Case Name: MILLER v. WROTON
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1908-12-09
Citations: 82 S.C. 97
Docket Number: 7080
Parties: MILLER v. WROTON.
Judges: Mr. Justice Jones concurs in judgment of reversal, as proposed in the-opinion of Mr. Justice Woods, for reasons therein stated.
Reporter: South Carolina Reports
Volume: 82
Pages: 97–109

Head Matter:
7080
MILLER v. WROTON.
1. Deed — Fraud—Equitable Mortgage, — The testimony here tends to show that the husband some years since, when he began business, in consideration of a sum of money advanced him by his wife, made a verbal agreement with her that a tract of land which he expected to inherit and to which he afterwárd made her an absolute deed, should stand as security for the sum advanced, thereby creating an equitable mortgage on the land. Deed set aside as a fraud upon creditors, but case remanded with permission to the wife to set up her equitable mortgage.
Messes. Justices Jones and Woods think there was no evidence tending to support an equitable mortgage.
2. Statute of Frauds — Waiver.—The right to interpose the objection that an equitable lien on land in parol is obnoxious to the statute of frauds is personal to the party and may be waived.
3. Fraud — Notice.—Simple contract creditors and lien creditors whose judgments were recovered after record of deed are not subsequent creditors against a deed, executed since on a parol contract made before the amendment to section 2456 of Code of Laws in 1898, and before the debts, of which contract such creditors had no notice. Messrs Justices Jones and Woods think this principle does not avail against trustee in bankruptcy.
4. Fraud — Principal and Agent. — Where a husband acts as agent of the wife in executing to her a deed when he knew he was then insolvent and which he did with intent to hinder, delay and defruad his creditors, the deed is fraudulent as to the creditors, notwithstanding the wife did not know of his condition or intention.
5. Homestead. — Rehearing refused. Where the claim of homestead is not made in the pleadings this Court cannot adjudicate anything in reference thereto.
Before Gage, J., Orangeburg, May, 1907.
Reversed.
Action by Joseph H. Miller, trustee in bankruptcy of Charles R. Wroton, against Charles R. Wroton, Alice Alston Wroton et al. Prom Circuit decree, plaintiff appeals.
■ Messrs. Wm. J. Cherry and Glaser & Herbert, for appellant.
Mr. Cherry cites: No consideration arising from children, and their part of deed void: 69 S. C., 373. Fraud may be inferred from facts and circumstances: 52 S. C., 179; 57 S. C., 110; 11 Ency., 192', 197. 198; 26 N. Y., 211; 11 Ency., 290¡; 2 Pom. Eq. Jur., 600; McM. Eq., 27; 32 S'. C., 171; Bump. Pr. Con., secs. 12-67, 600; 39 S. C., 118. Verbal agreeinent is within statute of frauds: 138 U. S'., 587; 30 III, 63; 21 S. C., 180; 27 S'. C., 363, 621; 94 Mo., 637; 3 Pars, on Con., 368. Verbal agreement could not stand against creditors: 29 Ency., 1098; 22 How., 41; 11 Rich. Eq., 132; 36 S. C., 343; 14 Ency., 430; 2 Pom. Eq. Jur., 821. Burden is on grantee to shozv consideration and no notice of grantor’s fraud: 14 Ency., 299, 490; 1 Hill, 16; 1 Hill, ch. 293; Bump. Fr. Con., sec. 265; 5 E. R. A. (N. S.), 395.
Messrs. C. B- Spencer, W. M. Dunlap and Ray sor & Summers, contra.
Messrs. Ray sor & Summers cite: All insolvent debtors may prefer one creditor, under statute of Blisabeth: 27 S. C., 285; 42 S. C., 475; 14 Ency., 226; 13 Ency., 224; 8 Ency., 856; Bump, on Fr. Con., 219; 36 S. C., 154; 64 S. C., 365; 54 S. C., 472. What inadequacy of price will avoid a contract: 20 Cyc., 521; 21 S. C., 261; 57 S, C., 280; 100 Va., 638; 83 Fed. R., 234; 9 A.m. R„ 676; 61 Am. Dec., 375; Bump, on Fr. Con., 237, 232; 24 Rich Eq., 114. Contract was taken out of statute of frauds by execution of the deed: 55 S. C.,>195; 28 S. C., 193; 20 Cyc., 306. S%ich objection is personal to the debtor: 20 Cyc., 307; 45 Am. Dec., 590; 20 Ohio, 206; 30 Ohio, 191; 11 Nev., 227. Husband was not agent of wife in executing the deed: 69 S. C., 23; 50' S. C., 259; 68 Am. St. R., 446; 57 S. C., 29. Wife is not estopped because she knezv nothing of husband’s insolvency: 37 S. C., 507; 49 S. C., 69; 16 Cyc., 730', 733; 25 Conn., 118; 75 Am. St. R., 454; 42 S. C., 351; Big. on Est., 434.
