34 S.E. 390 (S.C. 1899), Edmonds T. Brown Co. v. Allen

Citation:34 S.E. 390, 56 S.C. 237
Opinion Judge:JONES, J.
Party Name:EDMONDS T. BROWN CO. et al. v. ALLEN et al.
Attorney:Wells, Ansel & Cothran, for appellants. F. B. Gary, S.C. Cason, and De Bruhl & Lyon, for respondents.
Case Date:November 22, 1899
Court:Supreme Court of South Carolina

Page 390

34 S.E. 390 (S.C. 1899)

56 S.C. 237



ALLEN et al.

Supreme Court of South Carolina

November 22, 1899

Appeal from common pleas circuit court of Abbeville county; J. C. Klugh, Judge.

Action by the Edmonds T. Brown Company and others against B. B. Allen and others. Judgment for plaintiffs, and defendants appeal. Affirmed.

The following is the master's report:

"Pursuant to the order of the court, I held a reference in this case on August 4, 1898, which was continued until final argument was heard, on September 1, 1898. The testimony taken at these several references is filed herewith. I respectfully submit the following report:

This is a creditors' bill, brought by the plaintiffs for the purpose of collecting their debts out of the property of the defendants' debtor, under circumstances where the process of execution at common law cannot afford relief. On the 7th of October last, B. Berrian Allen, one of the defendants herein,

Page 391

conveyed a tract of land consisting of several parcels, containing in all some 800 acres, and known as the 'Allen & Cooley Tract,' to his wife, Keturah W. Allen, for the sum of $100. This was all the real estate which he then owned. Some three years before that he had conveyed to his wife his home place, consisting of some 900 acres, for $2,500. This action is brought to set aside the conveyance from B. Berrian Allen to his wife of the 800 acres referred to above,--the Allen & Cooley tract,--on the ground that it was voluntary, and that it was fraudulent and void, and made with intent to hinder, delay, and defeat the claim of creditors. Mrs. Allen maintains that the consideration for the Allen & Cooley place was not $100, as expressed in the deed, but was, in fact, in round numbers, $3,500. Previous to this time, B. Berrian Allen had been a member of the firm of Allen & Cooley, doing a general mercantile business at Lowndesville, D. K. Cooley being the other partner. The firm had been in business for several years. In the fall of 1897, and a short time before the conveyance above referred to from Allen to his wife of the Allen & Cooley tract, the partnership was dissolved, and D. K. Cooley agreed to shoulder the liabilities of the firm. In the settlement between them the tract now in dispute was conveyed from D. K. Cooley to B. B. Allen. At the time of the dissolution of the partnership, the firm owed a considerable amount to various creditors, among whom were these plaintiffs. After the dissolution of the firm, the plaintiffs reduced their claims to judgment, and there was a return of nulla bona, both as to Allen and Cooley. The plaintiffs [56 S.C. 239] are now attempting to set aside this deed from Allen to his wife, on the ground that it was voluntary and fraudulent, and made with intent to defeat the claim of creditors. Plaintiffs claim that, at the time of the dissolution, B. B. Allen owned the tract which is now in dispute, and that it was applicable to the firm debts, and that the conveyance of October 1, 1897, to his wife, was voluntary, fraudulent, and void. The issue there is this: Was the conveyance from Allen to his wife fraudulent or not? Was the conveyance voluntary, and made with fraudulent intent? Or was it bona fide, and for a valuable consideration? Mrs. Allen says that her husband was indebted to her in various amounts, a part of which went to make up the consideration of this deed, $3,500. She says she got from her father's estate $850, which, with interest for eight years, made $1,530; that she got from her grandmother's estate $300 in 1880, which went into her husband's hands, and which he loaned out at 10 per cent. previous to the usury law act. The $850 above referred to as coming from her father's estate her husband also had, and the interest was due by him. The above she claims were loans to her husband, and were a part of the consideration of the deed in dispute. The balance came from the rent due her by her husband from the home place for the three years 1895, 1896 and 1897.

There are certain principles derived from the law books and well supported by the authorities that are to serve as tests and guides in cases of this kind. One is that in the case of existing creditors a voluntary conveyance is a prima facie evidence of fraud, and the burden of proof is thrown upon the debtor to show good faith. This I understand is the general rule, with certain exceptions: 'As against existing creditors, a voluntary conveyance is, as a general rule, fraudulent and void.' The only qualification to the general rule is that where the indebtedness is slight, as for the current expenses of the family, or the debts are inconsiderable as compared with the value of the donor's estate, and the creditor, by his delay or laches, has allowed the reserved estate to be wasted, in such case the conveyance will be held valid. Richardson v. Rhodus, 14 Rich. Law, 95. A voluntary conveyance is fraudulent and void as to existing creditors, who are unable to obtain satisfaction of their demands; but if the debts were contracted subsequently to the conveyance, or the conveyance was founded on a valuable consideration, there must be proof or circumstances to establish an actual fraudulent intent. Blake v. Jones, Bailey, Eq. 141. In Bank v. Toomer, 2 Hill, Eq. 33, Justice Harper, in delivering the opinion of the court, says: 'If a conveyance merely voluntary be made by a person indebted, this has generally been held sufficient of itself to establish the character of the conveyance.' In 8 Am. & Eng. Enc. Law, p. 752, we find the following: 'In case of an attack by existing creditors, however, they are aided by the presumption that the conveyance, if voluntary, was intended to defraud them, while the burden is upon subsequent creditors to show fraud in the transaction.' From these and other authorities, I believe the rule to be that the fact that the conveyance is voluntary is prima facie evidence of fraud, and is a question for the jury to decide.

One of the qualifications to the rule we find given above in Richardson v. Rhodus, where the debts are small, or where the creditor, by his laches, has allowed the assets to be wasted. Another qualification is where the insolvency has been produced by some unexpected agency, which the debtor could not control or anticipate, such as fire or something out of the ordinary course. Buchanan v....

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