McInnis v. McRae

• Decision Date: 01 March 1926
• Docket Number: 11925.
• Citation: 132 S.E. 473,134 S.C. 162
• Parties: McINNIS v. McRAE et al.
• Court: South Carolina Supreme Court

132 S.E. 473

134 S.C. 162

McINNIS v. McRAE et al.

No. 11925.

Supreme Court of South Carolina

March 1, 1926

Watts J., dissenting.

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

Action by John McInnis against A. C. McRae and others. Judgment for plaintiff, and defendants appeal. Decree modified.

The referee's report and decree of the Circuit Court are as follows:

"Report of Referee.

"This case was referred to me for the purpose of taking testimony and reporting my findings upon the issues of law and fact. Messrs. Tison & Miller, attorneys for the plaintiff, and J. W. Le Grand, attorney for all of the defendants, were present at all of the references held by me and the testimony was, by agreement of counsel, taken stenographically by Miss Sara Buzhardt and transcribed, and copies furnished to the counsel for each side, and the original filed with me and will be filed along with the report, to which reference is directed.

While in the beginning of this report I have referred to this as a case, when, as a fact it is more in the nature of a supplementary proceeding, and has been so treated by all parties, wherein the plaintiff by his complaint or petition is seeking to discover assets belonging to A. C. McRae, or rather to set aside a deed executed by A. C. McRae to Alice McL. McRae, who is his wife, and a mortgage executed by Alice McL. McRae to H. W. McLaurin covering the lands described in the complaint in this proceeding. At the first reference held, it appeared from the testimony of H. W. McLaurin that, while the mortgage and notes secured thereby were executed to him, the same really belonged to the Scotland Supply Company, a corporation of which he is president, and that he had transferred said papers to the corporation. Thereafter, at another reference held, the Scotland Supply Company, on motion of S. S. Tison, Esq., attorney for plaintiff, was made a party defendant, and the Scotland Supply Company, the new defendant, was permitted to set up its mortgage debt and to ask for foreclosure, although no formal amended complaint was served or filed, and no formal answer was served or filed.

I think that the interest of all parties can be properly cared for without requiring such papers to be filed or served, since the plaintiff was ably represented at every reference, and the defendants and their attorney were present and had notice of the entire proceeding. By reference to the testimony, it will be disclosed:

That A. C. McRae, being the owner of the land described in the complaint (which seems by actual survey to have contained about 62 acres), on the 10th day of February, 1920, obtained a loan of $5,000 from Southern Life & Trust Company, a corporation of Greensboro, N. C., and secured the loan by the execution of five notes, each for the principal sum of $1,000, and a mortgage on the lands described in the complaint. That the defendant, A. C. McRae, had not paid any part of the principal, and became in arrears with the interest, thus causing the whole debt to become due, and on August 24, 1922, a lis pendens was filed in the case of Southern Life & Trust Company, a corporation, plaintiff, against A. C. McRae, defendant, covering the land mortgaged, in the office of the clerk of court for Marlboro county. That on the 26th day of August, 1922, the sheriff of the county served on A. C. McRae the summons and complaint with copies of the notes attached, in the case of Southern Life & Trust Company, a corporation, plaintiff, against A. C. McRae, defendant, said action being for the foreclosure of the mortgage covering the premises described in the complaint in this proceeding. That some time after the papers were served, but before judgment in foreclosure was taken, the defendant A. C. McRae made an effort to sell the lands at private sale, and failed to obtain a satisfactory offer. He then procured Col. Tom C. Hamer, of the firm of Hamer, Hamer & Darby, to sell the lands at public auction on the 9th day of November, 1922, and advertised the sale properly and fully, by having printed and distributed throughout the county a number of handbills, and also advertised in the Pee Dee Advocate in a very prominent way, thus bringing to the attention of all who might desire to purchase said lands the notice of intention to sell, and the time and place of such sale. That at said sale all those who could be considered prospective buyers were present, including the plaintiff and the defendant H. W. McLaurin and several other prominent gentlemen. That the sale was fair and open, and without any chilling of bids, or attempt to chill bids, and that all who desired to bid had full opportunity to do so, and that H. W. McLaurin, representing the Scotland Supply Company, became the last and highest bidder, and was declared to be the purchaser of said lands. It was announced at the sale that the Southern Life & Trust Company held a mortgage, and that same was to be satisfied out of the purchase price.

