Miller v. Erwin

October 28, 1924. The opinion of the Court was delivered by "S.L. Miller commenced an action in the Court of Common Pleas for Barnwell County on or about the 20th day of April, 1918, against J.L. Erwin and Ruth Erwin, by the service of a summons and complaint. The defendants filed separate answers. The case was referred to the Master of Barnwell County to take testimony only. The first reference was held November 17, 1919, and a continuance was granted on motion of plaintiff's attorneys to give an opportunity to apply for an order substituting S.L. Miller, Jr., as plaintiff. And thereafter an amended complaint was served to which the defendants filed separate answers. The Master held references from time to time, and the testimony of witnesses was taken. During the pendency of the action, Allendale County was created, and under the terms of the act creating that county the record was transferred to Allendale. The case was argued before Judge Johnson on the 19th day of July, 1923, and on the 16th day of August, 1923, a decree was filed deciding the case in favor of plaintiff."

The exceptions, four in number, challenge all of his Honor's findings, and contend that: (1) The deed was not a voluntary deed, but was founded upon a valuable bonafide consideration; that a pre-existing debt is a valuable consideration, and the burden of proof is upon the attacking party to prove that the terms of the written instrument are not as expressed by the instrument; that the evidence offered was sufficient to support defendant's contention. (2) That knowledge of the grantor acting as agent for the grantee under the circumstances of the transaction should not be imputed to the grantee. (3) The mala fides necessary to constitute a conveyance as fraudulent must be shown as existent to all of the parties of the transfer. (4) Apparent ownership of property by debtor is not a prejudice to a creditor who does not change his position because of his belief.

The complaint in this case does not ask to set aside the conveyances under the statute of this State to prevent an insolvent debtor from transferring his property with interest to prefer and favor a particular creditor or creditors, but is for the purpose of declaring the conveyances void for actual fraud, under the statute known as the Statute of Elizabeth. Under the Statute of Elizabeth both parties must participate in the fraud. The evidence in the case fails absolutely to connect the daughter, Ruth, with any fraud in the whole transaction. She was helpless in dealing with her father; he was her father, guardian, and agent. A daughter should not be charged with the fraud of her father; a transaction between a father and child does not of itself create a badge of fraud.

There is no doubt that the father owed his daughter, and in attempting to secure a bona fide debt he conveyed the property to her. There is not in the whole case any evidence to connect her with any participation of any fraud that her father committed (if any he did) to hinder, delay, defeat, and defraud his creditors. The evidence absolutely fails to connect the daughter, Ruth, as a participant of the fraud (if any) that her father committed. She was the daughter, he the father. He owed her. He attempted to protect her; that is, the whole of it as far as the testimony goes.

To stigmatize the daughter under the facts of the case, with actual fraud, would be cruel, and is not sustained by the evidence. If the father was her agent and acting for her, his conveyance to her for a bona fide debt that he owed her, without her knowledge, even though the father was guilty of fraud, his fraud could not be imputed to her. Her interests were antagonistic to his, and his knowledge could not be imputed to her. Manship v. Newton, 105 S.C. 1;89 S.E., 467. The mala fides must exist in the minds of the grantor and grantee to constitute the conveyance as fraudulent. Magovern v. Richard, 27 S.C. 286;3 S.E., 340. McElwee v. Kennedy, 56 S.C. 154; 34 S.E., 86. Lenhardt v. Ponder, 64 S.C. 364; 42 S.E., 169. Bell v.Thompson, 122 S.C. 400; 115 S.E., 633. Nothing in the case shows any mala fides on the part of Ruth Erwin, the appellant.

The last group of exceptions are not considered, being unnecessary in our view of the case. Exceptions 12 and 3 should be sustained, the judgment should be reversed, and the complaint dismissed, but a majority of the Court decide otherwise, and the judgment of the Circuit Court is affirmed.

MR. CHIEF JUSTICE GARY and MESSRS. JUSTICES COTHRAN and MARION concur in result.

MR. JUSTICE FRASER dissents.

MR. JUSTICE COTHRAN: The defendant does not claim to have borrowed the $5,000 directly from his daughter, but from the executor with the understanding that it was to be charged against her interest. Whether this was done in the settlement could have easily been shown, but was not. The defendant's showing I do not think was sufficient to overcome the finding of the Circuit Judge that the conveyance was voluntary.

MR. JUSTICE MARION: The opinion of Mr. Justice Watts assumes as a fact that J.L. Erwin owed his daughter $5,000, or an amount sufficient to cover the value of the real estate transferred. The Circuit Judge found to the contrary, that the conveyances were in fact voluntary. That finding of fact was fully warranted. If so, the Circuit Court's conclusions of law were sound. I think the decree of the Circuit Judge should be affirmed, for the reasons therein stated.

MR. JUSTICE COTHRAN concurs.