Werts v. Spearman

| S.C. | Mar 9, 1885

The opinion of the court was delivered by

Mr. Chief Justice Simpson.

Graves Spearman, late of Newberry County, died in 1869 intestate. George H. Werts (respondent), a son-in-law of the deceased, administered on the estate, and in February, 1870, he instituted the proceeding below, in which he alleged that he was a creditor of the estate; that the personal property in his hands as administrator was insufficient to pay the debts; that the defendant, G. W. L. Spearman, a son of the deceased, ivas in possession of a portion of the personalty, and that the deceased died seized and possessed of a certain tract of land of 423 acres, more or less, and prayed an accounting from G. W. L. Spearman as to the personalty alleged to be in his hands, and the sale of the aforesaid land in aid of the personalty, and that creditors be called in. No defence was interposed by any of the parties except G. W. L. Spearman, who answered, denying his accountability for any personal property, and also asserting title in himself of the tract of land in question.

The case came to trial a.t the November term of Common Pleas for Newberry County in 1879, when an issue as to the title to the land was submitted to a jury. The plaintiff introduced a deed to.Graves Spearman, the intestate, from the then Commissioner in Equity for said county, dated in 1828. He also proved that the estate was indebted to him in a large amount by seal note, dated March 22, 1863. The defendant relied upon an unrecorded deed from Graves Spearman to himself, dated April 10., 1866, the consideration being $4,230, which, according to the evidence, was paid by the said G. W. L. Spearman to Graves in the conveyance by the former to the latter of a certain other tract of land containing 279 acres, valued at $3,060, the balance being paid by a note held by G. W. L. Spearman on his father, which was delivered up and cancelled. The 279-acre tract it appeared was made up out of a tract of land of 212 acres pre-' viously obtained by G. W. L. Spearman from his father and a portion of a tract which he, G. W. L., had bought from one Taylor.

There was some evidence that the 212-acre tract had been given to the said G. W. L. by His father as an advancement several years back. It further appeared that the said G. W. L. occupied the land, but did not live upon it; that he cultivated it sometimes with his own hands and sometimes with his father’s and his own together. It was further in evidence that some days after the purchase,*, e., April 18, 1866, he had leased fifty acres of the land to his father for life at a consideration of one dollar per annum, with the privilege of getting all necessary timber, fuel, &c., from any of his lands. At the time the 212-acre tract was transferred by Graves to his son, he, Graves, was a man of considerable estate. At the time of the last transaction, however, in 1866, he was much embarrassed, and it was admitted that at his death his personal assets were insufficient to pay his debts. It further appeared that Graves in his life-time, after he had obtained the 27 9-acre tract from his son in the transfer of the lands mentioned, had conveyed said tract to one Francis Hill in settlement of a large debt, amounting to much more than the consideration mentioned in the deed conveying said land to him.

The jury found that Graves Spearman died seized and possessed of the 423-acre tract, and that it was liable for his debts and distribution among his heirs at law. A motion was then made for a new trial on the minutes of the judge, which, after argument, was refused, and upon appeal taken to this court the case was remanded to the Circuit Court for a new trial. 16 S. C., 618. The cause came on again for a second trial before his honor, Judge Kershaw, at the’July term of the pourt, 1883. Upon this trial the testimony offered at the former trial was heard by consent, including certain declarations of Graves Spearman, made both before and after the land transaction above, with other and additional evidence.

The two leading questions of law discussed and decided in the decree of his honor, Judge Kershaw, are: First. Whether the plaintiff, being administrator of the intestate, could contest the intestate’s deed of the 423 acres to the defendant. Second. Whether said deed was void, as to creditors. As to the first question his honor ruled that the plaintiff being a creditor as well as administrator, and having no remedy at law, could maintain the action, contesting said deed, citing Winsmith v. Winsmith, 15 S. C., 611. As to the second, finding as matter of fact that the deed from the father to the son was executed when the father was in embarrassed circumstances, resulting in the insolvency of the estate; that it was made in part in consideration of a pre-existing debt; that the grantor remained in possession of a portion of the land under a lease for a nominal consideration ; that the deed was never recorded; and that the grantor remained in possession of all his property conveyed to liis other children under leases from them — he adjudged the said deed to be void as against creditors, but without “actual fraud” in G. W. L.; and inasmuch as the land transferred by G. W, L. to his father was applied by the father to the satisfaction of a large debt due by him to Hill, he further adjudged and decreed that the said G. W. L. should be refunded the value of said land, without improvements, and not to account for rents and profits; and also that the said G. W. L. should be allowed to set up against the estate the note which he had delivered up in the land trade according to its>rank, and to the amount of $1,170. And he ordered the land to be sold, the proceeds after the payment of the costs to be applied, first, to the payment to G. W. L. Spearman of the sum of $3,060, the value of the land transferred by him to his father in exchange for the 423-acre tract; next, to the payment of the debts established, or that may be established, against the estate according to their legal rank; and, lastly, should anything remain, to be paid to the heirs at law, according to their rights.

The appeal of the defendant does not question the ruling of the Circuit judge as to the right of the plaintiff to contest the deed of his intestate as a general proposition. That question, therefore, is not before us. The eighth exception, however, denies his right to do so in this action, as the bill was not framed for that purpose, there being no charge of fraud therein nor any demand that said deed should be vacated and set aside. Should the bill have been dismissed on this ground, is the question raised in this exception. In Lowry v. Pinson (2 Bail., 324) the plaintiff was allowed without question to attack and defeat for fraud the deed of defendant interposed at the trial, and yet there was no allegation of fraud in the declaration nor claim that defendant’s deed should be declared void. The action was the ordinary action for trespass to try titles, the plaintiff claiming as purchaser at sheriff’s sale, and the defendant under a prior deed from the judgment debtor. So, too, in Thomas & Ashby v. Jeter & Abney, 1 Hill Ch., 380; Smith v. Culbertson, 9 Rich., 106, and in many other cases.