After the sale the defendant, Alice McL. McRae, took title to the land and executed her promissory note to the defendant H. W. McLaurin for the principal sum of $8,296.24, bearing date November 10, 1922, and becoming due by its terms November 10, 1923, and bearing interest at the rate of 6 per cent. per annum, and providing for attorney's fees. At the same time she executed a mortgage covering the land purchased and described in the complaint in this proceeding, securing the payment of said note. I find from the testimony that Alice McL. McRae paid the full value for the lands conveyed to her, and that such consideration is made up as follows: The assumption by her of the debt due by A. C. McRae to the Scotland Supply Company, about which there is no question, and the amount of which was on that date $2,662.61, and the assumption by her of the mortgage debt due by A. C. McRae to Southern Life & Trust Company, which mortgage debt was being foreclosed at the time of the sale

and the existence of which made the sale necessary, and which amounted to over $5,000 on the date of the sale, and the assumption by her of certain small judgments against A. C. McRae, which account of Scotland Supply Company, mortgage to Southern Life & Trust Company, and judgments against A. C. McRae at that time exceeded $8,296.24 on November 10, 1922. That the Scotland Supply Company paid the mortgage debt to the Southern Life & Trust Company and the judgments then existing against A. C. McRae, which had been assumed by Alice McL. McRae, and she contemporaneously with the receiving title to the land executed her note and mortgage, as above stated, for $8,296.24, which was given to secure the note mentioned and the account of A. C. McRae to Scotland Supply Company of $2,662.61, which she had assumed the payment of. While the note and mortgage was actually executed in the name of H. W. McLaurin, the same really belonged to the Scotland Supply Company, and was properly transferred to same by H. W. McLaurin.

I therefore find that the sale of the lands on the 9th day of November, 1922, which is sought to be set aside, was fair and open and without any evidence of fraud or collusion on the part of any one, and that full and complete notice was given of such sale, and that the plaintiff and all parties interested had full opportunity to purchase, and that the lands were sold for full value to H. W. McLaurin, who (it is made clear in this case from his testimony) was acting for the Scotland Supply Company, who became the highest bidder for the lands, that, after the lands were bid off, H. W. McLaurin, acting for the Scotland Supply Company, allowed Alice McL. McRae to take the lands at his bid, upon her contemporaneously with the receiving title executing her note and mortgage for $8,296.24 to secure the indebtedness above mentioned of A. C. McRae to Scotland Supply Company, and the mortgage debt of A. C. McRae to Southern Life & Trust Company, which was paid on the date of the execution of the deed by the Scotland Supply Company and certain judgments against A. C. McRae, all of which amounted to something more than the principal sum named in her note and mortgage to H. W. McLaurin. There was some testimony that the property would be now worth more than the sum for which it was sold to Alice McL. McRae, but the testimony overwhelmingly points to the fact that the land was sold for its full value on the date of the sale, and that the defendant A. C. McRae was without power to prevent a sale under foreclosure, and that the lands brought as much or more than they would have brought had they been sold under the judgment of foreclosure in the action then pending. I do not find anything in the testimony which even indicates to my mind that there was any collusion or agreement between any of the parties to the sale, or any effort or intention of effort to defeat the rights of the plaintiff or any other person who might have had any claim against A. C. McRae. H. W. McLaurin was acting for the Scotland Supply Company, and did what any other prudent creditor of A. C. McRae had the right to do in bidding on the land, and, when same was sold to him in permitting his bid to go to another, upon such purchaser securing to him his claim.

Now as to the rights of the plaintiff: An effort was made to prove that a short time before the sale A. C. McRae executed an open note to the plaintiff, which was the renewal of another note which by its terms did not become due until after the date of the sale, and that the purpose of this was to prevent the plaintiff from collecting his debt. I do not think, however, that this effort was sustained by any of the testimony. At the reference held before me on the 20th day of February, 1924, the plaintiff testified, and on the

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