Virginia-Carolina Chemical Co. v. Hunter

• Decision Date: 17 March 1913
• Citation: 77 S.E. 751,94 S.C. 65
• Parties: VIRGINIA-CAROLINA CHEMICAL CO. v. HUNTER et al.
• Court: South Carolina Supreme Court

77 S.E. 751

94 S.C. 65

VIRGINIA-CAROLINA CHEMICAL CO. v. HUNTER et al.

Supreme Court of South Carolina

March 17, 1913

Appeal from Common Pleas Circuit Court of Laurens County; G. W Gage, Judge.

"To be officially reported."

Action by the Virginia-Carolina Chemical Company against G. Wash Hunter and others. From an adverse judgment, defendants appeal. Affirmed.

See also, 84 S.C. 214, 66 S.E. 177.

Fred H Dominick, of Newberry, for appellants. Grier & Park, of Greenwood, and Dial & Todd, of Laurens, for respondent.

HYDRICK J.

The plaintiff commenced this action on December 14, 1908, in behalf of itself and all other creditors of the defendant Hunter to set aside for fraud certain mortgages given by Hunter to his sister, the defendant Mrs. Evans, as follows: (1) One dated October 18, 1907, and recorded October 25, 1907, over 625 acres, to secure his note for $8,000 of same date, due one day after date. (2) One dated November 19, 1907, over 170 acres, to secure his note for $2,000 of same date, due one day after date. This mortgage was not recorded until November 10, 1908. (3) One dated November 6, 1908, over 800 acres, being the two tracts covered by mortgages numbered 1 and 2, which was all the land owned by Hunter to secure his note for $1,250. This mortgage was also recorded November 10, 1908. (4) One covering his personal property, dated November 19, 1907. Plaintiff also sought to avoid a mortgage given to the defendant Cole L. Blease for $1,000, on the ground that it was an unlawful preference in violation of the assignment act. On motion of plaintiff, the court passed an order appointing a receiver of Hunter's property, and enjoining creditors from prosecuting their claims, except in this action. That order was affirmed by this court. 84 S.C. 214, 66 S.E. 177. The case was then referred to Hon. Frank B. Gary, as special referee, to hear and decide all issues and report his findings and conclusions. In a report showing careful consideration of the law and evidence he reached the conclusion that all the mortgages given by Hunter to Mrs. Evans, except the one for $8,000, were fraudulent and void, and that the mortgage of the defendant Blease was valid. The defendants alone excepted to his report. Therefore the validity of the $8,000 mortgage to Mrs. Evans and the mortgage to the defendant Blease is conclusively established, and that part of the referee's report which disposes of the issues as to those mortgages is of no further consequence, and for that reason it is omitted. That part of the report which deals with the mortgages found to be fraudulent reads as follows:

" Hunter contracted the debts with the plaintiff in April, 1908, and July 23, 1908; both notes were made payable November 15, 1908. In 1908 Hunter planted a large crop, and in April, 1908, sold 18 bales of cotton from the crop of 1907. On November 13th Hunter sold 60 bales of cotton, of the average weight of from 425 to 450 pounds. This cotton brought about 12 1/2 cents per pound, making a total for this cotton of $3,100. Seven days before he sold this cotton he claims to have given Mrs. Evans the mortgage for $1,250. Three days before he sold his cotton the $2,000 mortgage to his sister and the $1,250 mortgage to his sister were put on record. Less than two weeks after selling the 60 bales of cotton the defendant Hunter wrote to Mr. Huff to the effect that he was unable to pay anything on his debts, and advised him to join the other creditors in their efforts to sell him out, and send him to the penitentiary. With more than $3,000 apparently going into his hands in November and December, 1908, he pays no creditors, but, on the contrary, permits to go on record against him mortgages covering all his real estate and all the personal property he owned. He claimed that his money went to pay his attorney's fees. The evidence shows that he is now owing his attorneys $3,200. He does not attempt to make any showing as to what he has done with the large amounts going into his hands. It seems clear to me that the plaintiffs have shown that those conditions exist, which, unexplained, warrant the inference that there has been a fraudulent disposition of his property. No effort has been made by the defendant Hunter to explain this combination of circumstances. We therefore conclude and hold that there was a fraudulent disposition of his property on the part of the said Hunter.

"Having answered these two subsidiary questions in the affirmative, it seems to me that the main question before me, to wit, Should the receivership be continued, and should all creditors of the defendant Hunter be enjoined from prosecuting their claims otherwise than in this suit? must be answered in the affirmative. *** We come next to the $2,000 mortgage from Hunter to Mrs. Evans, which is described in the complaint. This mortgage was executed by a brother to his sister. It purports to have been executed November 19, 1907, but it was withheld from record until November 10, 1908. So far as the public was concerned, it never saw the light of day until the mortgagor was insolvent, creditors were clamoring for the payment of their claims, and the defendant Hunter was making a fraudulent disposition of his property. It was not conceded to have been executed for a valid consideration, nor was it conceded that it was executed when it purported to have been. Giving due weight to the maxim 'that fraud is never to be presumed,' and giving full effect to the rule that in every case fraud must be established by the party alleging it, nevertheless, after a careful examination of the evidence and the law applicable thereto, I am convinced that the plaintiffs have made out a prima facie case against the defendant on the grounds upon which they have assailed the mortgage in question.

...