Miller v. Hughes

• Decision Date: 08 December 1890
• Citation: 12 S.E. 419,33 S.C. 530
• Parties: MILLER et al. v. HUGHES et al.
• Court: South Carolina Supreme Court

12 S.E. 419

33 S.C. 530

MILLER et al. v. HUGHES et al.

Supreme Court of South Carolina

December 8, 1890

Appeal from common pleas circuit court of Hampton county; HUDSON Judge.

Action by Daniel Miller & Co. against A. J. Salinas & Son, Z. Daniel & Co., and Dr. Thomas, defendants. The complaint was as follows:

"The plaintiffs, complaining on behalf of themselves and all other creditors of the defendant L. F. Hughes who shall in due time come in and seek relief by, and contribute to the expenses of, this action, allege: (1) That at the time hereinafter mentioned, the plaintiffs, Theodore K. Miller Daniel Miller, Robert C. Davidson, I. Frank Supplee, and Richard M. Turner were doing business in the city of Baltimore under the firm name of Daniel Miller & Co. (2) That between the 4th day of September, 1889, and the 12th day of September, 1889, the said L. F. Hughes became indebted to the plaintiffs, as partners, in the sum of nine hundred and twenty-nine dollars and seventy-two cents, for goods sold and delivered, as per account hereto attached as Exhibit A, and made a part hereof, of which account four hundred and forty-three 37-100 dollars is now due, and balance will be due in a few days. (3) That said L. F Hughes and defendant L. F. Brunson about two years ago entered into a mercantile partnership, and carried on such business, advancing farmers to make crops, buying and selling divers commodities on credit, and taking mortgages and other security therefor, in the name of Hughes & Brunson, and continued such business up to about six months ago. (4) That after said dissolution defendant L. F. Brunson held possession not only of all said paper, but the stock in trade as well, but acknowledged that said Hughes still had an interest in the securities of the late firm, at least. (5) That shortly prior and subsequent to said dissolution of said firm of Hughes & Brunson, said L. F. Hughes, for the purpose of deception in procuring credit, and by some mysterious influence, obtained a high property rating in the two leading commercial agencies of the United States, which rating was untrue. (6) That said L. F. Hughes, shortly after said dissolution of the said firm of Hughes & Brunson, and although the stock of goods of such firm were still undisturbed, left in the possession of his former partner, Brunson, who continued the business in his name,--he (said Hughes) erected a small and cheap building or storehouse, about three miles from the town of Brunson, which he soon crammed with ten thousand dollars' worth of goods, procured as hereinafter stated, but which goods, for reasons hereinafter stated, only remained there a short time. (7) That said L. F. Hughes, having erected the store-house aforesaid, about thirty feet by fifty, if so large, visited Baltimore and New York and other cities, and, on the strength of said false rating, and by promises too many to mention, bought on credit, from unsuspecting merchants, some ten thousand dollars worth of goods, some of the finest fabrics, to sell among poor people, in a sparsely populated country, after most of the cotton was gone to market, and to cram into said little store-house, costing one hundred dollars, if that much. (8) That said large quantity of goods were out of all proportion to the trade of the section of country where said store-house was situate, and capacity of same; and said Hughes, in order to avoid suspicion and unfavorable comment, caused a quantity of said goods to be shipped to Campbellton, a station on the Port Royal & Augusta Railway, although Brunson is and was the home of said Hughes, and the depot where he had heretofore received his goods. (9) That said Hughes made all large accounts payable very nearly the same time, which, in the light of subsequent events, was shown to be a part and parcel of the original undertaking to buy heavily on credit, and not pay for the goods. (10) That on the 12th day of November, 1889, Francis H. Leggett & Co. of New York instituted a suit against said L. F. Hughes on a small account, which said Hughes, after frequent promises, had declared his inability to pay. (11) That, within three days after the summons had been served in said suit on said Hughes, and a short time before the large claims fell due, said Hughes, in order to defraud his creditors, pretended to sell all of the goods, of the value of eight thousand dollars or more, to his late partner, L. F. Brunson; and, in order to give some color to this transfer or assignment, said Hughes, or some one in his behalf, sent a hasty message by wire, as plaintiffs are informed, to defendants Z. Daniel & Co., at Augusta Ga., to send a certain sum