Walker v. Brothers

• Decision Date: 22 April 1885
• Court: South Carolina Supreme Court
• Parties: WALKER, EVANS & COGSWELL v. BOLLMANN BROS.

22 S.C. 512

WALKER, EVANS & COGSWELL

v.BOLLMANN BROS.

Supreme Court of South Carolina.

Apr. 22, 1885.

1. A complaint by subsequent creditors attacking as fraudulent a prior mortgage, should not be dismissed as insufficient. A prior deed of a debtor may under some circumstances be assailed by a subsequent creditor with notice.

2. Where a deed or other instrument has been executed by one not in debt at the time, and the deed is founded upon a sufficient consideration, it is invulnerable as to subsequent creditors with notice, as well as to all others.

3. Before a subsequent creditor can attack a settlement or transfer of a party made when not indebted, he must show that the same was voluntary and was made with reference to future indebtedness, or prove circumstances of fraud other than what arises from its being voluntary.

4. When a Circuit judge in a chancery case has not indicated upon what findings of fact he bases his conclusion of law, this court must pass upon the facts as original questions.

5. A bond and mortgage executed between parties closely connected, held, not to have been without consideration, or given with a view to future indebtedness, or attended by circumstances showing fraud upon subsequent creditors, notwithstanding some suspicious conduct between the parties at or about the same time. MR. JUSTICE MCGOWAN dissenting.

6. The bond and mortgage being good, plaintiffs cannot attack its subsequent assignment by the mortgagee as collateral security for a debt due by her, or raise any question as to whether the debt so collaterally secured has been paid, both mortgagee and assignee being before the court.

7. Where the plaintiff fails to appeal from a finding of fact in a decree which gives him the relief he asks, he is concluded by such finding.

8. Where plaintiffs allege in their complaint that property of S. has been fraudulently disposed of by mortgage, the question whether such property is in the hands of S., only as agent of H., cannot be considered.

Before COTHRAN, J., Marion, April, 1884.

This was an action by Walker, Evans & Cogswell, H. K. & F. B. Thurber & Co., and others, judgment creditors of A. Schafer, against Bollmann Bros., H. Sternberger, L. Sternberger, and A. Schafer, trading under the firm name of A. Schafer, E. Iseman, and E. Sternberger. The opinion states the case. The Circuit decree was as follows:

The plaintiffs, to maintain the issues on their part, offered in evidence:

1. The judgments obtained by them in the court of trial justice; the transcripts of the same filed in the clerk's office; and the returns of nulla bona, made by the sheriff on the executions.

2. The proceedings before the referee supplementary to the executions, including Judge Hudson's order of February 2, 1884.

3. The certified examination under said order, taken in writing, of A. Schafer, H. Sternberger, B. Bollmann, and E. Iseman, with numerous exhibits, including the mercantile books of A. Schafer, the bond and mortgage of A. Schafer to H. Sternberger, of November 8, 1881; the three notes of Lizzie Sternberger to Bollmann Bros., aggregating $4,500; the accounts current severally of Bollmann Bros. with A. Schafer and Lizzie Sternberger, and the proceedings before trial justice Evans, resulting in judgments in favor of E. W. Percival and Boykin, Carmer & Co. vs. A. Schafer and Lizzie Sternberger sued jointly.

4. The order dated February 23, 1884, made at chambers on the motion to appoint a receiver. The defendants' counsel objected to the introduction of the evidence taken in writing before the referee in supplementary proceedings, upon the grounds: (1) that that is an independent proceeding; and (2) that the parties who testified there being present or procurable, the evidence proposed is not the highest evidence. The objection was sustained. The plaintiffs' counsel were not disposed to risk their case upon the testimony of adverse witnesses and declined to put the defendants upon the stand, but claimed the right, as they are all parties to this suit, to prove by the referee and others, who were present at the examination, the declarations there made by them. I held that this could be done; and to this ruling the defendants by their counsel duly excepted.

A. Q. McDuffie, Esq., the referee, was then sworn, and testified as follows: “I saw H. Sternberger sign this paper” (testimony taken upon the examination). “It was read over to him before he signed it.”“Behrend Bollmann also appeared before me and testified as a witness, I took down his testimony, certified it, and believe that” (referring to the written testimony) “to be what he said.”

