says: "We have not been able to see the force of his honor's reasoning in regard to the legal effect of the two deeds of Jesse to Romulus Saunders, or how the legal effect of the deeds could be at all affected by the fact that the 'existence of this prima facie title had been brought to the notice of the court by the plaintiffs themselves.' Had the plaintiff's demanded judgment that these two deeds be canceled in order to remove a cloud from the title, then Romulus F. Saunders would have been a necessary party; and, although the deed from Aaron to Jesse was deemed void, still Romulus would be allowed to protect his title by showing that he was a bona fide purchaser for valuable consideration, without notice of the fraud that vitiates the deed to Jesse, but the onus probandi would have been on him, and prima facie his title would be affected by the same infirmity."

The plea that the defendant is a purchaser for value and without notice is in the nature of a plea of confession and avoidance, and the matter in avoidance is to be proved by the party pleading it. If it be said that the purchaser in that case will be required to prove a negative, the answer is that, though somewhat negative in form, it is an affirmative plea in substance; and, besides, it is peculiarly within the purchaser's knowledge whether he had notice, or not, of the fraud, and he can now testify in his own behalf. We think this view of the case is sustained by authority. In Boone v. Chiles, 10 Pet. 210, it is said: "But still this will not be done on mere averment or allegation. The protection of such bona fide purchaser is necessary only when the plaintiff has a prior equity, which can be barred or avoided only by the union of the legal title with an equity arising from the payment of the money, and receiving the conveyance without notice, and a clear conscience. It is setting up matter not in the bill. A new case is presented, not responsive to the bill, but one founded on a right and title operating, if made out, to bar and avoid the plaintiff's equity, which must otherwise prevail. The answer setting it up is no evidence against the plaintiff, who is not bound to contradict or rebut it. It must be established affirmatively by the defendant, independently of his oath.

Such is the case which must be stated to give a defendant the benefit of an answer or plea of an innocent purchase without notice. The case stated must be made out. Evidence will not be permitted to be given of any other matter not set out." In Jewett v. Palmer, 7 Johns. Ch. 65, 11 Am. Dec. 401, the court lays down the following rule: "To support the plea of a bona fide purchaser without notice, the defendant must aver and prove not only that he had no notice of the plaintiff's rights before his purchase, but that he had actually paid the money before such notice." In Weber v. Rothchild, 15 Or. 390, 391, 15

Pac. 653, 3 Am. St. Rep. 162, it is said: "Here the defendant, Rothchild, has alleged facts in one part of his answer tending to show that he is a bona fide purchaser for value, without notice of this property, but he has offered no evidence whatever on those issues. The plea of a bona fide purchaser for value, as here alleged, is an affirmative defense interposed by the defendant, and in this connection it is not perceived that it differs from other affirmative defenses. The party having the affirmative of the issue must offer evidence to support it. Another rule of law, equally elementary, which is frequently applied in such cases, is that, when a fact is peculiarly within the knowledge of a party, he must furnish the necessary evidence of such fact." The case just cited quotes with approval Tredwell v. Graham, 88 N. C. 208. In Young v. Schofield, 132 Mo. 663, 34 S. W. 499, it is said: "Inasmuch as the averment or defense of being 'an innocent purchaser' is an affirmative allegation or plea, so must the evidence offered in its support be of the like nature. As the allegation must be affirmatively pleaded, so, also, must it affirmatively be proved. The onus lies on the pleader." In Edwards' v. Ry. Co., 82 Mo. App. 101, the court says: "A question is made here as to where the burden of proof was on the question of the plaintiff's being an innocent purchaser without notice of the prior unrecorded deed. Ordinarily the burden would be on the party whose case depends on his innocence and lack of notice. Here the plaintiff's claim of title being by a subsequent deed is invalid, unless he can establish that he was an innocent purchaser."

We do not cite these authorities as controlling upon us in the interpretation of our statute, but as stating and applying the general rule in regard to pleading and proof, that he who would avail himself of a fact which is necessary to protect his right or title must aver and prove the fact. The solution of this question depends somewhat upon the phraseology of the statute against fraudulent conveyances, and the decisions of the courts of other states and any rule which may be supposed to have prevailed at common law cannot be safely followed, as our statute is not in all respects like the statutes of other states, or in strict accordance with the common-law principle. The rules of evidence, including the burden of proof, to be applied in the trial of a case, are a part of the law of the remedy, and will be supplied by the lex fori, especially when the cause of action is founded upon a local statute. We must follow our own decisions upon the subject. In the case of Jones v. Simpson, 116 U. S. 615, 6 Sup. Ct. 538, 29 L. Ed. 742, to which we have been referred, the court followed, as it was bound to do, the decisions of the Supreme Court of Kansas in construing the statute of that state, which by its very

