Parker Peanut Co. v. Felder

• Decision Date: 07 June 1945
• Docket Number: 15742.
• Citation: 34 S.E.2d 488,207 S.C. 63
• Parties: PARKER PEANUT CO. v. FELDER et ux.
• Court: South Carolina Supreme Court

34 S.E.2d 488

207 S.C. 63

PARKER PEANUT CO. v. FELDER et ux.

No. 15742.

Supreme Court of South Carolina

June 7, 1945

Zeigler & Brailsford, of Orangeburg, for appellants.

Adam H. Moss, James A. Moss, R. A. Bowman, and C. E. Summers, all of Orangeburg, for respondent.

FISHBURNE Justice.

The Parker Peanut Company brought a suit in equity against M. H Felder & Company in the nature of a creditors' bill which was merged and consolidated with a later case of the same nature against the same defendant by Bob Clark, trading as Clark Tire Company. Insolvency of the defendant was alleged, and a receivership sought.

Later Charles R. Allen, on behalf of himself and all other creditors of M. H. Felder & Company, which was a wholesale grocery corporation with its principal office in Orangeburg, instituted an ancillary suit against this defendant and the defendants, M. H. Felder, Grace K. Felder, M. H. Felder Real Estate Company, and M. & H. Grocery Company. This action was brought for the purpose of sweeping aside the corporate veils from the defendants, M. H. Felder & Company, M. H. Felder Real Estate Company, and M. & H. Grocery Company; for injunctive relief, and for the appointment of a receiver to take charge of the assets and affairs of all of the named parties for the benefit of creditors.

The lengthy history of this litigation will be found stated in detail in two previous appeals to this Court: Parker Peanut Co. v. Felder, 200 S.C. 203, 20 S.E.2d 716, and Parker Peanut Co. v. M. H. Felder & Co., 196 S.C. 271, 13 S.E.2d 143.

The record shows that the individual appellants, M. H. Felder and Grace K. Felder, are husband and wife, and that the three corporations herein named were used by them as blinds behind which to hide themselves for the purpose of defrauding creditors. They were the sole owners, stockholders, and managers of the business carried on by the pseudo corporations.

After a full hearing before a referee, the Circuit Court held in a decree affirmed by this Court, that the defendants were insolvent, and that their affairs should be placed in the hands of a receiver for the benefit of creditors. Following due advertisement by the receiver, claims were duly filed, and all the assets of the individual appellants and of the three purported corporations, which had been seized and converted into cash, were disbursed proportionately to the creditors, leaving, however, a substantial balance due.

It was held in the two decisions of this Court above referred to, that the individual appellants, M. H. Felder and Grace K. Felder, were engaged in a scheme or plan to defraud creditors for their own enrichment, and that the various transfers of assets from one name to another, and from one corporation to another, in reality resulted in no change of ownership of the assets so transferred, but that such ownership remained in appellants. It was concretely stated: 'In the instant case, we have an association composed of two people doing business under five names, and regardless of what name in which title to property is held by the two individuals, it will at all times remain liable for their debts.'

Following the complete liquidation of all assets and the discharge of the receiver, the Circuit Court, on motion of the Parker Peanut Company, granted an order giving a personal judgment against M. H. Felder and Grace K. Felder in behalf of the Parker Peanut Company and all other unsecured creditors for the balance due on their individual claims. The Felders have appealed from these judgments.

The sole question presented by the appeal is whether under the facts of this case a judgment in rem can be made the basis of a judgment in personam. Essentially, the issue is whether these personal money judgments rendered against M. H. Felder and Grace K. Felder properly come within the scope of the pleadings and proofs in these consolidated equity suits.

These suits brought in chancery were merged and prosecuted as class artions for the benefit of creditors, numbering in all 150. The lower Court held that it had jurisdiction to grant personal judgments against the Felders in favor of the individual creditors for the unpaid balances due them. And this holding was predicated in part upon the theory that this Court had previously adjudicated that the Felders were personally liable for the debts of these various corporations. We think the Circuit Court misapprehended the specific questions passed upon by this Court in the former appeals.

The prime purpose of the suits as consolidated was the appointment of a receiver, the seizure of all assets of the spurious corporations and of the individual defendants, and their division among the creditors. The object sought was to gain possession of the res and to subject this property to the payment of what was deemed the personal obligations of the Felders,...