#### GURNEY P. HOOD, Commissioner of Banks, Ex Rel. PINETOPS BANKING COMPANY, v. JAMES L. COBB and EMMA D. COBB.

(Filed 10 October, 1934.)

1. Fraudulent Conveyances A d — Failure to retain property sufficient to pay existing debts is prerequisite to presumption of fraud.

In an action to set aside a voluntary deed as being fraudulent as to creditors of tbe grantor, tbe failure of tbe debtor to retain property -sufficient and available to satisfy bis then existing creditors is necessary to raise tbe presumption of fraud, since tbe statute, C. S., 1007, destroyed the presumption of fraud theretofore arising from the fact of tbe grantor’s indebtedness, and made such indebtedness merely evidence tending to show an intent to delay, binder and defraud creditors.

2. Fraudulent,Conveyances C d—

Tbe burden is on plaintiff in an action to set aside a deed as being fraudulent as to creditors to prove tbat tbe grantor failed to retain property sufficient and available to pay bis then existing creditors.

3. Fraudulent Conveyances C e — Tax valuation of debtor’s lands held competent on issue of his intent to defraud creditors.

In an action to set aside a deed as being fraudulent as to creditors evidence of tbe tax valuation of tbe other lands of the debtor at tbe time of tbe conveyance is competent on the issue of intent- to binder, delay and defraud creditors as tending to show the debtor bad reason to believe be was retaining property sufficient and available to pay bis then existing creditors.

*1294. Same — Commissioner’s deed to part of debtor’s lands, executed three years after voluntary conveyance attacked, held incompetent.

A commissioner’s deed of sale of part of the lands of the debtor, executed three years after the execution of the deed sought to be set aside as being fraudulent as to creditors, is held incompetent, the issue being the value of all the debtor’s lands at the time of the voluntary deed attacked in the action.

5. Trial E f—

An objection to the statement of the contentions of a party by the trial court must be made in time to afford the court opportunity to make correction in order to be available on appeal.

Appeal by plaintiff from Small, J., at April Term, 1934, of Edge-cojibe.

No error.

Tbis was an action instituted by tbe plaintiff as tbe liquidating agent of tbe Pinetops Banting Company, one of tbe creditors of tbe male defendant, against James L. Cobb and Emma D. Cobb to bave declared void a deed executed by tbe male defendant to tbe feme defendant, bis wife, for that sucb conveyance was a voluntary gift or settlement of property by one indebted, without retaining property fully sufficient and available to satisfy bis tben existing creditors, and made witb intent to binder, delay and defraud tbe creditors of tbe grantor.

Tbe material allegations of tbe complaint were denied by tbe defendants, and tbe case was submitted to tbe jury-upon tbe following issues:

1. Is tbe deed from J ames L. Cobb to bis wife, Emma D. Cobb, dated 22 November, 1930, a voluntary conveyance, as alleged in tbe complaint?

2. Did James L. Cobb at tbe time of executing said deed retain property in bis own name fully sufficient and available to pay bis tben existing creditors, as alleged in tbe answer ?

3. Did James L. Cobb execute said deed witb tbe intent to binder aud delay or defraud bis creditors, as alleged in tbe complaint ?

Tbe jury, under tbe direction of tbe court, answered tbe first issue “Yes,” in favor of tbe plaintiff; and, under tbe evidence and charge, answered tbe second issue “Yes,” and tbe third issue “No,” in favor of tbe defendants. Whereupon tbe court entered judgment adjudging that tbe conveyance executed by tbe defendant James L. Cobb to bis co-defendant, Emma D. Cobb, bis wife, on 22 November, 1930, was a legal and valid instrument, and that tbe plaintiff recover nothing by bis action and be taxed witb tbe costs. To tbis judgment tbe plaintiff objected and excepted, and appealed to tbis Court.

Henry G. Bourne for appellant.

Gilliam & Bond for appellees.

ScheNCK, J.