terms implied that the burden of proof should rest upon the creditor or the party attacking the conveyance. The court was not called upon to state the rule as to the burden of proof, except as it had been settled by the courts of that state in construing its statutes. In Bamberger v. Schoolfield, 160 U. S. 149, 16 Sup. Ct. 225, 40 L. Ed. 374, what is said by the court with reference to the burden of proof does not relate to the notice of the fraud, but to the fraud itself; and, of course, the burden to establish the latter was placed upon the contesting creditor. In Reiger v. Davis, 67 N. C. 185, Lassiter v. Davis, 64 N. C. 498, and the class of cases of which they are the leading representatives, the question as to the burden of proof was not involved. The court decides in those cases merely that the fraudulent conveyance is void unless it appears that the vendee was not a party to the fraud, or purchased without any notice of the fraudulent intent. Deveries v. Phillips, 63 N. C. 53.

There was error in placing the burden of proof as to notice upon the plaintiff, for which a new trial is awarded. New trial.

DOUGLAS, J. (dissenting). From reason and authority, it seems to me that the learned judge below was right in saying that, when the purchaser has shown that he has paid a fair price for the goods, the burden then shifts back to the plaintiff to show that the purchaser had knowledge of the fraudulent intent of the vendor. The mere fact that a fair price is paid is in itself the strongest evidence of good faith. It may be said that the vendee knows whether or not he knew of the vendor's fraudulent intent, and that he can disprove such knowledge by his own testimony. This is the only way such a negative can be proved, but is it any easier for the vendee to prove his want of knowledge, than for the plaintiff to prove his knowledge? That the vendee had knowledge might be proved by one witness, but a thousand witnesses could not prove that he had no knowledge. All that they could prove would be that they did not give him any information to put him on notice, and that he had no knowledge as far as they knew. Suppose the vendee should die; ought the widow and orphan child to be deprived of the property, the full value of which had been honestly paid, on the unsupported admission of a self-confessed swindler that he had sold the property with the intent to thereafter fraudulently misapply the proceeds? Who could swear, of his own knowledge, that the deceased vendee had no knowledge of such intent? Do we not effectually deprive a man of his right when we deprive him of all opportunity of asserting that right? It may be said again that "hard cases are the uicksands of the law," but that celebrated expression of Chief Justice Pearson is no authority for creating quicksands. The few remaining hours of the. term give me no time for the examination

and citation of authorities, and so I must content myself with a simple statement of my personal views.

(132 N. C. 743)

MORGAN et al. v. BOSTIC et al. (Supreme Court of North Carolina. June 6, 1903.)

FRAUDULENT CONVEYANCES - BURDEN OF PROOF-LIS PENDENS-PLEADINGS-EFFECT -PURCHASE BEFORE COMPLAINT FILED.

1. The burden of proving that a conveyance was made with intent to hinder, delay, or defeat creditors of the grantor was on plaintiff, suing to set it aside.

2. Code 1883, § 1545, provides that conveyances made to defraud creditors shall be absolutely void; and section 1548 provides that the preceding section shall not avoid conveyances made in good faith, on a good consideration, to any person not having notice of the fraud. Held that, where a purchaser of land, conveyed in fraud of creditors, claimed to be a boua fide purchaser without notice, the burden of proof of such fact was on him.

3. Code 1883, § 229, provides that, in an action affecting the title to real estate, the plaintiff may file with the clerk of each county in which the property is situated a notice of the pendency of the action, containing the names of the parties, the object of the action, and the description of the property in that county affected thereby, and from the time of filing, only, shall the pendency of the action be constructive notice to a purchaser or incumbrancer. that, where the action is pending in the county in which the land is situated, if the pleadings describe the land with reasonable certainty, and contain the names of the parties, the object of the action, etc., the filing thereof constitutes a sufficient lis pendens to impart notice to subsequent purchasers or incumbrancers.

Held

4. Code 1883, § 229, provides that, in an action affecting title to real property, the plaintiff at the time of filing the complaint, or at any time thereafter, may file a lis pendens, and that from the time of filing, only, shall the pendency of the action be constructive notice to the purchaser or incumbrancer of the property affected thereby. Held that, since a lis pendens filed prior to the filing of the complaint becomes operative only on the filing of the complaint, a purchaser of the property, without knowledge of the action, after the filing of the lis pendens, but before the filing of the complaint, was not charged with constructive notice thereby.

Appeal from Superior Court, Buncombe County; Councill, Judge.

Action by J. P. Morgan and others against J. B. Bostic and others. From a judgment in favor of plaintiffs, defendants appeal. Judgment reversed as to defendant C. H. Yeatman.

Frank Carter and T. H. Cobb, for appellants. Merrimon & Merrimon and Tucker & Murphy, for appellees.

