McIntyre v. Legon, 38 S.C. 457

McIntyre v. Legon

38 S.C. 457 | S.C. | 1893

The opinion of the court was delivered by

Mr. Justice McGowan.

The record shows the important facts of this case to be, substantially, as follows: Rudolph Legón was a retail liquor dealer in the city of Greenville. His visible property consisted of two stocks of liquors, Sc., and a city lot, the latter mortgaged for nearly its full value. On May 20,1891, Rudolph Legón employed Thompson H. Cooke, Esq., to draft two mortgages from himself to his wife, Catherine Legón, one covering the two stocks of liquors, and the other the said city lot, both to secure his own note to her for $4,800, given that day, and payable on January 1, 1892. Mrs. Legón was not present, but at that time was in Europe, and knew nothing of the transaction. Legón signed the papers, and left them with his attorney, Mr. Cooke, saying, “Keep the papers for her for the present, I may make some other arrangement about the matter.” The attorney placed them in his *460office desk, and kept them there, awaiting Legoffis instructions. Mrs. Legón returned from abroad in the following July, but for a time nothing was said to her about the matter'. On September 5, Legón called on his attorney, Judge Cooke, and instructed him to have the mortgages recorded, and give them to Mrs. Legón. On the same day he informed his clerks that he would be absent for awhile, and that all money received from sales and collections must be turned over to Mrs. Legón; and on September 6, having taken possession of all the money in bank and on hand, secretly fled the State. Judge Cooke had the mortgages recorded, and, on the 7th or 8th of September, delivered them to Mrs. Legón, which was the first time she knew of the mortgages.

On September 10, Mrs. Legón,- having heard that the other creditors of Legón were about to attach the property, took charge of both stocks of liquors, closing one bar, and continuing to operate the other; whereupon the plaintiff, Charles C. McIntyre, for himself and other creditors, instituted this proceeding to have said transactions set aside, as being in violation of the assignment act, and fraudulent and void, for injunction, the appointment of a receiver, &c. All of the defendants answered except Rudolph Legón, who being in parts unknown, was served by publication, &c. His honor, Judge Kérshaw, at chambers appointed C. J. Pride, Esq., receiver of both the real and personal estate, and referred it to the master to call in creditors, and especially to determine all issues of law which arise upon the pleadings in regard to the claim, of the defendant, Catherine Legón.

The master took the testimony, which is all in the record, and reported as follows as to his findings of fact: “1. That on May 20, 1891, the defendant, Rudolph Legón, was justly indebted to his wife, Catherine Legón, in a sum greater than the amount of the mortgages mentioned in the complaint, to wit: in the sum of $7,083. II. That on that day the said Catherine Legón was in Europe, but that in order to secure to her the payment of $4,800, the said Rudolph Legou on said day executed and delivered to one T. H. Cooke, to be kept for her, the mortgages mentioned in the complaint; that said execution and *461delivery was absolute and complete on that day. III. That by an agreement between said Rudolph Legón and said Cooke, the mortgages were not to be recorded until Legón should notify Cooke to have it done, and that this was not done until the 6th day of September, 1891. IY. That Catherine Legón returned from Europe on the 30th day of July, 1891, and after her return was told by Legón that he had executed certain papers for her benefit, and that she claimed the benefit of these papers when they were discovered. Y. That these papers or mortgages were not intended by Legón to operate as an assignment of his property, but were honestly executed for the purpose of protecting Catherine Legón as a bona fide creditor. YI. That Legón was guilty of no fraud in executing and delivering these mortgages, and that Catherine Legón was guilty of none in receiving them. YII. That Legón never has made any assignment of his property for the benefit of his creditors, within the meaning of the assignment laws of this State. YIII. That said Legón was not insolvent either on the 20th of May, 1891, or on the 5th day of September, 1891, and that Catherine Legón had no reason to suppose he was.”

And as conclusions of law: “(1) That said mortgages are valid securities and should be enforced. (2) That the said Catherine Legón is entitled to the proceeds of the mortgaged chattels, and to such parts of the proceeds of the realty as may remain after payment of the mortgages of Cauble and Beattie, not exceeding the amount of the mortgage debt. (3) That in fixing the amount of her claim the master has considered the $190, received by her from Legon’s business after his departure. (4) That the mortgages did not operate as an assignment of the property of said Legón, within the meaning of the assignment law, and were not affected by that law. (5) That said mortgage, not having been intended to hinder and delay the creditors of Legón, and having been executed and delivered in good faith for a valuable consideration, are not repugnant to the Statute of Elizabeth. (6) That as to the defendant, Catherine Legón, the complaint be dismissed.”

