Miller v. Erwin

• Decision Date: 28 October 1924
• Docket Number: 11592.
• Citation: 125 S.E. 36,129 S.C. 415
• Parties: MILLER v. ERWIN ET AL.
• Court: South Carolina Supreme Court

125 S.E. 36

129 S.C. 415

MILLER v. ERWIN ET AL.

No. 11592.

Supreme Court of South Carolina

October 28, 1924

Appeal from Common Pleas Circuit Court of Allendale County; J. Henry Johnson, Judge.

Action by S. L. Miller, Jr., against J. L. Erwin and another. Decree for plaintiff, and defendants appeal. Affirmed.

The decree follows:

This was an action brought by S. L. Miller against J. L. Erwin and Ruth Erwin, his daughter for the purpose of setting aside a certain deed from J. L. Erwin to Ruth Erwin, dated March 3 1915, and recorded in the clerk's office for Barnwell county, March 4, 1916, in book of deeds 8Q, at page 325. This action was brought to set aside this conveyance as fraud on the rights of all the creditors of J. L. Erwin. The complaint sets up that on September 15, 1916, a judgment was obtained by J. B. S. Lyles, trustee, against J. L. Erwin, which judgment was filed and entered in the clerk's office for Richland county, September 25, 1916, in the sum of $8,557.82 with interest from May 29, 1916.

The land conveyed by the deed above referred to is described as follows: All that certain piece, parcel or lot of land situate, lying and being in Allendale (formerly Barnwell) county, S. C., known as tract No. 4 of the Erwin estate containing 190 acres, more or less, known as Church place and bounded as follows: North by Joseph Erwin, east by H. C. Flowers, south by J. D. Erwin, and west by P. A. Erwin. Also all that certain piece, parcel or lot of land, situate, lying and being in Allendale (formerly Barnwell) county, S. C., known as tract No. 5 of the Erwin estate, containing 162 acres, more or less, known as Polly Owens place, and bounded as follows: North by lands of the estate of J. D. Erwin, east by H. C. Flowers, south by T. R. Erwin, and west by P. A. Erwin.

The answer of the defendant J. L. Erwin is as follows:

For a first defense: Denies each and every allegation in said complaint contained.

For a second defense: That on or about March 3, 1915, this defendant bona fide and for a good and valuable consideration sold to his codefendant the premises described in the complaint, and executed and delivered a deed whereby he conveyed the same to her in fee simple, and since that time he has not been in possession of said premises and has not received the rents, income, profits, benefits, and advantages arising or accruing therefrom.

For a third defense: That the proceedings referred to in the complaint, wherein J. B. S. Lyles as trustee was plaintiff, was for the foreclosure of a first mortgage over a valuable lot of land in the city of Columbia and of greater value than the indebtedness secured by said mortgage, and in which the plaintiff was directly interested; that during the pendency of said foreclosure proceeding, and before a sale of said premises was had, the plaintiff herein voluntarily agreed to satisfy and discharge the judgments recovered therein as soon as said proceedings was ended, and he succeeded in completing certain arrangements; that this defendant and his co-obligors did not bid on such property when it was offered for sale and the same was bid in for $500, and the plaintiff in this action thereby acquired a direct and substantial interest therein, and as this defendant is informed and believes the plaintiff herein has completed the arrangements referred to above, and by reason of all which this defendant alleges that he has been fully discharged and relieved of said judgment, and it should be satisfied and canceled of record.

The answer of Miss Ruth Erwin is as follows:

For a first defense: Denies each and every allegation in said complaint contained.

For a second defense: This defendant alleges that on or about March 3, 1915, she purchased from her codefendant the premises described in the complaint bona fide, and paid a good and valuable consideration therefor, and received a deed whereby said premises were conveyed to her in fee simple, that since said time she has been in possession of the same and has received the rents, income, profits, benefits, and advantages arising and accruing therefrom

The case was duly referred to the master for Barnwell county to take the testimony. Subsequently the complaint was amended by consent making S. L. Miller, Jr., a party plaintiff in place and stead of S. L. Miller. The amended complaint in substance sets out the same allegations as the original complaint. The amended answers of J. L. Erwin and Miss Ruth Erwin in substance sets out the same defenses.

Subsequent to the bringing of this complaint, Allendale county was formed, and the land described in the complaint is now situate in Allendale county, and subsequent thereto, under an order of the court, the said case was transferred to Allendale county, in which county it is now pending. The order transmitting the testimony and signed by the master for Barnwell county is a part of the record.