December 9, 1908.

Opinion:
The opinion of the Court was delivered by
Mr. Justice Gairy.
The case was referred to Robert E. Copes, as special referee, who made the following report :
"This action is brought under Sections 2369, 2372, Code of 1902, Vol. I, for the purpose of having the deed''set forth in the complaint and executed by the defendant, Charles D- Wroton, to his co-defendants, adjudged fraudulent and void, as against the plaintiff and the creditors of the said Charles L- Wroton.
"The defendants, Charles h- Wroton arid Alice Alston Wroton, by their answers, allege, substantially, that the deed in question was upon good consideration and bona -fide, and they ask that the complaint be dismissed.
"The other defendants are infants, and file their answer through their duly appointed guardian ad litem.
"From the evidence taken in the cause, I find
"As matter of fact:
"During the fall of 1893, and spring of 1894, the defendant, Charles L. Wroton, for the sum of thirteen hundred dollars, then advanced.him by his wife, the defendant, Alice A. Wroton, promised her, verbally, that, when he came into it, he would give her and their children the real estate which would come to him from his mother's estate.
"On December 15, 1900', the said Charles D- Wroton, who had met with business reverses and failures, and who had become indebted to numerous creditors, owing them in the aggregate a large and considerable sum of money, by his deed of that date, and being the deed in question, conveyed the real estate which came to him from his mother's estate to his co-defendants, his wife, and their children.
"The said Charles L. Wroton was rendered totally insolvent by the execution of said deed; and he executed same only after certain of his creditors had been pressing him vigorously for payment, and with the intent to hinder, delay and defraud his creditors.
"The said Alice A. Wroton knew nothing of this insolvency, and in no way participated in the fraudulent purpose of the said Charles L. Wroton, but accepted said deed in good faith, and in the fulfilment of said promise.
"As matter of law:
"Having found that the transactions of Alice A. Wroton relative to said deed were bona fide, and were based on a promise made to her years before by the said Charles L. Wroton, for money which she actually advanced, I recommend that the complaint be dismissed."
Upon hearing the plaintiff's exceptions to the report, it was confirmed by the Circuit Court, and the plaintiff has appealed to this Court.
The first question that will be considered is, whether there was error in finding that the deed executed by Charles L. Wroton, whereby he conveyed to the defendants the land described in the complaint, was made in pursuance of an agreement entered into between Charles L. Wroton and his wife in 1893 or 1894.
Charles L. Wroton testified in behalf of the plaintiff, as follows: "Q. Mr. Wroton, the consideration named in this deed is $1,476. Will you please state to the Court how that was paid? A. Well, it was paid from my wife to me; it was paid by my wife. My wife paid that money. Sent it from Rock Hill. Q. Was it paid at the time this deed was executed? A. Not at that time. It -was paid previously. Q. Well, state the circumstances as to how it was paid? A. Well, when I went into business — when I went to go into business — -when I was in Denmark, I had no money. I had been cashier at the bank. The salary I was earning was not a large one, and it took all the salary I was making to live on. • When I left the bank I did not have enough money to use as capital, and my wife offered to lend me this money. I told her I had nothing to secure her with at the present time, but in all human probability I would eventually come into possession of this Orange-burg property; that was my mother's property, my mother's estate; and I told her whenever I got that property [I am willing to give you that property, so that you and'the children, if anything happens to me, shall have something to fall back on,' and that was the bargain and understanding when that was done."
When recalled for the defendants, he testified as follows : "Q. Referring to the money that you got from your wife, will you please state what agreement, if any, you and wife had concerning money and concerning land ? A. I had been cashier of the bank at Denmark, and gave up that position, as I desired to go into business. When I got ready to go into business I had no funds to start on, and my wife volunteered to lend me some money to start business on, in the neighborhood of $1,900. I told her I did not have anything to secure her for this money, except that I would be entitled to some land when my mother died, at least, when my father died, because my father was in possession of the land, and I could not feel that I had any moral right to try to dispossess him of the land. I borrowed this money from my wife and I agreed to give her this farm, when I came into possession of it. She let me have it on that basis."
