One Hundred Eighth Cookingham, Inc. v. Miller

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

One Hundred
Eighth Cookingham, Inc., Respondent,

v.

David K.
Miller, Julia J. Miller, Alan Fredrick Hagemaster and Andrew Lee Hagemaster, Appellants.

Appeal From Beaufort County

 Curtis L. Coltrane, Circuit Court Judge

Unpublished Opinion No. 2008-UP-141

Submitted February 1, 2008 – Filed March
4, 2008

AFFIRMED

Brian Deen McDaniel, of Beaufort; Jonathan Brent Kiker, of Hilton Head Island, for Appellants.

James M. Herring of Hilton Head Island and William Weston Jones Newton, of Bluffton, for Respondent.

PER CURIAM:  David
and Julia Miller and Julia Miller’s sons from a prior marriage, Alan and Andrew
Hagemaster (collectively the Hagemasters), appeal an order setting aside certain
property transfers as fraudulent pursuant to the Statute of Elizabeth.  We
affirm.[1]

FACTS

On September 24, 2001, the Millers purchased a condominium in
Village West in Hilton Head Island, South Carolina.  The purchase price for the
condominium was $300,000, the entirety of which was paid by David Miller from
his own funds.  According to the Millers, Julia Miller was to receive the
property as compensation for relinquishing a tenured position with the University of Kansas when she married David in April 2001; however, the deed to the
condominium listed the Millers as joint tenants with right of survivorship.

On June 27, 2002, One Hundred Eighth Cookingham, Inc., a Missouri corporation, filed a demand for arbitration against David, a Kansas resident, with
the American Arbitration Association at its office in Kansas City, Missouri.  In the demand, Cookingham claimed $1,337,400 in damages for breach of a real
estate and option contract, plus costs and expenses.  The date of the alleged
breach was July 1, 1997.  On June 26, 2003, the arbitrator awarded Cookingham
$789,039 plus costs, finding all issues in favor of Cookingham.

By quitclaim deed dated July 25, 2003, and recorded on July 30,
2003, in the Office of the Register of Deeds for Beaufort County, South Carolina, David and Julia transferred the condominium to Julia for no consideration. 
In addition, by deed dated July 25, 2003, and recorded July 31, 2003, Julia
deeded the condominium to the Hagemasters for no consideration, reserving a
life estate for herself and David.

On December 23, 2003, the arbitrator’s award was enrolled in the
circuit court of Clay County, Missouri, as a final judgment.  Thereafter, on
February 16, 2005, the Missouri judgment was enrolled in the Beaufort Court of
Common Pleas as a South Carolina judgment.

In 2005, Cookingham petitioned the Beaufort County Court of Common
Pleas to set aside the conveyances pursuant to the Statute of Elizabeth.  The
trial court set aside both the 2001 grant of a one-half interest in the
property to Julia and David’s subsequent conveyance in 2003 of his half
interest in the property.  This appeal followed.

STANDARD OF REVIEW

“An
action to set aside a transfer of land as fraudulent pursuant to the Statute of
Elizabeth is an action in equity.”  Albertson v. Robinson, 371, S.C.
311, 315, 638 S.E.2d 81, 83 (Ct. App. 2006) (citing Future Group, II v.
Nationsbank, 324 S.C. 89, 97 n.6, 478 S.E.2d 45, 49 n.6 (1996)).  In an
action in equity tried without a reference, the appellate court may find facts
in accordance with its own view of the preponderance of the evidence.  Townes
Assoc., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775-76
(1976).  Notwithstanding this broad scope of review, however, the appellate
court does not disregard the findings of fact by the trial judge, “who saw and heard the witnesses and was in a better
position to evaluate their credibility.”  Tiger, Inc. v. Fisher-Agro, Inc.,
301 S.C. 229, 237, 311 S.E.2d 538, 53 (1989).

LAW/ANALYSIS

1.  The Millers and the
Hagemasters argue the Statute of Elizabeth cannot be used to set aside the conveyances
at issue because both the initial acquisition of the condominium by David and
Julia Miller and the subsequent transfer of David’s interest to Julia were
supported by valuable consideration.  We disagree.

Under
the Statute of Elizabeth, a transfer of real property made to prevent a
creditor from collecting on a debt “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.”  S.C. Code Ann. § 27-23-10(A) (2007). 

