Meinhard v. Youngblood

19 S.E. 675, 41 S.C. 312, 1894 S.C. LEXIS 120

• Court: Supreme Court of South Carolina
• Decided: April 21, 1894
• Status: Published

Opinion

The opinion of the court was delivered by

Me. Justice McGowan.

This action was originally brought in 1891, for the purpose of setting aside two writs of attachment levied upon the property of the defendant, J. T. Youngblood, by his codefendants, Witz, Biedler & Co. and Hurst, Purnell & Co., two of his creditors. The complaint, in substance, alleged that Youngblood was indebted to the plaintiffs by two notes, respectively, for $944.35 and $1,144.25; that Youngblood was largely insolvent; that the defendants, Witz, Biedler & Co. and Hurst, Purnell & Co., had issued two writs of attachments, which were levied by Sheriff Mann upon all the property of Youngblood on January 5, 1891; that the issuing of said attachments, and the levy upon all the property of Young-blood, was an attempt to give a preference to the said Witz, Biedler & Co. and Hurst, Purnell & Co. over the other creditors; and that said transaction was “collusive, and a fraud upon the rights of other creditors of said Youngblood.” And for relief, the plaintiffs prayed: (1) That the defendants and all other creditors be enjoined from prosecuting or commencing suit against Youngblood. (2) That Sheriff Mann, who held the property under the attachment proceedings, be enjoined from selling or disposing of, or interfering with, said property. (3) That a receiver be appointed to take charge of said property, and hold it subject to the order of the court. And (4) that the attachments be set aside and declared null and void, and for other relief, &c.

Upon some preliminary questions, the case came to the Supreme Court. But after these points were settled here, the cause was sent back to the Circuit, to be heard on its merits (see 37 S. C., 223 and 231), and in January, 1893, was fully heard by his honor, Judge Izlar, who states that upon the call of the case, on motion of the attaching creditors, and under the act of 1890, relating to the referring of issues out of chancery, the following issue of fact was submitted to a jury, viz: “Did the defendants, Witz, Biedler & Co. and Hurst, Purnell & Co., in procuring the attachments to be issued against their codefendant, J. T. Youngblood, act in collusion with the said Youngblood, for the purpose of defrauding the other creditors of the said J. T. Youngblood?” “To this question, after hearing all the evidence, and the able argument of zealous counsel on both sides, the jury answered ‘Yes.’ A motion for a new trial on the minutes of the court was made by the said defendants, which I refused in a formal order. The case was then ■heard by me upon the issues involved, and I now proceed to decide the same.”

After a very full consideration of the whole subject, his honor, Judge Izlar, rendered an exhaustive decree, which we hope will appear in full in the report of the case, as no argument that we could make would add to its fullness or clearness. He held that the procurement of the attachments by collusion between the debtor and the attaching creditors was a fraud upon the other creditors, and a violation of the assignment act, and thus concluded: “In view of the foregoing, I find: (1) That J. T. Youngblood, at the time of the attachments of Witz, Biedler & Co. and Hurst, Purnell & Co. were issued and levied upon his property, was insolvent to a large amount. (2) That the defendants, Witz, Biedler & Co. and Hurst, Purnell & Co., in procuring the attachments to be issued, acted in collusion with their codefendant, J. T. Youngblood, for the purpose of defrauding the other creditors of the said Youngblood. (3) That in acting in collusion with the said attachment creditors in the issuing of said attachments, the said J. T. Youngblood transferred all his property to them for the purpose of giving them a preference or priority as creditors over his other creditors. It is, therefore, ordered, adjudged, and decreed, that the aforesaid writs of attachment, issued as aforesaid, be, and the same are hereby, set aside, and declared null and void, and the clerk of the court is hereby directed so to mark the same. It is further ordered, that the injunction heretofore granted herein be continued, and that the funds now in the hands of the sheriff, under the order of the court, made in this cause, be held by him subject to the former order of the court. It is further ordered, that the master of said county do forthwith publish for thirty (30) days, in one of the papers of the said county, a notice requiring all creditors of the said J. T. Young-blood, who are willing to contribute their share of the expenses of this suit, to present and prove their claims before him within the said time, to wit: thirty days, or be thereafter barred; such creditors to sign an agreement in writing that they will pay their proper proportion of such expenses. It is further ordered, that the master report at the next term of the court all claims thus presented and proved before him, and the amount thereof; and that he also report the amount of the funds now in the hands of the sheriff, subject to the order of the court in this cause.”