Mrs. Alice Alston Wroton testified as follows, in behalf of the defendants: "Q. What did your husband tell you when you let him have the money? A. He said several times that he expected to give me that property for that money. Not only one time, either. He said it more than one time. Q. When did he say it in reference to getting the money? You said he said it more than one time. A. He told me that from time to time. Q. When was the first time he ever mentioned it to you? A. It was long years ago; not recently. Q. Was it about the time he got the money? A. Yes, sir; it was when we were in the low country. Q. Just tell the referee again what your husband told you when you let him have that money? A. He said he was going to-turn that place over to me and my children. It was not his at the time."
Again she testified as follows: "Q. Did you consider that a loan to your husband, or just a gift? A. I just let him have it, but he told me that it was what he would do. Q. You let him have it without regard tO' what he would do? A. Of course, I gave it to him free and willingly, but he told me he was going to give me that for it. Q. That was after you gave him the money? A. I don't know.. I don't think it is necessary for you to ask me these questions. You know as well as I do. I think I have given the facts, and I think that is all that is necessary. Q. Well, you don't know whether he told you he would give you this property afterwards or previous to getting the money? A. No, I don't know. Q. You can't fix the date when he told you that? A. No, I don't remember dates, at all; .don't try to remember."
This testimony, together with other facts and circumstances, satisfies us that there was not an agreement between Charles L- Wroton and his wife in 1893 or 1894, whereby he obligated himself to convey the land in fee to his wife and children, but there was testimony tending to show that, in consideration of the sums of money advanced to him by her, there was at that time a verbal agreement to the effect that the land should stand as security for the sums advanced, thereby creating an equitable mortgage on the land.
The plaintiff's attorneys contend that even if there was such an agreement, it was within the statute of frauds. The right to interpose this objection is personal to the party who agrees that the land shall be encumbered, Finley v. Moore, 55 S. C., 195; and the testimony tended to show that Charles L- Wroton waived the right to insist upon this objection.
The testimony tends to show either that the plaintiffs were only simple contract creditors, or that if any of them were lien creditors, their judgments were recovered after they had notice of the recorded deed. As the agreement was entered into between C. L. Wroton and his wife, prior to the amendment to section 3456 of the Code of Laws, in 1898, it did not affect said agreement. Under these circumstances the plaintiffs would, not be in a position to claim that they were subsequent creditors for valuable consideration without notice.
The next question that will be considered is, whether there was error in finding that the deed was not fraudulent and void as to the wife and children. 'Tire special referee and his Honor, the Circuit Judge, both find that Charles T. Wroton executed the deed with intent to hinder, delay and defraud his creditors. None of the grantees were present when the deed was executed in the office of the grantor, who sent it to the proper office to be recorded, after which it was returned to him and locked in his safe.
Mrs. Alice Alston Wroton testified as follows as to the agency of her husband: "Q. Mr. Wroton managed that entire transaction? A. Charley Tang manages affairs of that kind. I just know he will do it all right. I have perfect confidence in him in that way."
In his decree the Circuit Judge says : "Some wives act independently of their husbands, but most of them act through the agency of their husbands, even though the transaction be between themselves. Mr. Wroton so acted in the case at bar."
It thus clearly appears that Charles T. Wroton was the agent of his wife in the tranaction resulting in the execution of the deed; and, as there was fraud on his part, she will not be allowed to'enjoy the benefits arising therefrom. Notice to him under these circumstances will be imputed to her, and renders the deed null and void. Blackwell v. Mortgage Co., 65 S. C., 105, 43 S. E., 395.
Both the special referee and his Honor, the Circuit Júdge, find as matter of fact that there was no intention on the part of Mrs. Wroton to defraud the creditors of her husband.
If, therefore, it should be established as a fact that there was an agreement between Charles T. Wroton and his wife, whereby an equitable mortgage was created on the land, she would be entitled to assert her rights under said agreement even though the deed be set aside for fraud. Smith v. Stubbs, 3 S. C., 204; Arnold v. House, 12 S. C., 600; Brown v. Newell, 64 S. C., 27, 40 S. E., 1032.
As this Court has reached the conclusion that the deed was null and void for fraud, Mrs. Wroton should be remitted to her rights under the said agreement, and the questions arising thereunder as to whether the agreement created an equitable mortgage which is • now enforceable, should be determined when the case is remanded to the Circuit Court.
It is the judgment of this Court that the judgment of the Circuit Court be reversed, and that the case be remanded to the Circuit Court for the purpose of determining all questions relative to the alleged agreement entered into between C. D. Wroton and his wife in 1893 or 1894.