45 S.C. 575 | S.C. | 1896
The opinion of the Court was delivered by
This action was commenced in the Court of Common Pleas for Fairfield County by the plaintiff, as assignee, for the benefit of the creditors of Alexander Williford, Quay D. Williford, and Wade H. Williford, against all the creditors of the said assignors, and the assignors', as defendants, in July, 1894, by the service of the summons and complaint on defendants residing in this State, and by the service of the summons on non-resident defendants by publication.
The decree of his Honor, the presiding Judge, contains the following statement of the facts in the case: On the 18th of January, 1894, one A. Williford, the father, and Quay D. Williford and Wade H. Williford, his two sons, each by his separate act, did execute and deliver his certain deed of assignment, whereby each conveys to the plaintiff all his property, both real and personal, in trust for the benefit of his creditors, upon conditions set forth in the deed.- The condition in each of the deeds was, substantially, to the effect, that all such creditors as should, within four mouths from the date of the deeds, present their claims duly verified, and accept in writing the terms of the assignment, and execute a release, and file the same with the assignee, should first participate in the distribution of the assigned estates. The assignors had all been engaged in business, not jointly, however, but each on his own account. The three deeds of assignment were executed and delivered on the same day, “within one hour,” in the same office, and the same assignee chosen for all three estates. No question is made as to the good faith of the assignors, and no efforts made to annul the assignments. At the time of the assignment, each of the assignors was individually in debt to a large amount. They had also, by interchangeably endorsing, become liable on each other’s notes as sureties or endorsers, two of them endorsing the paper of the third. Within the time limited — four months — verified claims, acceptances in writing, and releases were duly filed with
The assignors and their numerous creditors were made defendants, and the answers were filed, raising issues already adverted to. The main issue arising out of the facts and pleadings in this cause is this: To what extent, if any, is a surety affected by the discharge of his principal? To put the question in a concrete form: When the Winnsboro National Bank — holding notes on which Alexander Williford appeared as maker, and Quay D. Williford and Wade H. Williford, his sons, appeared as sureties and endorsers— voluntarily executed a release under A. Williford’s deed of assignment, whereby it forever discharged in full the claims on said notes against the said Alexander Williford, did it thereby relinquish its claims against the two sureties, and discharge them? Or may the bank present its claim in
His Honor, Judge Benet, ordered, adjudged, and decreed, that the assignee, Glenn W. Ragsdale, Esq., do distribute the three aforementioned assigned estates in accordance with the views herein expressed, that is to say, that creditors, holders of notes, who released and discharged the maker shall not be paid dividends out of the assigned estates of the sureties or endorsers; and that with respect to creditors who hold collateral securities, they shall be paid their pro rata dividends regardless of the amounts they may have collected or may yet collect on said collaterals.
Numerous and lengthy exceptions were filed to said decree by the appellants; and the respondents served notice that they would ask this Court to sustain said decree upon additional grounds set forth in their notice.
These, however, will not be considered seriatim, as they raise practically but three questions: 1st. Whether his Honor erred in adjudging that the assignee should distribute the aforementioned estates, in such a manner, that creditors, holders of notes who released and discharged the maker, should not be paid dividends out of the assigned estates of the sureties or endorsers. 2d. If his Honor was in error in so deciding, and it should be held that the creditors not only have the right to a pro rata of the dividends from the estate of the maker, but also from the sureties or endorsers, then upon what basis should such dividends be distributed? Would the creditors be entitled to dividends
Amongst the preferences allowed by said statute is that “to such creditors as may accept the terms of such assignment and execute a release of their claim against the debtor.” The statute simply provides for the release of the claim against the debtor, and was not intended to interfere with the rights of the accepting creditor against other persons jointly liable with the maker. This construction is in harmony with the spirit of section 2311, Rev. Stat.,which provides as follows: “A joint debtor may make a separate composition with his creditor as prescribed in this section. Such a composition shall discharge the debtor making it, and him only. The creditor must execute to the compounding debtor a release of the indebtedness or other instrument exonerating him therefrom. * * * An instrument specified in this section shall not impair the creditor’s right of aGtion against any other joint debtor, or his right to take any other proceedings against the latter, unless an intent to release or exonerate him appears affirmatively
These cases show that the creditors were entitled to demand and receive from the assigned estates a pro rata dividend upon the full amount due upon their respective claims, out of each of the assigned estates, until the said claims should be paid in full, or the assets of said estates, when so applied, should be exhausted.
We understand that the exceptions to so much of his Honor’s decree as decided that creditors who hold collateral securities should be paid their pro rata dividend regardless of the amounts they may have collected or-may yet collect on said collaterals, has been abandoned. This Court, however, does not desire it to be understood that it assents to this rule of distribution.
It is the judgment of this Court, that the judgment of the Circuit Court be modified.