CONNOR, J. This action was brought by the plaintiffs, creditors of the defendant J. B. Bostic, against him and the defendants Miller and Weaver, for the purpose of having the two last named declared trustees for the benefit of plaintiffs in respect to the title of certain real estate. Summons was issued March

1. See Fraudulent Conveyances, vol. 24, Cent. Dig. 798, 805.

Upon the coming in of the verdict, the court rendered judgment declaring that the defendants Weaver and Miller took title to the land in trust for the creditors of Bostic, and that Yeatman purchased with notice of the pendency of this action, and was fixed with knowledge thereof, and held the title to the said land upon the same trust. There were numerous requests for instructions by both the plaintiff and defendant, many of them becoming immaterial by reason of the finding of the jury upon the first issue. Among other instructions given the jury, his honor charged them, at the request of the defendants, "that the burden of proof is upon the plaintiffs to satisfy the jury that J. B. Bostic caused C. S. Baylis to execute the deed described in the complaint with intent to hinder, delay, defeat, and defraud the creditors of the said J. B. Bostic," and, unless they did so satisfy them, they should answer the third issue "No." He also charged the jury that the burden of the first issue was upon the plaintiffs. Upon the fourth issue he charged the jury that the burden was upon the defendants Weaver and Miller to show that at the time they purchased this land they did it in good faith, without notice of any purpose of Bostic to hinder, delay, defeat, and defraud his creditors, and that they purchased it for value; that if they did satisfy the jury that, at the time they purchased the land, they knew of it and its condition, and that they exercised their best judgment in ascertaining what the land was really worth, and after doing so they considered it not worth more than $1,250, allowing to themselves what would be a reasonable margin to be made upon the land as an investment, they would be purchasers for value, within the meaning of the law; that, in order to protect themselves against a prior donor or creditor, they must prove a fair consideration; that the court adopted in this connection the language used by the Supreme Court in Worthy v. Caddell, 76 N. C. 82, which had been read to the jury and commented upon. We are of opinion that his honor correctly instructed the jury in regard to the burden of proof. It is well established by decisions of this court that, if one executes a deed or enters into an arrangement for the purpose of defrauding his creditors, the grantee will take the title to the land conveyed subject to the claims of the creditors of his grantor, unless he shall show by a preponderance of evidence that he purchased for full value, and without notice of the fraudulent purpose and intent on the part of his grantor. Section 1545 of the Code of 1883 declares "that all deeds and other conveyances which might be contrived and devised of fraud with the purpose to delay, hinder and defraud creditors and others of their just and lawful actions and debts, shall be deemed and taken to be utterly void and of no effect." Section 1548, Code 1883, declares that nothing contained in the preceding section shall be con44 S.E.-41

strued to impeach or make void any conveyance bona fide made, and upon and for good consideration, to any person not having notice of such fraud. This section has been frequently construed, and it would seem to be settled that, if one would take advantage of the provision in favor of bona fide purchasers for value without notice, he must allege and prove such fact as will bring him within the exception. In Wade v. Saunders, 70 N. C. 270, Pearson, C. J., says: "The finding of the jury 'that the deed executed by Aaron Saunders to his son Jesse Saunders was not bona fide, but was fraudulent and done with the purpose to defraud his creditors,' disposes of the other points made in the case on the part of the defendants, for how can Romulus F. Saunders, who claims under Jesse, the fraudulent donee, stand upon fairer ground than he does, except as a purchaser for valuable consideration, and without notice of the fraud attempted to be done by the said Jesse and his father, the defendant Aaron? There was no evidence of his being an innocent purchaser.” In the same case, upon the appeal by the plaintiffs, the Chief Justice says: "Romulus would be allowed to protect his title by showing that he was a bona fide purchaser for valuable consideration, without notice of the fraud which vitiates the deed to Jesse, but the onus probandi would be on him, and prima facie his title would be affected by the same infirmity." In Tredwell v. Graham, 88 N. C. 208, Ruffin, J., says: "When a grantor executes a deed with intent to defraud his creditors, the grantee can only protect his title. by showing that he is a purchaser for a valuable consideration, and without notice of a fraudulent intent on the part of his grantor." Saunders v. Lee, 101 N. C. 3, 7 S. E. 590. See Cox v. Wall & Huske (at this term) 44 S. E. 635.

We think that, upon the whole record, his honor's instructions to the jury are sustained by the authorities.

