Coleman v. Daniel

• Decision Date: 05 September 1973
• Docket Number: No. 19689,19689
• Court: South Carolina Supreme Court
• Parties: Moseley C. COLEMAN, Appellant, v. James D. DANIEL, II, et al., Respondents.

Page 74

199 S.E.2d 74

261 S.C. 198

Moseley C. COLEMAN, Appellant, v. James D. DANIEL, II, et al., Respondents.

No. 19689.

Supreme Court of South Carolina.

Sept. 5, 1973.

William E. Jenkinson, Kingstree, for appellant.

Connor & Connor, Kingstree, for respondents.

LITTLEJOHN, Justice:

The plaintiff, Moseley C. Coleman, is the owner of two deficiency judgments procured May 30, 1966, against the defendant Linzie L. Rogers, and against his son, L. M. Rogers, known as Buddy Rogers. Coleman brings this action as a creditor of defendant Linzie Rogers, under South Carolina Code, § 57--301 (1962).

The complaint alleges that a deed dated October 26, 1964, to 198 acres of land, executed by Linzie Rogers to his daughter, Annie Margaret Rogers Daniel, and to her husband, James D. Daniel, II, both of whom are also defendants, was a fraudulent conveyance for the purpose of evading the payment of debts. This deed conveyed practically all of Linzie Rogers' assets. The prayer for relief in the complaint was as follows:

'1. That said conveyance be adjudged and declared fraudulent and void and of none effect as to the judgments held by the plaintiff.

'2. That the tracts of land above described be adjudged to be subject to the liens of the plaintiff's judgments and that the same be foreclosed and satisfied by the sale of said lands by judicial sale as provided by law.

'3. That the judgments of the plaintiff and such other claims as may be adjudged as liens upon said tracts of land be paid from the proceeds in the order of priority, and the balance to the defendants, L. L. Rogers, James D. Daniel and Annie Margaret R. Daniel, as the Court may direct.

'4. For such other and further relief as to the Court may seem just and proper.'

The complaint does not ask that the deed be declared absolutely void as between the grantor and the grantee.

The action was tried before a special referee, who recommended that the court deny relief and dismiss the complaint. The plaintiff excepted to the referee's report; the circuit judge adopted the recommendations of the referee and dismissed the action. Coleman has appealed from that order. This case has been before this Court heretofore. See Coleman v. Daniel et al., 253 S.C. 363, 170 S.E.2d 665. A related matter has also been before this Court. ¹

Coleman in his brief submits four questions to this Court, but we think that there is one basic question, the answer to which requires a reversal and thereby disposes of all issues. That question may be fairly stated as follows:

Did the trial judge err in holding, incident to the deed of October 26, 1964, that there was no fraudulent intent on the part of Linzie Rogers to defraud Coleman or other creditors, and that the intent of Linzie Rogers was not imputed to the grantees, who are his daughter and son-in-law?

The referee and the circuit judge found: (1) that the conveyance was for valuable consideration; (2) that Linzie Rogers did not intend to defraud Coleman or any other creditors; and (3) that any fraudulent intent was not imputed to the grantees.

In many cases, we have held that the concurrent findings of the referee and of the trial judge will not be disturbed unless without evidentiary support, or unless contrary to the clear preponderance of the evidence. Cases collected, 3 South Carolina Digest, Appeal and Error, k1022 (1952, Supp.1972). We have also held that in an equity case it is appropriate for this Court to make its own findings of fact. Cases collected, 3 South Carolina Digest, Appeal and Error, k987(3) and 990 (1952, Supp.1972). Inasmuch as we conclude that the concurrent findings are against the clear preponderance of the evidence, we proceed to review the evidence and to make our own findings.

Linzie Rogers had lived on the subject premises all of his life. He has been physically disabled to actively carry on farming operations since 1926 and farmed the premises with the aid of sharecroppers until 1962. Linzie Rogers' son, Buddy, was formerly in the banking business. In 1962, he undertook to farm both the lands of his father and his own lands, which adjoined. Coleman financed the farming operations and took notes and mortgages on property owned by Buddy. On November 7, 1962, Linzie Rogers signed a note with Buddy for $21,023.51. On October 14, 1964 (12 days before the deed here involved), Linzie Rogers signed a note with Buddy for $6,847.00, payable to Coleman and due only 16 days later, on November 1, 1964 (4 days after the deed was excuted).

