Mallek v. Tangeman

THIS OPINION
HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN
ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Barry D. Mallek
and Alice R. Mallek, Respondents,

v.

Delbert R.
Tangeman, Appellant.

Appeal From Spartanburg County

 Gordon G. Cooper, Master-In-Equity

Unpublished Opinion No. 2008-UP-317

Submitted June 2, 2008 – Filed June 25,
2008   

REVERSED AND REMANDED

Delbert R. Tangeman, of Duncan, for Appellant.

Donald C. Coggins, Jr., Max Thomas Hyde, and Jack W. Lawrence, all
of Spartanburg, for Respondents.

PER CURIAM: Subsequent
to a supplemental proceeding, Delbert Tangeman (Tangeman) appeals the master-in-equity’s
order setting aside the transfer of real property from Tangeman to his wife as
a fraudulent transfer.  We reverse and remand.[1]

FACTS

Barry and Alice Mallek (the Malleks) received
a general verdict against Tangeman following a jury trial in June 2002, which
was affirmed by this court on January 14, 2005.  The Malleks sought to execute
on the judgment against Tangeman; however, the execution was returned nulla
bona on or about June 13, 2005. 

Thereafter,
the Malleks sought an order of reference and rule to show cause for supplemental
proceedings.  A supplemental proceeding was held before the master-in-equity on
August 1, 2005.  During the hearing, Tangeman indicated that his business
assets, as well as numerous pieces of real estate, had been transferred to his
wife.  Tangeman did not have the documents regarding the transfers at the time
of the hearing; thus, the hearing was adjourned and Tangeman was ordered to produce
the relevant documents at a later date. 

The
hearing was reconvened on January 17, 2006.  At the hearing, Tangeman returned
to the stand and answered questions regarding the documents.  The documents
included mortgage notes dated August 1, 1998, in the amounts of $20,000,
$30,000, and $150,000.[2] 
The mortgages securing these notes, although dated August 1, 1998, were
notarized and recorded on April 26, 2000.  This date correlates to a document
presented by Tangeman wherein he had transferred all of his assets, including
all of his real estate, household furniture, construction business vehicles,
equipment, and tools to his wife on April 25, 2000.  Tangeman testified that
valid consideration for the transfers was given by his wife who, in addition to
her personal service as secretary without compensation, had invested sums of
money from her inheritance and otherwise into his business over the years.  He
also stated that a written agreement reflecting any obligation for repayment
from either himself or from his business was not executed. 

At the
close of the hearing, the Malleks asked the master-in-equity to set aside the
transfers as fraudulent conveyances under the Statute of Elizabeth.  At this
time, Tangeman requested an opportunity to enter into evidence documents which he
alleged would prove the transfers were not fraudulent.  The master-in-equity
refused and the following colloquy ensued:

TANGEMAN:  Your Honor?

THE COURT:  Yes, sir.

TANGEMAN:  Don’t I get an opportunity to - - -

THE COURT:  Your opportunity was a long time ago.  You are here at the direction and the request to appear by [c]ounsel in an
attempt to locate funds to pay his client’s judgment.  The issues relating to
any other matters were tried in a case  - - -

TANGEMAN:  They were - - -

THE COURT:  In 2001 and those are not here.  Today, the only reason
I am here, or the only reason we are here and I am hearing this, is to assist Mr. Coggins in having
his client recover the money that was found to be due from you to
the Malleks.

TANGEMAN: 
Your Honor, there are two very important documents that Mr. Coggins is not present
here today.

THE
COURT:  Well, again - - - Excuse me, sir.

TANGEMAN: 
And they have been presented in the past.

THE COURT:  Excuse me.  Mr. Coggins is handling his case for his
client.  Now whether in his presentation he decided not to include documents,
that is solely up to him.  But you are not handling his case and the sole
purpose you are here today is to try to find funds to pay his client’s
judgment.

TANGEMAN: 
There are two - - -

THE
COURT:  I understand.

TANGEMAN: 
There are two - - -

THE
COURT:  You didn’t - - - You didn’t hear me.

