Third Nat. Bank v. Divine Grocery Co.

• Decision Date: 12 November 1896
• Citation: 37 S.W. 390,97 Tenn. 603
• Parties: THIRD NAT. BANK et al. v. DIVINE GROCERY CO.
• Court: Tennessee Supreme Court

37 S.W. 390

97 Tenn. 603

THIRD NAT. BANK et al. v. DIVINE GROCERY CO.

Supreme Court of Tennessee.

November 12, 1896

Appeal from chancery court, Hamilton county; T. M. McConnell Chancellor.

Bill by the Third National Bank and others against the Divine Grocery Company to set aside certain conveyances, and subject the property to the satisfaction of complainants' debts.From a decree of the chancery court of appeals adjudging two of the conveyances to be void, defendant appeals.Reversed.

Cooke Swaney & Cooke and Shepherd & Frierson, for appellant.

Pritchard & Sizer, A. W. Gaines, and White & Martin, for appellees.

SNODGRASS C.J.

The bill in this cause was filed by creditors of the Divine Grocery Company to set aside several conveyances and subject property conveyed for the satisfaction of the complainants' debts.Two of the conveyances were held by the chancellor to have been valid, and from this part of the decree there was no appeal.The other two were declared to be void, as in violation of the assignment act of 1895.Defendant appealed and assigned errors.

The act is contained in chapter 128 of the Acts of the General Assembly of that session.It was approved May 11th, and took effect from the date of its passage, and is found on pages 258 to 260 of the Acts of 1895.It is entitled "An act to secure to creditors a pro rata distribution of the property, estates and assets of debtors, and to prevent debtors from making preferences among creditors by assignments, deeds of trusts, mortgages, deeds, sale, pledge or by any other form of transfer or conveyance, or by confession of judgment, and to repeal chapter 121 of the Acts of General Assembly of the state of Tennessee of 1881, entitled 'An act to secure to creditors an equal and just distribution of the estates and assets of debtors who make general assignments for the benefit of their creditors, and to prevent the giving of preference in such assignments, or by other conveyances, confession of judgment by default, or collusion in contemplation of a general assignment."'If this act be valid, then certain preferences were given which, according to its provisions, are not permissible, and the decree of the chancellor and of the court of chancery appeals affirming this decree are correct.If it be invalid, there is no objection to the preferences contained in these deeds.And the question, therefore, to be determined, is whether or not the act is constitutional.

The first objection urged is that its title is not broad enough to cover the purposes of the act, and that the act embraces more than one subject, and it therefore violates section 17 of article 2 of the constitution of the state, which, among other things, provides that "no bill shall become a law which embraces more than one subject, to be expressed in the title."We proceed, therefore, to analyze the act, to determine whether it is obnoxious to this constitutional provision.The title of the actwe have already quoted, and leaving out so much of it as refers to the repeal of a former law, which, of course, covers no subject other than that repeal, we quote again the abbreviated title: "An act to secure to creditors a pro rata distribution of the property, estates and assets of debtors, and to prevent debtors from making preferences among creditors by assignments, deeds of trust, mortgages, deeds, sale, pledge, or by any other form of transfer or conveyance, or by confession of judgment."It will be seen that it is, in general and specific terms, to prevent debtors making preferences among creditors by assignment, deeds of trust, mortgages, deeds, sale, pledge, or by any other form or transfer or conveyance, or by confession of judgment.It is general, absolute, sweeping, and unconditional to prohibit any preference, without limitation or exception; yet the eighth section of this act provides as follows: "That the provision of the act shall not apply to any assignment, mortgage, confession of judgment, or other conveyance made to pay or secure an indebtedness contracted prior to the passage of this act."Here it is obvious that, under a title of one subject forbidding a preference, an effort is made to legislate by limitation that permits a preference, and is manifestly not in accord with or pursuance of the title of the act, and that the bill embraces this subject and provision for antecedent debt preference, not contemplated in, but in direct antagonism to, the specific terms of its title.We are not here discussing at all the question of the power of the legislature to provide for such preference.We are merely determining the question whether that can be done under a title which specifically and positively forbids any preference.Again, the title of the act is to prevent preferences, among other things, by confession of judgment (only) so far as court proceedings are referred to.

The third section provides that any confession of a judgment by debtors, or permitting judgment to be taken by default fixing a lien or incumbrance on any of the debtor's property, estate, or assets, and made for the purpose of giving preference to one or more creditors, or that would so result, shall be held illegal and void, and such preferred creditor or creditors shall only be permitted to share ratably in a distribution of such debtor's assets.Here it is again obvious that a provision has been inserted in the act of a most vital and important character, and without which it is presumed that act would not have been passed, upon a subject not within the title of the act.It is clear that this effort to legislate against the result of a judgment by "default" is entirely beyond the legislation contemplated in the title, as to the effect of a judgment by "confession."They are not synonymous terms, and the express language of the act clearly shows that the legislature did not so understand them.A judgment by confession is one which results from the voluntary agreement of the parties; a judgment taken by default is one resulting either from the fact that a defendant has no defense to make, or does not appear to make it.If a party is sued...