X by Mr. Harllee:“A good deal of what he said was not taken down. I tried to take down all the material testimony. I exercised great care and took down the answers as nearly in the words of the witness as I could. I don't think I read over Bollmann's testimony to him.”

X by Mr. Nettles:“There were two examinations of H. Sternberger. I think I read both over to him; he only signed one.”

“The corrections (alteration of words) ran through both examinations of H. Sternberger and were made at his instance as read over to him. I think as I said at first that both were read over to him; one follows the other.” Again witness said: “As to A. Schafer and E. Iseman's testimony, I have the same to say as in regard to B. Bollmann's.'DDD' “Schafer speaks indistinctly broken English.”

The testimony is too voluminous to make further extracts from it; with my own notes of evidence, it is all in writing and can be taken up if necessary to do so. It consists, besides my notes taken at the trial and the numerous exhibits and books of account, of nearly ninety pages of legal cap, and from a careful and patient consideration of all of it, I have reached certain conclusions, which I shall now proceed to state:

First. The execution of the bond and mortgage by Schafer to H. Sternberger, and by him assigned to Lizzie Sternberger, and by her to Bollmann Brothers, was fraudulent.

Second. The transfer of the same to Bollmann Bros. was without fraud so far as they are concerned, but the three notes made by Lizzie Sternberger and signed by them as accommodation endorsers, were paid by them with her funds as appears by the account current, and at or about the time of their maturity. They were so marked at the time of payment by Bollmann Bros., who had the unquestionable right if they paid them with their own funds, to have cancelled their own endorsements, and to have held them as subsisting claims against Lizzie Sternberger, the maker. Instead of doing this, however, they have marked them paid, and their true and only value now is that of vouchers in their hands, showing the disbursement to that extent of her funds.

The question of application of payments, so earnestly urged at the trial by the counsel for the Sternbergers, is at rest, wheneverit appears that the application has been actually made by the creditor and acquiesced in, as was done in this case; and notwithstanding the fact that there is a balance still due to Bollmann Bros. on the account with Lizzie Sternberger, such can only appear by striking the same at the foot of the account, and the balance so found cannot be referred to the intermediate items of the notes which had been already paid, and such payment destroyed forever the said mortgage as a security in the hands of Bollmann Bros. “When the brains are out the man must die.” B. Bollmann said in his testimony concerning these notes, that when they were endorsed, on March 13, 1882, the several amounts were charged up to Lizzie Sternberger on her account current; that the rule of their house is the same as to endorsements and acceptances.

This does not appear to me to be in conformity with the rule of law upon the subject or with the approved custom of merchants. The relations between the endorser and the endorsee, and between the acceptor and the drawer, are altogether different. In the former it is not the reasonable expectation of the endorser to be compelled to pay. In the latter the acceptor can expect nothing else, for the very fact of accepting implies the possession of funds of the drawer for that purpose, and in such case it is proper to charge up to the drawer the amount of the acceptance-not so, however, in the case of endorsement; and notwithstanding the fact that in law the act of endorsement is an acknowledgment of pecuniary liability to the endorsee, and in order to preserve his credit and prevent protest the endorser does pay promptly and punctually, it is not in his original contemplation to do so.

The testimony of B. Bollmann that these notes were paid with the funds of Bollmann Bros. must be regarded as but little, if anything, more than a mere play upon words, for it clearly appears, from their own entries on the account current, that at the maturity of the two notes first due they were in funds of Lizzie Sternberger by remittances of cash for the exact amounts and at the precise times, and as to the third note that they were at its maturity partially in funds of hers, and soon afterwards fully so. It is most probable that Pelzer, Rodgers & Co., the endorsees of said notes, were paid with funds of the bank upon the checks of Bollmann Bros. It is needless, however, to speculate upon this point. It is quite enough that the fact appears that Bollmann Bros. were in funds belonging to the maker of the notes.

Third. It is contended by the plaintiffs that Bollmann Bros. should make up to the creditors of Schafer the difference between the appraised value of the stock of goods and the amount realized at the sale. I do not find in the connection that Bollmann Bros. have had with this matter enough to warrant the allowance of this demand, even if there were any proof upon this point to guide me to a satisfactory conclusion. I have already held that the transfer of the bond and mortgage to Bollmann Bros. was without fraud on their part; this,...