TANGEMAN: 
Yes, I did.

THE COURT:  Alright.  And so that is the - - - That is the end of
the conversation.

TANGEMAN: 
So I cannot make a motion?

THE COURT:  No, you cannot.  If you want to have an attorney file
some type of motion on your behalf, then you are welcome to do that.  Once the [o]rder
has been signed, then if there is grounds for filing a motion or any type of
responsive pleading, then the attorney would have to review the [o]rder that I
have signed and at that point the [o]rder is subject to whatever attack that
can be done.  But until then - - -

TANGEMAN:  There have been two - - - May I share the two documents
that are in evidence and that are not - - -

THE COURT:  They are not.  The only evidence are here and I have
reviewed these documents as they were handed up.

TANGEMAN:  Okay.

THE COURT:  There’s eleven documents that were presented by Mr.
Coggins during your testimony.

TANGEMAN:  There is one side of that page that you have not
considered, Your Honor.

THE COURT:  I have looked at every document.

TANGEMAN:  No, sir.  You have not.  It is on the back side of that
one mortgage.

THE COURT:  I have - Sir, I have looked at every document as it
was handed up and I’ve looked at the dates.  I’ve looked at all the recording
information and everything that is on the documents.

TANGEMAN:  There is a [o]ne hundred fifty thousand ($150,000) [d]ollar
mortgage that preceded all of these dates and it is in evidence.

THE COURT:  I understand that.  I understand that.

TANGEMAN:  And it will clearly take care of any fraudulent
claims.  It is clearly - - -

THE COURT:  Well, sir, I am not meaning to cut you short, but I
am.  If, after the [o]rder is entered, you have an attorney who wants to file
some type of motion relating to the [o]rder, then that is the time to do it. 
Alright, sir?

TANGEMAN:  Yes, sir.

Shortly after
this exchange, the hearing concluded.  In the final order, the master-in-equity
set aside the transfer of Tangeman’s property to his wife as a fraudulent
conveyance and appointed a receiver over all of his business and real estate
properties until the Malleks’ judgment was paid in full. 

Tangeman
filed a motion to reconsider claiming he was not provided an opportunity to
prove the transfers were valid and requested the master-in-equity consider
certain documents he was not allowed to present at the hearing.  The master-in-equity
denied Tangeman’s motion.  This appeal follows.          

STANDARD OF REVIEW

Supplementary proceedings
are equitable in nature.  Ag-Chem Equip. Co., Inc. v. Daggerhart, 281
S.C. 380, 383, 315 S.E.2d 379, 381 (Ct. App. 1984).  In an equitable matter
referred to a master-in-equity for final judgment, we may find facts in
accordance with our own view of the preponderance of the evidence.  Van
Blarcum v. City of North Myrtle Beach, 337 S.C. 446, 450, 523 S.E.2d 486,
488 (Ct. App. 1999).  However, this court is not required to disregard the
findings of the master-in-equity.  Friarsgate, Inc. v. First Fed. Sav. &
Loan Ass’n, 317 S.C. 452, 456, 454 S.E.2d 901, 904 (Ct. App. 1995). 

The admissibility
of evidence is within the sound discretion of the trial court and will not be
reversed on appeal absent an abuse of discretion or the commission of legal error
resulting in prejudice to the defendant.  Wright v. Craft, 372 S.C. 1,
33, 640 S.E.2d 486, 504 (Ct. App. 2006).  “An abuse of discretion occurs when
the ruling is based on an error of law or a factual conclusion that is without
evidentiary support.”  Menne v. Keowee Key Prop. Owners’ Ass’n, Inc.,
368 S.C. 557, 568, 629 S.E.2d 690, 696 (Ct. App. 2006).  “To warrant reversal
based on the admission or exclusion of evidence, the appellant must prove both
the error of the ruling and the resulting prejudice.”  Fields v. Reg’l Med.
Ctr. Orangeburg, 363 S.C. 19, 609 S.E.2d 506, 509 (2005).

