McGowan v. Hitt
| Decision Date | 29 March 1882 |
| Docket Number | CASE 1183.[a1] |
| Citation | 16 S.C. 602 |
| Parties | MCGOWAN v. HITT. |
| Court | South Carolina Supreme Court |
1. A man on the eve of his marriage, and on the alleged consideration of the marriage, but with intent to defeat the claims of his creditors, conveyed his entire visible estate to his intended wife, she being ignorant of his fraudulent purpose. Held , that the deed was fraudulent, and its terms were sufficient to charge the wife with notice and to affect her with the fraud.
2. And the deed being recorded, creditors of the husband were chargeable with notice of the fraud which the terms of the deed disclosed.
3. Distributees of an estate having given to an administratrix in 1861, their bonds, with sureties, for purchases at the estate sale of personalty, it would seem that the administratrix, by reason of the sureties' rights, have proceeded in equity to subject the distributive shares of the principals to the extinguishment of their indebtedness.
4. A creditor cannot be sad to have so exhausted his legal remedies against a surety as to entitle him to ask the aid of the Court of Equity to reach property fraudulently conveyed away, until he has exhausted his legal remedies against the principal and other surety also.
5. A debtor fraudulently conveyed away his estate, pending action against him. From failure of the courts to sit, and other causes, judgment was not obtained until seven years afterwards, and thereupon plaintiff promptly proceeded in equity to reach the property so transferred. Without imputing any laches to plaintiff in obtaining his judgment- Held , that the Statute of Limitations commenced to run from the discovery of the fraud, and was not suspended until judgment obtained at law; and that the suit in equity was barred.
Before HUDSON, J., Laurens, February, 1881.
At the hearing of this appeal, Hon. Benjamin C. Pressley, of the First Judicial Circuit, and Hon. Thomas B. Fraser, of the Third Circuit, sat in the stead of the Chief Justice and Associate Justice McGowan, who were constitutionally disqualified.
The action was by John J. McGowan as administrator de bonis non of William Hitt, deceased, against Martin Hitt and Mary, his wife, and Aaron Wells.
The Circuit decree (omitting its statement of facts, which are repeated in the opinion,) was as follows:
The issues presented and the questions to be determined in this case are of a very interesting character, and I would be pleased to have more time to elaborate my views upon them but pressure of business requires that I shall forego this desire and give my opinion briefly.
Antenuptial conveyances sometimes are made to the intended wife voluntarily by the man through overflowing love and affection, and unsolicited by the woman. In this case they are more properly denominated voluntary deeds, than conveyances in consideration of marriage. Others, again, are the result of negotiations between the parties. They are made conditions precedent to the marriage, enter into and form part of the consideration, and are properly denominated deeds in consideration of marriage, which it is needless to say constitutes the highest and most valuable consideration known to law. In either instance the deed may on its face purport to be in consideration of marriage, but the fact may be, that in the one case it is an unsolicited donation, and in the other the result of deliberate contract, and a sine qua non to the solemnization of the marriage. Evidence, I think, is always admissible to prove the facts of the case, and these facts should be made always to appear, as they may seriously affect consequent litigation.
The first question raised for answer is, Was it lawful for Martin Hitt, being indebted $2,200, and owning property worth but little if any more, voluntarily to give the whole of this property to his intended wife, and thus to entirely defeat, delay and hinder his creditors? The leading case on this subject in South Carolina is that of Simpson & Davidson v. Admiral Richard Graves and others, Riley's Ch. 232. I cannot find that this case has been overruled or even modified by subsequent decisions, but on the contrary has been recognized as sound law by later decisions of our courts.