From this decree the defendants, Witz, Biedler & Co. and Hurst, Burnell & Co., appeal to this court upon some thirty grounds. We think, however, this large number can be reduced by a classification which shall include all the issues that were actually raised. In so classifying them, we shall follow somewhat the arrangement adopted by appellant’s counsel in their argument.

1 Exception 30 raises the question of jurisdiction of the persons of the appellants. It is proper to dispose of this at the outset. It appears that this very issue was raised and passed upon in one of the former appeals in this case. See 37 S. C., 235-6. It is only necessary to refer to our foi’mer decision on this point, and to say that the plea to the jurisdiction cannot be maintained. Exception 28 charges error on the part of the Circuit Judge for “Not holding that the said plaintiffs have no right to attack the said attachments as being-contrary to the provisions of the assignment act, until they have first obtained judgment and had a return of nulla bona made upon their executions.” This issue, also, was argued and decided in the same former appeal. See 37 S. C., 237-8-9. It was there held that the plaintiffs, suing by a creditor’s bill for themselves and other creditors, cannot be required to await judgment at law and return of nulla bona on their executions. No reason has been furnished ns for changing the opinion then expressed.

2 Exceptions 23 and 24 allege error in the Circuit Judge for holding as nullities judgments by default recovered by the appellants against Youngblood, their codefendant, pending the former appeal. To borrow the language of the Circuit decree: “It appears that after Judge Witherspoon had dismissed the complaint, and pending the appeal from his decision, the attachment creditors as plaintiffs in the attachment suits moved for judgment against Youngblood, who had not answered the complaint in attachment. This was at the October Term, 1891, before Judge Kershaw, who granted judgments by default,” &c. In considering this issue, it is not to be forgotten that the property in dispute — the assets of the attachment debtor — had by order of Judge Wallace been sold, and the proceeds placed in the hands of t;he sheriff, subject to the further order of the court. When, therefore, Judge Witherspoon dismissed the complaint under which the injunction had been granted, it is plain that, pending the appeal from his decision, the attachment creditors could not obtain a lien upon the fund thus taken charge of by the court. We agree with Judge Izlar, that when they moved for judgment pending the appeal, they did so in the face of the fact that, if the appeal were sustained, the injunction would be restored in full force, and the parties placed in the position' they occupied before the complaint was dismissed. Such is our view of the law; and we see no error in the Circuit Judge’s ruling and holding that the said judgments were nullities, and could have no preference.

3 Exceptions 13 and 14 allege error because the Circuit Judge did not hold that the question of assignment and preference was eliminated from the ease by the decree of Judge Witherspoon and the opinion of the Supreme Court; and iu not holding that the plaintiffs were estopped and concluded by the said decree from making any attack upon the attachments under the assignment act. On this point the Circuit decree is sufficiently clear. It quotes from our former opinion in this case and from the decree of Judge Witherspoon, and shows conclusively that the question of preference or prioritv under the act of assignment was not eliminated, but that the ease went back from this court intact, with not one of its allegations or causes of action eliminated. The language of our former opinion sustains the view of the Circuit Judge where it says: “It is the judgment of this court, that the judgment of the Circuit Court, wherein Judge Witherspoon dismissed the complaint, be reversed, and that the action be remitted to the Circuit Court for trial.” Judge Izlar rightly held that the cause was heard on its merits for the first time by him.

