Lamar v. Pool
| Decision Date | 19 April 1887 |
| Citation | 2 S.E. 322,26 S.C. 441 |
| Parties | LAMAR, Sr., and others, Partners, etc., v. POOL and another. |
| Court | South Carolina Supreme Court |
Appeal from circuit court, Laurens county.
W. H Martin, for respondents.
William H. Pool, (respondent,) merchandising at Laurens Court-House being largely indebted to Martin B. Pool, (the other respondent,) for moneys advanced him to commence business and to aid him in the continuance thereof, as it is alleged, executed a mortgage to the said Martin B., embracing his entire mercantile assets, goods, wares, etc., actual and prospective, to secure the payment of said indebtedness, aggregating $6,800, with authority on the part of the said Martin, upon default of payment, to take possession, and to sell the same, returning the surplus, if any, to the said William H., etc., which was recorded. William H. Pool was quite ill at the time, and, during his illness, after the execution of this mortgage, Martin was frequently about the premises, but it does not seem that he took possession under the mortgage. The clerks of W. H. continued to sell the goods as usual, and from the proceeds of sales paid to Martin some $2,400 on his claims. W. H. Pool recovered, and soon thereafter the mortgage was marked "canceled" on the record, January 20, 1885, and the remainder of the goods were sold by W. H. Pool. In February, 1885, the plaintiffs obtained a judgment against W. H. Pool, on account for goods sold, amounting to $24.85, execution was issued, and a return of nulla bona made, whereupon the action below was instituted in behalf of the plaintiffs, and such other creditors as might come in, demanding judgment that the mortgage be adjudged an assignment for the benefit of the creditors of W. H. Pool; that Martin B. Pool be adjudged the assignee; and that an accounting be had, etc.
The case was referred to the master "to hear and determine all issues of law and fact" to be reported to the court, who found and reported as matters of fact (1) "that, at the time of the execution of the mortgage, the defendant W. H. Pool was insolvent, and that he knew himself to be so; (2) that he intended, by the execution of the mortgage to Martin B. Pool, to transfer all of his tangible property to the exclusion of his other creditors, and to prefer him over all other creditors; (3) that the mortgage has accomplished, and was intended to accomplish, the purpose of an assignment," Martin B. Pool being preferred, etc. And he recommended that the plaintiffs have judgment declaring the mortgage void under section 2014, Gen. St., requiring the defendants to disclose fully, and to account for all the assets of the mercantile business of the said William H. Pool, etc., and for costs; citing Wilks v. Walker, 22 S.C. 108, and Austin v. Morris, 23 S.C. 393.
This report, with exceptions, was heard by his honor, T. B. FRASER, who upon the testimony reported, while sustaining the finding of fact by the master as to the insolvency of W. H. Pool, overruled him as to the object and intent of the mortgage, and found "that the evidence was in favor of the view that the mortgage was given bona fide as a security, and not as a preference, although it might have had the effect, if it had been foreclosed, of defeating all other creditors." Upon this finding his honor held that the principle of Wilks v. Walker and Austin v. Morris did not apply so as to justify the conclusion that the mortgage was void as an assignment under section 2014 of the General Statutes. He therefore adjudged that the report of the master be overruled, and the complaint be dismissed, with costs.
The cases of Wilks v. Walker and Austin v. Morris have established the doctrine that it is not absolutely necessary for a paper to be in the form of a general assignment for the benefit of creditors in which a preference is given, to render it void under section 2014, Gen. St., but that any papers, whether single or more than one, connected with each other operating as an assignment, and intended to give a preference, shall have that effect; in other words, any attempted evasion of the act in form, while the end prohibited is accomplished, though not in violation of the terms of the act, is yet a violation of its spirit, and therefore as violative of the act as though contrary to its express terms in form.
While this is now the conceded law of the state, and must govern in all cases where the intent inhibited appears, yet these cases did not disturb the well-established principle that an indebted party might make a mortgage to secure one creditor over another. In the case of Austin v. Morris, the court, in discussing this question, used the following language: "A man may by a bona fide mortgage, which is intended merely as a security, prefer one creditor;" so that in all of these cases where the instrument assailed as contrary to section 2014 does not in its form violate that section, having ear-marks that cannot be mistaken, the question must hinge upon the intent of the parties. Is the paper a bona fide mortgage, intended as a security, which the law allows, or was it intended as an assignment in which the particular creditor is preferred, the form of the paper having been adopted to evade the act? This question, in such a case, becomes a question of fact, and such is the case now before the court, because we suppose there is no doubt that the instrument assailed here is not in form an assignment for the benefit of creditors, such as that mentioned in section 2014, and which is declared therein to be void, if a preference is given, whether fraudulent or not; the preference itself, without more, defeating it.
Upon this vital question, and which, as it appears to us, is the only question in the case, the master and the circuit judge differ. There is no difference as to the law under Wilks v. Walker and Austin v. Morris; but the difference is as to whether the facts of this case bring it under those cases, and the law as there settled. Where a referee or master and the circuit judge differ upon a question of fact, in a chancery case, and there is an appeal on the findings, they come before us as open questions. And in such case it is our duty to examine the testimony, and form our conclusions, uninfluenced by the previous findings. This we have done here, and the result of our examination is to sustain the circuit judge. The action below assailed the paper in...
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