Court Opinion

ID: 6679600
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:19:32.37201+00
Date Added: 2024-06-11T16:00:48.319786
License: Public Domain

The opinion of the Court was delivered by
Mr. Chief Justice McIver.
This action was commenced on the 4th of February, 1897, by the plaintiffs, as *26judgment creditors of the defendant, Eliza R. Steinmeyer, in behalf of themselves and all other creditors of the said Eliza R. Steinmeyer, who shall, in due time, come in and seek relief by and contribute to the expenses of this action. The object of the action is to have certain conveyances, made by said Eliza R. Steinmeyer to different members of her family, as well as certain mortgages executed by the grantees in such conveyances, set aside, and the property mentioned therein sold, and the proceeds applied to the payment of the judgment in favor of the plaintiffs, and to- the claims of all other creditors of the said Eliza R. Steinmeyer entitled to share therein, according to their legal priorities; and also to have the assignment of the bond and mortgage given by the defendant, Wallace M. Plowden, and his wife., Mary E. Plowden, to James McDowell, executed by said Eliza R. Steinmeyer to said Wallace M. Plowden, set aside upon the ground that the same was voluntary and without valuable consideration, and that the debt secured by said mortgage be collected and the proceeds applied to the payment of plaintiffs’ judgment and to the claims of such other creditors of said Eliza R. Steinmeyer, entitled to share therein, according to- their legal priorities. The case was heard by his Honor, Judge Aldrich, upon exceptions to the report of Master Sass, to whom it had been referred to hear and determine all the issues in the case. The decree of the Circuit Judge was filed on the 13th of August, 1898, a copy of which is set out in the “Case,” which should be incorporated by the Reporter in his report of this case. From this decree all of the parties, except Thomas Della Torre (in whose favor the master reported, and there was no exception to that part of the report), appeal upon thevarious exceptions 'set out in the record. We do not deem it necessary to repeat these exceptions here, especially as in several instances the exceptions of the several parties present the same points. We think it better to state the several questions which we understand are raised by the exceptions, and then to inquire *27whether the Circuit Judge has erred in determining any or all of such questions.
1 2 These questions may be stated as follows: ist. Whether the bonds upon which the claim of the plaintiffs originally rested were based upon valuable consideration, or were mere gratuities from Eliza R. Steinmeyer to the plaintiffs ? In view of the fact that these bonds have been regularly reduced to judgment in an action 'brought upon them, it seems to us that it is now too late to raise this question, especially in a collateral proceeding like this. But even if these bonds had never been reduced to judgment, it is very clear, from the undisputed testimony, that these bonds were based upon valuable consideration, and can, in no sense, be regarded as gratuities. They were given to secure the payment of a valid debt due by J. H. Steinmeyer, sr., to the estate of his son, to which the plaintiffs became entitled under the provisions of the son’s will. It is true that Mrs. Eliza R. Steinmeyer did not originally owe that debt, but when she signed these bonds, she practically became the surety of her husband, who did owe the debt, and she thereby became morally as well as legally bound to* pay such debt. But we need not add anything to what the Circuit Judge says in his decree upon this point. All the exceptions raising the first question must, therefore, be overruled.
3 2d. Whether the plaintiffs were. guilty of such laches in enforcing their claim as would bar this action ?
4 3d. Whether the consent order of the United States Court for the resale of the property bid off by Ferguson at the first sale estops the plaintiffs from bringing this action ?
5 4th. Whether the indebtedness of Eliza R. Steinmeyer at the time of making the voluntary conveyances was so inconsiderable as to defeat this action? We are entirely satisfied with the views taken by the Circuit Judge as to the second, third and fourth questions, and for the reason stated in his decree we affirm his conclusions. *28The exceptions raising these questions must, therefore, be overruled.
6 7 5 th. Whether the assignment of the Plowden bond and mortgage was based upon valuable consideration, or was voluntary? We agree with the Circuit Judge in the view which he takes of this question, and think his reason- / ing is sufficient to sustain his conclusion.. We desire to add, however, that the plaintiffs, in the 15th paragraph of their complaint, allege that this assignment purports on its face to be based upon valuable consideration, and this allegation is admitted in the answer of Mrs. Eliza R. Steinmeyer. But what is more, the copy of this assignment set out in the “Case” shows that it was based upon valuable consideration. When this is the case, the burden of proof is upon the plaintiffs to show that there was no valuable consideration for this assignment, but that burden has not béen met. On the contrary, the allegation in the 16th paragraph of the complaint, made only upon information and belief, is distinctly denied, not only in the answer of Plowden, but also in the answer of Mrs. Eliza R. Steinmeyer; and the undisputed testimony of Plow-den is that there was valuable consideration for the assignment. The testimony leaves no doubt upon our minds that Mrs. Eliza R. Steinmeyer got from her daughter, Mrs. Plowden, insurance money to which she was entitled, amounting to more than the debt secured by the mortgage to McDowell, and there is no testimony tending to show that this money was ever repaid, except as a consideration for the assignment in question. The- exceptions raising the fifth question must, therefore, be overruled.