It would appear that Buddy Rogers had three unprofitable farming years, and it is abundantly clear from the whole of the record that he was consistently in financial difficulties. Actions were brought against Linzie Rogers and Buddy Rogers to collect on the two notes, as well as other notes signed by Buddy Rogers only, and to foreclose mortgages executed by Buddy Rogers. On September 6, 1965, the property of Buddy Rogers was sold, under a mortgage foreclosure proceeding, for $57,000.00. On May 30, 1966, deficiency judgments against Buddy Rogers and Linzie Rogers were granted because of the two notes co-signed by Linzie Rogers. The amounts were $26,306.52 and $8,627.02, respectively. Thereafter judgment was entered and execution returned nulla bona.

Annie Margaret Rogers Daniel and her husband, James D. Daniel, II, lived in Hemingway, some seven miles from the farm. Both are employed in the school system. They devoted considerable time and effort to the elderly Rogerses. On October 26, 1964, Linzie Rogers, along with his daughter and his son-in-law, went to the office of Attorney Whitlock in Lake City, about 25 miles from Hemingway. Linzie Rogers executed a deed in favor of his daughter and son-in-law, reciting as the consideration, '$5, love and affection, and subject to the lien of a mortgage held by Lake City Building & Loan Association', which was in the amount of $29,000. The grantees did not assume payment of the mortgage; however, they did pay the mortgage deby by refinancing it on November 18, 1964, through another lending institution, giving a new mortgage for $32,000. The Daniels submit that there was additional consideration not appearing on the face of the deed. It is contended that Linzie Rogers owed them, and others, about $10,000, which they assumed; and that they agreed to pay him an additional $10,000 by way of future support at $1,000 per year. In addition, it was agreed that Linzie Rogers and his wife could continue to live on the premises. We need not evaluate with exactness how much Linzie Rogers owed the Daniels and others, nor need we determine just what effect the agreement to provide future support has upon the case. Suffice it to say that the evidence, viewed most favorably to the Daniels, would indicate a maximum consideration of $49,000.

Counsel for Coleman argues: (1) that buying property 'subject to a mortgage' does not obligate the grantee to pay the mortgage debt; (2) that the alleged past due indebtedness of $10,000 is not wholly, even if in part, proven; and (3) that a promise to supply future support is not a valid consideration. We need not delicately weigh these arguments, because, even if each be rejected in favor of the defendants, the consideration still remains grossly inadequate.

Real estate appraisal witnesses for Coleman testified that the property involved was worth from $85,000 to $100,000 in October, 1964. Linzie Rogers testified that he had, just prior to the execution of the deed, been offered $75,000 for the property. The referee and the trial judge accepted the $75,000 figure as being the true value. Using this figure, the property was conveyed for at least $26,000 less than its true value. We think, however, that both the referee and the trial judge erred in accepting the $75,000 figure as indicative of true value. The fact that someone offered to pay $75,000 bears little relation to what a willing seller would take and what a willing purchaser would give for the property. This is the usual test applied. It is, at most, evidence that the property was worth at least $75,000. We think that both the referee and the trial judge should have evaluated the property based on at least an $85,000 appraisal. This, of necessity, indicates that there was at least a $36,000 discrepancy between the maximum consideration and the minimum true value, and possibly as much as a $51,000 discrepancy. We need not factually find the exact value of the farm because, if it be $85,000 or $100,000, the consideration was still grossly inadequate.

Attorney Whitlock testified that at the time the deed was executed on October 26, 1964, no consideration was discussed or mentioned other than that which he inserted in the deed ($5, love and affection, and subject to mortgage). The defendants testified in essence that after the deed was executed and while they were enroute home, they decided to go by the office of a real estate dealer in Hemingway, 25 miles away from Whitlock's office, and execute an instrument. It reads as follows:

'WHEREAS, by separate instrument, the undersigned, L. L. Rogers has conveyed three (3) tracts of land in Williamsburg County, South Carolina, to his son in law, James D. Daniel, II, and his daughter Annie Margaret Rogers Daniel, for an expressed consideration of 'Five Dollars, love and affection, and subject to the lien of a mortgage then held by Lake City Building & Loan Association', and

'WHEREAS, other considerations, in addition to the consideration expressed, were in existence, namely: That over a period of several years, the said James D. Daniel II and Annie Margaret Rogers Daniel, had advanced to L. L. Rogers approximately Ten Thousand and No/100 ($10,000.00) Dollars, and by this agreement the said James D. Daniel, II, and Annie Margaret Rogers Daniel promises to pay to the said L. L. Rogers and to his wife Maria H. Rogers an additional sum of TEN THOUSAND AND NO/100 ($10,000.00) DOLLARS, within ten (10) years from...