Ferguson v. Harrison

| S.C. | Apr 23, 1894

The opinion of the court was delivered by

Mr. Justice Pope.

Early in January, 1883, the four sons of John Harrison, deceased, as his only heirs at law, made a partition of the lands of which he died seized, and in such partition John H. Harrison received two tracts of land, aggregating 300 acres, whereon there was no dwelling house, the tracts being largely timbered lands. In such partition the said John H., for purposes of equalization, was required to pay his brother Richard $600. At that date the said John H. had a family, consisting of his wife, Mrs. Fannie Harrison, and several children. On the 28th January, 1883, he purchased from H. M. Cely a tract of land, containing 106 acres, whereon was a dwelling house and out-buildings, at. the price of $1,590, on a credit of one, two, and three years, and secured the payment of such purchase money and the interest thereon by his mortgage of said 106 acres. This last tract was contiguous to his other lands. In December, 1883, his dwelling house was accidentally burned down. He and his family then, for a time, lived with his brother, Edward Harrison.

On the 2d day of January, 1884, while still owing his brother $600 for equalization in partition, and while owing his brother •Samuel $800, he conveyed the 300 acres he had inherited from his father, by deed therefor to his wife, Mrs. Nannie Harrison, “and her bodily heirs begotten of me.” The consideration named in his said deed to his wife was the love and affection he bore to his wife and their children. This conveyance was discussed with his two brothers, Bichard aud Samuel, and was actually made, as the consideration therefor, the agreement on the part of the said Nannie Harrison that she would pay, and secure the payment by a; mortgage of said lands of the $600 due by John H. to Bichard, and also the $800 due by John H. to Samuel. During the early months of the year 1884, by reason of advances in cash, provisions, clothing, &c., the indebtedness to Samuel E. was increased by account from $800 to $1,050, and also the debt of $600 to Bichard was increased from $600 to $1,000, by reason of lumber and work done. In July, 1884, John H. and his wife and children occupied the new dwelling house and out-buildings which had been erected on the 300 acres, after the dwelling house on the 106 acres had been burned down.

On the 18th January, 1886, H. M. Cely having died testate, his two sons, H. W. Cely and W. H. Cely, instituted their action against John H. Harrison to recover the $1,590 and the interest thereon, of which no part had been paid, as well as a foreclosure of the mortgage on the 106 acres. On the 28th January, 1886, Nannie E. Harrison made her sealed note to Bichard Harrison for $1,000 and interest due at one day thereafter, and also made her sealed note to Samuel E. Harrison for the sum of $1,100 and interest due at one day thereafter, and to secure the payment of said two sealed notes, she executed to Bichard and Samuel E. her mortgage of the 300 acres of land, stipulating, however, in such mortgage that her right of homestead in said lands should not he thereby affected. On the 8th April, 1886, the action instituted by the Cely executors ripened into a judgment for foreclosure of mortgage, and after the sale of the 106 acres and its application to the mortgage debt, there still remained a debt of $1,321.43 due by John H. Harrison to such executors, for which judgment was entered aud execution for its collection duly issued on the 11th,April, 1887, which being wholly unpaid, was duly assigned by such Cely executors to John Ferguson and Jacob P. Miller, composing the firm of Ferguson & Miller. All these matters and things occurred in Greenville County, in this State. The sheriff of Greenville County returned the said execution nulla bona.

In February, 1889, the said Ferguson & Miller instituted their action in the Court of Common Pleas for Greenville County, to set aside and have cancelled, as null and void, the conveyance of John H. Harrison to his wife, Nannie E. Harrison, and the two mortgages of Nannie E. Harrison to Richard' and Samuel E. Harrison. To this action the said John H., Nannie E., Richard, and Samuel E. Harrison were made parties defendant. The grounds set up in the complaint, upon which to base the relief sought by these plaintiffs, was: That in January, 1884, when John H. conveyed to his wife the 300 acres of land, he did so with intent to hinder, delay, and defeat the debt due to the Cely executors, as well as his other creditors, and in anticipation of future indebtedness, and without any consideration whatever, save natural love and affection, and that such conveyance was fraudulently made by him to his wife, who was fully cognizant of his condition; that in January, 1886, the defendant, Nannie E. Harrison, fraudulently, and without any consideration, executed her two mortgages of said land to the defendants, Richard and Samuel E. Harrison, to secure the alleged debts of $1,100 and $1,000, the intent being to cover up said property from the creditors of the defendant, John H. Harrison; that the defendant, John H., has no other property out of which the judgment can be realized, and set forth the nulla bona return of the execution by the sheriff; that the action is brought for the benefit of all the creditors, &c., of John H. Harrison. Of course, this complaint set forth the dates of the debts, deeds, mortgages, judgment in foreclosure, judgment for balance of mortgage debt, and that execution was duly issued.