8 The sixth question is: Whether the mortgagee, Whit-ridge, at the time he took his mortgage, had such notice as would defeat his right to claim as purchaser for valuable consideration without notice? Here again we agree with the Circuit Judge in the view which he has taken of this question, and think his conclusion is sufficiently vindicated by what he has said in his decree. We *29may add, however, that it is quite certain that the testimony fails to show that Whitridge had any actual personal notice. On the contrary, Mr. Whitridge testifies that at the time he took his mortgage he did not know Mrs.'Eliza R. Steinmeyer, never had heard of her, and had no knowledge of her affairs; and Mr. Ficken testifies that he never communicated to Whitridge any information which he had previously obtained in reference to the business affairs of the Steinmeyers. Indeed, under the view which he then had, and still has, with reference to the dealings of Mrs. Eliza R. Steinmeyer with her property, there was no reason why he should communicate such information to Mr. Whitridge. before, or at the time he took his mortgage. It is obvious, therefore, that the only ground upon which it could be claimed that Whitridge had notice, is the fact that Mr. Ficken had notice of the condition of affairs, and that his client, Whitridge, must be regarded as having had notice, upon the doctrine that notice to the agent is notice to the principal. But Ficken’s knowledge was not acquired while acting as attorney or agent for Whitridge, but was acquired while acting as attorney for other parties, and hence the doctrine does not apply in this case. See Akers v. Rowan, 33 S. C., 451; Knobelock v. Bank, 50 S. C., 259. The exceptions raising the sixth question must, therefore, be overruled.
7th. Whether there was error in holding that the conveyance from Mrs. Eliza R. Steinmeyer to Mrs. Carrie A. E. Steinmeyer was voluntary and without valuable consideration? The exception raising this question, though not abandoned, was not pressed in the argument. But in view of the fact that this conveyance purports, on its face, to be a voluntary conveyance, and in view of the concurrent finding of the master and the Circuit Judge, which is fully sustained by the testimony, this exception must be overruled.
*309 *298th. The eighth and last question presented is: Whether there was error in ordering that the lands conveyed to Mrs. Carrie A. E. Steinmeyer should be sold before those conveyed to Mrs. A. Matilda Steinmeyer? We cannot agree *30with the Circuit Judge in the view which he has taken of this question. The conveyances to both of these ladies were purely voluntary — neither of them having paid any valuable consideration. They, therefore, stand upon the same footing, and neither of them has any prior or superior equity to the other; and they, therefore, must share rateably in the burden which rests upon their lands. The Circuit Judge rests his conclusion upon the analogy drawn from the rale that where a mortgagor sells to third persons, at different times, different portions of the mortgaged premises, the first purchaser has an equity to require the mortgagee first to sell such portion of the mortgaged premises as remains in the hands of the mortgagor (if any), and if that is not sufficient to pay the mortgage debt, then to sell the different portions conveyed to third persons in the inverse order of the sales made by the mortgagor. While there is not entire harmony in the cases elsewhere as to this rule, and it does not seem to have commanded the approval of that great jurist, Mr. Justice Story, in so far as it relates to the equities of the purchasers from the mortgagor (see 2 Story Ec. Jur., sec. 1233a; Savings Bank v. Creswell, 100 U. S., 630), yet it must be regarded as settled in this State. Stoney v. Schultz, 1 Hill Ch., 465; Norton v. Lewis, 3 S. C., 25; Lynch v. Hancock, 14 S. C., 66; followed in several other cases. See, also, 3 Pom. Eq. Jur., sec. 1224. But the equity upon which this rule rests grows out of the fact that the first purchaser from the mortgagor had actually paid his money, looking to the residue of the mortgaged premises as a security for the payment of the mortgage debt; and it is well said in Stoney v. Schultz, at page 500: “Every subsequent purchase diminished the amount of this security, and operated as a fraud upon the first purchasers.” This could not be said of a voluntary donee, who has parted with nothing of value, and cannot be said to be defrauded by the taking from him that for which he has paid nothing, and subjecting it to the payment of his donor’s debts. Besides, a majority of this Court, in the case *31of Gordon v. Hazzard, 32 S. C., 351, declined to- apply this rule, in which the analogy was much closer than in the case now under consideration. T.n that case two bonds, maturing at different dates, were secured by one mortgage. The mortgagee assigned the bond last maturing to one person, and the other bond first maturing to another person; and the question was which of the two assignees were entitled to priority. Held, that neither was entitled to priority, but that they must share pro rata in the proceeds of the sale of the mortgaged premises — the same being insufficient to pay both in full. Now if the mortgage rule, as it may be called for the sake of convenience, could not be applied to a case very much alike in principle at least, there is still stronger reason why it should not be applied to a case like the present, where there is no valuable consideration upon which to rest the equity which gives rise to the rule. But, again, there is another analogy which supports the view which we take. In 1 Story Eq. Jur., sec. 176, it is said a Court of Equity will not grant relief to one claiming under a defective voluntary conveyance against one also claiming under a voluntary conveyance. So, also, the rule is well settled that equity will not enforce the specific performance of agreement unless it is based upon a valuable consideration. 1 Story Eq. Jur., sec. 793a, and the other sections therein cited. 3 Pom. Eq. Jur., sec. 1293, 1405. We are not aware of any case in this State where the question which we have been considering has been distinctly decided; but counsel for Mrs. Carrie A. E. Steinmeyer has cited us to a case — Thompson v. Murray, 2 Hill Ch., 213 — where the view which we take is plainly recognized. The exceptions presenting the eighth question must, therefore, be sustained; and in this respect only the Circuit decree must be reversed.
The judgment of this Court is that the judgment of the Circuit Court, except upon the point hereinbefore stated, be affirmed, and that the case be remanded to that Court for such further proceedings as may be necessary to carry into effect the views hereinabove presented.