Case ID: scl_46/html/0259-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, J. Withers, J., Wardlaw, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The President and Directors of the Bank of the State of South Carolina vs. John F. Ballard.
    
      Insolvent Debtors’ Act — Fraud—Statute of Limitations— Notice.
    
    A debtor who, with a view to hinder, delay or defeat his creditors, invests his money, no matter how acquired,.in property for the benefit of his wife and children, is not entitled to the benefit of the Insolvent Debtors’ Act.
    But in such case the creditors must proceed with reasonable diligence; existing creditors will be barred if they do not proceed within four years, and subsequent creditors, with notice, have no right to complain.
    BEFORE WARDLAW, J„ AT SUMTER, JUNE, EXTRA TERM, 1859.
    The report of his Honor, the presiding Judge, is as follows:
    “ This was a trial had upon an issue made upon the application of the defendant for the benefits of the Insolvent Debtors’ Act.
    “In 1854, the defendant borrowed from this Bank two thousand dollars, giving a joint and several note made by himself and six gentlemen, his sureties. Upon a renewal of this note, judgment was entered, April, 1857, against all the makers; and after ineffectual attempts to obtain payment from this defendant by a fi.fa., a ca. sa. against him was, at the instance of the sureties, lodged in July, 1857. Immediately afterwards, having been arrested, he filed his schedule and petition. A suggestion in opposition to his discharge was filed, and an issue made.
    “ The suggestion contains thirteen specifications — five relate to the special provision of the Insolvent Debtors’ Act against loss of money by gaming; other five object to the applicant’s expenditure of a greater sum per diem than that allowed, and to his omission in the schedule of a slave Clarissa, of a buggy, two mules and a horse. The remaining three are all that require attention now. These object:
    “First, to the omission in the schedule of a man slave; named Friday.
    “ Second, that the tract of land on which the defendant lives, called the Providence place, was purchased by the defendant, and paid for out of his own funds; but for the purpose of defrauding, delaying, hindering and defeating his creditors, he caused title of the said land to be made to some person in trust for his children or family.
    “ Third, that the slave Tempe, mentioned in the schedule, but not therein claimed by the applicant as his own property, was purchased and paid for by him with his own funds at sheriff’s sale; and that for the purpose of defrauding, delaying, hindering and defeating his creditors, he caused title to the said slave to be made to some person, in trust for his 'children or family.
    “No specification referred to money in the hands of the applicant, nor required a showing of the disposition made by him of sums which came to his hands. No evidence on either side was directed to this point, nor was it made prominent in the argument.
    “The schedule contains, inter alia, ‘whatever interest I may have (if any) in a negro woman named Tempe, thirty-eight or forty years old;’ ‘ whatever interest (if any) I may have, now or hereafter, in and to lands on which I now reside, known as the Providence place‘‘my interest (if any) arising under the will of my step-mother, the late Elizabeth Ballard; whatever interest (if any) I may have in any lands or negroes under the said will of Elizabeth Ballard, or the deeds therein referred to, (I cannot specify, never having seen the deeds or copies thereof.) And. also, any and all other interest I may have either under said will or deeds.’
    “ The plaintiffs urged that the offer to assign the defendant’s interest in the Providence place, and in Tempe, was illusory; and that the perplexity in which the defendant had involved the title to them, was a hindrance to creditors, and a fraud upon them ; further, that Friday was in no way contained in the schedule.
    “ The applicant appeared from the evidence to be skilful in playing the fiddle, and to be fond of music and sports. He had lived a gay and indolent life. If ever he had acquired any. thing by honest labor, nothing was said about it; and of his earnings by play, it was in testimony that he said he never won any thing that did him any good, except what paid for Tempe.
    “ Dr. William Ballard, the applicant’s father, a man of doubtful solvency, married a widow, the sister of William Sanders. She died in 1831, leaving a will, which was said to have been executed under power conferred by some deed not produced. By the fifth clause of this will, the residue of her estate was given to John Ballard, Sr., in trust to pay the rent and hire to William Ballard, the husband, during his life — the said William Ballard to have power to dispose of one-balf thereof by his will, and the other half, after his death, to go to Mrs. Ellerbe, sister of the testatrix. John Ballard, Sr., was made executor. He, too, was insolvent, but of good character.
    “In 1832, writs of fi. fa. against John E. Ballard were returned nulla bona, which yet remain unsatisfied. Of unsatisfied judgments against him, obtained from time to time 'between 1832 and 1857, thirty-eight were in evidence.
    “In'1835 he lived'at Sumterville, with a wife and two children, and there received some assistance from Bostick, a man of means, who had married his sister Margaret.
    “About 1837,' he procured William Sanders to buy for him a small tract of land, near Providence Springs. Sanders took title from Andrews to himself, with the understanding that he’would-convey as John E. Ballard, the applicant, should direct, upon the money he advanced being refunded to him. The amount of this money was'three hundred and fourteen dollars and seventy-five cents. ‘ In small sums repayments were made to Sanders by the applicant, and in December, 1841, the ^balance then due, one hundred and fifteen dollars, was paid by an order on Sanders, which the applicant in some way procured from Dr. Burgess; and then by direction of the applicant, Sanders conveyed the land to John Ballard, Sr., in trust for the sole and separate use of the applicant’s wife during her life, and after her death for her children.
    ■ “How the money which wmnt to Sanders, and other money which was expended in a house and other improvements on this land was obtained, did not distinctly appear; but much was said about the applicant’s gambling, and about the thrift of his wife, who kept a boarding house.
    
