Wilks v. Walker

• Decision Date: 06 January 1885
• Citation: 22 S.C. 108
• Parties: WILKS v. WALKER.
• Court: South Carolina Supreme Court

22 S.C. 108

WILKS v. WALKER.

Supreme Court of South Carolina.

January 6, 1885

1. The manifest object of section 2014 of the general statutes is to prevent an insolvent debtor from transferring or assigning his property for the benefit of one or more creditors to the exclusion of others, and whether this object is sought to be effected by a formal deed of assignment or in any other mode can make no difference.

2. Where an insolvent debtor transfers all of his property to one creditor by means of a chattel mortgage and, at a later date, by a bill of sale and a deed of conveyance, all under a design originally determined on by himself and the favored creditor, for the benefit of such creditor and another, to the exclusion of all other creditors, the transaction is void because in violation of the statute that prohibits assignments for the benefit of creditors from giving preferences.

MR CHIEF JUSTICE SIMPSON dissenting .

Before FRASER, J., Chester, October, 1883.

The opinion sufficiently states the case. The appeal was taken upon the following exceptions:

1. Because his honor ruled and decided that the following question propounded by the attorney for the defendants to Addison F. Kitchens, a witness for the plaintiff, on cross-examination, to wit: What property did you own on the 5th day of October, 1882? was incompetent and irrelevant.

2. Because his honor refused to allow or require the said witness to answer the said question.

Messrs. Patterson & Gaston , for appellants, cited General Statutes , ch. 72, §§ 2014-16; 1 McCord Ch. , 441; Bump Fr. Conv. , 355-6; Burr. Ass. , 495-500; 30 Ala. , 199; 22 Pick. , 269; 8 Iowa 96; 42 Me. , 445; 12 S.C. 5; 13 Id. , 368; 22 Pick. , 275.

Mr. John M. McNeel , contra.

At common law, a debtor may prefer one creditor to another. 1 McCord Ch. , 441, 475; 1 Bail. , 571; Rice Ch. , 7, 300; 2 Hill Ch. , 444; 2 S.C. 354. This right has been taken away only where there is an assignment for the benefit of creditors generally. An assignment is a transfer in trust to pay creditors; a formal paper with certain essential parts. Dudley , 51. The papers in question here are not such an assignment. Bump Fr. Conv. , 330; 10 Paige , 445; 1 Coms. , 201; 3 Sumn. , 345; 4 Watts & S. , 383; 7 Id. , 335; 23 Pick. , 446; 13 N.H. 298; 10 Conn. , 280; 26 Vt. , 686; 18 Ga. , 668; 2 Metc. , 99; 3 S.C. 266. This action has nothing to do with the land of Kitchens, and these several papers cannot be construed together. If they were, the statute makes void assignments giving preferences , that is, where the deed of assignment by its own terms declares a preference. Whatever the law ought to be, this case is not reached by the law as it is. The court can only say, ita lex scripta est; and should carefully avoid the evils of judicial legislation.

OPINION

MR. JUSTICE MCIVER.

On October 5, 1882, one A. F. Kitchens, being indebted to the plaintiff in the sum of fifteen hundred and forty-three dollars, a large portion of which had been antecedently contracted, executed a mortgage on sundry articles of personal property, including the cotton which is the subject matter of the present controversy, to secure the payment of said debt on or before the first day of January, 1883. On February 10, 1883, the said Kitchens, in consideration of said indebtedness, and of a credit of fourteen hundred and ninety-eight dollars on the mortgage debt, executed a bill of sale for the property mentioned in the mortgage to the plaintiff-all of the cotton having been ginned and packed in bales, except so much thereof as was estimated to be sufficient to pay certain agricultural liens held by Barber & Drennan, the payment of which was assumed by the plaintiff. On or about February 23, 1883, the said cotton was seized by the defendant Walker as sheriff under a warrant of attachment issued by the defendants, Cousar & Son, against the said Kitchens, and upon repeated demands made therefor by the plaintiff he refused to deliver it up to the plaintiff. On April 5, 1883, the said sheriff levied upon the cotton under an execution obtained in the case in which the above mentioned warrant had been issued, and a bond of indemnity having been executed to him by Cousar & Son, with the defendant, Allen Beard, as surety, he sold the same to Cousar & Son, they being the highest bidders therefor. Whereupon this action was brought to recover the value of the said cotton.

