Opinion ID: 1329016
Heading Depth: 1
Heading Rank: 3

Heading: statute of elizabeth

Text: Windsor contends that Dolphin Head's transfer of the Brogdon property to Linda was fraudulent under the Statute of Elizabeth. [3] We agree. The Statute of Elizabeth, as codified in S.C.Code Ann. § 27-23-10 (Supp.1997), provides in relevant part: Every ... conveyance of lands ... which may be had or made to or for any intent or purpose to delay, hinder, or defraud creditors and others of their just and lawful ... debts ... must be deemed and taken ... to be clearly and utterly void, frustrate and of no effect, any pretense, color, feigned consideration, expressing of use, or any other matter or thing to the contrary notwithstanding. We have held that under this statute, conveyances shall be set aside under two conditions: First, where the transfer is made by the grantor with the actual intent of defrauding his creditors where that intent is imputable to the grantee, even though there is a valuable consideration; and, second, where a transfer is made without actual intent to defraud the grantor's creditors, but without consideration. McDaniel v. Allen, 265 S.C. 237, 217 S.E.2d 773 (1975). The present case involves the second scenario envisioned by McDaniel. If the transfer was not made on a valuable consideration, no actual intent to hinder or delay creditors needs be proven. Here, there is extensive evidence that Dolphin Head received no consideration for its transfer of Brogdon to Linda. The deed transferring the property stated: Five dollars and no other consideration. The attorney who drew up the deed testified that he had no recollection of any money changing hands. Linda herself testified that she did not pay anything when she received the deed. On appeal, the Liscios essentially argue that consideration existed in the form of the thousands of dollars Linda advanced for the purchase and renovation of Brogdon. There does not exist clear and convincing evidence of this. It is well-established that: Where transfers to members of the family are attacked either upon the ground of actual fraud or on account of their voluntary character, the law imposes the burden on the transferee to establish both a valuable consideration and the bona fides of the transaction by clear and convincing testimony. Gardner v. Kirven, 184 S.C. 37, 41, 191 S.E. 814, 816 (1937); see also Coleman v. Daniel, II, 261 S.C. 198, 199 S.E.2d 74 (1973); Matthews v. Matthews, 207 S.C. 170, 35 S.E.2d 157 (1945); Matthews v. Montgomery, 193 S.C. 118, 7 S.E.2d 841 (1940); First Union Nat. Bank v. Smith, 314 S.C. 459, 445 S.E.2d 457 (Ct.App.1994). Here, the property was transferred from Dolphin Head, wholly-owned by Ralph, to Linda. Accordingly, because this was in reality an intra-family transfer, [4] the law imposes on Linda the burden of establishing by clear and convincing evidence that there was consideration and that the transaction was bona fide. Linda asserts that she made over $168,000 in payments for the Brogdon property. An examination of the record reveals that the maximum she could have paid, during the period preceding the conveyance of property to her, was $40,965 to Blackwell for the purchase price of Brogdon, and $79,528 for other costs connected to Brogdon. These numbers in isolation would suggest that she has conveyed valuable consideration for Brogdon; however, there are a number of problems with these figures. First, the record contains no documentary evidence of these payments besides a single chart prepared by Linda listing her contributions. The chart references attachments (e.g. copies of checks), but none of these have been included in the record on appeal. Because the law imposes on Linda, as the transferee, the burden of establishing the validity of the transfer, she has the responsibility of providing an adequate record. Cf. General Accident Ins. Co. v. Safeco Ins. Companies, 314 S.C. 63, 443 S.E.2d 813 (Ct.App.1994). Second, assuming these contributions were being made, they were offered at a time when Dolphin Head was still showing signs of ownership of the property. This same chart shows that in March 1991, Dolphin Head pledged the Brogdon property as security for a $31,849 mortgage loan, which was to be used by Dolphin Head for operating capital. Third, it is unclear that the payments were going to Dolphin Head: One check is listed as being made out to a plumber; another is described as being made out to South Carolina Federal for application to debt incurred to renovate Brogdon House. The other major problem with Linda's argumentthat she gave valuable considerationis that it contradicts the position she took at the hearing before the referee. There, the Liscio's attorney stated that the crux of their argument was not on the basis of consideration, but rather, on the basis of a prior satisfaction: There was no money paid for the deed at the time the deed was delivered. We concede that. There's never been a question about that. The evidence has already been introduced that Dolphin Head didn't buy this property. Mr. Blackwell bought the property. He put up the money. Linda Liscio gave him the money back. That's our position with regard to the deed. We don't want there to be any misunderstanding about anywe don't claim that there was any money given in exchange for the deed.... Our contention is Mr. Blackwell ... bought the property. Mrs. Liscio gave him his money back, and then she funded the renovation. (emphasis added). Finally, we reject Linda's argument because it contravenes the purpose of the Statute of Elizabeth, which aims to prevent persons from defrauding creditors by transferring their assets to third-parties. The focus of the Statute is whether the grantor has reserved sufficient assets to satisfy his obligations: Where a conveyance is made without an actual intent to defraud but without consideration, it is said that the conveyance will stand if the grantor reserves a sufficient amount of property to pay his creditors. But this means a sufficient amount of property not merely at the time of the transfer, but an amount from which in the final analysis the creditors are able to collect their indebtedness in full. Gardner, 184 S.C. at 42, 191 S.E. at 816 (internal citations omitted). In this case, the deed transferring the property to Linda was executed three months before Ralph and Dolphin Head executed a note and confession of judgment evidencing their $110,092 debt to Windsor. The deed was executed approximately two months before Ralph wrote Attorney and informed him that he owed Windsor some $180,500. Dolphin Head and Ralph are insolvent. The conveyance will not stand here because Dolphin Head and Ralph have not reserved a sufficient amount of property to pay their creditor. Linda has not demonstrated by clear and convincing evidence that the transfer was for consideration and was bona fide. The Statute of Elizabeth was violated. The referee erred in finding otherwise.