There are ten assignments of error in tbe record, six of which, Nos. 3, 4, 6, 7, 8, and 9, are to tbe action of tbe court in placing *130the burden of proof upon the plaintiff on the second issue, that is, placing upon the plaintiff the burden of showing by a preponderance of the evidence that the defendant James L. Cobb, at the time of the conveyance, 22 November, 1930, did not retain property fully sufficient and available to pay his then existing creditors. We think his Honor was correct in so placing the burden of proof. The plaintiff’s alleged cause of action is governed by the provisions of C. S., 1007. This section, in part, reads: “No voluntary gift or settlement of property by one indebted shall be deemed or taken to be paid 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; . . .” The effect of this statute 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.

The fifth syllabus of the case of Shuford v. Cook, 169 N. C., 52, which correctly interprets the opinion, reads as follows: “In an action to set aside a husband’s deed to his wife for fraud as to his creditors, the presumption formerly arising from a voluntary conveyance is removed and the indebtedness of the husband is evidence only from which the intent may be inferred, and a requested instruction is properly refused which requires the defendant to satisfy the jury by the greater weight of the evidence that he retain property fully sufficient and available. Revisal, sec. 962” (C. S., 1007). See, also, Finch v. Cecil, 170 N. C., 114.

Clarkson, J., in Wallace v. Phillips, 195 N. C., 665 (672), cited in both briefs in this case, says: “The defendants demur on the ground that the complaint 'does not allege the insolvency of the defendant Phillips (whose deed to his wife was under attack by creditors), and that he did not retain sufficient property to pay his debts.’ We think the complaint to be good should have alleged that at the time of making such gift or settlement property fully sufficient and available for the satisfaction of his then creditors was not retained. This was a material ingredient of the cause of action and should have been alleged.”

“Whenever, whether in plea or replication or rejoinder or surrejoin-der, an issue of fact is reached (says 2 Wharton Ev., sec. 354), then, whether the party claiming the judgment of the court asserts an affirma*131tive or negative proposition, be must make good bis assertion. On bim lies tbe burden of proof.” Cook v. Guirkin, 119 N. C., 13.

“Whenever tbe establishment of an affirmative case requires proof of a material negative allegation, tbe party who makes such allegation has tbe burden of proving it.” 22 C. J., par. 15.

We think bis Honor’s charge was logical and in accord with tbe rules of pleading and practice, and with tbe decisions of this Court.

C. S., 1007, continues: “. . . but tbe indebtedness of tbe 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, binder or defraud creditors may be inferred; and in any trial shall, as such, be submitted by tbe court to tbe jury, with such observations as may be right and proper.” Pursuant to this latter provision of tbe statute, under tbe third issue, tbe court submitted, with proper observations, to tbe jury tbe admitted indebtedness of tbe male defendant as evidence tending to show an intent to delay, binder, and defraud creditors. There was no exception taken to tbe charge as it related to this issue.

The objection in tbe first assignment of error to tbe introduction of tbe tax valuation of defendants’ lands for 1930 cannot be sustained for that, while such tax valuation may not be competent evidence of values, it was at least competent upon tbe third issue as tending to show that tbe male defendant bad grounds to think be bad sufficient land value to pay bis indebtedness in 1930, and therefore did not execute tbe deed with intent to defraud bis creditors. Tbe plaintiff’s objection in tbe second assignment to tbe court’s declining to admit in evidence a commissioner’s deed of sale of a part of tbe land of tbe defendants in November, 1933, is untenable, as tbe deed tended to prove, if it tended to prove anything, only tbe value of a part of tbe land in 1933, when tbe issue was tbe value of all of tbe land in 1930. This deed was also res inter alios acta. Tbe objection in tbe fifth assignment is likewise untenable, as any error in tbe portion of tbe charge to which objection was made was in tbe statement of tbe contentions of tbe parties, and to have availed tbe plaintiff must have been made at tbe time, so as to afford opportunity to make correction. Green v. Lumber Co., 182 N. C., 681. Tbe objection in tbe tenth assignment to tbe refusal of tbe court to set aside tbe verdict and to tbe signing of tbe judgment is formal and is disposed of by tbe rulings of tbe court upon tbe other exceptions.

We conclude that in tbe trial below there was

No error.