Boykin, Seddon & Co. v. Epstein

94 Ga. 750 | Ga. | 1894

Lumpkin, Justice.

1. Section 1954 of the code of 1863 made void, as to creditors, “Every assignment or transfer by a debtor, insolvent at the time, of real or personal property of any description to any person, either in trust or for the benefit of himself or any one or more of his creditors, or any person appointed by him, to the exclusion of any other creditor in the equal participation of such property, unless such assignment or transfer [was] & bona fide sale, in extinction, in whole or in part, of the debt of the purchaser, and without any trust or benefit reserved to the seller or any person appointed by him.” It will thus be seen that the assignment or transfer of anything, except for actual payment, in whole or in part, of an existing debt, or else for the equal benefit of all creditors, was prohibited. Consequently, according to the provisions of that section, there could be no transfer or assignment of accounts, or books of account, to one creditor as collateral security for his demand alone, nor to any number or class of creditors, to the exclusion of others.

Section 1955 of the same code was as follows: “A debtor may prefer one creditor to another, and to that end he may bona fide give a lien by mortgage, or other legal means, or he may sell in payment of the debt, or he may transfer negotiable papers as collateral security, the surplus in such cases not being reserved for his own benefit or'that of any other favored creditor to the exclusion of other creditors.” By virtue of this section, a debtor, irrespective of his solvency or insolvency, had the right to prefer one creditor to another, and to this end, might create in favor of the preferred creditor a lien by mortgage, or other legal means; or, might transfer to such creditor negotiable papers as collateral ■security; or, as provided in the preceding section, a debtor might make payment by an actual and bona fide sale. Thus there were three modes of preferring creditors by an insolvent debtor: the first, by sale in payment or part payment; the second, by mortgage or other legal lien; and the third, by the transfer of negotiable papers as collateral security.

So far as non-negotiable ehoses in action are concerned, the only question which could arise under the language of section 1955 is, whether what seems to have been made impossible by the preceding section, viz: an assignment of the same as mere security for one creditor alone, was, under the name of creating a lien, rendered possible by section 1955.

Prior to the code, the assignment of accounts would create an equitable lien; but by the use of the words “other legal means,” there is little room for doubt that the section last mentioned contemplated legal, and not ■equitable, liens. Ilence, properly understood, there was not, for any reason yet suggested, any real incongruity ■ between the two sections in the respect indicated.

The next consideration is, what effect should be given to section 2224 of the code of 1863 (the language of which is exactly the same as that used in section 2244 of the present code), which makes all ehoses in action arising upon contract assignable so as to vest the title in the assignee ? That section certainly does not contemplate the creation of a lien merely, but a change of ownership relatively to the legal title.

The conclusion from the foregoing is, that, while the terms “negotiable papers” should be construed as comprehending anything which the code in any of its provisions denominates negotiable, there was, prior to the passage of the act of February 24th, 1866 (Acts of 1865-6, p. 29), no way to prefer a single creditor by making accounts mere security for the payment of his demand; accounts could not, by assignment or otherwise, be made available as collateral security for creditors, unless it was done for the benefit of all creditors-alike.

Had the case of Hale-Berry Company v. Diamond State Iron Company et al. (94 Ga. 61) depended alone upon the code of 1868, we think the decision therein rendered would have been a correct exposition of the law applicable; but taking into consideration the modification of the provisions of the old code made by the above cited act of 1866, we are now of the opinion that the judgment rendered in that case is, to the extent indicated in the first head-note of this opinion, unsound. The provisions of the act of 1866 are embodied in paragraph 1 of section 1952 of the present code, that paragraph having been, by the act in question, substituted for paragraph 1 of section 1954 of the old code. In endeavoring to arrive at a correct solution of the question presented, we went back to that code to see how the law stood under its provisions, and concluded it was as has been stated above; but in tracing it into the present code, we somehow, - as we now think, failed to grasp to the full extent the changes made by the act of 1866 in the law existing at the time of its passage. A comparison of the two paragraphs just mentioned will show that,, in the latter, “ dioses in action” (which, of course, comprehend open accounts and other claims embraced in the descriptive words “negotiable papers”) are specially designated; whereas, the terms “chosesin action” do not appear in the paragraph cited from the old code. It may be remarked, however, that the words “ real or personal property of any description ” would, perhaps, be sufficiently comprehensive to include choses in action, without special mention. But the great change made by the act was, that while, under the old law, an assignment or transfer save by absolute sale for the benefit of creditors was void unless all the creditors of the debtor were given an equal participation in the proceeds .of the property, under the new law an insolvent debtor cozzld lawfully trazzsfer or assigzi any property, including choses in action — whether negotiable papers or not — for the benefit of a single creditor, provided only zzo trust or benefit was resezwed to the assignor or any person for him.