4 Exceptions 1, 2, 3, and 4, in different forms, substantially complain of error on the part of the Circuit Judge in admitting evidence, on the trial of the issue ordered, tending to show, that during the negotiations between the parties at Greenwood, just before the attachments were issued, and afterwards, assurances were given to the creditors, especially by Mr. Giles, the junior partner of the law firm of Gray-don & Graydou & Giles, that “Mr. Youngblood was making an assignment for the benefit of all his creditors, saying, also, that he had so advised him.” It was not then known that the Messrs. Graydon had withdrawn from the defence of Young-blood, leaving him iii charge solely of the junior partner, Mr. Giles, and engaging with the creditors, “Witz, Biedler & Co. and Hurst, Purnell & Co.,” for whom they procured the writs of attachment now in contention. The issue involved “collusion and fraud,” as to which great latitude is allowed in the proof of the circumstances relied on to establish the charge. Under these circumstances, it seems to us that the statements of those who represented Youngblood constituted an important part of the whole transaction, and were, therefore, a part of the res gestae. “The principal constituted the agent his representative in the transaction of certain business; therefore, whatever the agent does in the lawful prosecution is the act of the principal whom he represents. And when the acts of the agent will bind the principal, his declarations respecting the subject-matter will also bind him, if made at the same time and constituting part of the res gestee. They are then in the nature of original evidence and not of hearsay, and are the ultimate facts to be proved, and not an admissiou of some other fact. They must be made not only during the continuance of the agency, but in respect to a transaction' depending at the very time.” 1 Greenl. Evid., § 113, and authorities.

5 The other exceptions, some twenty in number, relate more or less directly to the charge and decree of the Circuit Judge on the assignment act and the Statute of Elizabeth, and their application to this case. The error they allege in various forms may be stated, generally, to be: First, because he held the negotiations and arrangements by which the attachments were procured to be an attempt to evade the assignment act; second, that in addition to their remedy under the assignment act, the plaintiffs w.ere entitled to relief, under the Statute of Elizabeth, because the transaction was a scheme of fraud, whereby the attachment creditors, acting in collusion with the attachment debtor, endeavored, not by superior diligence, but by unfair means and deception, to obtain an advantage over the other creditors; and third, because he did not confine the plaintiffs either to an attack under the assignment act or to an attack under the Statute of Elizabeth. It was distinctly held in the two former appeals, that the plaintiffs were not required to “narrow their line of attack;” that “at least two remedies exist to give them relief, if they can prove their charges,” and that they were not bound to “take one remedy to the exclusion of the other.” See 37 S. C., 237. The two remedies referred to had been sufficiently indicated in the first appeal. See 37 S. 0., 231. It was there held that the complaint sought relief on two legal grounds, to wit: under the assignment act and because of fraud. We see no error in the Circuit Judge deciding that the plaintiffs were entitled to relief on either ground. And a careful examination of the evidence, we think, will satisfy any impartial mind that the jury and the judge were fully justified in pronouncing the procuring of the attachments to be a fraud.

6 As to the assignment act, we adopt the languge of the Circuit decree: “Since the passage of our assignment law of 1882, our courts have been made acquainted with many and various efforts to evade its provisions. The transfers of property have taken the form of mortgages, conveyanees, bills of sale, confessions of judgment. But whenever the court has been satisfied that the transfer of the insolvent debt- or’s property was, in effect, an assignment for the benefit of certain creditors, to the exclusion of the other creditors, it has not hesitated to set it aside, no matter by what name it might be called. This is the first case, so far as I am aware, in which the attempt has assumed the guise of an attachment. I may add, it is of all forms of evasion yet attempted, the most difficult to expose and set aside. From the view I take of this case, and of the issue presented to the jury, I am compelled to hold that the procuring of the attachments by collusion between the attachment debtor and the attachment creditors was an attempt to give said creditors a preference or priority over the other creditors, by so transferring the debtor’s property as to exclude the other creditors and leave nothing to meet their claims; and that as such it was in violation of section 2016 of the General Statutes, in that, although in form and name it was an attachment, in reality and in effect it was an assignment.” In this statement and finding we agree with the Circuit Judge.

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