Opinion
(Filed 19 May, 1903.)
1. Fraudulent Conveyances — Notice — Executors and Administrators.
In an action for land alleged to have been fraudulently sold by an administrator, a subsequent purchaser is entitled to an issue as to whether he bought with notice of the fraud.
2. Fraudulent Conveyances — Executors and Administrators — Notice.
In an action for land alleged to have been fraudulently sold by an administrator, it is error for the trial court to instruct that the title of a subsequent purchaser depended on whether he knew of the rights of an heir to the property, without reference to the knowledge of the purchaser of the fraudulent sale.
3. Fraudulent Conveyances — Notice.
In an action to recover land alleged to have been fraudulently sold by an administrator, it is error for the trial court to instruct that if the administrator was guilty of fraud in making the sale, that subsequent purchasers were guilty of fraud, without adding that such subsequent purchaser must have had notice of such fraud.
4. Fraudulent Conveyances — Executors and Administrators — Damages.
An administrator whose sale of realty is set aside by an heir for fraud is not liable for injury to such realty committed by his grantee, it not appearing that he aided in such injury.
(679)
ACTION by J. O. Morrow and wife against G. H. P. Cole and others, heard by Councill, J., and a jury, at May Term, 1902, of HENDERSON.
J. C. Martin, Geo. A. Shuford and W. J. Peele for plaintiffs.
Merrimon Merrimon for defendants.
From a judgment for the plaintiffs, the defendants appealed.
The plaintiff's mother, at the time of her death in 1877, had title to the tract of land which is the subject of this action, and that title descended to the plaintiff at the mother's death, she being her only heir at law. The father of the plaintiff, who is now dead, became tenant by the curtesy upon the death of his wife in 1877. He afterwards married again, and he with his wife conveyed the land in fee simple with warranty to the defendant Long, who, in exchange, conveyed to the father of the plaintiff another tract of land. Long mortgaged the tract of land which he acquired, by exchange from the father of the plaintiff, to the defendant Cole, and when the debt fell due Cole demanded his money, and Long procured the services of Rickman to raise money on the land to pay the Cole debt. In the investigation of the title Rickman found that Long got no title in the exchange with the plaintiff's father, and so informed Long and Cole. Rickman said he could perfect the title. The plaintiff alleged in her complaint that Rickman, Long, and Cole conspired to cheat and defraud the plaintiff, who was then Mary R. Dunlap, an infant under 21 years and a resident of the State of South Carolina, out of her land with the view of perfecting the title in Long and Cole, by causing (680) the land to be sold under a proceeding to be instituted in the Superior Court of Henderson County, ostensibly for the purpose of creating assets with which to pay the debts of the plaintiff's mother, although she owed no debts whatever, which all the parties knew. The undisputed evidence shows that Rickman was appointed administrator of Mary R. Dunlap, the plaintiff's mother; that he immediately filed his petition in the Superior Court of Henderson County, in which he alleged that Mary R. Dunlap died seized of the land, leaving as her only heir at law the plaintiff Mary R. Morrow, then Mary R. Dunlap, an infant about 12 years of age; that Mary Dunlap, the deceased, owed debts to the amount of about $1,000, and that she left no personal estate whatever. The petitioner asked that service of summons be had upon said nonresident defendant by publication as required by law. A summons was issued and returned by the sheriff of Henderson County with the indorsement that the defendant (the plaintiff here) was not to be found in that county. Afterwards, H. C. Johnson, a cousin of Rickman, was appointed guardian ad litem of the defendant in that proceeding, the plaintiff in this, and Rickman wrote the answer for the said guardian ad litem, in which he admitted all the allegations of the complaint. Johnson testified that, relying upon representations made by Rickman and Long, he signed the answer. An order of sale was procured under which Rickman sold the land and Long bid it in at $500. The sale was reported and confirmed, and Rickman executed a deed to Long on 29 November, 1890, the consideration recited being $500. No cash was paid by Long. He simply passed his receipt to Rickman for the $500, "to be credited for that amount on my claim against said estate, this being the amount of my bid for said land." Four (681) months afterwards Cole foreclosed his mortgage against Long, and at the sale Maddry, an employee of Cole, bid off the property, Cole as mortgagee executing a deed to said Maddry. Maddry afterwards reconveyed to Cole. No money was paid by Maddry. Afterwards, Long conveyed the tract of land to Cole for the nominal consideration of $25. On 1 March, 1886, following, Cole executed a deed for said land to the defendant Guice. The complaint contains an allegation that Guice paid only a nominal consideration for the land and took the deed with full knowledge of the plaintiff's right in said land and of the said fraudulent proceeding instituted and conducted by the said T. J. Rickman in the Superior Court of the said county of Henderson, for the purpose of bringing said land into sale and of depriving the plaintiff, Mary R. Morrow, of her said property. The plaintiff further alleges that the proceeding instituted by Rickman for the sale of the land, and the sale of the land thereunder, and the deed made by Rickman to Long, were fraudulent and void, and did not divest the title of the plaintiff in said land, but that she is still seized of the same and entitled to the possession thereof against Guice, who is in the unlawful possession of the same. There was evidence against Rickman, Long, and Cole, going to show the fraud alleged in the complaint, and the jury found in the affirmative the first issue, "Was the sale of the land described in the complaint procured by fraud as alleged?"