To this complaint the defendants, each for himself and herself, answered, flatly contradicting the plaintiff’s allegations of fraud, fraudulent intent, and that the deed and mortgage were, in effect, for love and affection, or preteusive. On the contrary, they assert that it was well understood in January, 1884, that John H. Harrison was conveying his 300 acres of laud to his wife, Nannie E., not for love and affection of herself and their children, but really and actually on her agreement to pay Richard and Samuel E. the debts owed them respectively by John H., and that subsequently, when Nannie E. Harrison executed her mortgage of such lands to Richard and Samuel E., it was done in good faith, and with no knowledge that John H. owed others than themselves, to secure John H.’s debt of $600 to one and $800 to the other of the said Richard and Samuel; and the addition of $400 to Richard’s indebtedness and $250 to Samuel E.’s indebtedness was for such sums actually received by her of them.

It was ordered by Judge Aldrich, on March 14, 1890, that the testimony be taken by the master of Greenville, and that such master do report on all the issues of law and fact. The master’s report was in favor of the defendants on every issue. Exceptions to such report were heard by Judge Izlar, and by his decree he sustained the master both in his conclusions of law and fact. However, pending the hearing of these exceptions, Mrs. Nannie E. Harrison died, leaving her husband and seven children as her heirs at law. Judge Fraser ordered that they be made parties defendant as such heirs at law, and they each answered as such heirs at law. The case is heard here on numerous exceptions to the decree of the Circuit Judge by the plaintiffs, and it remains for this court to now consider the same.

1 1. The first exception complains that the Circuit Judge should have sustained the exceptions by plaintiffs to the admission by the master of parol testimony, to vary the deed from John H. Harrison to Nannie E. Harrison, thereby providing a consideration for, and engrafting a trust upon, the deed. It must be very evident from the framework of the complaint itself, the testimony adduced by the plaintiffs at the hearing, and also the exceptions to the master’s report and the decree of the Circuit Judge, that legal fraud is directly charged by the plaintiffs. When this fact is admitted, the propriety of the ruling of the master, as well as that of the Circuit Judge to the same point, is manifest. The intention of the parties to the deed is directly at issue. In such case it is competent on such a charge in the Court of Common Pleas, as it would be in the Court of General Sessions, for the defendants to show that their intent was not fraudulent, but, on the contrary, was high and honorable. The cases of Banks v. Brown, 2 Hill Ch., 558; Henderson v. Dodd, Bail. Eg., 133; Featherston v. Dagnell, 29 S. C., 45; Brice v. Miller, 35 Id., 548, abundantly establish the rule that it is competent to show the real consideration of a deed, especially when fraudulent intent is attributed to the parties thereto. And the last case quoted holds that such testimony is not offered to vary the terms of the deed, but to .show the real consideration of the alleged transfer. It is not offered so as to predicate the creation of a trust, but to show that the payment of grantor’s debts was the purchase money covered by the deed as its consideration. The second exception is answered by the views just expressed and the authorities just quoted. And so, also, the third exception, as well as the fourth exception.

2 The fifth exception imputes error to the Circuit Judge in not holding that the terms of the deed from John H. Harrison to his wife, Nannie E. Harrison, and “her bodily heirs begotten by me,” some of whom were in esse at that date, made such conveyance to the wife and bodily heirs, &c., as joint tenants or tenants in common; that the agreement to mortgage was inconsistent with such a construction of the deed, and that the testimony as to the right and duty of Nannie E. Harrison to mortgage such lands, was inadmissible. The plaintiffs, it must be assumed, framed their complaint with due care, so that the propriety of their prayer for relief might be manifested thereby. When we turn to the complaint itself, it distinctly alleges that the conveyance in question was made to Mrs. Nannie E. Harrison, as the grantee. In fact, she is the only party defendant, as long as she lived, that the plaintiffs recognized as the grantee under such deed. Not only so, but after her death, by the plaintiffs’ motion, her husband and children are alone made parties defendant as her heirs at law and next of kin. Besides all this, no question is even suggested by plaintiffs’ exceptions to the master’s report, squinting at this position. It was not made before the Circuit Judge who heard the case. Such a question is not passed upon in his decree. The parties and the allegations are wanting for such an investigation in the court below, and we cannot, for the first time it is made, entertain this question here. This is a Court of Appeals, and, except when jurisdiction is questioned, we must confine ourselves to an examination of errors made in the lower courts, aud, of necessity, that involves the hearing of questions whose decision is said to be erroneous in the court from which an appeal is taken. The appellants must fail here.