I have carefully considered all of the competent testimony in the case, and I find as a matter of fact that in 1915, and prior thereto, the defendant J. L. Erwin was heavily involved, numerous creditors were bringing suits and threatening suits in the foreclosure of mortgages caused by the defendant's speculations in real estate in the city of Columbia, and some creditors had obtained judgments. I find that the defendant J. L. Erwin was insolvent. The insolvency of J. L. Erwin is clearly established by the testimony in the case. I find that on March 4, 1916, for the first time the creditors had record notice of a conveyance from the insolvent J. L. Erwin to his daughter, Ruth Erwin This deed was dated March 3, 1915, and the consideration expressed therein is the sum of $1,800. I find S. L. Miller, Jr., to be the owner and holder of the judgment above referred to.

In discussing fraudulent conveyances, the court in the case of Lenhardt v. Ponder, 64 S.C. 364, 42 S.E. 172, holds as follows:

" The rule is thus stated in Magovern v. Richard, 27 S. C 286, 3 S.E. 340: 'Was the mortgage void under the statute of fraud? To be void under said statute or at common law, it should be made to appear that it was either without consideration or that it was mala fide, one or both. In other words, for a paper of the kind to be invulnerable, it should be based upon a valuable consideration, and be a bona fide transaction. * * * What is a mala fide? It must be an intent not simply to assert one's own rights, but, in addition thereto, to defeat the rights of another, participated in, as we have said, by both parties to the instrument.' The last-mentioned case [referring to the case of Magovern v. Richard] is cited with approval in the recent case of McElwee v. Kennedy, 56 S.C. 154, 34 S.E. 86, in which the court also uses this language: 'To annul for fraud a deed based upon a valuable consideration, it must not only be shown that the grantor intended thereby to hinder, delay, or defraud creditors, but it must also appear that the grantee participated in such fraudulent purpose. Even if we were to assume that there is evidence of mala fides in the grantor, yet if the sole purpose of the grantee was to secure her claims, having no intent to hinder, delay, or defeat other creditors, her title cannot be affected by the mala fides of the grantor.' "

The court, in the case of Braffman v. Glover, 35 S.C. 431, 14 S.E. 935, holds as follows:

"When a deed is made by a failing merchant to a kinsman within a few days after notification that creditors are about to sue, the grantee having been sent for at a distance of 30 miles, but his arrival not awaited, and the alleged consideration being a prior advance by the grantee to grantor when she (the grantor) had purchased the land, and a verbal promise at that time to make such conveyance, if the grantor failed to make payment of balance due by her to her vendor (such balance not having yet matured), the court will require the fullest, clearest, and most satisfactory evidence of good faith on the part of the parties, whenever the bona fides of the transaction is called in question."

Again, in the same case the court holds as follows:

"A deed made and received with the intent to defeat, delay, and hinder creditors of the grantor, is fraudulent and void as to creditors, even if based upon a valuable consideration."

In the case of Jackson v. Lewis, 34 S.C. 1, 12 S.E. 560, the court holds as follows:

"A voluntary deed may be set aside at the instance of an existing creditor upon the ground of constructive or legal fraud, even where there is not the slightest taint of actual or moral fraud in the transaction, under the principle that the law requires that one must be just before he is generous. The law will not permit one who is indebted at the time to give his property away, provided such gift proves prejudicial to the interest of existing creditors. The motive which prompts the donor to make the gift is wholly immaterial. If the donor is indebted at the time, and the event proves that it is necessary to resort to the property attempted to be conveyed away by a voluntary deed for the purpose of paying such indebtedness, the voluntary conveyance will be set aside and the property subjected to the payment of such indebtedness, upon the ground that it would otherwise operate as a legal fraud upon the rights of creditors, even though it might be perfectly clear that the transaction was free from any trace of moral fraud."

To the same effect as the above cases are the following cases: Richardson v. Rhodus, 14 Rich. 95; Hudnal v. Wilder, 4 McCord, 302; Blake v. Jones, Bailey Eq 142, 21 Am. Dec. 530; Eichelberger v. Kibbe, 1 Hill Eq. 120, 26 Am. Dec. 192.

The intention to defraud may be shown by surrounding circumstances, and from the acts of the parties, and need...