The defendant Guice was entitled to have an issue submitted to the jury, which he tendered, but it was refused. That issue was in these words: "If the sale was fraudulent on the part of Long, Cole, and Rickman, did Guice take his deed with knowledge of the same?" The word "notice" would have been a more appropriate word than "knowledge", and may be substituted for the word "knowledge" in the issue to be submitted on the next trial. Instead of submitting the above issue, his Honor submitted one in the following words: "Did P. H. Guice, one of the defendants in this action, take title to the land in (682) controversy from George H. P. Cole with notice of the rights of the plaintiff, Mary R. Morrow, in said land?" The jury answered that issue in the affirmative. It seems to us that the jury might have well understood that the sense of the issue, which was submitted, was that if Guice had heard that the plaintiff was her mother's sole heir and had inherited the land, that would be sufficient to require him to investigate the proceedings in the Superior Court instituted by Rickman for a sale of the land, beyond looking to see whether the court had jurisdiction of the subject-matter of the suit and of the parties and the decree ordering the sale, before he could become a bona fide purchaser for value without notice. What if he did know that the plaintiff acquired her land through descent from her mother, the proceedings in the Superior Court instituted by Rickman were regular in all respects, and their inspection was a full protection to him, unless he knew or had notice of matters which if examined into would reasonably lead him to a knowledge of the fraud perpetrated by Rickman, Long, and Cole by means of the special proceeding referred to. The complaint, as we have said, alleged that he had knowledge of the fraud in the special proceeding. There was no evidence that he had any knowledge of the fraudulent character of these proceedings.
The court erred, too, in charging the jury on the issue which was submitted as to Guice's conduct. His Honor said: "If the plaintiff's evidence has greater weight upon your minds, and leads you to the conclusion that he, Guice, did have knowledge and bought with knowledge of the rights of Mary R. Morrow, you should answer `Yes'; otherwise, `No.'" That did not explain to the jury what would constitute the rights of Mary R. Morrow, and, because taken in connection with the ninth special prayer asked by the plaintiff, he might have come to the conclusion, as he had a right to do, that the claims and rights of the plaintiff had been disposed of by the sale of the defendant (683) Rickman, the administrator; and, further, because it assumes as matter of law that notice of her claims and rights would have resulted in a knowledge of a fraud charged in the complaint; whereas it should have been left to the jury as a question of fact, upon the evidence, whether or not Guice made proper investigation on account of any notice which he might have had; and it should also have been left to the jury to say whether or not as a matter of fact the notice, if any, which the defendant Guice had of the plaintiff's claim, was notice to him of the fraud of Rickman.
As we have said, there was evidence of the fraudulent conduct of Long and Rickman and Cole in the special proceeding under which the land was sold. But in the giving of the third and ninth special prayers asked by the plaintiff, the court charged the jury, in effect, that Cole and Guice would both be guilty of fraud and conspiracy on account of the action and misconduct on the part of Rickman. The jury of course, were authorized to find Cole guilty of fraud for his knowledge of the fraudulent character of the proceedings in the sale of the land; but they could not do so because of anything Rickman did without their knowledge or consent. The giving of the sixth prayer requested by the plaintiff was erroneous as to Rickman. The matters therein set forth were not fraudulent as a conclusion of law, as his Honor instructed the jury, but were matters which ought to have been left to the jury for them to say what the intent of Rickman was under the evidence. After the deed from Rickman, administrator, to Long, Long committed certain injuries to the freehold which greatly impaired the value of the property. Upon the verdict that the land had been damaged by Long, since the sale to him by Rickman, to the amount of $250, his Honor entered up judgment of his own motion against Rickman for that amount. There was no allegation in the complaint that Rickman was responsible for this damage, nor was there (684) any evidence in the case that the damage to the property was the result of or connected with the fraud of Rickman and others. Long had been in possession of the property for a number of years under a deed from the plaintiff's father. Rickman had never been in possession of the land, and he had no connection with it, but only with the title. There was no evidence that he aided or abetted Long in committing waste upon the property. He was only charged by the plaintiff with a fraudulent conspiracy with others to sell and pass title to the property to perfect the title of Long and Cole.
New trial.