Blair v. Black

• Decision Date: 16 July 1889
• Citation: 9 S.E. 1033,31 S.C. 346
• Parties: BLAIR et al. v. BLACK et al. COHEN et al. v. SAME.
• Court: South Carolina Supreme Court

9 S.E. 1033

31 S.C. 346

BLAIR et al. v. BLACK et al.

COHEN et al. v. SAME.

Supreme Court of South Carolina

July 16, 1889

Appeal from common pleas circuit court of York county; J. B Kershaw, Judge.

Actions by Lewis H. Blair, heretofore trading as L. H. Blair & Co. E. B. Springs, survivor of E. B. Springs and E. S. Burwell traders as Springs & Burwell, and J. H. Hargrave, Sr., and J H. Hargrave, Jr., traders as J. H. Hargrave & Son, against John G. Black, assignee of James W Black and Jacob K. Carpenter, as individuals, and copartners as Black & Carpenter, and of James W. Black, Jacob & Carpenter, and John L. Davis, as individuals, and copartners as Black, Carpenter & Davis, and by David Elias and Solomon A. Cohen, partners as Elias & Cohen, and C. E. Wingo, J. S. Ellett, and J. D. Crump, partners as Wingo, Ellett & Crump, against the same defendants, to set aside an assignment as void for preferences given. An order of reference was agreed to and made to the testimony. Afterwards the circuit court filed its decree in favor of plaintiffs, and defendants appeal.

C. E. Spencer and W. B. McCarr, for appellants.

Hart & Hart, for appellees.

McGOWAN J.

On January 29, 1889, James W. Black and Jacob K. Carpenter, of the old mercantile firm of Black & Carpenter, and also of its successor, Black, Carpenter & Davis, made an assignment of both their individual and partnership property for the payment of their debts to John G. Black, as assignee and trustee. J. L. Davis, one of the latter firm, did not sign the original deed of assignment, being absent at the time it was executed, but ratified it some days later, and indeed executed another deed, conforming substantially to the first. The assignment provided that the property and assets of the individual members of the respective firms should be first applied to the payment of the individual debts of the members of the firm, and that the property and assets of the firms, respectively, should be first applied to the debts of the partnership, and that if a surplus should remain after paying the debts of the one class, then such surplus should be applied to debts of the other class, and so receiprocally of the other class. The assignment also provided that, if there should not be sufficient funds to pay the debts, the assignee should pay them ratably, or such as should, within 30 days from the date of the assignment, agree to accept the terms of it, and to release the parties from all liability on their debts and claims, etc. The cases stated above were instituted by creditors of the respective firms for the purpose of setting aside the deed of assignment, and, being identical in object and purpose, were consolidated and heard together. Several grounds were urged sufficient, as alleged, to set aside the assignment, and subject the property to the claim of creditors according to law, but, from the view which the court takes, it will not be necessary to consider any of the objections except the one chiefly relied on by the assailing creditors, viz., that, in violation of section 2014 of the General Statutes, which denounces assignments giving preferences as "absolutely void," this assignment gives undue and illegal preferences to individual over copartner-ship creditors, in excluding the partnership creditors, after exhausting the partnership assets, from coming in and participating with the individual creditors in the individual property of the members of the different firms; the proposition relied on being that, under the law of this state, the individual creditors are not entitled to be paid first out of the individual property, but have only an equity to require that the partnership creditors should exhaust the assets of the firm and, after that is applied, they are then entitled, as to any balance due them, to share equally and ratably with the individual creditors in the individual assets, while, on the other hand, in support of the assignment, it is urged that the rule is that the joint debts are primarily payable out of the joint effects, and are entitled to a preference over separate debts; and so, in the converse case, the separate debts are primarily payable out of the separate effects, and as to that possess a like preference, and the surplus only, after satisfying such priorities, can be reached by the other class of creditors, so that really the only question involved is one purely of law. What was the law of this state upon the subject when the assignment was executed?

The cause came on to be heard by Judge KERSHAW, who, making a full and interesting review of the authorities both in the English and American courts, in law and in equity, held that the question as to the priority of the individual over the partnership creditors in the individual property of the members of the firm was still an open question in this state and "furthermore that the departure from this settled rule of administration of partnership assets, where there are individual claims and individual property, is wholly founded upon the case of Wardlaw v. Gray, Dud. Eq. 110, and that wholly upon a total misconception of the English cases cited to support it. With great deference to the opinions of the eminent jurists whose decisions are here reviewed, I am impelled to the conclusion that in the case under consideration the individual property is first applicable to the individual debts, and that the provisions upon that subject in the assignment are in strict conformity to the established rule, and therefore constitute no improper preference." -- and dismissed the complaints. From this decree the plaintiff's partnership creditors appeal to this court upon the ground, inter alia, that it was error of law to hold "that, as between the partnership creditors of a firm and the individual creditors of its members and the individual assets are first liable to...