A conveyance
may be set aside as fraudulent under the Statute of Elizabeth if it was voluntary
or if there is actual intent to defraud the grantor’s creditors.  Royal Z Lanes,
Inc. v. Collins Holding Corp., 337 S.C. 592, 595, 524 S.E.2d 621, 622
(1999).  A voluntary conveyance is a gratuitous transfer of property or one
without valuable consideration.  Id. at 594-95, 524 S.E.2d at 622.  To
set aside a voluntary conveyance, a creditor must establish the following:  (1)
the grantor was indebted to the creditor at the time of the transfer; (2) the
conveyance was voluntary; and (3) the grantor failed to retain sufficient
property to pay the indebtedness to the creditor in full, not merely at the
time of transfer, but in the final analysis when the creditor seeks to collect
the debt.  Mathis v. Burton, 319 S.C. 261, 265, 460 S.E.2d 406, 408 (Ct.
App. 1995). 

The
Millers and the Hagemasters contend the transfers that One Hundred Eighth
Cookingham sought to invalidate were supported by valuable consideration,
namely, the $300,000 in income that Julia purportedly forfeited in order to
marry David.  In support of their argument, they cite their uncontradicted testimony
that (1) the sole purpose of acquiring the condominium was to induce Julia to
marry David and to compensate her for the income she forfeited in so doing; and
(2) the initial deed giving title to both David and Julia was an oversight and only
Julia should have received title to the property.

Notwithstanding
the absence of evidence discrediting their statements, the Millers failed to
carry their burden of establishing both valuable consideration and the bona
fides of the transfer by clear and convincing evidence.  See Gardner v. Kirven, 184 S.C. 37, 41, 191 S.E. 814, 816 (1936) (“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.”).  The trial court specifically found the
Millers lacked credibility and gave sound reasons for this finding.  These
reasons included the following:  (1) it was illogical that Julia, having been
advised in early 2001 about her grave medical prognosis, would not make the
certain the condominium was properly titled solely in her name in accordance
with the purported agreement; (2) the Millers’ assertion that they never
discussed David’s business difficulties was questionable considering their
demonstrated “ability and willingness to discuss potentially touchy subjects at
some depth during their discussions about the marriage” and the timing of the
demand for arbitration vis-à-vis that of the arbitration hearing; (3) the
Millers’ contention that it was only when Julia learned she was cancer-free, which
was coincidentally during the same months the arbitration proceeding was
pending, that they realized their supposed agreement would be upset if she
pre-deceased David; and (4) Julia’s testimony that her sons had no knowledge of
David’s difficulties and no knowledge of the conveyance of the condominium to
them actually supported a finding that this subsequent conveyance was not a
bona fide transfer.  These reasons also support the trial court’s finding that
the Millers did not enter into any agreement before their marriage under which
David was to purchase property and title it in Julia’s name as consideration
for her loss of income from taking early retirement.

2.  The Millers and the Hagemasters also argue Julia was an
innocent purchaser without knowledge of any indebtedness to Cookingham.  Specifically,
they contend that “[b]y accepting the deed(s) to the subject property, Julia
Miller merely was exercising her own right to the property in accordance with
the contract she had with her husband; a contract upon which she fully
performed.”  Because, however, we uphold the trial court’s finding that there
was no such contract, we do not address this argument.  See Futch v.
McAllister Towing of Georgetown, 335 S.C. 598, 613, 518 S.E.2d 591, 598
(1999) (explaining an appellate court need not address remaining issues when its
decision concerning prior issues is dispositive of the case).

3.  We also reject the
contention of the Millers and the Hagemasters that David that the Statute of
Elizabeth is inapplicable to this case because David was not a debtor of Cookingham
at the time of the initial acquisition of the condominium.  The inception of
the debt or obligation controls rather than the date of the subsequent entry of
judgment.  Matthews v. Montgomery, 193 S.C. 118, 133, 7 S.E.2d 841, 848
(1940).  Moreover, as the supreme court stated in Matthews, “It is only
necessary that the debt should have been in existence or the right of action
have accrued at or before the time of the transfer. It may be reduced to
judgment at a later date.”  Id.; see also Albertson, 371
S.C. at 317-18, 638 S.E.2d at 84 (setting aside the conveyance of a marital
home from a debtor to his wife pursuant to the Statute of Elizabeth and holding
the pivotal event was when the debtor breached his contract with the party
seeking to invalidate the transfer rather than the entry of judgment against
him).  

In
the present case, David became indebted to Cookingham when he breached the
contract in 1997.  The acquisition of the condominium and the transfers at
issue here did not occur until 2001 and 2003, several years after the breach. 
We therefore hold Cookingham had obtained creditor’s status at the time the
Millers first acquired the condominium.

AFFIRMED. 

ANDERSON and
THOMAS, JJ., and GOOLSBY, A.J., concur.

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