Sloan v. Hunter

The opinion of the Court was delivered by Mr. Justice Jones. The plaintiff is a judgment creditor of Henry M. Hunter, deceased, and the defendants are the heirs-at-law and administrator ’ of said deceased. The main abject of the complaint is to' set aside as fraudulent a confession of judgment by Henry M. Hunter to his brother, Robert C. Hunter, and the sale of a 500 acre tract of land by the sheriff to Robert C. Hunter under said judgment, and a subsequent conveyance thereof to the defendant, J. H. Hunter, by J. H. T. Hunter, the only heir-at-law of R. C. Hunter, deceased.' The Circuit decree sets aside the said judgment and sale thereunder and the subsequent conveyance as fraudulent and void. The complaint further sought and the Circuit decree adjudged a sale of this 500 acre tract and three other tracts, designated as the 150 acre tract, and the 130 acre tract, and the 50 acre tract, as the property of said Henry M. Hunter, with a view to distribution among creditors. The real question in the case on t'he merits is whether the confession of judgment was made with intent to defraud the creditors of Henry M. Hunter; for if the confession was bona tide, and R. C. Hunter was the bona tide purchaser at sheriff’s sale, the creditors of Henry M. Hunter are in no wise concerned with the subsequent transfer of the heir-at-law of R. C. Hunter to the defendant, J. H. Hunter. Furthermore, if said confession and sale thereunder was not fraudulent, then the 500 acre tract is beyond the reach of Henry M. Hunter’s creditors, and plaintiff has a plain and adequate remedy at law to sell all the interest of Henry M. Hunter in the other tracts. We, therefore, treat the case first on its merits. [387] The theory of the complaint is that the confession was [388] merely pretensive, and was made for the purpose of delaying and hindering the creditors of Henry M. Hunter, and with intent to secure said land to said Henry M. Hunter and his children. In sustaining the charge of fraud, the Circuit Judge was evidently influenced by the view that the confession was for a pretensive debt. But we find no evidence impeachingtheexistenceor the bona ñdcs of the debt. The confession recites that the notes for which it was made, aggregating $6,015.55, were given in lieu of a note for the purchase of slaves by James O. Duck-ett to R. C. Hunter, Duckett having resold the slaves to Henry M. Hunter, who assumed Duckett’s liability. The existence of such a debt was also shown by the testimony of plaintiff’s witness, Miss Kate Martin, who was employed in the household of Henry M. Hunter at the time of the confession. The Circuit Judge was in error in supposing that a slave debt was “uncollectible.” Calhoun v. Calhoun, 2 S. C., 283; Brewster v. Williams, 2 S. C., 455; and there was no evidence that the claim was “out of date,” and the law does not prevent one from acknowledging and paying a debt merely because it is old. To- secure this bona fide debt, Henry M. Hunter had the right, though in failing circumstances, 2 to prefer his brother by a confession of judgment, so far as the Statute of Elizabeth or the common law is concerned, provided he did not thereby intend also to delay or defraud his other creditors, or did not thereby, as the price of the preference, secure to- himself a direct advantage at the expense of his creditors. McElwee v. Kennedy, 56 S. C., 154. The land was sold at public outcry by the sheriff in 1883, when there existed plaintiff’s judgment and a number of other judgments against Henry M. Hunter, including a confession of judgment by Hunter to M. S. Bailey for $4,000, on the same day of the confession to- R. C. Hunter. There was no evidence of any improper conduct of either Henry M. Hunter or R. C. Hunter at said sale. R. C. Hunter became the purchaser at $5,35°, a fair price for the land. It is true this amount was not [389] credited on the judgment, and that some years afterwards this judgment was reversed by the administrator of R. C. Hunter for the whole amount, on default of Henry M. Hunter. But these facts do not show mala ñdes in R. C. Hunter and Henry M. Hunter in the original judgment and' sale by the sheriff thereunder. It is also true that Henry M. Hunter remained on the land from the time of sale to his death in 1893, but the Circuit Judge is mistaken in supposing that the testimony of R. Lee Hunter, who1 lived with his father, Henry M. Hunter, on the land until the death of his father, “shows that Henry M. Hunter was entitled to one-half of the rents,” thus indicating that Henry M. Hunter had an interest in the land. R. Lee Hunter’s testimony was to- the effect that he and his,' father farmed the land together, that his father was to get half of the “profits,” and that they paid rent for the land to J. H. T. Hunter, the only heir at law of R. C. Hunter. It is well settled that if Henry M. Hunter had conveyed the land directly or privately to1 R. C. Hunter and had remained in possession, such possession is not conclusive evidence of fraud, but may be explained. Nelson v. Good, 20 S. C., 231. The possession in this, case is fully explained by the payment of rent- to another as the owner. But, further, the sale to R. C. Hunter was a public sale, and as shown in Guignard v. Aldrich, 10 Rich. Eq., 253, if the sale is otherwise fair, it is an insufficient