      “ Tempe had belonged to Mrs. 'Elizabeth Ballard. Some time after her death, under a fi.fa. against John Ballard, Sr., her executor, Tempe was sold by the sheriff, and bid off by John Ballard, Sr., for Mrs. Bostick, then a widow, to whom she was set down. The money bid was, a few minutes after the sale, obtained by John Ballard, Sr., in presence of the applicant, from Mrs. Bostick, under circumstances which the plaintiffs urged showed that it had been deposited with Mrs. Bostick by the applicant. The sheriff made title to Mrs. Bostick, and she by deed, dated April, 1841, transferred Tempe to John Ballard, Sr, in trust for John E. Ballard and his wife, during their coverture, and after the death of either, for the survivor of them, and after the death of both, for the children of their marriage.
    “ Friday, too, had belonged to Mrs. Elizabeth Ballard. Soon after her death in 1834, he went into the possession of the applicant, and has remained in his possesion,' and subject to his control, ever since. Dr. William Ballard testified that his right to-Friday was under the will of his deceased wife; that he lent Friday to his son John for relief of his distress, and that John has alwas held, and still holds Friday, under contract of loan, with acknowledgment of his (the father’s) title.
    “John Ballard, Sr., is dead, and so is Mrs. Bostick. Williams Sanders was a witness, as well as Dr. William Ballard.
    “As to Friday, I held that the Iona fide loan of a slave by a father to a destitute son, was not opposed to the rights of creditors, unless the circumstances attending the possession were such as to mislead them to the extension of credit upon faith of the property in the son’s possession. I left the jury to determine whether here there had been such loan free from deceiving influence, or whether by his long-continued possession, John F. Ballard had, in reference to creditors, acquired, the right of the father. If the latter, I was in much doubt as to the nature, of the father’s right, although on both sides the will of Mrs. Elizabeth Ballard was spoken of as an effective instrument, and for the applicant presumptions were urged to show the power that was necessary to sustain it. I chose to direct the jury that the right of the father had been absolute; and if the.acquisition of his right by the son in favor of creditors was found, I submitted the question, whether under the general description of negroes, ' under the will of Mrs. Elizabeth Ballard, and the deeds therein referred to,’ Friday was contained in the schedule.’
    “ As to Tempe and the Providence place, I submitted inquiries concerning the sources from which the money that paid for them came: but upon the assumption that it would be found that the applicant had furnished the money, I gave other directions, as follows:
    “If the money had come from any property of his, disposed of with fraudulent purpose, I held that all the proceeds of that property were liable to creditors, as the property itself had been.
    “ If the title to the land and to Tempe had ever been for an instant in -the applicant, then the conveyances which had been made were covinous, and the application for benefit of the Insolvent’s Act was barred.
    “ But if the money had been won at play, or otherwise acquired, without abstraction of anything that a creditor could take, the disposition of it in favor of wife and children I thought not less lawful than would have been the’loss of it at play, or the spending of it in gratification of vicious appetites. If it had been so lost or spent in 1841, the benefit of the Act in 1857 would not thereby have been defeated; and no worse result could come from putting it beyond the reach of creditors, by investing it in property of which the title was not subject to their claims.
    “ All the questions of fact which, under these instructions, were involved in the case, were submitted, and the jury found a verdict for the applicant.”
    The plaintiffs appealed, and now moved this Court for a new trial, upon the grounds:
    1. Because they respectfully submit there was error in the charge of the presiding Judge, in instructing the jury that although the fraudulent settlement by the insolvent debtor of such property as land and negroes upon his wife and family, would debar him from taking the benefit of the Acts; yet the gift of money to be invested in property to be settled in the same manner, would not so debar him.
    2. Because, in point of fact, it was distinctly proved by William Sanders, that he bought the Providence tract of land in the year 1837, at the request and for the exclusive benefit of John E. Ballard, and held himself bound, whenever reimbursed by John F. Ballard for the purchase money, to convey the title to him, or according to his order; and that John F. Ballard did, at different times,-prior to the execution of the deed of trust in 1841, pay about two-thirds of the purchase money; and that it was only when a final settlement took place in 1811, that the said William Sanders was instructed by John F. Ballard to execute the deed of trust to John Ballard; and therefore the thing which John F. Ballard gave to the trustee was not the money, (at least to the extent mentioned above,) but the equitable interest in the land which he had purchased, and held at his own disposal; and the jury were led into error with regard to this fact by the charge of the presiding Judge, who represented the transaction as simply a gift of money.
    3. Because the presiding Judge instructed the jury that a disposition of money on the part of a debtor, by buying property and settling it to the sole and separate use of his wife or his family, was not a fraud against which his creditors could be relieved.
    4. Because, it is respectfully submitted, the presiding Judge should have said to the jury that any fraud which delayed, hindered or prevented creditors in the collection of their debts, would deprive a debtor of a right to his discharge under the Insolvent Acts.
    5. Because the presiding Judge, in charging the jury, said to them, that if under his charge they concluded that Friday ought to have been put in the schedule, then they should inquire whether he was not sufficiently inserted, by reason of the reference of the applicant in his schedule to certain wills and deeds; and that they might so find.
    6. Because as to the land and the negro woman Tempe, the presiding Judge left nothing to the jury to-decide, but upon the facts as proved, concluded them by his opinion of the law.
    7.Because the verdict was against the evidence, which proved the applicant not entitled to his discharge by reason of the grounds suggested concerning the Providence land, Tempe and Friday; and which also showed the receipt by the applicant of large sums of money for many years past, no losses suffered by him, and no application of payments to a heavy amount of judgments, beginning as long ago as 1832, and remaining without diminution by reason of the new debts contracted; the applicant having a family of only a wife and two children, being able in body and of good understanding ; and yet assigning in his schedule comparatively nothing.
    
