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Gordon v. Lancaster

Court of Appeals of South Carolina

November 2, 2016

Frank Gordon, Jr., Individually and as Trustee of Dorothy S. Gordon (Deceased) Trust, Respondent,
Donald W. Lancaster, Appellant. Appellate Case No. 2014-001247

          Submitted June 1, 2016

         Appeal From Charleston County J. C. Nicholson, Jr., Circuit Court Judge


          John Joseph Dodds, III, of The Law Firm of Cisa & Dodds, LLP, of Mt. Pleasant; and Stephen Peterson Groves, Sr., of Nexsen Pruet, LLC, of Charleston, for Appellant.

          Stephanie D. Drawdy and Justin OToole Lucey, both of Justin O'Toole Lucey, PA, of Mount Pleasant, for Respondent.

          SHORT, J.

         Donald W. Lancaster appeals an order awarding damages to Respondent Frank Gordon, Jr., Individually and as Trustee of the Dorothy S. Gordon (Deceased) Trust, in a lawsuit Gordon filed to collect on a prior judgment he obtained against Lancaster's uncle. On appeal, Lancaster argues the underlying judgment was no longer enforceable and challenges the findings that he and his uncle engaged in various fraudulent conveyances. We affirm.[1]


         From 1946 until approximately 1992, Lancaster's maternal uncle, Rudolph Robert Drews, owned and operated "The Drews Company, " a construction business in Charleston, South Carolina. During his high school and college years, Lancaster worked at The Drews Company and became close to both Drews and Drews's wife, Effie. According to Lancaster, The Drews Company suffered financially after Hurricane Hugo in 1989 as a result of the acts of an unscrupulous business associate who absconded with customer deposits for lucrative jobs. As a result of this misfortune, the Drewses began borrowing heavily on their home in an effort to raise revenue for their business. The situation worsened when the Internal Revenue Service (IRS) filed liens against Drews and his business. Drews sold what was left of his business to Dorsey Biller, who had been the General Manager of The Drews Company. The Drewses decided to sell their home to raise funds to pay the various IRS liens and outstanding loans associated with The Drews Company. Lancaster asserted the Drewses had $100, 000 "[a]fter appropriately paying off the IRS and satisfying other standing debts."[2]

         In May 1992, at Drews's request, Lancaster used the $100, 000 allegedly remaining from the sale of Drews's residence, along with $60, 000 of his own funds to purchase 17 Bainbridge Drive, in Charleston, South Carolina. On May 22, 1992, Lancaster executed an agreement purporting to grant the Drewses a life estate in this property. The agreement was not a deed and was not recorded in the public records. It does not reference the $100, 000 Drews gave to Lancaster to purchase the property, and it indicated the consideration for the conveyance of the life estate was "the sum of TEN ($10.00) AND NO/100S DOLLARS and love and affection for my uncle and aunt."

         On June 12, 1992, Lancaster obtained a $40, 000 open-ended mortgage on the Bainbridge Property. From 1993 to 1995, Lancaster paid Drews $40, 000 in checks drawn from the bank from which the $40, 000 line of credit was obtained, supposedly for the purpose of helping the Drewses pay their living expenses. Drews, however, paid the interest incurred on the line of credit, but did not sign any IOUs or notes of indebtedness for the disbursements. Lancaster maintained he used a spreadsheet to document payments by Drews on the loan and updated the entries contemporaneously with the corresponding events; however, Lancaster was unable to explain a discrepancy between the spreadsheet produced during his deposition and the one at trial.

         In March 1995, Drews granted Lancaster a $40, 000 mortgage on real property Drews owned at 1705 Meeting Street, Charleston, South Carolina. The mortgage was not recorded until November 1995. Drews did not execute a note on the mortgage, and Lancaster did not provide any contemporaneous consideration for it.

         On April 27, 1995, Drews, as attorney-in-fact for Lancaster, signed an agreement to purchase a residence at 2 Nuffield Road, in Charleston, South Carolina. Lancaster claimed he and Drews agreed they would substitute a one-story house chosen by the Drewses for the Bainbridge property because of medical problems with Drews's knees. Lancaster claimed he gave Drews a power of attorney to sign a sales contract on Lancaster's behalf; however, at trial, Lancaster could not find the document granting this authority, and no such document could be found in the public records. Mrs. Drews paid the $1, 000 deposit on the home. On May 15, 1995, Lancaster increased the $40, 000 line of credit to $79, 250 and purchased the Nuffield property for $125, 000 the following day. On May 17, 1995, Lancaster executed a "Memorandum of Lease and Subordination Agreement" for the Nuffield property that actually granted the Drewses a life tenancy in the property for consideration of $10.00 "and other good and valuable consideration." The document was recorded; however, it was titled as a "lease" rather than as a deed.

         In 1996, Drews and his business partner, Raymond Beasley, opened a hardware store in Charleston. The store, known as Builders Station, was incorporated, and its board of directors approved a business plan and capital structure that provided for the sale of stock to outside investors. Gordon, one of the outside investors, purchased fifty shares of stock on September 9, 1996, for ...

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