Hubbard v. Camperdown Mills

2 S.E. 576, 26 S.C. 581, 1887 S.C. LEXIS 80

• Court: Supreme Court of South Carolina
• Decided: April 26, 1887
• Status: Published

Opinion

The opinion of the court was delivered by

Mr. Justice McGowan.

This action was instituted by certain stockholders of the “Camperdown Mills,” an incorporated manufacturing company of Greenville, for the sale of the property, injunction, the appointment of a receiver, &c. See former case, 25 S. O., 496. Among other things, an order was passed directing the master to publish a notice for six months in the cities of Boston, Philadelphia, and Greenville, requiring the creditors of the defendant corporation to present and prove their demands, “the amount, date, and rank of their respective claims.” The master published the rule as therein required, and a number of claims were established before him. He reports, “that on June 15, 1883, the said Camperdown Mills, through its officers duly authorized thereto, issued bonds to the amount of $75,000, and to secure the same executed a mortgage on all the machinery, fixtures, franchises, and leases to Hamlin Beattie, as trustee. Some of these bonds were afterwards negotiated, and have been proved before him under the order aforesaid; others were pledged as collaterals to secure money borrowed, and the notes thus secured have also been proved before him, and are set out in exhibit A, hereunto attached. These bonds and the notes secured by them as collaterals are entitled to priority of payment out of the proceeds of sale of the said machinery, fixtures, franchises, and leases,” &c.

This report was filed on November 11, 1885, and at the next term of the court was confirmed by Judge Wallace, without objection, December 4, 1885. The case was brought up on appeal to this court, but upon points no way connected with the report confirmed as stated, in relation to the debts proved and their priorities. But at the next term, on March 27,1886, a motion was made before the presiding judge for “an order recommitting the report of the master on claims, for the purpose of taking additional testimony.” This motion was refused without prejudice, and at the July term (1886) the motion to “open and recommit” was renewed, and affidavits were submitted pro and con.

Those submitted in support of the motion alleged, substantially, “That since the confirmation of the report evidence has been discovered, showing that certain of the claims of exhibit A of said report are not entitled to rank as reported by the master, viz., two notes of Hamlin Beattie amounting to $15,501.26, and certain demands designated as ‘claims’ of the Greenville National Bank, amounting to the sum of $16,466; that the master has reported these claims as entitled to payment upon exhibit A, upon the ground that they are secured by certain mortgage bonds of the said Camperdown Mills, claimed as collaterals by the said Hamlin Beattie and the bank, whereas the evidence’ above referred to shows that said bonds have never been hypothecated, and are not legal demands against the said Camperdown Mills; that the evidence referred to is to be found in the minute book of the said Camperdown Mills, which book the attorneys for these defendants were not allowed to examine until some time after the adjournment of November term of the court,'” &c.; that the resolution of the company, authorizing the bonds to be hypothecated, was as follows: “Resolved further, that the said bonds may be used as collateral security for notes, as in the discretion of the board may be deemed expedient,” but that there was no formal resolution of the board hypothecating the bonds claimed as collateral security by Beattie and the bank; that the said Hamlin Beattie is president of the bank, and a large number of the bonds were entrusted to him for sale, and he now claims the right to hold the same to indemnify said bank for losses sustained upon certain drafts drawn by the agent of the company and negotiated in bank, as also for statutory damages arising upon the protest of said drafts; and that no authority appears for such use of the bonds.

On the other side, it was opposed to this, in substance: that the company was pressed; that there were eight directors, two of them non-residents of the State, and could not be easily summoned, and that the six resident directors swear “that they are cognizant of the history of the hypothecation of the said bonds; that the first effort of the directors was to sell the bonds outright to the stockholders in amounts proportioned to the stock held by each respectively, but certain of the stockholders refused. It became necessary to advance money to buy cotton and pay employees or stop. Application was then made to the bank and resident directors to advance money and hold the bonds as collateral security until they should be realized upon, instead of taking the bonds outright; and this arrangement was made, and the money advanced and the bonds deposited as collateral security with the bank and the resident directors. This was done with the full knowledge and consent of the board of directors, it being the only way in which funds could be raised to carry on the mill. These bonds were so used for actual money advanced to the mill, and before the bonds were taken by the Nonantum Worsted Company,” &c.

The Circuit Judge, Kershaw, refused the motion to vacate the order of confirmation and recommit the report, upon two grounds: First, that reasonable diligence had not been exercised in reference to the alleged newly discovered evidence; and second, that upon the merits the evidence, if admitted, would not change the result. From this order the appeal comes to this court, upon the following grounds: I. That his honor erred in deciding that the motion “must be determined by the same principles as are applicable in cases of motions for a new trial on the ground of newly discovered evidence, and petitions for a new hearing of the cause.” II. That his honor erred in holding that “the bond held by Julius C. Smith was deposited with him under the same authority and by the same action of the directors as those given to Mr. Beattie and the bank.” III. That his honor erred in holding that the bonds could be- legally hypothecated without a meeting of the directors and without the knowledge of the non-resident directors. IY. That his honor erred in holding that the bonds claimed by Beattie and the bank were deposited to secure the drafts cashed by the bank and statutory damages upon protested drafts. Y. That his honor erred in holding that the appellants had not exercised due diligence in the matters in question.

The order of the Circuit Judge refusing the motion is so full and clear that we can add very little to it. We cannot consider this as a mere motion, during the consideration of a report, to recommit it for further testimony. The refusal of such a motion is not error of law appealable to this court, but is rather one of those matters which appertain to the conduct of the cause, and must, from necessity, be left to the discretion of the Circuit Judge. Symmes v. Symmes, 18 S. C., 601; Caulfield v. County of Charleston, 19 Id., 600.

