Case Name: Elihu Madden v. Nathaniel Day
Court: North Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1830-01
Citations: 1 Bail. 337
Docket Number: 
Parties: Elihu Madden v. Nathaniel Day.
Judges: 
Reporter: South Carolina Law Reports
Volume: 17
Pages: 337–341

Head Matter:
Elihu Madden v. Nathaniel Day.
Columbia,
Jan. 1830.
Where the donor was indebted at the time of the gift, and retained possession of the property afterwards, using it as his own, and still continuing in debt, up to the period of insolvency, the gift cannot be supported, even against subsequent creditors, without notice ; although the antecedent debts have been paid off, or liquidated by the substitution of securities of a later date, if the actual amount of his debts has not been reduced: nor does it make any difference-, that the donee was the child of the donor, vide M’Elwee v. Sutton, 2 Bailey, 128.
Where the donor retains possession after a gift, using the property as his own, the circumstance, that the donee is his child, is in no case sufficient to repel the presumption of fraud, and to support the gift against subsequent creditors, who have trusted him on thefaith of such property, ob. diet.per Nott, J. vide Howard v. Williams, post, contra, sed vide Smith v. Henry, 2 Bailey, 122.
Tried before Mr. Justice O'Neall, at Laurens, Fall Term,' 1829.
This was an action of trover for a slave, which the defendant, who was sheriff of Laurens District, had levied on as tiie property of John Madden. The conversion and value were proved, and the case turned upon the question of title. The plaintiff, who was a son of John Madden, claimed by parol gift from him ; and it was contended by the defendant, that this gift was fraudulent against creditors, and, therefore, void. A great deal of evidence was introduced on both sides, which so far as it is necessary to an understanding of the opinion delivered by the Court of Appeals, was to the following effect.
Two witnesses testified to a parol gift, made sometime in the years 1818, or 1819 ; but the donor appeared to have remained in possession until within two or three years previous to the trial of this action, the plaintiff residing generally with him during that time. At the latter period the plaintiff took, and retained possession, until the levy by defendant ; and there.were many circumstances, even in the testimony of the witnesses who proved the gift at the first mentioned period, which would lead to the conclusion that they were mistaken in supposing, that there had been an absolute gift, until the time when the plaintiff took possession. A number of judgments against John Madden, were produced, of various dates, from 1819 to 1826, some of which wore for debts due prior to the year 1,818, but which jja(j ¡36611 liquidated by note, or renewals of notes, of a later date, and the actual amount of his debts did not appear to have been at any time afterwards, reduced below the sums due by him at that period. It was, however, proved that in 1818, he owned six or eight slaves, a good stock of cattle and three.tracts of land, which was more than sufficient to have discharged all the debts, proved to be due by him, at that time ; and he was supposed by some of the witnesses, to have been solvent as late as 1820. At the period, however, when the plaintiff took possession of the slave now in dispute, John Madden was proved to bo utterly insolvent. His tracts of land were severally claimed by different sons ; six of his slaves bad been since sold by the sheriff for the payment of his debts ; and he was now destitute of property, and the greater part of his debts unpaid. The judgment under which the defendant levied was dated in 1826.
The presiding Judge instructed the jury, that it was very material to determine, whether the gift was made in 1818, or 181£>, or at the period when the plaintiff took possession ; since upon that question it greatly depended, whether, the gift was, or was not fraudulent, as to creditors. The evidence would seem to lead to the conclusion, that there was no absolute gift, but only a declaration of an intention to give, until the latter period. Two of the witnesses had testified to an absolute gift at the earlier period ; but it was obvious from many circumstances, that they must have been mistaken as to particulars, which they did not regard as important at that time. This, however, was for the jury to determine. The law applicable to the case, his Honor stated to be as follows :—
Where a man owes a sum of money, at the time of making a gift to a child, without consideration, .and the money is never paid, the presumption of fraud can be rebutted, only by shewing very abundant property, over and above the gift, kept and retained by the donor, for the purpose of paying his debt: and if, in the ordinary course of events, such property turns out to be inadequate to the discharge of his debts, the presumption of fraud remains, although the property reserved may have been originally adequate to that purpose, if exclusively so applied. In a word, the case must, be an exceedingly fair one not to be deemed fraudulent, when a debt due prior to the gift shall have remained unsatisfied. Blakeny ads. Kirkley, 2 N. & M. 544. That where debts were contracted subsequently to the gift, the latter was not void, because it was voluntary: and if fair in other respects, and the jury should believe, it not to be fraudulent, then it was good, and ought to be supported. Smith v. Littlejohn, 2 M’C. 362. Where, however,, the donor retained possession of the property after the gift, this was in general conclusive evidence of fraud; but that in some cases, where the possession of the donor was consistent with the title of the donee, as in the case of a parent and a minor child, the legal presumption of fraud would, by this fact, be explained away and destroyed. It was also one of the usual • eVidences of fraud, that the donor had conveyed away the whole, or the greater part of his estate, leaving his debts unpaid. '
With these legal rules for their guide, his Honor submitted the case to the jury upon the facts, intimating his own opinion, •that the defendant was intitled to a verdict. Th,e jury, however, found for the plaintiff; and the defendant moved to set aside their verdict, as contrary to law, on several grounds, which are sufficiently referred to in the opinion delivered by the Court of Appeals.
