Sheldon v. Blauvelt

1 L.R.A. 685, 7 S.E. 593, 29 S.C. 453, 1888 S.C. LEXIS 147

• Court: Supreme Court of South Carolina
• Decided: October 23, 1888
• Status: Published

Opinion

The opinion of the court was delivered by

Mr. Justice McIver.

On the 15th day of October, 1886, the defendant, Blauvclt, a citizen of the State of New York, executed a general assignment to the petitioner, Dickinson, for the benefit of his creditors, which was duly recorded in the County of Lancaster on the 23rd of October, 1886. This assignment was executed in the State of New York, and provided for the payment of all wages and salaries actually owing to the employees of the assignor in preference of all other debts, which preference is not only allowed but required by the statutes of New York. At the time of the execution of the assignment the principal part of the assignor’s property was in the State of New York, though he also owned some property in South Carolina, located in the Counties of Lancaster and Kershaw. Between the 27th of October and the 10th of November, 1886, the plaintiffs, appellants, three of whom are citizens and residents of the State of New York, and the other two of the State of Connecticut, as creditors of Blauvelt, commenced their actions against him in this State, and procured the issue of warrants of attachment, which were levied on a tract of land in the County of Lancaster, known as the Gay Mine, and also upon one cotton gin, one portable steam engine, one saw frame and fixtures, and one log carriage and fixtures found on said land; and also upon a tract of land in Kershaw County, known as the DeKalb factory, including all of Blauvelt’s interest in mill, gin, fixtures, &c.

On the 15th day of February, 1887, the said Asa D. Dickinson filed his petitions as above stated, claiming to be the owner of the property in Lancaster County levied on under the attachments, under and by virtue of the deed of assignment above stated, and praying that the same might be adjudged to him, and that “said warrants of attachment be dissolved.” On hearing these petitions with the answers thereto, Judge Pressley ordered an issue in each case to determine the question of title. These issues came on for trial before Judge Wallace, who, by consent, heard the same without a jury, and rendered judgment, holding that the cotton gin was a fixture and must therefore be regarded as part of the realty; but that the engine and saw mill were not fixtures and must be regarded as personal property, and that Blauvelt had no leviable interest in any of the property, the same having passed to his assignee under the deed of assignment before the levy of the attachments, and therefore ordered that the attachments be set aside and the levies under them be vacated.

From this judgment the attaching creditors appeal upon the several grounds set out in the record, assigning errors, which may be stated in general terms as follows: 1st. In holding that the engine and saw mill were not fixtures, and should therefore be regarded as personal property. 2nd. In holding that the deed of assignment, though providing for a preference which would render it void under the law of this State, was valid under the law of the State of New York, and upon principles of comity should be held valid here, in a case like this where none of the parties interested are citizens of this State invoking the protection of our law.

No question as to the propriety of this mode of proceeding, or as to the right of a person not a party to the proceedings in attachment to move to set it aside, was made either in the court below or in the argument here, and we therefore decide nothing as to that. It may be that the fact that in these cases issues were ordered to try the title to the property levied on under the attachments, would be sufficient to distinguish these cases from Copeland v. Piedmont & Arlington Life Insurance Company, 17 S. C., 116, and Metts v. The same Company, Ibid., 120, but as this matter was not discussed or even referred to, either in the court below or in the argument here, we will pass it by without any intimation of opinion either one way or the other.

The fundamental question in these cases is as to the validity of the assignment under which the petitioner claims — whether it is sufficient to pass the title to the property found in this State, and under the jurisdiction of its courts. It is conceded that if this assignment had been executed here, it would have been absolutely void under the provisions of section 2014 of the General Statutes, because of the preferences provided for therein ; but it is contended that inasmuch as the assignment was valid under the laws of New York, where it was executed, it must be so regarded here upon principles of comity, especially where the interests of our own citizens are not involved. Upon this question there is no little conflict of authority elsewhere, but we have no decision, so far as we are informed, in this State upon the subject. The cases of West v. Tupper, 1 Bail., 193; Greene v. Mowry, 2 Id., 163; Mitchell v. Smith, 3 Strob., 236; and Russell v. Tunno, 11 Rich., 303, do decide that a valid assignment executed abroad will take precedence over the liens of subsequent attachments taken out in this State and levied upon property here; but none of the assignments under consideration in those cases contained provisions which, under the express statute law of this State, would render them void. The question, therefore, which we are now called upon to decide is an open one in this State.

It seems to us that, upon general principles, the assignment here in question cannot be recognized. The legislature having seen fit to declare, in the most positive and unqualified terms, that “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” (with certain exceptions not applicable to the present case) “such assignment shall be absolutely null and void, and of no effect whatever,” we do not see by what authority a court, called upon to administer the laws of this State, could undertake to declare that an assignment providing for such preferences was good and valid, and give it just as full force and effect as if the legislature had made no such declaration. Surely the courts of this State cannot treat that as valid which the legislature has expressly declared shall be absolutely null and void.