It is true, there has been no final judgment, in the sense that the litigation has been entirely ended, as the cause upon other issues is still in the court. But as to the matters embraced in the report confirmed without appeal, the order was as conclusive and final as if they were the only questions in the case. See Hand v. S. C. R. R. Co., 17 S. C., at page 262, in reference to the coupons proved before the master by Isaacs, Miller, and Adger & Co. Indeed, that case is conclusive as to several of the points made in this. It is there said, in reference to opening a report of the master, while the case is still in court: “It is true that there has been no final judgment in the sense that the litigation has been entirely ended. The ca'se has been before this court several times, and at different stages particular questions have been decided. * * * In cases involving many questions, there is danger of the litigation being prolonged, and it is necessary to eliminate in their order those fully decided, so as to be able to make progress with those still undecided.” In the case of Boyce v. Boyce (6 Rich. Eq., 302), the court says: “We have numberless adjudications, that where a party had an opportunity to except and has not excepted, he cannot again bring the matter before the master (or the court) on Circuit or on appeal. The principle is essential to the due and orderly administration of justice, and must have a place in every well constituted forum. * * * See the opinion of Chancellor Harper in Britton v. Johnson, Dudley Eq., 28. A party who brings up a partial appeal, loses every gi’ound of appeal then existing which he neglects and leaves behind him, and cannot afterwards stir the objections lost by his supineness and acquiescence. The door of litigation must at some time be closed.” Huson v. Wallace, 1 Rich. Eq., 1.

Then, as the matters embraced in the report of the master were res adjudieata, how could it be opened and recommitted ? Certainly not under section 195 of the- Code. That section -was intended only for the relief of parties, who, by reason of excusable mistake, inadvertence, &c., may have lost the opportunity to be present at the trial or to be represented there, as is suggested by the words, “taken against him.” (See Steele v. The Railroad Company, 14 S. C., 331, and the authorities there cited.) There was no such claim in this case.

, As the order of Judge Wallace had never been affirmed by the Supreme Court, it was allowable to make an application in the Circuit Court to open it. Cothran v. Knox, 17 S. C., 207. But we agree with the Circuit Judge, that it was proper to determine that application “by the same principles that are applicable in cases of motions for a new trial, on the ground of newly discovered evidence, and petitions for a rehearing for the same cause.” The application was made to the Circuit Judge, and he refused the motion on the ground that the evidence was not sufficient to authorize him to set aside the order of confirmation and recommit the report. That was a pure finding of fact, and there may be some doubt whether we' have the right to reyiew it on appeal. The rule is, that this court has no right to review findings of fact upon motions to set aside judgments or for new trials in the court below. Gibbes v. Elliott, 8 S. C., 63; LeConte v. Irwin, 19 Id., 556.

We have, however, the right to review the facts as an appellate tribunal in “cases in chancery” ; and as this motion to recommit was made in such a case, it may be that we can review the facts considered by the Circuit Judge in his finding. We have carefully read all the affidavits, and we cannot say that the Circuit Judge committed error in holding that the showing was not sufficient to set aside the order of confirmation and recommit the report. Whittaker in his Practice states the rule as follows: “In motions for new trials on the ground of surprise or newly discovered evidence, the strongest possible case must he made out. * * Enough ought to he shown to raise at least a fair' and bona fide inference, that had the surprise not occurred, or had the newly discovered evidence been introduced, the result might, and probably would, have been different.” 2 Whit. Prac. (4th edit.), 465.

But it is strongly urged that the motion was an appeal to the large discretionary jurisdiction of the Circuit Judge, sitting as chancellor ; that as long as the cause was still ' pending, and the court in possession of the fund, it was competent for the court to correct any oversight or mistake which had occurred from surprise, and to make any order necessary to do justice between the parties. It is true that the Court of Equity, in the interest of justice, exercises large powers before a matter has been finally disposed of, as in the case of Gist v. Gist (Bail. Eq., 343), where it is said that “the court is always reluctant, when the case is in its power, to exclude any apparently just claim or defence.” In that view, however, the application is not upon strict right, but is addressed to the equitable discretion of the Circuit Judge; and he, being requested to put forth his exferaordinary powers, may undoubtedly require the moving party to do equity in order to get equity.

The Circuit Judge in this case does^not seem to have been impressed with the equity of the motion. The only fact of importance claimed to have been subsequently discovered, was the absence of any formal order of the board of directors on the books, hypothecating bonds as collateral security for the advances made by Beattie and the bank. There can be no doubt whatever that one of the purposes for which the bonds were issued was to raise money to continue the running of the mills ; and there is quite as little that, upon application, Beattie and the bank did advance largely for that very purpose. Debts were pressing, twm of the directors were absent from the State, non-residents, and a majority, the other six, authorized, informally it may be, these bonds to be held by Beattie and the bank as collateral security for advances made by them, as was done in the case of other advances; and upon the faith of this transaction the advances vrere actually made and used to the relief of the company. Under these circumstances, it seems to us that the Circuit Judge did not abuse his judicial discretion in holding that “there had been no improper or unauthorized use of said bonds, and if they were not pledged by resolution of the directors duly assembled, the company, with their knowledge and approval or gratification, have received the benefit of the money advanced on the said bonds, and the transaction, in law and equity, must stand as against the company and all creditors.” See Ketchum v. Duncan, 96 U. S., 659; Clafflin v. S. C. R. R. Co., 8 Fed. Rep., 118.

The judgment of this court is, that the judgment of the Circuit Court be affirmed.