of money, about four thousand dollars, to Brunson town, to be used ostensibly as purchase money in this patent attempt to put the said goods beyond the reach of honest creditors, and said amount of money was exhibited to certain parties, as plaintiffs are informed, which was supposed by said Hughes to have been all that was required to give validity to this fraudulent assignment against creditors. (12) That defendant L. F. Brunson had every reason to know, and did know, that the object of defendant L. F. Hughes in endeavoring to transfer and assign the said large stock of goods in the manner, and at less than half their costs, aforesaid, the goods being new, was to prevent plaintiffs in the said pending action, and other creditors of said L. F. Hughes, from collecting their just demands; said demands being for the purchase money of the identical merchandise, and said transfer is therefore void against creditors. (13) That said Hughes transferred, as aforesaid, all of his stock in trade, and never made, as is somewhat customary under like circumstances, a pretense of leaving a few worthless articles for his defrauded creditors. (14) That said transfer or assignment is fraudulent and void against creditors, and in violation of the statute of this state. (15) And plaintiffs further allege that while L. F. Hughes was a partner with L. F. Brunson, as aforesaid, he executed mortgages on his real estate, except, perhaps, his home-stead, to defendants Caroline Salinas, Edward Salinas, and A. J. Salinas, who were and are partners, doing business as A. J. Salinas & Son; and that, although large sums were paid on said mortgage during the existence of said partnership of Hughes & Brunson, and subsequently by L. F. Brunson and L. F. Hughes, yet no credits were placed on the record, and the creditors are uninformed as to the balance due defendants Salinas & Son on said mortgages, and they should be adjudged to declare same on oath. (16) That defendants Z. Daniel & Co., well knowing the object of Hughes in attempting to transfer the said stock of goods to said Brunson, and having been hastily summoned from Augusta, Ga., to advance a certain amount of money to be seen by witnesses, and being warned by all the surrounding circumstances of the ulterior object in transferring or assigning the entire stock of goods to said Brunson, put up a certain sum of money,--about one-half of the value of the goods,--which was held out as the money paid by Brunson; whereupon a mortgage was drawn by L. F. Hughes from said L. F. Brunson to Z. Daniel & Co. on the stock of goods, as security for said money as claimed, which mortgage is, as stated, in the handwriting of L. F. Hughes, and bears date November 14, 1889, payable February 1, 1890, and given, as set out, to secure forty-five hundred dollars. (17) That said mortgage, having been taken by Z. Daniel & Co. with full knowledge of the purpose of said transfer, as aforesaid, is void against the creditors of said Hughes. (18) That plaintiffs are informed and believe that Z. Daniel & Co. never advanced the said forty-five hundred dollars, the consideration of said mortgage, but that same was shown witnesses, and soon afterwards returned to Z. Daniel & Co., and that they (Z. Daniel & Co.) will so declare under oath, which plaintiffs pray they may be adjudged to do. (19) That the defendant Doctor Thomas has purchased on credit, from Hughes, a tract of land in this county, known as 'Oregon,' and owes something on the purchase money, which, when established, should be ordered to be paid towards the settlement of the debts of said Hughes herein. (20) That said Hughes is insolvent, and the stock of goods is perishable, and the rents of the mortgaged realty are being collected by him, and L. F. Brunson is not responsible for the value of said goods. (21) That the mortgages and assignment aforesaid constitute but one instrument in law, and are parts of one general plan to secure a preference to mortgagees and assignees at the expense of the general creditors of L. F. Hughes, who was insolvent, and said transactions are in fraud of sections 2014 and 2015 of the General Statutes of this state, and are void as aiding a debtor in disposing of his property to defeat creditors, or in being taken with sufficient knowledge of the intent of Hughes to defeat creditors."

Wherefore the plaintiffs demand judgment: "(1) That said transfer or assignment to L. F. Brunson and the mortgage to Z. Daniel & Co. be adjudged fraudulent and void against the plaintiffs and all other creditors of L. F. Hughes who shall come in and share the expenses of this action. (2) That a receiver of all the property and effects of L. F. Hughes be appointed. (3) That the defendant L. F. Brunson be required and adjudged to account for all the property received by him under said transfer...