The general rule undoubtedly is, that in regard to all contracts of which the subject matter is personal property, their validity is to be tested by the law of the place where the contract is made. If valid there, they will be sustained everywhere, upon principles of international or inter-State comity. See chap. IX. of Story Confl. Laws; Burrell on Assignments, section 302. But to this rule there is a well defined exception, that where the contract is in violation of established public policy of the State whose courts are called upon to enforce the contract, especially if it is in violation of some express statutory enactment of such State, this rule of comity is no longer recognized or acted upon, and in such case the contract, though valid where made, cannot be enforced in the State in violation of whose laws it was made: for, as is said by Mr. Justice Davis, in Green v. Van Buskirk (7 Wall., at page 151): “This principle of comity always yields when the laws and policy of the State where the property is located have prescribed a different rule of transfer from that of the State where the owner lives.” This doctrine was subsequently recognized and affirmed in the case of Herver v. R. I. Locomotive Works, 93 U. S., 664.

It may be that the language used in those eases is too broad, as perhaps authorizing the inference that no transfer of personal property made by the owner in accordance with the laws of the State where he has his domicile will be recognized in another State, unless it is made in the manner prescribed by the laws of the latter State, but such was not the point decided in either of those cases. The real point decided was that a transfer of personal property located in one State, by the owner in the State of his domicile, valid according to the laws of that State, but in violation of the laws of the State where the property was actually located, could not be recognized by the courts of the latter State, and that is the extent to which we go. While, as we have said, there is some conflict of authority upon this subject, our view is sustained by the decisions of courts entitled to high consideration. See Warner v. Jaffray, 96 N. Y., 248, S. C., 48 Am. Rep., 616; Pierce v. O'Brien, 129 Mass., 314, S. C., 37 Am. Rep., 360; Paine v. Lester, 44 Conn., 196, S. C., 26 Am. Rep., 442; Moore v. Church, 70 Iowa, 208, S. C., 59 Am. Rep., 439; Stricker v. Tinkham, 35 Ga., 177; Mason v. Stricker, 37 Ga., 262, besides the two cases above cited from the Supreme Court of the United States.

An examination of the cases which have been and may be cited to sustain a contrary view will show that some of them (as, for example, Butler v. Wendell, 57 Mich., 62, S. C., 58 Am. Rep., 329) rest upon the theory that the provisions of the assignment act of that State forbidding preferences applies only to assignments made within that State, while others draw a distinction between the rights of resident and non-resident attaching creditors, recognizing the priority of a resident attaching creditor over an assignment valid by the law of the State where it was executed but invalid by the law of the State where it is sought to be enforced, but denying such priority to a non-resident attaching creditor. Such a distinction we are not inclined to recognize ; but, on the contrary, prefer to adopt the language of Danforth, J., in Hibernia National Bank v. Lacombe (84 N. Y., 367, S. C., 38 Am. Rep., 518): “The plaintiff, as we have seen, although a foreign creditor, is rightfully in our courts pursuing a remedy given by our statutes. It may enforce the remedy to the same extent and in the same manner and with the same priority as a citizen. * * * Once properly in court and accepted as a suitor, neither the law, nor the court administering the law will admit any distinction between the citizen of its own State and that of another. Before the law and in its tribunals there can be no preference of one over the other.”

The true rule, as we understand it, is, that while on principles of comity the transfer or assignment of personal property located here, made by the owner in accordance with the laws of his domcile, will be recognized here ; yet, in the language of Colt, J., in Pierce v. O’Brien, supra: “There is no comity which requires us to give force to laws of another State which directly conflict with the laws of our own.” Indeed, some of the cases cited by respondent, as, for example, Weider v. Maddox (66 Texas, 372, S. C., 59 Am. Rep., 617), concede that an assignment of personal property for the benefit of creditors, made in accordance with the laws of the debtor’s domicile, is good in the State where the property is actually located, only in the absence of express enactment of such State to the contrary. Hence, where, as in this case, it is sought to set up an assignment directly in conflict with our express statutory enactment, and containing provisions which our statute declares shall render it “absolutely null and void and of no effect,whatsoever,” we think it clear that no principles of comity require us to recognize such an assignment, even though it be in strict conformity with the law of the debtor’s domicile.

It is, however, earnestly insisted by respondent that our statute relates only to domestic assignments — those executed within the limits of this State ; and that its provisions do not apply to foreign assignments — those executed outside the limits of this State; and the case of Russell v. Tunno, supra, is relied on to support this view. It will be observed, however, that Judge Withers in that ease was considering the assignment act of 1828, which relates solely to the administration of assignments, and contains no provision touching their validity. After giving a brief abstract of the provisions of the act, he says: “It seems to us manifestly to contemplate, not the validity of assignments, but the administration of them, a regulation in restraint of assignee as well as agent; and a priority of right among creditors prescribed in an assignment cannot depend upon legislation having such purview only. It nowhere discloses that a non-compliance with any or all of its provisions shall render the assignment itself null and void, in whole or in part, whether such default proceed from agent, assignee, or creditors, some or all.” It was, therefore, very properly held in that case that the assignment act of 1828 applied only to domestic assignments.