Judge Staples, of Virginia, in the late case of Herring v. Wickham , 29 Gratt. 628, takes issue with Justice Nott, of South Carolina, in the aforesaid case, and in a very learned opinion combats this doctrine of South Carolina. His opinion lays down the bold doctrine that creditors are utterly helpless as against an antenuptial conveyance of a man's entire property to his intended wife, however much he may be in debt and however fraudulent may be his intention, provided the wife is not cognizant of the fraud. The two opinions are able and learned, and hold the opposite extremes of the law of fraud as applicable to antenuptial settlement by insolvent debtors. I regard the views of Justice Nott as the sounder and safer of the two, and certainly more binding on me. I shall not trouble myself to make extracts from either, nor from other judgments upon this subject. I hold that the conveyance by an insolvent man voluntarily of his entire property to an intended wife on the eve of marriage is fraudulent as against his creditors, and will be declared void, on proper and timely application to the courts.
Secondly . Does the fact that the conveyance of his entire property by an insolvent to his intended wife on the eve of marriage is made at her special instance and request and as a condition precedent to the marriage, she being innocent of fraudulent intent, alter the case? We think not. And for our reasons refer to the aforesaid opinion of Justice Nott. We hold that a man in debt cannot be allowed to make marriage the means and occasion of entirely defeating, delaying and hindering creditors by settling the whole of his property on a woman in consideration of marriage. The case in hand clearly shows that Martin Hitt, being indebted to an amount nearly equal to the value of his entire property, did, on the eve of marriage, convey to his affianced his entire property, with intent thereby to defeat his creditors. Though not cognizant of this intent, his wife cannot retain this property against the demands of the creditors, unless these demands are barred by the Statute of Limitations interposed in her behalf; and to this inquiry we will address ourselves.
The deed in this instance is expressed to be in consideration of marriage and purports to convey certain well-defined real estate and specific articles and items of personal property. The present plaintiff, McGowan, was familiar with the property of Hitt, and still more cognizant of his affairs was Milly Hitt, the first administratrix of William Hitt, and payee of these notes. She knew that Hitt had conveyed his entire property to Mary Henderson, solely in consideration of marriage, whilst her suit for a large amount was pending against him. Not a fact or circumstance alleged now against this deed was not known to her when it was made, and seems also to have been known to McGowan. But, whether positively and actually known, or not, the deed was duly recorded November 30th, 1868, and bears on its face all the facts constituting the fraud, or enough at least to put the parties upon inquiry.
A recorded deed is constructive notice to the world of all that it contains on its face, and if it express on its face all the elements that constitute the fraud, it becomes notice of the fraud itself. If an insolvent man convey away all his property, expressed to be for a valuable consideration, it is not constructive notice of fraud, because it may speak truth. But it may afterwards be discovered that it speaks falsely in expressing a valuable consideration, when in fact it is voluntary. From this discovery of the fraud alone would the currency of the statute begin; but if the deed on its face announced a gift to be made, it is notice of all the fraud that a gift gives rise to, and the statute would run from the date of the recording against all having no previous actual notice. To his kinswoman, Milly, and neighbor McGowan, the deed when recorded proclaimed its own character, and they had personal knowledge that he was in debt, and that the deed covered his entire visible, tangible property. They were thus affected with notice of the fraud from November 30th, 1868. Nine years elapsed before the institution of this suit, and more than four, perhaps six years, before the death of Milly Hitt.
But the plaintiff contends that he could not ask relief of the Court of Common Pleas sitting in equity, until he had recovered judgment at law and exhausted his remedy there. That this did not occur until June, 1875, from which date alone can the currency of the statute against him begin, and that having come into this court November 1st, 1877, the bar was not complete. But the inflexible rule of law, and also in equity, is that the statute runs from the discovery of the fraud. To all persons sui juris the law allows four years from this date, in which to begin proceedings. Within this time all persons not under disability are supposed to be able to proceed at law, exhaust their remedy there, and, if necessary, come into equity. Certain it is that this is all the time the law as it then stood, allowed them. If their own tardiness or untoward events prevented them from entering suit in due time, it is the plaintiff's loss and the defendant's gain. Vigilantibus non dormientibus leges subveniunt .
The payee of the note, Milly Hitt, was barred in her life-time against this action and claim, and her successor, the plaintiff, is in no better condition. The action is barred by lapse of time, and it is adjudged that the complaint...
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