      Moses, Gregg, for appellants.
    The doctrine that a fraudulent conveyance, to be reached by the provisions of the Statute of 13th Elizabeth, cap. 5, must be of property subject to execution, as stated in 1 Story Eq. Jur., section 367, Ath. on Marr. Set. 220, and Boberts on Fraud. Conv. 424, was not favored universally by the English Courts, and was combated and rejected by Chancellor Kent, in Bayard vs. Hoffman, 4 Johns. Oh. 452. See further authorities to the same effect cited in note to 1 Story Eq. Jur., section 3681 The decision in Gore and Oasey vs. Waters, 2 Bail. 477, was simply that for a husband to assign to a trustee for his wife a chose in action belonging to her, was no fraud upon the husband’s creditors, because the wife’s equity was superior to their claim.
    The words of the oath to be administered to insolvent debtors under the Actofl759, P.L. 248, as well as of the oath under the Act of 1785, P. L. 380, make no distinction between money or choses in action, and land or other property subject to execution. The debtor, under the Act of 1759, must swear that he has not, either since his arrest, or before, directly or indirectly, sold, leased, assigned, or otherwise, disposed of, or made over in trust for himself, or otherwise, other than as mentioned in the' account of his estate filed by him, any part of his lands, estate, goods, stock, money, debts, or other real or personal estate, whereby to have or expect any benefit or profit to himself, or to defraud any of his creditors to whom he is indebted; and under the Act of 1785, he must swear that he has not, either directly or indirectly, sold, leased, or otherwise disposed pf in trust, or concealed all or any part of his lands, money, goods, stock, debts, securities, contracts or other estate, whereby to secure the same, to re* ceive or expect any profit or advantage thereof, or to defraud or deceive any creditor or creditors to whom he is indebted, in anywise whatsoever. In Thomson y s. Linam, 2 Bail. 131, a debtor had sent his slaves out of the State, but included them in his schedule, and offered to assign them. A verdict , was rendered by a jury against the debtor for fraud; and the Court held that he was excluded from the benefit of the Prison Bounds Act. The Stat. 13 Eliz., cap. 5, introduced no new principle into the common law. It is merely in affirmance of the common law; and yet the doctrine as applied by the presiding Judge on the Circuit, would seem to imply that the debtor must go free, unless lie be charged with some fraud specified by that Statute.
    