3 In considering some of the remaining exceptions, it seems to us that a close attention must be paid to the facts, so that we may correctly apply the law as administered on the equity side of the court. The master allowed the claim of defendants to a homestead in this 300 acres of land, and the Circuit Judge sustained this position. Was this error? Let us see. We may say just here that this claim of homestead is the pivotal point in this case. When John H. Harrison conveyed this laud to his wife on 2d January, 1884, he owed his brother Bichard $600. He owed, also, his brother Samuel E. $800. But this was not all, for he owed the estate of Cely some $1,300, also. Now, it is claimed that his said conveyance to his wife, although voluntary on its face, was not so; on the contrary, it is claimed that the payment, and the mortgaging of such laud to secure the payment of these two debts of $600 and $800, was the true consideration. And the defendants insist that this being a valuable consideration for such a deed, it must be sustained; and, further, that because Mrs. Harrison, in the two mortgages to Bichard and Samuel E. Harrison, reserved her homestead in such lands, therefore, the homestead exemption follows. Care must be taken to remember that not only $600 and $800 of debts to Richard and Samuel E. must be secured, but also $250 to the one and $400 t.o the other must likewise be protected by these mortgages.

The testimony shows that when John H. conveyed this land to his wife, it was worth $3,000. He conveyed these lands worth $3,000 to his own wife, on her agreement to pay $1,400 of his debts, or rather, he conveyed these lands to her to mortgage to his two brothers to secure $1,400 that he owed. them. In order to mortgage these lands, the legal title had to vest in his wife, Mrs. Harrison. So far as a valuable consideration therefor, it was only vested, however, to secure $1,400, when it was worth $3,000. If the wife, Mrs. Harrison, could hold the property, freed from any claims of her husband, and only subject to the payment of the $1,400 of his debts, she would receive a benefit at the expense of the creditors of John H. Harrison of the sum of $1,600. Her reply is, not so, for I owe $700 besides to the brothers, which I have secured by my mortgages to them. Why was this done? Surely not for debts due by her husbaud, John H., but really for debts contracted by herself after the deed was executed. We are very much inclined to view this transaction between the parties to the deed, John H. and his wife, to amount to this in law, namely, that thereby John H. conveyed to his wife, and by such conveyance the husband himself was divested of title, and she was, while living, bound to hold such title, and, after her death, her heirs at law were equally bound to hold such title, first, to secure the payment to Richard of $600 aüd interest, and to Samuel E. of $800 and interest, and the court has ordered the land sold to pay such indebtedness, and from this decree for the sale for this purpose, no appeal has been taken by the defendants; and, second, for the creditors of John H. Harrison.

We cannot agree that John H. Harrison had any homestead rights after he sold the land. We cannot agree that Mrs. Harrison had any homestead right in such lands, because the lands were conveyed to her upon the consideration that she should mortgage the lands to pay Bichard and Samuel $1,400 and interest, and that, under that deed, she can hold no rights as a purchaser against the creditors of John H. Harrison, because after the is paid', such deed is a voluntary one, and, therefore, inoperative to convey away from the creditors the property of their debtor. “A man must be just before he is generous.” See last proviso of sec. 8 of art. XIV., State Constitution, where grants or gifts of husband to wife are required not to be detrimental to the just claims of his creditors. It was not in the power of Mrs. Harrison to inject into the consideration of the deed from John H. to herself, any power on her part to mortgage the lands to secure her own debts.

We think the testimony very clearly shows that the debts of Bichard and Samuel E., to the extent of $600 to one and $800 to the other, were bona fide, and that there was no intention to do anything more, so far as they are concerned, in the deed of 2d January, 1884, than to secure their payment, which John H. had a right to do, under the proof here adduced. Her title to the whole land being necessary in order to successfully bottom her mortgage of the 300 acres, to secure the $1,400 and interest thereon, to Bichard and Samuel E. Harrison, and the sale of the land having been ordered, from which there is no appeal, she, while living, and her heirs at law since her death, must be decreed to hold the title to such lands so far as the proceeds of sale, after the extinguishment of the $1,400 and interest, which is due to Bichard and Samuel E., is concerned, in trust for the payment pro rata of all the debts due by John H. Harrison at the date of such conveyance. It follows, therefore, that the decree of the Circuit Court should be modified as herein required. So far as the views herein announced sustain the exceptions following the sixth, so much thereof are ordered sustained, and where such views are inconsistent with these exceptions, that they be overruled.

It is needless to say, and we take pleasure in so holding, that we are unable to find any evidence of actual fraud or fraudulent intent in the parties defendant; but the law affixes its reprobation upon any human conduct where the same in effect works an injury to creditors by a deed with no consideration, or an insufficient consideration, especially in transactions between members of the same family.

It is the judgment of this court, that the judgment of the Circuit Court be modified as herein required, and that the cause be remanded to the Circuit Court for such further orders as may be necessary.