IJpon exceptions to this report, the cause came on to be heard by his honor, Judge Fraser, who confirmed the report in all *462respects, except that he did not think it was the proper practice in such cases to dismiss the complaint, and for that reason alone he did not dismiss the complaint as to Catherine Legón. From this decree the plaintiff appeals to this court upon ten exceptions, which are all printed in the record, and need not be set out here, but probably ought to appear in the report of the case.

This action seems to have been brought with the double view: to set aside the mortgages given by the debtor, Eudolph Legón, to his wife, Catherine, as being without consideration, to hinder, delay, and defraud the other creditors of Legón; or that thejr were really intended as an assignment, to transfer all the tangible property of Legón to his wife, in violation of the provisions of the assignment act, against preferences, contained in section 2014 of the General Statutes.

1 As to the first charge, that, the mortgages were void for fraud under the Statute of Elizabeth. There was no evidence to sustain the allegation that the mortgages in question were without consideration, fraudulent, and void. Both the referee and the Circuit Judge found, as a matter of fact, that Mrs. Legón was a bona fide creditor of her husband, Eudolph Legón, and there is no exception to that finding. In order to sustain an allegation that a conveyance is void for actual fraud, it is necessary to show that the donee of the conveyance joined in the transaction, and was partieeps eriminis in the perpetration of the fraud. There is no such proof in this case. Mrs. Legón was not in the country when her husband had the mortgages executed for her benefit, and she had nothing whatever to do with the matter, and it seems was in entire ignorance of the embarrassments of her husband. So we need not recur to this subject again.

2 It is insisted, however, that section 2014 of the General Statutes declares, that ’‘any assignment of 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 * * * -shall be absolutely null and void, and of no effect whatever.” In a case coming within the purview of this act, the assignment is made abso*463lutely void, with or without the concurrence of the preferred creditor. The thing aimed at by the inhibition of the act seems to have been simply the unlawful preference. But was there an assignment in this case so as to bring it within the act upon the subjects That must depend upon the character of the case. There was certainly no formal assignment, but mortgages in the usual form, which the debtor had a right to make, provided they were executed in good faith, bona fide intended to secure the debt due to Mrs. Legou; but if they were put in that form as a mere device to evade the law as to the assignment — if they in effect accomplished, and were intended to accomplish, the very purpose of an assignment — then they were tantamount to an assignment, and should be so treated. The rule by which that question should be determined was stated by the present Chief Justice in the case of Austin, Nichols & Co. v. Morris, 23 S. C., 407, as follows: “I do not doubt that an insolvent debtor may, by a bona fide mortgage, which is intended merely as a security, prefer one creditor, yet if the mortgage is designed, not as a security, but as a means of transferring his property to one or more of his creditors in preference of others, it seems to me that it is, in effect, though not in form, an assignment, and comes within the mischief intended to be suppressed by section 2014 of the General Statutes.”

Taking this as our guide, let us apply the rule to this ease. The question is really one of fact. The referee found “that the mortgages were not intended by Legón to operate as an assignment of his property, but were honestly executed for the purpose of protecting Catherine Legou as a bona fide creditor-” The Circuit Judge concurred in this finding, and under the well known rule of this court, it will not be disturbed unless it is against the weight of the testimony. We have read the testimony carefully, and it does seem that, under the peculiar circumstances of the case, the mortgages have very much the same effect as an assignment would have, in transferring the whole of the debtor’s tangible property to one creditor; but that is largely due to the fact that the debtor, after executing the mortgages, left the country with a large (the precise *464amount not known) amount of cash, for which the deserted wife is in no way responsible.’

3 It also appears that on May 20, 1891, when Mrs. Legón was in Europe, after the mortgages were signed, they were left for a time with the attorney who had prepared them; and from that circumstance it was strongly urged that, in fact, they were not delivered until September 5th. But it is quite clear that they were delivered before the debtor absconded, or any of the other creditors had sued or attached his property; and, therefore, we are unable to see that, in its bearing upon the issue involved, it makes any difference whether, as a matter of fact, the mortgages were formally and legally delivered when they were signed on May 20, or on September 5,1891. We can not say that the findings of the referee, concurred in by the Circuit Judge, are not sustained by the evidence.

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