      Spain, Richardson, contra.
   The opinion of the Court was delivered by

O’Neall, J.

The Judge below, speaking of Tempe, and the Providence place, and the purchase of them by money coming from the defendant, said, “ if the money had been won at play, or otherwise acquired, without abstraction of any thing which a creditor could take, the disposition of it in favor of wife and children, I thought not less lawful than would have been the loss of it at play, or the spending of it, in gratification of vicious appetites. If it had been so lost or spent in 1841, the benefit of the Act in 1857, would not thereby have been defeated and no worse result could come from putting it beyond the reach of creditors by investing it in property, of which the title was not subject to their claims.”

We do not concur, in this ruling, for we think it wholly immaterial from what source a man derives money for his own use, if he fraudulently invests or otherwise puts it out of the reach of his creditors with a view to hinder, defeat or delay them.

■ But still we do not think, that the defendant’s discharge ought to have been prevented by the transactions alleged to be fraudulent in reference to Tempe, or the Providence place.

The purchase of the Providence place for him by Sanders was in 1837. In 1841, the purchase money was refunded to Sanders, and he made the title to John Ballard, Sr., in trust for the sole and separate use of the defendant’s wife during her life, and after her death for her children.

A lapse of sixteen years would prevent a Court of Equity from declaring this deed to be fraudulent as to existing creditors; and the fact of being recorded would prevent subsequent creditors from being considered as thereby defrauded. Eor they would credit with notice, that the property was not John F. Ballard’s. The same remarks apply to* Tempe, for she was conveyed in a similar way (except that John F. Ballard is entitled to a contingent survivorship for life which is certainly covered by his amended schedule.)

How these matters can, after this great lapse of time be set up as an objection to the debtors’s discharge, when the estate, whatever it might have been in the beginning, is in the trustee for his wife and children, I cannot conceive. For beyond all doubt, he never had any estate, legal or equitable, which was liable to his creditors. It is true, the monev which he paid, if paid without any direction, might have made a resulting trust to him, but when paid, and a trust was directed to his wife and children, the express trust prevented the implication of a different one.

The only matter which could arise against his discharge, would be that at that time, he put that much money out of his power, to defeat, delay or hinder his creditors. In analogy to the Statute of Limitations, I hold, that that cannot avail existing creditors after a lapse of four years, and as to subsequent creditors, with notice of the conveyances there is no fraud. If, however, the defendant has any interest in the Providence place, or Tempe, his amended schedule conveys that to the plaintiff, and certainly, there can be no objection in, these particulars to his discharge. On all the other points in the case, we concur in the ruling of the Judge below. The facts were for the jury, and we perceive no reason to be dissatisfied with their verdict.

The motion is dismissed.

Wardlaw, Whitner and Munro, JJ., concurred.