In dealizig with the Hale-Berry case, we were too much influeziced by section 1953 of the present code, which is in the sanze language as sectiozz 1955 of the code of 1863; and as this section provides for the transfer as eollatez’al security of ziegotiable papez’s only, we came to the cozzelusion that nozz-negotiable papers could not be transfez’red for this purpose. But we did not give proper recognition to the alteration izz the law of the whole subject-znatter, arising by necessary implication from the amendnzent made by the act of 1866, appearizzg in sectiozi 1952, in the respects indicated. The two sections must be read and construed together; and although, after the passage of that act, the language of sectiozi 1953 was left precisely the same as formerly, its restrictive effect was uttei’ly chazzged, so far as non-negotiable choses in action are concerned, because of the amezidment which the legislature saw fit to make izi the matter and scope of the preceding sectiozi. The effect of this amendment was to reverse the general policy of the first code, and by implication to allow an insolvent debtor to make preferences amongst creditors at pleasure by legal assignment or transfer, provided no trust for himself, or to any person for him, be reserved. This is the law now, and thus it has stood ever since the act of 1866 was enacted. By virtué of section 2244 of the code of 1882, which, as already said, corresponds to section 2224 of the first code, the owner may assign any chose in action arising upon contract, so as to vest the title in the assignee; and his insolvency, since the change of policy brought in by the act of 1866, being no obstacle to assigning such choses in action as collateral security, they are no less assignable for that purpose than are negotiable securities. The modes of giving preference enumerated in section 1953 of the present code still remain, but to them is added, by virtue of the act of 1866, any assignment or transfer whatever, otherwise lawful, which does not involve some reservation of trust or benefit to the assignor or to another for him. It was correctly ruled in Powell, Brother & Co. v. Kelly Brothers Porter, 82 Ga. 1, that the object of the act of 1866 was to change the prior policy of the State touching the preference of creditors, and that the act allowed a debtor to prefer one creditor to another; also, that it repealed by implication the latter part of section 1953 of the code, the repealed words.being, “or that of any other favored creditor, to the exclusion of other creditors.” These words were appropriate to the general scheme of non-preference which the first code had in view, but are wholly inconsistent with the reverse scheme which the act of 1866 introduced and intended to legalize. In its last analysis, the right to assign or transfer non-negotiable papei’s for the purpose of securing one creditor to the exclusion of others, does not rest in any degree upon section 1953 of the code. It would be precisely the same without that section as with it. Its true and only source (save as to the mere element of assignability for passing title) is the act of 1866, and the substitution by that act of one single restriction upon assignments and transfers in place of the different and more numerous restrictions imposed by section 1954 of the first code.

We can find no reason satisfactory even to ourselves for falling into the error which we now feel was committed in the Hale-Berry ease, but we are glad that it was detected so soon, and this opportunity given to recall it. When the enormous amount of work we have to do and the want of time at our command are taken into consideration, some excuse for this and other shortcomings may be accorded us, but we neither expect nor ask complete justification for a mistake like this.

So far as the case of Baer v. English & Co., 84 Ga. 403, is concerned, as it was correctly decided on its facts, it presents no essential conflict with anything we now rule. The suggestion in the opinion deliyered in that case, that “An account, not being negotiable paper, cannot, we think, be transferred as collateral security for an existing debt to the prejudice of another existing creditor,” was toned down and qualified by what followed it in the next sentence, and was not meant to be an adjudication of the question now before us. This will be apparent to any one who will read the whole opinion in a spirit of candor. By oversight, section 1953 of the code was quoted entire in that opinion, without any allusion to the repeal of the concluding words by the act of 1866, or to the previous case in 82d Ga., cited supra, by which the repeal of these words was declared and recognized.