Thompson, for the motion,
cited Hudnal v. Wilder, 4 M’C. 294. De Bardeleben v. Beekman; 1 Desaus. 346. Stark. Ev. 4 part, 620.
Youno, contra.

Opinion:
Nott, J.
delivered the opinion of the Court.
If the jury had found a verdict in this case in conformity with the instructions of the presiding Judge, I should have been satisfied with the verdict, and should have thought no expression •of the opinion of this Court necessary, further than that of a general concurrence in the views of the Court below. But as they have come to a different conclusion, it is necessary that the grounds of the opinion of this Court should be expressed.
.Of all the questions growing out of the several grounds made in-the defendant's brief, the two following, alone, appear to me necessary to be considered. 1st, Whether á voluntary parol gift to a child, the property always continuing in the possession of the parent, and used as his own, can be set up to defeat the claims of subsequent creditors, who have trusted him on the faith of such property. 2d, Whether such a gift can be maintained against subsequent creditors, where the parent was indebted at the time of such gift, and always continued so, until he became totally insolvent.
The first is not necessary to a decision of this case, and I shall not, therefore, express any decided opinion upon it; and shall merely notice it, so far as is necessary to repel any inference favorable to such a claim, which might be drawn from the observations made on the other ground.
I have already had occasion to observe during the sitting of this Court, that a vendor's continuing in possession of personal properly is usually considered as furnishing such evidence of fraud, as will render the property liable to the claims of creditors even against a bona fide purchaser for valuable consideration ; and the principle must apply more strongly in the case of a volunteer. The only circumstance which can be relied on to repel the presumption, is, that the possession by a parent, of the property of his infant child, of whom he is ihe natural guardian, is not inconsistent with the nature of the claim set up by the child. But if it may be evaded by so flimsy a pretext, as by conveying to one under his own roof, and for whom he is bound to provide, the rule is of but litte value. I am not disposed, therefore, to volunteer an opinion in favor of such a claim, unless accompanied with some other evidence of title, than the mere proof of a gift. It is not my intention, however, to dwell upon this part of the case, as it is not called for on this occasion.
With regard to the second question, I think there can be but little doubt. A voluntary deed, executed with the most formal solemnities, cannot be supported against the claims of a subsisting creditor, even when the gift is accompanied with exclusive possession. That it' will be good against a subsequent creditor, where the donor was not in debt at the time, unless made with a view to future indebtedness, seems now to be admitted. And it seems also to be admitted that a trifling indebtedness, merely for the current expenses of a family, will not render a voluntary deed void, when the donor is still possessed of a considerable estate unincumbered.
But I am not aware of any case, where a donor was indebted at the time of the gift, and continuing in possession, and using iCas his,own, and still continuing- in debt,- up to the period of insolvency, that the gift has been supported against a creditor. It does appear, that the donor, in this case, -was in debt at the time the gift was made ; to what extent, is not ascertained, neither can we expect that any one can shew the extent of another's debts. But it does appear, that he was then unable to pay his debts, except by renewing his notes ; ánd it does not appear, that he was at any period of his life afterwards in a better situation. \ It has been one continued race between him and his creditors, until he has been overtaken by insolvency, and we can only judge of his situation by the result.' Paying off one debt by^contracting another, is not getting out of debt. .Proving, therefore, that the debts, which he owed.at th.at time have been .paid off, is doing nothing, if in so doing, he has contracted others to a greater amount. All the cases of any authority which have occurred in our Courts between the donee and creditors,- where the gift has been supported, Jiave turned upon the fáct of notice. If a person has notice-of the gift, he does not trust on the faith of the property, but on a personal confidence in-the debtor. But no such notice is pretended-in this case.
I am of opinion, therefore, that the motion for a new trial .ought to be granted.
Motion granted.