Withers, J.,

dissenting. If an 'applicant for discharge under the Insolvent laws has “ disposed of or made over,” money, effects or any kind of estate, “ in trust for himself or otherwise, other than as mentioned in the account of his estate filed by him,” (vide the oath prescribed,) it still remains to be considered whether any disposition set forth in the “ account of his estate,” be fraudulent or not, i. e., whether any disposition he has made, was intended to defeat, delay, hinder or defraud his creditors. Some of his transactions creditors may be able to overthrow — some not. Whether they can do so or not is not the test, but the purpose of the debtor to defraud is. Otherwise, he would have to " mention” his fraudulent transactions among others, in making over and disposing of his effects and estate, and leave his creditor to unravel and overthrow them, if he could. Setting forth the particulars and assigning all his interest, if any he has, is no compliance with the law, if he has fraudulently divested himself of any interest, or meant to do it in order to cheat his creditors.

When such an issue is allowed to be made up, the jury can alone respond to it, and whether a fraud be attempted at a remote period or recently, and what effect that difference in fact may produce, ought to be referred to the jury, and we should have been better satisfied if that course had been taken on this occasion, instead of putting the case on the footing that the interest of Ballard, if any he has, is assigned. The question is, if he has no interest, did he divest himself of it by a fraud ?

We all agree that the distinction laid down on circuit, between the disposition of money won at play, &c., and that arising from the sale of tangible property cannot be maintained. Now, for aught we can know, the jury, guided by the above stated distinction, might have been of opinion, that Ballard’s investments in the negro Tempe and the Providence place, would be fraudulent in effect and design against his creditors, but that the money so invested was derived from gaming and therefore the investment of it was not a legitimate matter of inquiry. How far the lapse of time might operate to control a conclusion of fact, was a proper matter for the jury.

Glover, J., concurred.

Wardlaw, J.

I believe that the distinction which was taken on the circuit, between money acquired without abstraction of any thing that a creditor could take, and money obtained by disposing of property, is, even where the former is confined to acquisitions by gambling, finding and the like, unimportant, in reference to fraud imputed to an applicant for the benefit of our Insolvent Debtors’ Act, except, perhaps that a voluntary conveyance by an insolvent of the proceeds of property disposed of would be prima facie considered fraudulent, whilst some evidence of fraudulent intention would be required as to unexpected windfalls of money spent or invested. This applicant’s purpose in disposing of his money in land and a negro to be settled on his family, should then have been submitted to the jury. A creditor is entitled to an account not only of the visible, tangible property, which a ft. fa. could take, and which only is, perhaps, embraced by the Stat. 13 Eliz., but also of choses in action, and money. The eighth Sect, of our Act of 1759 (4 Stat. 91) excludes from the benefit of the Act, certain enumerated eases, amongst which is the advancement to a child on marriage of more than one hundred pounds, but no other gift to'wife or child. The seventh Sect, of the Act of 1788, (5 Stat. 79) has the words fraudulently sold, conveyed or assigned his estate,” which do not naturally include purchases or other disposition' of money, and no words more pertinent to the fraudulent disposition of money are to be found in that Act. Yet the oath in the Act of 1759, and decisions which have been had in this State, may be well held to deny benefit to an applicant, who has invested money with a view to hinder, delay, or defeat creditors.

The ground upon, which, then, I concur in the result of this case, whilst I acknowledge misdirection on the circuit, is this: — If the jury by special verdict had found that the applicant had in 1841, applied money which he had won by gambling to the purchase of the Providence place, and of Tempe, with the purpose of placing the money beyond the reach of creditors — that he was then much in debt, and that debts then subsisting are yet in judgment unsatisfied) although the debt to the plaintiff in this case was not contracted until 1854 — that the Providence place and Tempe yet ■remain unimpaired in value, and the deeds to the wife and children were recorded soon after they were executed — that the schedule mentions both the land and negro, and the applicant is ready to assign his interest in them ; — I would not hold that the benefit of the Act should be denied. I would see that time would have closed the mouths of subsisting creditors, and fair notice those of subsequent ones, or if not, that the applicant had done all that he could do to repair his fault, and direct creditors in pursuit of the property which abides whilst all his other money has been long since misspent, without leaving any thing to represent it, or any ground for the complaint of creditors; — and in the large discretion which I conceive the Act of 1759 entrusts to the Court, I would refuse to hold that the fraud imputed to the applicant — far less censurable perhaps than much of his other conduct — was altogether inexpiable without his performing the impossibility of paying his debts.

Motion dismissed.