Opinion
(June Term, 1862.)
A bond given as a pretext to enable one person to set up a claim to the property of another, so as to defraud the creditors of that other, is void even as between the parties to the same.
DEBT tried before Saunders, J., at Spring Term, 1861, of COLUMBUS.
Shepherd, Strange, and W. A. Wright for plaintiff.
Leitch and M. B. Smith for defendant.
The action was upon a bond, executed by Robert Inman to Jesse Inman, and indorsed to the plaintiffs. The defendant pleaded general issue, fraud, illegal consideration.
The plaintiff proved the execution of the bond by the defendant and the indorsement to the obligee, which was after it became due.
The defendant then offered the evidence of the subscribing witness, who testified that he was present at the time the bond was executed, and Jesse Inman stated that the bond was given to defraud his creditors, and that there were then executions out against him in the hands of the sheriff; that the consideration for the bond was a raft of timber, a quantity of corn, cows and calves, about fifteen hundred pounds of bacon, horse and buggy, sows and pigs, ox and cart, and a quantity of fodder; and that when the sheriff went to levy on the property it was to be claimed by Robert Inman, the defendant; but, in fact, the property was to remain in the possession of Jesse Inman; that the bond was not to go beyond the ditch near where they were, but was to be destroyed. The witness further testified that Robert Inman was (437) present and said nothing. The plaintiffs proved that they had paid Jesse Inman a valuable consideration for the note; also, that the property, above referred to, remained in the possession of Jesse Inman, and that when the sheriff of Robeson went to levy on it as his property, Robert Inman claimed it, and said that he had purchased it from his brother Jesse.
There was other testimony on the question of fraud, all of which was submitted to the jury under the charge of the court.
His Honor instructed the jury that if they believed the declarations of Jesse Inman, that the bond was given for the purposes and upon the consideration stated by him, the plaintiff could not recover.
The plaintiff's counsel excepted to the charge. Verdict for defendant. Appeal by plaintiff.
This case is brought before us again, for the purpose, as we are informed, of having reviewed the decision which we made in it at December Term, 1859, 52 N.C. 28. In the argument now submitted by the counsel for the plaintiff he admits the correctness of the general principle that a contract the consideration of which is the doing of an act either malum in se or malum prohibitum is void, and no action at law can be sustained upon it. He also admits that the fact of the contract's being under seal does not preclude the illegality of the consideration from being inquired into, and urged as a defense. See Broom's Com., 91; Law Lib., 280, and several pages following. But he contends that a bond for the payment of money, though made for the express purpose of defrauding the obligor's creditors, is valid as against him, by force of the Stat. Eliz., chap. 5, sec. 2; Rev. Code, chap. 50, sec. 1. By reference to that statute it will be seen that bonds are mentioned along with several kinds of conveyances made with the (438) intent to delay, hinder, and defraud creditors, however, as against those persons who are hindered, delayed, and defrauded of their debts; and it is inferred that bonds as well as conveyances of property, are good and valid against those who execute them in favor of the obligee and grantee. This argument confounds the distinction between the nature and effect of a bond and an executed conveyance. The former is a chose in action, which may require the aid of a court, through the means of an action or suit, to give the obligee the benefit of it, while the latter transfers at once the title of the property granted or sold to the grantee or bargainee. Hence, to the former the well-established maxim of Ex dolo malo non oritur actio may apply, while it is entirely inapplicable to the latter, which does not require the aid of a court to transfer the property. The fraudulent grantee or bargainee has, then, the advantage of his grantor or bargainor, because, having the property by force of the conveyance, the grantor or bargainor will be met, when he applies to be relieved against it, with the objection that "No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act." Holman v. Johnson, 1 Cowp., 343. The statute of frauds, 13 Eliz., in making void and of no effect conveyances intended to defraud creditors, as to the creditors only, and leaving them in full force in other respects as between the parties, does not contravene that rule. But if the statute is to be construed as to its effect upon fraudulent bonds in the manner contended for by the plaintiff's counsel, it will violate the rule, and produce the strange and unnecessary anomaly that while the obligee in a bond founded upon the illegal consideration of compounding a felony, gaming, usury, restraining trade, restraining marriage, and the like, he may do so if the consideration were that of a most gross and outrageous attempt to cheat and defraud creditors. But the words of the statute may be satisfied without the necessity of adopting any such construction. A voluntary bond, executed without any actual (439) intent to defraud creditors, may be avoided by them under the statute, if such an avoidance be necessary to secure their debts, but as between the parties the statute leaves it still in force. By giving to the statute such an operation and no more, the very salutary maxim to which we have referred, of Ex dolo malo non oritur actio, will be left in its full integrity, to prevent a recovery by the obligee of a bond conceived and executed by the parties with the actual intent to hinder, delay, and defraud the creditors of the obligor.
That the distinction which we have endeavored to point out between bonds and executed conveyances does exist is, as we think, established by adjudicated cases. Roberts v. Roberts, 2 Barn. and Ald., 366 (4 Eng. C. Law, 545), cited by the plaintiff's counsel, and all those referred to by Roberts in his work on Fraudulent Conveyances, which were held to be valid as between the parties, are cases of executed conveyances, while not a single instance of a bond made for the express purpose of defrauding creditors has, to our knowledge, been upheld as good between the obligor and obligee.
The judgment of the court below being in accordance with the views which we have now expressed, must be affirmed.
PER CURIAM. No error.