LAW/ANALYSIS

Tangeman argues the
denial by the master-in-equity of his request to present evidence of a valid
conveyance was error.  We agree.

The
Statute of Elizabeth, as codified in section 27-23-10 of the South Carolina
Code (Supp. 2007), 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.

Pursuant to this
statute, conveyances may be set aside under two conditions: (1) 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
valuable consideration; and (2) where a transfer is made without actual intent
to defraud the grantor’s creditors, but without valuable consideration.  See Albertson v. Robinson, 371 S.C. 311, 316, 638 S.E.2d 81, 83 (Ct. App.
2006).  Where a conveyance is made without an actual intent to defraud but
without consideration, the conveyance will stand if the grantor reserves 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 v. Kirven, 184 S.C. 37, 41, 191
S.E. 814, 816 (1937).  Moreover, “[w]here 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.”  Id. (emphasis added). 

In
this case, the alleged fraudulent conveyance was between family members; thus, the
burden to establish valuable consideration and the bona fides of the transaction
was imposed upon the transferee.  See Id.   However, the
transferee, Tangeman’s wife, was not a party to the proceeding at issue.[3] Moreover, not only was the transferee not a party to the proceeding, but Tangeman
himself was also denied the opportunity to introduce documentary evidence and
to present an argument as to the validity of the transfer.  Review of the
record indicates the master-in-equity stated that the Malleks had exclusive
control over the presentation of the case and Tangeman’s involvement was
limited solely to responding to their questions on direct examination.  The
record further reveals that Tangeman sought to present testimony in response to
the Malleks’ presentation on direct examination and was repeatedly denied the
opportunity.  The master-in-equity erred by precluding Tangeman the opportunity
to present his position as to the validity of the transfer.  Moreover, we
further express concern that the master-in-equity clearly stated that Tangeman
may only respond by having an attorney file some motion after the issuance of
the court’s order.[4] 
We find Tangeman’s inability to present his position prejudiced him. 

Therefore,
we conclude a remand is appropriate to allow for a hearing in which Tangeman is
provided an opportunity to address the validity of the transfer.[5] 
Accordingly, we find it unnecessary to address Tangeman’s remaining issues and
arguments.  See I’On, L.L.C. v. Town of Mount Pleasant, 338 S.C.
406, 423, 526 S.E.2d 716, 725 (2005) (holding that the court need not address
additional issues if it is not necessary to the resolution of the case).  

Based
on our reasoning herein, the decision of the master-in-equity is  

REVERSED AND
REMANDED.

WILLIAMS,
THOMAS, and PIEPER, JJ., concur.

[1] We decide this case without oral argument pursuant to
Rule 215, SCACR.

[2] Tangeman also produced his 2001 and 2002 Federal
income tax returns, which list “Delbert Tangeman” as the sole proprietor of his
building contracting business.  The returns also indicated income received from
rental property in the names of both Tangeman and his wife. 

[3] We recognize the issue as to the transferee not being
named as a party was not raised; therefore, we focus only on the decision to
preclude Tangeman from addressing the validity of the transfer.

[4] As to the Malleks’ argument that Tangeman failed to
proffer the documents into the record, the record clearly shows the futility of
further attempts to preserve Tangeman’s desire to introduce these documents in
light of the comments of the master-in-equity.  See Staubes v. City
of Folly Beach, 339 S.C. 406, 415, 529 S.E.2d 543, 547 (2000) (noting that
this court does not require parties to engage in futile actions in order to
preserve issues for appellate review).  Moreover, since the master-in-equity
specifically indicated that Tangeman could only further address the court by
way of post trial motion, we find Tangeman has preserved his arguments because
he complied with the court’s specific instructions by way of a motion to
reconsider.  Thus, in light of the court’s specific directions, we decline to
find Tangeman’s arguments unpreserved.  

[5] On remand, consideration should be given as to
whether the case should be postured as a declaratory judgment or other
independent action and whether Tangeman’s wife, as transferee, should be added
as a party.