But the assignment act of 1882 (sections 2014, 2015, and 2016 of the General Statutes) contains very different provisions from those found in the act of 1828. It does not stop with simply regulating the administration of assignments, but it goes on to declare that if any assignment shall contain certain provisions, it wdll thereby be rendered absolutely null and void, and hence the remarks of Judge Withers, above quoted, cannot properly be applied to such an act. Indeed, the language which he uses, and the reasons which he gives for limiting the operation of the act of 1828 to domestic assignments, afford the strongest inference that he would have placed a different construction upon the present act, which is manifestly not confined to the mere administration of assignments, but does in express terms relate to their validity also. That case, therefore, affords no support whatever to the view that the present assignment act relates only to domestic assignments; and to place such a construction upon the act would require us to interpolate words into the act which we have no authority to do. The language of the act is, “any assignments,” &c., and to adopt the construction contended for by respondent it would be necessary for us to interpolate some such words as are found in the Missouri statute, “hereafter made in this State,” or some equivalent words ; and this we have no right to do.

We are unable to discover any more reason why the words “any assignment,” as used in section 2014, should be confined to assignments executed within this State, than that the words “every agreement,” as used in section 2022 of the General Statutes, should be confined to agreements entered into in this State, and yet the provisions of that section were applied to an agreement entered into outside the limits of the State in the case of Ludden & Bates Southern Music House v. Dusenbury, 27 S. C., 464, and no question was ever even suggested, so far as we know, as to the propriety of such application. There is’ not a word in either section indicating an intention on the part of the legislature to limit the operation of either of those sections to papers executed in this State, and in the absence of any such indication it is the plain duty of the court to give the words used their natural and ordinary signification. The manifest object of both of these provisions was to prevent fraud, and surely the courts of this State cannot be expected to give force and effect to that which the legislature has practically declared to be a fraud, or to hold that an act, if done by a citizen of this State, is a fraud, but if done by a citizen of another State, is perfectly legal and valid.

The Circuit Judge seems to have been impressed with the view that inasmuch as the deed of assignment was executed in accordance with the laws of this State, so far as signing, sealing, and delivery in the presence of two witnesses were concerned, and that the only conflict with our larv was in one of the trusts of the deed, that would not invalidate the assignment here, as the trusts were to be executed in New York and not here. There would be great force in this view if our statute, like those of some of the States, simply declared the preference void, and required the property to be distributed pro rata amongst all of the creditors, without regard to any preferences provided for in the deed; for such an act would affect only the administration of the trust, and that might well be left to be governed by the law of the place where the trusts were to be executed. But our act goes much deeper and declares that the assignment itself, containing such a provision, shall be absolutely null and void. It strikes not merely at the preferences provided for, but at the whole assignment, and therefore we cannot adopt the view taken by the Circuit Judge.

The respondent has, in his argument here, for the first time raised the question whether the appellants, who are not residents of this State, and whose causes of action arose elsewhere, are entitled to the remedy afforded by our attachment laws. This question not having been passed upon or even raised in the Circuit Court, so far as we can discover from the “Case,” is not, strictly speaking, properly before us. But inasmuch as the rule is that a judgment appealed from may be affirmed upon other grounds than those upon which it was rested by the Circuit Court, we will not decline to consider the question, though according to proper practice the respondent should have given notice to appellants that he intended to support thejudgment below upon the ground that the attaching creditors had no right to the remedy afforded by our attachment laws, and therefore, irrespective of the assignment, the attachments could not bind the property.

There can be no doubt that a non-resident may maintain an ordinary action upon a money demand in the courts of this State, without regard to the place where the cause of action arose; and as an attachment is nothing more than a remedy in aid of an ordinary action, we see no reason why such non-resident may not invoke such remedy just as well as a citizen of this State, unless there is something in the provisions of our attachment law which confines the benefits afforded by it to citizens or residents of this State. But we do not find any such limitation in our attachment act, and, on the contrary, its provisions seem to be broad enough to cover any one who may be entitled to institute an action in the courts of this State.

Under the view which we have taken, the question whether certain of the property attached can be regarded as fixtures will not arise, and has not therefore been considered. According to our view, the assignment under which the petitioner claims is, under the express terms of our statute, absolutely null and void, and cannot have any force or effect whatsoever either to transfer real or personal property.

Thejudgment of this courtis, that thejudgment of the Circuit Court be reversed, and that the petitions in each of the cases above stated be dismissed.

Mr. Chibe Justice Simpson concurred in the result, and Mr. Justicjb McGowan concurred generally.