Bank v. Braoham Et Ux

• Decision Date: 16 July 1924
• Docket Number: (No. 11548.)
• Citation: 123 S.E. 835
• Parties: FARMERS' BANK. v. BRAOHAM et ux.
• Court: South Carolina Supreme Court

123 S.E. 835

FARMERS' BANK.

v.BRAOHAM et ux.

(No. 11548.)

Supreme Court of South Carolina.

July 16, 1924.

Appeal from Common Pleas Circuit Court of Williamsburg County; R. W. Memminger, Judge.

Action by the Farmers' Bank against J. J. Bradham and wife. From the judgment rendered, plaintiff appeals. Reversed, and case remanded for proper orders.

The report of Referee F. R. Hemingway follows:

Pursuant to an order of reference in the above-stated case, signed by his honor, Judge John S. Wilson, and dated the 1st day of August, 1923, to me directed, I held a reference in Kingstree, S. C, on the 29th day of August, 1923, and took the testimony which is herewith reported, and which is hereby made a part of this report.

The admitted facts in the case are these:

On October 13, 1920, the defendant J. J. Bradham borrowed from the plaintiff, the Farmers' Bank, the sum of $3,000, and as evidence thereof executed to it his two collateral promissory notes, each in the sum of $1,500, one to become due and payable on December 1, 1921, and the other to become due on December 1, 1922. As security for the payment of these notes Mr. Bradham pledged to the bank 10 shares of stock in the Farmers' Bank, of the par value of $1,000 and a mortgage covering 61 1/2 acres of land owned by him in addition tothe tract of land described in the complaint in this action, which mortgage was on its face given to secure the payment of the two notes mentioned. The first note for the sum of $1,500 became due and payable on the 1st day of December, 1921, and was not then paid.

By his deed bearing date June 13, 1922, the defendant J. J. Bradham conveyed to his wife and codefendant, Louise Annie Bradham, the tract of land described in the complaint, the same being his home place where he and his wife dwelt together, the consideration expressed in the deed being the sum of $10 and love and affection.

On December 1st, 1922, the second note for the sum of $1,500 became due and payable and the same was not then paid. With the maturity of this note the entire indebtedness from Mr. J. J. Bradham to the Farmers' Bank was due and unpaid.

Subsequent to the maturity of the said notes the bank stock put up as security was sold by the bank for the sum of $1,000, and that amount credited upon the notes and mortgage. On February 16, 1923, the plaintiff commenced an action in the court of common pleas for the county of Williamsburg, against the defendant J. J. Bradham for the foreclosure of the mortgage, asking for deficiency judgment in the matter, should the mortgaged premises when sold not bring enough to pay the judgment secured against the defendant. Judgment by default was entered against the defendant J. J. Bradham. The mortgaged premises sold for the sum of $1,200. The sum of $1,146.95 was credited upon the judgment, this sum being the net proceeds of the sale, leaving a balance due on the judgment of the sum '$1,280.18. Execution was then issued against the property of the defendant J. J. Bradham, ' on May 13, 1923, and the same was returned to the clerk of this court in due time by the sheriff with a nulla bona return marked thereon, all of which appears by the judgment roll in this action marked Exhibit A, and by the testimony in the case.

The present action was commenced by the plaintiff, the Farmers' Bank, against the defendants in this action, in June, 1923, to set aside the deed of conveyance executed by the defendant J. J. Bradham, of date June 13, 1922, to his wife and codefendant, Louise Annie Bradham, and to subject the land described in the deed to the payment of the amount due on the judgment secured against the defendant J. J. Bradham. After the service of the summons and complaint in this action both of the defendants filed their separate answers in this court. On motion of the plaintiff's attorneys his honor, Judge John S. Wilson, passed an order dated August 1, 1923, striking out certain portions of the answer of the defendant J. J. Bradham. The parts of the answer stricken out are not herein considered, but only those parts that remain make the issues in this case.

In paragraph IX of the complaint in this action it is alleged that the lands were at the time of the conveyance and are now worth the sum of $3,000, that the deed was and is purely voluntary, and without consideration, or adequate consideration, and was fraudulently made and executed by the defendant J. J. Bradham to his wife, Louise Annie Bradham, with the intent and purpose to hinder, delay, defraud, and prevent the plaintiff from collecting the amount due to it by the defendant J. J. Bradham, and that Louise Annie Bradham knew of and participated in the fraudulent purpose and intention of the defendant J. J. Bradham.

