American Wholesale Corp. v. Mauldin

• Decision Date: 19 April 1924
• Docket Number: 11478.
• Citation: 122 S.E. 576,128 S.C. 241
• Parties: AMERICAN WHOLESALE CORPORATION ET AL. v. MAULDIN ET AL.
• Court: South Carolina Supreme Court

122 S.E. 576

128 S.C. 241

AMERICAN WHOLESALE CORPORATION ET AL. v. MAULDIN ET AL.

No. 11478.

Supreme Court of South Carolina

April 19, 1924

Appeal from Common Pleas Circuit Court of Hampton County; J. K Henry, Judge.

Action by the American Wholesale Corporation and others against W H. Mauldin and others. From a judgment of nonsuit plaintiffs appeal. Reversed, and a new trial ordered.

J. A Mace, of Hampton, for appellants.

George Warren, of Hampton, for respondents.

MARION J.

Action for damages for breach of contract. The complaint alleged inter alia, that the defendant W. H. Mauldin was the president and general manager and sole owner of the stock of Mauldin & Hughes, a mercantile corporation; that on or about March 15, 1922, the defendant Mauldin "entered into an agreement with J. A. Mace, as attorney for certain creditors and for the benefit of all creditors of Mauldin & Hughes, Inc., whereby, in consideration of the fact that the creditors of Mauldin & Hughes, Inc., would not close the said corporation's doors and allow them to continue the business until May 15, 1922, that the said W. H. Mauldin would pay all creditors of Mauldin & Hughes, Inc., 25 per cent. of the amount of their claims in full settlement of the same and take over the business of the said Mauldin & Hughes, Inc., in his own name; that pursuant to said agreement the creditors of Mauldin & Hughes, Inc., did not close the doors of the said corporation, but allowed them to go on with the business and refrained from bringing any proceedings to close the business and allowed them to operate until the appointment of a receiver for the said corporation on June 6, 1923. The receiver was appointed upon and after the refusal of the said W. H. Mauldin to guarantee in writing the payment to the creditors of Mauldin & Hughes, Inc., 25 per cent. in full settlement of their claims and to secure the same in any manner; that the said agreement has been duly performed on the part of the plaintiff by their attorney and other creditors of Mauldin & Hughes, Inc." The defendant by answer denied generally the material allegations of the complaint and specifically denied that he had ever agreed "to assign or transfer the said equity to any creditor," or that he had ever agreed to become personally liable for the debts of the said corporation. What "equity" is referred to in the answer is not disclosed by the record.

On the trial, when plaintiffs undertook to prove the contract alleged in the complaint, it appearing that the agreement relied on was not in writing, upon objection by defendant, the evidence offered to establish the contract was excluded by the trial judge on the ground that "such testimony was obnoxious to the statute of frauds." As a consequence of that ruling a nonsuit was ordered. From the judgment of nonsuit the plaintiffs appeal.

1. Appellant's first contention is that the objection that the contract sought to be established was in contravention of the statute of frauds was not available to defendant for the reason that the statute had not been pleaded. In the case of Suber v. Richards, 61 S.C. 393, 39 S.E. 540, this court, after full discussion, expressed this view:

"There is much conflict in the decisions on this subject as shown by the citations in 9 Ency. Pl. & Pr. 705, but the better rule is stated to be that the party seeking the protection of the statute should plead it."

That view was recognized and approved in Coward v. Boyd, 79 S.C. 134, 60 S.E. 311, and in Fanning v. Bogacki, 111 S.C. 376, 98 S.E. 137. In the present state of our decisions, this court is committed to the doctrine that the party seeking the protection of the statute of frauds must plead it. But we do not deem it necessary to rest the decision here upon that ground. See 25 R. C. L. 746, § 398; note 49 L. R. A. (N. S.) 16.

2. The appellant's second contention is that the alleged agreement was not within the statute of frauds, in that the contract relied on was an original promise and not such a collateral undertaking to answer for the debt of another as falls within the statute. We think the contention is meritorious. In the recent case of Gaines v. Durham, 124 S.C. 435, 117 S.E. 732, the authorities in this jurisdiction and elsewhere have been very fully reviewed and discussed by Mr. Justice Cothran. By reference to the opinion in that case it will be seen that this Court has always recognized and approved, and with more or less consistency adhered to, the broad rule laid down by Chancellor Kent in an early leading case ( Leonard v. Vredenburgh, 8 Johns. [ N. Y.] 29, 5 Am. Dec. 317), that where a...