When an N-ch MOSFET is OFF, the DRAIN is more positive than the source but once the N-ch MOSFET is turned ON, the DRAIN and the SOURCE is ideally shorted. But in reality, when a MOSFET is turned ON, there is a small resistance developed between the DRAIN and SOURCE. This is called the Rdson. There will still be a small voltage drop accross the DRAIN and the SOURCE so for an N-ch MOSFET (ON or OFF) the DRAIN is always more positive than the SOURCE.