There is, however, a question presented in the appeal in which we concur with the defendants. There is no evidence that Yeatman had any other notice than such as was given by the filing of the lis pendens. No issue was submitted to the jury in that respect, and we do not think it necessary that an issue should have been submitted. The facts in reference to Yeatman's connection with the transaction are undisputed, and present the question, for the first time in this court, whether lis pendens should be filed at the time of filing the complaint? Code 1883, § 229, provides: "In an action affecting the title to real property, the plaintiff-at the time of filing the complaint, or at any time afterwards, or whenever a warrant of attachment shall be issued, or at any time afterwards, the plaintiff or a defendant wher he sets up an affirmative cause of action in his answer and demands substantive relief, at the time of filing his answer, or at any

time afterwards, if the same be intended to affect real property-may file with the clerk of each county, in which the property is situated, a notice of the pendency of the action, containing the names of the parties, the object of the action and the description of the property in that county affected thereby. * * From the time of filing only, shall the pendency of the action be constructive notice to a purchaser or incumbrancer of the property affected thereby." This section was first considered in Todd v. Outlaw, 79 N. C. 235, in which Bynum, J., says: "The defendant again insists that the plaintiffs had notice by lis pendens, in that they purchased during the pendency of an action by Bond against Vernoy to foreclose the mortgage upon the land now in controversy. The principle of lis pendens is that the specific property must be so pointed out by the proceedings as to warn the whole world that they meddle with it at their peril, and the pendency of such sait, duly prosecuted, is notice to a purchaser, so as to bind his interest. * But the law of lis pendens has been greatly modified and restricted by the Code of Civil Procedure, § 90 (section 229). That section provides that, in an action affecting the title to real property, the plaintiff, at the time of filing his complaint, or any time afterwards," etc. Referring to the decisions in Badger v. Daniel, 77 N. C. 251, and Rollins v. Henry, 78 N. C. 342, the learned justice said that, while he is of the opinion that the policy of the law would be better carried out by following the English and New York construction, this court has adopted a different construction by its decisions, from which he does not feel at liberty to dissent. It is there held that, when the action is pending in the county where the property is situated, it has the force and effect of lis pendens, and dispenses with the statutory requirements, or, rather, that the statute does not apply to such cases.

*

There can be no question that if the plaintiffs had filed their complaint, setting forth a description of the property and the purpose of the action, at the time of the issuing of the summons, or at any time prior to the purchase by Yeatman, the pendency of the action would have been notice to the world, and he would have taken title subject to the decree made in the cause. Baird v. Baird, 62 N. C. 317; Dancy v. Duncan, 96 N. C. 111, 1 S. E. 455, in which Smith, C. J. says, "No change in the rule is brought about by the statute prescribing how notice of a lis pendens shall be given (Code 1883, § 229), when the transaction is in one and the same county, as in the present case, and notice is furnished in the record in the pending action." In Spencer v. Credle, 102 N. C. 68, 78, 8 S. E. 901, Avery, J., says: "While strangers to the record are not affected with constructive notice of the pendency of an action involving the title to land lying in a county other than that in which the action

is pending, unless the notice required under section 229 of the Code has been given, even purchasers for a valuable consideration are affected with notice of an action brought in the county where the land lies, if the pleadings describe it with reasonable certainty, and take title subject to the final decree rendered in the action. A different rule has been adopted in some other states where the same statute has been passed, but the law has been settled in this state by the cases of Todd v. Outlaw, 79 N. C. 235, and Badger v. Daniel, 77 N. C. 251." In Collingwood v. Brown, 106 N. C. 362, 10 S. E. 868, Shepherd, J., discusses the construction of section 229, and the authorities both in this and other states, saying: "We are of the opinion, however, that as to real property there is but one rule of lis pendens in North Carolina, and that the provisions of the Code of 1883, § 229, are a substitute for the commonlaw rule. When the court held in the cases cited that it was not necessary to file a formal notice of lis pendens when the action was pending in the county in which the land was situated, we do not understand that it intimated that two rules of lis pendens, varying in their extent and operation, prevailed in this state. This consistency can be secured by holding, as we do, that where the action is brought in the county where the land is situated, and the pleadings contain 'the names of the parties, the object of the action, and the description of the property to be affected in that county,' this is a substantial compliance with Code 1883, § 229, as to the filing of notice, and puts in operation all of the provisions of the statute. There is no incongruity in thus holding, as the statute simply provides that the notice shall be filed with the clerk, and the place of filing would naturally be with the pleadings in the action." All of these cases hold that, if the plaintiff would bind purchasers pendente lite of lands lying in other counties than that in which the suit is pending, he must file a notice of lis pendens in each of such counties. The language of the statute is explicit in requiring such notice to be filed “at the time of filing the complaint, or at any time afterwards"; this court holding that the filing of the complaint, containing sufficient description of the property, operates as a lis pendens in respect to land lying in the county in which the action is pending. In Arrington v. Arrington, 114 N. C. 151, 159, 19 S. E. 351, Shepherd, C. J., says: "The rule of lis pendens, while founded upon principles of public policy, and absolutely necessary to give effect to the decrees of the courts, is nevertheless in many instances very harsh in its operation, and one who relies upon it to defeat a bona fide purchaser must understand that his case is strictissimi juris." For a long time, suits in equity were deemed commenced, for the purpose of affecting purchasers pendente lite, from the issuing of the subpoena. This rule was so harsh and un