The defendants, in their answer, allege that on October 5, 1882, the said Kitchens was insolvent, and that plaintiff had good reason to believe that he was so, and that the transfers of property above mentioned embraced all of the personal property of the said Kitchens subject to execution: and that on the same day the said Kitchens conveyed to the plaintiff all his real estate subject to execution, in consideration that the plaintiff would pay an antecedent debt due to the estate of Robert Patterson by the said Kitchens, and they therefore claim that these transactions between the plaintiff and Kitchens were in violation of section 2014 of the general statutes and therefore void.

At the trial, defendant's counsel proposed to ask Kitchens, while on the stand as a witness, the following question: " What property did you own on the 5th day of October, 1882?" which, upon objection being interposed by the counsel for plaintiff, " the presiding judge stated that he would have preferred to meet the question on a demurrer to the answer, but thought he ought to meet it in the shape he found it; that he thought the answer, if made out by the testimony, was no valid defence to the plaintiff's case, and that he would treat the matter in the same way he would have done if there had been a demurrer to the answer, for want of facts sufficient to prove a defence. The point to which the question was directed, and it was so conceded, was to establish the facts set out in paragraph VII. of the answer, which transactions it was claimed constituted such an assignment as was contrary to the provisions of chapter LXXII., section 2014, of the general statutes of this state, and therefore void."

The Circuit judge ruled that the said question was incompetent and irrelevant under the pleadings, and refused to allow or require the witness to answer the question. After this ruling, the defendants, of course, offered no further testimony, and the plaintiff had a verdict. The sole question, therefore, raised by this appeal is as to the correctness of this ruling.

Treating the question as if it arose upon a demurrer to the answer, that being the way in which it was considered by the Circuit judge, and should be by us, all of the material allegations of the answer must be taken to be true. It is there alleged that at the time of the transactions between the plaintiff and Kitchens the latter was insolvent and the former had good reason to know that fact, and that these transactions " were had and made in pursuance of an original design and intent of the said Addison F. Kitchens and John W. Wilks, determined on by them in the beginning, to transfer and assign all the property of Addison F. Kitchens, subject to execution for debt, to John W. Wilks, for the benefit of the said John W. Wilks and the estate of Robert Patterson, to the exclusion of all the other creditors of the said Addison F. Kitchens."

Assuming these allegations to be true, they amount to an admission that Kitchens and Wilks intended to effect the precise object which is declared to be illegal and absolutely null and void by section 2014 of the general statutes, which reads as follows: " Any assignment by an insolvent debtor of his or her property, for the benefit of his or her creditors, in which any preference or priority is given to any creditor or creditors of the said debtor by the terms of the said assignment over any other creditor or creditors, other than as to debts due to the public, or in which any provision or disposition of the property so assigned is made or directed, other than that the same be distributed among all creditors of the said insolvent debtor equally, in proportion to the amount of their several demands, and without preference or priority of any kind whatsoever, save only as to debts due to the public, and save only as to such creditors as may accept the terms of such assignment and execute a release of their claim against the debtor, and except as hereinafter provided, such assignment shall be absolutely null and void and of no effect whatsoever."

The manifest object of the act is to prevent an insolvent debtor from transferring or assigning his property for the benefit of one or more of his creditors to the exclusion of all others; and whether this object is sought to be effected by a formal deed of assignment, or in any other mode, can make no difference. Any other view, it seems to us, would sacrifice substance to mere form, and enable insolvent debtors, by evasion, to effect a purpose declared by statute to be unlawful. The statute is a remedial one, and should be so construed as to suppress the mischief which it was manifestly designed to prevent. It being conceded, as we have seen, that the object of Kitchens and Wilks was, by the means of the papers above referred to, determined on in the outset, to effect an assignment of the property of A. F. Kitchens, who was then insolvent, for the benefit of Wilks and the estate of Patterson, to the exclusion of all the other creditors of Kitchens, the transaction was in violation of the statute, and therefore void.

The judgment of this court is that the judgment of the Circuit Court be reversed and that the case be remanded to that court for a new trial.

MR JUSTICE MCGOWAN.

I concur upon the additional ground that the conveyance of the land to...