It appears from the record of the case now under consideration, that in every instance where Epstein & Wannbacher assigned to creditors open accounts as collateral security for their respective demands, the assignment was made directly to the creditor; and hence, no trust was created, there being no person other than the assignee taking any benefit under it. Therefore, the assignment acts of 1881 and 1885 do not apply, and decisions rendered by this court with reference to those acts are not pertinent, and need not be noticed. It does not appear that, in making these assignments, any benefit was reserved to the assignors, or to any one for them; and consequently, should there in any case be a surplus, the same would, by operation of law, be subject to the payment of Epstein & Wannbacher’s other outstanding indebtedness.

2. As will have been seen by reference to the reporter’s statement, the first petition against Epstein & Wannbacher was filed by Herman and others, who were preferred creditors of the defendants. Subsequently, a number of persons were made parties defendant and a number of other persons parties plaintiff to this case. After-wards, the petition of Boykin, Seddon & Co. and many others, on behalf of themselves and all other creditors of Epstein & Wannbacher, was filed against the latter, their preferred creditors and others. Some of the persons who were parties plaintiff in the first case withdrew from it and were made parties plaintiff in the second. The two cases were consolidated for trial, and the court allowed the counsel for Herman and others the opening and conclusion, over the objection of counsel for Boy-kin, Seddon & Co. and their associates. '

Inasmuch as Herman and others instituted the original petition which brought about all the litigation which afterwards arose over the affairs of Epstein & Wannbacher, we think the court could, with great propriety, award them the opening and conclusion. If they were not, as matter of right, entitled to this advantage, it was at least within the discretion of the trial judge to allow it to them, and in so doing his discretion was not abused. This is true although Herman and his associates, the preferred creditors, were made codefendants with Epstein & Wannbacher in the petition filed by the general creditors. We cannot see that this fact at all affects the merits of the question as to who should have the opening and conclusion.

3. The record in this case is exceedingly voluminous. It covers very nearly six hundred pages of closely typewritten matter. The motion for a new trial contains forty-seven grounds. It presented a large number of questions for consideration and determination by the trial judge, and upon his overruling of the motion, the entire case was brought here for review. We have given to it a careful, deliberate and most anxious examination. It has occupied the attention of the court for many days, and notwithstanding the relative brevity of this opinion, it must not be supposed that any feature of the case has been slighted or overlooked. We have faithfully, and to the best of our ability, considered and discussed all the material questions involved. We have not, however, after patient and most thorough investigation, found it necessary to definitely decide a large number of them, because, in our opinion, the verdict was right, no matter what might be the law as to many of these disputed issues. The evidence was clear and convincing that the claims held by all of the preferred creditors were bona fide and honest debts. There was not sufficient proof to authorize a jury to find that there was any collusion between these preferred creditors and their debtors, or that any conspii’acy existed among them having for its purpose any plan or scheme to delay, hinder or defraud other creditors. Nor was there sufficient evidence to warrant the jury in finding that the preferred creditors knew of, or participated in, any fraudulent design or intention on the part of Epstein & Wannbacher to delay, hinder or defraud their other creditors, if such a purpose existed at all on the part of the debtors. We also think the evidence fully authorized the jury in finding that the purchases made by the Savannah Grocery Company and other parties were fair and free from fraud. The questions submitted by the court to the jury were, when considered with reference to the entire charge, sufficiently full to cover all the absolutely essential issues. We do not, of course, mean to assert that no error at all was committed. Indeed, taking into consideration the magnitude of the case and the great number of intricate and complicated questions presented, it would be little short of a miracle if any judge could, through a nisi prius trial occupying about a month, be perfectly correct in every ruling. We do mean to say that, in our opinion, there was no substantial error requiring another trial. We deem it not inappropriate to add, in this connection, that our very learned and accomplished brother of the Eastern circuit handled this case, in all its branches, with the most marked ability and skill. The record before us presents high evidence of his wisdom and efficiency as a judge.

Had we found it necessary to rule upon all the numerous questions presented in the argument before us, we would have endeavored faithfully to do so, and would not shrink from preparing an opinion embracing as full a discussion of them as the time at our command would possibly allow; but to do this is not requisite, because we are convinced that the verdict and judgment rendered are about as nearly correct as any court or jury could render. The jury in this case was selected from the grand jury list. They have done their work well; it has had the sanction of the trial judge, and we are satisfied to allow their verdict, and the decree rendered upon it, to stand. Judgment affirmed.