Paragraphs X and XI of the complaint in this action allege that the said conveyance reduced the assets of the said J. J. Bradham to such an extent as to render him wholly insolvent; that the amount due on the said judgment remains wholly unpaid and unsatisfied, and the plaintiff is and will continue to be unable to enforce payment thereof unless the deed of conveyance executed by the defendant, J. J. Brad-bain to the defendant Louise Annie Bradham shall be declared fraudulent and void as to it, and the land conveyed thereby subjected to the payment of the amount due on the said judgment.

The defendants both deny the above paragraphs of the complaint, and both set up as a defense that at the time of the conveyance of the land in question from the defendant J. J. Bradham to his wife and codefendant, Louise Annie Bradham, the debt owing from the defendant, J. J. Bradham to the plaintiff, the Farmers' Bank, was fully and amply secured, and, being so secured, was not such a debt as would void the deed from J. J. Bradham to his wife, Louise Annie Bradham, or make it a voluntary conveyance.

This action is one based upon common law, and upon the statute commonly known as the Statute of Elizabeth. Section 5218, vol. 3, Code S. C. 1922. Under this section the remedy is given against any one who attempts by deed of conveyance or any other means denounced by this section to "defraud creditors, and others of their just and lawful actions, suits, debts, accounts, damages, penalties, and forfeitures."

First let us see whether or not the bank is such a creditor of J. J. Bradham as will bring this case under the common law and the statute applicable to cases of this nature. We find from the evidence that the defendant J. J. Bradham was at the time of the conveyance of the land to his wife, Mrs. Louise Annie Bradham, indebted to the plaintiff bank in the sum of $3,000, secured, of course, by $1,000 worth of the bank's stock, and the mortgage covering 61 1/2 acres of land. The testimony of the cashier of the bank, the testimony of Mr. Gamble, the president of the bank, and the testimony of Mr. and Mrs. Bradham all go to show that the bank was urging Mr. Bradham to pay this loan to the bank, and that he could not do so, was unable to raise the money, but desired more time in which to raise the money and arrange payment of at least a part of the loan. Just after this, as the testimony shows, Mr. Bradham conveyed the home tract of land on which he and his wife dwelt together to his wife for the express consideration of the sum of $10 and love and affection. Mr. Bradham knew, and the testimony shows that Mrs. Bradham knew, that he owed the bank this money. He knew that the bank would in all probability foreclose its mortgage if the notes were not paid, and knew, or should have known, as the knowledge is imputed to him, that upon failure of the security to satisfy the judgment execution would be issued against him or his property to collect the balance remaining due and unpaid on the judgment secured against him.

The rule is thus laid down: "The term 'cred-itors, ' as employed in the statutes and decisions concerning fraudulent and voluntary conveyances, is not used in any narrow or technical signification, but includes all persons whose interests might be defrauded by the transfer." 14 Am. St. Rep. 739, at page 743.

It is contended by the attorney for the defendants that the bank was fully and amply secured, and, being such secured creditor, was not entitled to the protection afforded by the common law and the statute. It is true that the bank was a secured creditor of the defendant J. J. Bradham, but the evidence does not show to my satisfaction that it was amply and fully secured, nor does it appear in the testimony at any place that the bank knew of or acquiesced in the conveyance of the tract of land from Mr. J. J. Bradham to his wife. Had the bank been consulted about the conveyance and given its consent, it would place the case on a different footing, but this is aside from the issue, owing to the fact that it had no knowledge of the conveyance.

The plaintiff's legal remedy to collect the amount due to it by the defendant J. J. Bradham on the secured account is well recognized in law, and is laid down in our Code of Procedure (2 Code S. C. 1912, subd. 7, § 218). The judgment roll introduced into evidence and the testimony all show that the plaintiff followed its legal remedy as far as it could—in fact, followed it to the end and exhausted it—yet the defendant J. J. Bradham is still indebted to it in a considerable sum. I do not know of any authority of law in this state that would prevent a secured creditor, after having exhausted his legal remedy to collect the debt owing to him from the security offered, from collecting the balance due out of the residue of the debtor's property, if the debtor has any property out of which collection could be enforced. If, then, a creditor can collect out of other property of the debtor on a secured obligation, he could certainly follow the debtor's property in case the debtor has made a voluntary conveyance and proves insolvent, and I know of no rule to the contrary. Izard v. Middleton, Baily, Eq. 228, see page 239; 27 C. J. 457; Allen v....