the Court, said:
"The jury have found that there was no actual intent to defraud, or, in other words, no mala mens; but if the defendant, the donor of the gift, failed to retain property fully sufficient and available for the satisfaction of his then creditors, the gift was void in law, without regard to the intent with which it was made. [Citations omitted.] The burden of, at least, going forward with proof of such intention of property is upon the defendant, where, as found in this case by the jury, there is a voluntary gift or settlement."
Therefore, though the ultimate burden of proof rests upon the plaintiff to show either actual intent by the defendant grantors to defraud their creditors or failure by them to retain property sufficient to pay their then existing debts, when the plaintiff introduced an admission by the defendants that their deed of trust was "voluntary," and introduced evidence that they were then indebted to the plaintiff, which debt has not been paid, this was evidence tending to show an intent to delay, hinder and defraud creditors sufficient to carry the case to the jury for its determination of the issue, and the judgment of nonsuit was improperly granted.
Reversed.
MOORE, J., not sitting.
BOBBITT and SHARP, JJ., dissent.
