Davis Adv. Sh. No. 5
THE STATE OF SOUTH CAROLINA
In The Supreme Court
Windsor Properties, Inc, Appellant/Respondent,
Construction Co., Inc.,
Linda T. Liscio and
Ralph Liscio, Respondents/Appellants.
Appeal From Clarendon County
Marion S. Riggs, Special Referee
Opinion No. 24755
Heard September 17, 1997 - Filed January 26, 1998
AFFIRMED IN PART; REVERSED IN PART
TOAL, A.J.: In this action for collection on a note and for
reconveyance of property, the plaintiff Windsor Properties appeals the special
referee's denial of such reconveyance, and the defendants appeal the referee's
denial of their slander of title claim. We affirm in part and reverse in part.
For several years, Randy Blackwell and Windsor Properties1 had a
business relationship with Ralph Liscio ("Ralph") and his wholly-owned
company Dolphin Head Construction whereby Windsor would finance the
construction and remodeling of houses by Dolphin Head. One of their joint
projects -- the purchase and renovation of the Brogdon property -- is at the
center of the dispute in the present case. The parties had planned to
renovate this property and to split the profits when the property was sold.
In February 1990, Blackwell loaned Dolphin Head $27,6502 for the purchase
and renovation of the Brogdon property. Brogdon was purchased in Dolphin
Ralph's wife, Linda Liscio ("Linda"), owned a piece of property called
the Pointer house. On October 26, 1990, Windsor Properties made a loan in
the amount of $127,000 to Linda, taking as security her equity in the Pointer
house. This money was to be used to complete the Brogdon property.
Windsor got back all of the money due it on the $127,000 loan.
Linda and Ralph decided to list for sale both the Brogdon property and
the Pointer house; they would move into whichever house did not sell first.
Blackwell knew that Linda's intent was to end up with one of these two
houses. The Pointer house was sold January 1, 1992.
ln February 1992, Ralph approached William Coffey ("Attorney") about
deeding Brogdon from Dolphin Head to Linda. A deed was prepared by
Attorney to convey the property. The deed reads, "Five dollars and no other
consideration." Attorney testified that he did not recall having any input into
the fact that the deed recites five dollars and no other consideration. He
further stated: "I may have asked if there were any consideration being
passed, and I was told no, or we would have put it in there. We always
would ask that as a matter of policy." Attorney had no recollection of any
money changing hands. Linda testified that she did not pay anything when
she received the deed.
2The record is not consistent as to this figure. Blackwell testified to the
$27,650 figure; however, Ralph actually testified to a higher amount. Ralph
testified that Blackwell wrote a check for $38,000 to Dolphin Head.
Blackwell then advanced another $13,000 for renovations.
In the spring of 1992, Ralph wrote Attorney a letter that listed eight
separate debts (totaling some $180,500) he owed Blackwell and Jordan. In
the letter, Ralph proposed a scheme for repayment of these debts. Ralph
wrote in the letter that he anticipated that in the course of negotiations,
Blackwell would bring up the issue of Brogdon house. Ralph stated this
property "is in Linda's name; we have a mortgage of $75,000 on it and in no
way will Linda agree to pledging the remaining equity [on the house]."
(emphasis in original). Attorney passed on the letter to Blackwell. Blackwell
testified that he did not know, prior to receiving this letter, that the property
had been transferred to Linda.
Soon after the letter was sent, Ralph negotiated Dolphin Head's debt
with Windsor, and they reached an agreement on May 1, 1992. Dolphin
Head executed a promissory note and a loan agreement in favor of Windsor
in the amount of $110,092. The note was personally guaranteed by Ralph.
At the same time, Windsor received a confession of judgment from Dolphin
Head and Ralph. The confession states that Dolphin Head and Ralph are
indebted to Windsor in the amount of $110,092.
In August 1993, Ralph and Linda contracted to sell the Brogdon
property to certain purchasers. When Blackwell heard about the proposed
sale, he filed a lis pendens.
In September 1993, Windsor brought this action against Dolphin Head,
Ralph, Linda, and another party. The complaint alleged that the May 1,
1992 note executed in favor of Windsor for $110,092 was in default. It
moreover alleged that Ralph conveyed the Brogdon property to Linda for no
consideration, thereby depriving Windsor of the right to obtain satisfaction
of all proceeds due to it by Dolphin Head. Windsor prayed for an order
reconveying the Brogdon property to Dolphin Head. The complaint
additionally alleged that Dolphin Head and Ralph had defaulted on a $50,000
In their answer, Dolphin Head and Ralph declared that they had
executed a loan agreement, promissory note, and confession of judgment to
memorialize the indebtedness to Windsor, and admitted that the note was in
default. They also admitted that Dolphin Head had conveyed the Brogdon
property to Linda. By way of counterclaim against Windsor, they alleged
intentional interference with contract and slander of title. They specified
that "By deed dated February 6, 1992, Defendant Linda Liscio became the
owner of the [Brogdon] property . . . ." It was further declared that on
August 19, 1993, Linda entered into a contract for the sale of the Brogdon
property to a third-party. On September 13, 1993, Windsor filed a lis
pendens that prevented her from conveying title in accordance with the terms
of the contract and created a cloud on the title, causing her damages of
The matter was referred to a special referee to conduct a hearing and
issue an order directly appealable to this Court. The referee held that
Windsor should be awarded $107,092, with interest, and $36,934, with
interest, against Dolphin Head and Ralph individually, as well as $10,000 in
attorneys' fees. The order further found that Linda had paid adequate and
valuable consideration for the transfer of the Brogdon property by Dolphin
Head. Even though there was no consideration exchanged when the deed
was delivered, Linda had already reimbursed Blackwell for the purchase
In relation to the slander of title counterclaim against Windsor, the
referee held that the lis pendens on the Brogdon property should be canceled;
however, there was no evidence that Windsor acted maliciously when it
caused the lis pendens to be filed against the Brogdon property.
Both parties have appealed. Windsor argues on appeal that the referee
erred in finding that the transfer of the Brogdon property was not fraudulent
within the meaning of the Statute of Elizabeth. The Liscios have appealed
the referee's denial of their slander of title claim.
A. Statute of Elizabeth
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:
does not comply with Rule 207(b)(1)(B), SCACR, which requires that the
statement be "concise and direct." This argument is without merit.
Windsor's Statement of Issue on Appeal does concisely and directly identify
the question before this Court.
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
It is well-established that:
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:
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
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 fides. Accordingly, the referee
erred in failing to find that the Statute of Elizabeth had not been violated.
B. Lis Pendens
The Liscios have cross-appealed, raising one issue. They assert that
the referee erred in concluding there was no evidence that Windsor was
acting maliciously when it filed the lis pendens against the Brogdon property,
thereby slandering the title to this property. Because we set aside the
transfer of Brogdon from Dolphin Head to Linda, the Liscios have no title to
this property, on the basis of which they may assert a slander of title action.
Based on the foregoing, the referee's order is REVERSED on the issue
of the violation of the Statute of Elizabeth. Accordingly, the transfer of the
Brogdon property from Dolphin Head to Linda is set aside. The referee's
order is AFFIRMED on the issue of slander of title.
FINNEY, C.J., MOORE, WALLER and BURNETT, JJ., concur.