In fact, the practice in the law courts of contesting deeds in this way for fraud is of old standing, and has been frequently pursued in the past. The action below, it is true, was not in form an action to try titles, yet it assumed that form at the trial, by the defendant asserting title in himself to the land in dispute. The plaintiff', as administrator and creditor, claimed that it was necessary to sell the real estate of his intestate in aid of the personalty to pay debts, and he alleged that the intestate died seized and possessed of the land in question. The defendant appeared and claimed the land himself, by virtue of a deed from the deceased, thus raising the question of title, and therefore putting the validity of his deed in issue himself. Under these circumstances, and by analogy to the cases above referred to, ought not the plaintiff to have been allowed to assail the deed at the trial, when for the first time it had perhaps been presented or known to exist; especially in a case like this, where the plaintiff, because of the fact that he was the administrator of his deceased debtor, had no means of reducing his debt to judgment, and of exhausting the estate by execution and return of nulla bona ¶ Unless this could he done, in cases like the present, then the principle that there can be no legal right without a remedy to enforce it should be exploded.

Besides, in Ragsdale v. Holmes (1 S. C., 96) it was held that creditors of an estate could seek the application of the assets to their claims, by means of a creditors’ bill, before reducing them to judgment and without exhausting their legal remedies. That necessity, it was said in that case, existed inter vivos, “for the reason that the estate of the living debtor does not become assets for the payment of debts until the exhaustion of the legal remedies is complete, whereas the estate of a deceased debtor, or so much thereof as may be required for the payment of his debts, becomes assets from his decease.”

The next question involves the correctness of the Circuit decree as to the validity of defendant’s deed. The Circuit judge, though finding no “actual fraud” in the defendant, yet declared this deed void for legal fraud under the eases of Smith v. Henry, 1 Hill, 16, and Maples v. Maples, Rice Ch., 310, and the other cases referred to in the decree, on the ground that where property is transferred by a debtor to his creditors in payment of a preexisting debt, either in whole or in part, the debtor still retaining possession, the transaction is per se fraudulent. True, he says that the other circumstances attending the transaction strengthened the legal presumption, and upon these two principles he adjudged the deed fraudulent.

We think he gave rather too much weight to Smith v. Henry, especially in the light of subsequent cases, which, though not distinctly overruling that case, have modified and explained the principle, which seems to have been applied there by the authority, of Chancellor Harper himself, who pronounced the opinion in Smith v. Henry. In Jones & Briggs v. Blake and wife (2 Hill Ch., 636) it was held, Chancellor Harper delivering the opinion, that where the debtor retained possession by virtue of a contract of hiring, made after the sale and independent thereof, this relieved the transaction of the per se fraudulent feature, as laid down in Smith v. Henry. The same doctrine was held in Pringle v. Rhame, 10 Rich., 75, which was also a case of hiring,- and in the recent case of Pregnall & Brother v. Miller & Kelly, 21 S. C., 385. Considering the principle upon which these two cases were based, this court held that it could not be confined in its application to a case of hiring alone, but that it extended to all cases where possession was retained, leaving such possession an open question in every case, with the burden, however, of explaining it satisfactorily upon the party attempting to sustain the deed, and in the absence of such satisfactory explanation, to have the effect as held in Smith v. Henry.

Now, in this case we have found no testimony explaining the possession retained here. The conveyance was made upon the consideration of a pre-existing debt, in part at least. The possession of a portion of the land was retained upon a nominal-consideration, and this was to continue for the life of the grantor. With these facts unexplained, we think the decree of his honor may be sustained even in accordance with Pringle v. Rhame and Pregnall & Brother v. Miller & Kelly, supra. The Circuit judge distinctly found no actual fraud on the part of G. W. L., and on that account he adjudged that the defendant should be refunded the value of the 279 acres transferred to his father in the exchange of lands, and also that he should be allowed to set up against the estate his note which was delivered up and can-celled in that trade also. McMeekin v. Edmonds, 1 Hill Ch., 294, sustains this.

Under the rules which control this court as to the findings of fact in equity causes, we cannot interfere with such findings below, as we are unable to say that the manifest weight of the testimony is against these findings.

Lastly, the plaintiff excepted to the admission of testimony as to'character of the defendant, G. W. L. No doubt, as a general rule in civil cases, such testimony is incompetent, but there are cases even on the civil side where such evidence has been received, under a principle which makes it competent in similar cases. Mr. Greenleaf, than whom there is no higher authority on evidence, says: “In civil cases, such evidence [speaking of general character] is not admitted, unless the nature of the action involves the general character of the party, or goes directly to affect it;” referring to several cases in the notes. Green. Evid., § 54. And further, he said: “Generally in actions of tort, wherever the defendant is charged with fraud from mere circumstances, evidence of his general good character is admissible to repel it.” And Judge O’Neall, in Dawkins v. Gault (5 Rich., 153), though the case did not turn on it, recognizes this principle, and referring to Greenleaf, and also to Smets v. Plunket (1 Strob., 372), said: “Where an actual fraud is charged, perpetrated with a fraudulent intent, and the proof of the charge consists of circumstances, then good character, as in a case of crime, might be resorted to.” The Circuit judge says the “case below-was of that character;” charges of actual fraud were made against the defendant, and in a great part resting on circumstances; “and upon that point only the evidence was admitted and considered.” We do not think this was error.

It is the judgment of this court that the judgment of the Circuit Court be affirmed.