badge of fraud for the purchasing creditor to permit the debtor to remain in possession. The Court said: “Undue weight * * * has been attached to the fact that Harley remained in possession of the property after sale. The principle that vendors remaining in possession of the property is a badge of fraud, does not apply bo sheriff’s sales * * * Conceding the sale to have been fair and the prices paid full, and at that conclusion we have arrived, what mischief or injustice is there to anj'- one, if the defendant in execution is permitted by the purchaser to remain in possession of the property which has been sold ?” But it is supposed that the testimony of Miss Kate Martin shows a corrupt agreement 'between Henry M. [390] 3 Hunter and R. C. Hunter, by which the property was to' be placed beyond the reach of creditors. Before referring to that testimony we dispose of certain preliminary questions as to its admissibility. First, the testimony was taken de bene esse 'before J. A. Longley or John Andrew Langley, whereas it was noticed to be taken before Andrew Langley. As defendants were represented by attorneys at the taking of the deposition and were in wise prejudiced or misled by the slight difference in the sound of the name given in the notice and the real name of the officer, we see nothing in this point. Second, it is objected that this testimony is obnoxious to sec. 400 of the Code, it being’ established 4 that Miss Martin is a creditor of Henry M. Hunter, deceased, and could come into1 this case as a creditor under the calling in thereof. We are of opinion that since it does not appear that the witness was testifying as to a transaction or communication between the witness and the deceased, but was as to a transaction or communication between the deceased and another person, her testimony is not to> be excluded under section 400. McLaurin v. Wilson, 16 S. C., 402; Norris v. Clinkscales, 47 S. C., 492. 5 Third, the testimony was not liable to exclusion as hearsay, for while there is great probability that -much of her testimony was founded on what she had heard, still it was given in answer to> a question as ti> her knowledge, and if it was really hearsay, it was incumbent on the objector to make that fact appear ti> the Court. 6 The testimony was as follows : “Ans. 5. Henry M. Hunter owed R. C. Hunter a debt- called an- old negro debt. The amount I do not know, but they compromised and agreed that the debt was $3,600, as I remember it; it was agreed that this 500 acre tract should be sold, and R. C. Hunter bid in the land, and was to take title in his own name and the taxes was to be paid in R. C. Hunter’s name. R. C. Hunter agreed to g'ive Henry M. Hunter time in which to redeem the land. Henry M. Hunter was to pay whatever amount he could each December, and when the [391] $3,600 and interest were paid, R. C. Hunter was to convey the land to some one, to' be held in trust for the children of said Henry M. Hunter — to protect the property to said children. Henry M. Hunter continued to live on said tract of land by reason of the above agreement.” But this testimony does not justify an inference of fraud against other creditors, provided it be true, as we 'hold to' be true, that t'he confession was for a bona fide debt, and the sale by the sheriff was at a fair price. R. C. Hunter having fairly 'bought the land, could, if he desired, befriend the family of his unfortunate brother by allowing it to' be redeemed for their benefit. Having the right to do as he pleased with his own, other creditors could not convert his generosity into' fraud. In the case of Guignard v. Aldrich, supra, the Court,by Chancellor Dargan, said: “Suppose it to> have been proved that Aid-rich, before the saie, had said to Harley that if he purchased his property he would let him have it back and give him an opportunity of redeeming it; and that after his purchase he had fulfilled this promise and agreement; and Harly had accordingly resumed the possession of his property — the sales being otherwise fair and the prices adequate — where is the fraud or vice of such an agreement ? My impression is that such arrangements at the call of friendship are not at all infrequent, nor condemned by any legal or moral obligation.” 7 Under our view of the evidence, the complaint should have been dismissed on the merits. But there is strong reason for holding that the statute of limitations and the laches of plaintiff should bar the action. 8 Furthermore, the proper parties are not before the Court. It appears that Ursula Wilson is in possession of the 150 acre tract, and that W. H. Workman is in possession of the 50 acre tract, claiming in their own right, and neither is made a party to> this suit. Moreover, neither the administrator nor the heir at law of R. C. Hunter is before the Court, and they are necessary parties to an action to set aside as fraudulent the judgment in favor of R. C. [392] Hunter and the sale thereunder to R. C. Hunter. Sheppard v. Green, 47 S. C., 165. The judgment of the Circuit Court is reversed and the complaint dismissed, without prejudice, however, to any rights which the children of Henry M. Hunter may claim to have in said land, as among themselves. 9 Petition for rehearing filed and remittitur stayed until January 24, 1900, when petition was refused and remittitur senit down.