Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1885-01-22
Mlistellaueuns &eading.
PREFERRED CREDITORS.

me recent decision OF Cne Suprelne COurt
of South Carolina, denying the right of an
insolvent debtor to make an assignment in
favor of preferred creditoror creditors, has
attracted considerable attention in legal as
we'll as business circles. The decision evil
dently places this question in an entirely
new light, which the business community
will do we'll to observe. We printed the
gist of the decision last week. From SUBJ
seuuent issues of the Neacs Gtna Courier we
copy the following comments by prominent
members of the Charleston bar:
Col. Charles H. Simonton gave his views
to reporter and said:
II think the entire scope of the decision
is. that if person is in insolvent circum-
stances either conveys his whole property to
Il creditor for antecedent debt or covers it
with lien for an antecedent debt, the trans
action is void as against his creditors. 1t
gives to the term assignment used in the
General Statutes Chapter LNN1D a mean
ing which the profession has not given to
it at this time. 1t has been supposed that
all the sections of this chapter related to
what is known as general assignment TOR
the benefit of creditors, and that the sole
purpose of the two sections discussed by
the Supreme Court in this opinion was to
limit the power of debter in making such
an assignment and preventing. him from
giving preference among his creditors. The
decision of the Supreme Court goes to make
void any assignment made by debtor in
insolvent circumstances, whether it profess
es to be general assignment or not.
s'I think the decision effects every trans
action that has been made since the pas
sage of the Act in 1882 and reaches much
further than the person who introduced the
Act had any intention"
Major A. It. Smythe, who is the author OF
the Act which has been construed by the
Supreme Court, gave his views of the de-
cision as follows:
''The sections of the General Statutes con-
strued by this decision were introduced by
me after consultation with several eminent
lawyers. AS the result of some experience
and considerable thought, it seemed to us
advisable to stop, if possible, the too COM
mon practice of debtors extending their
credit to the utmost limit and then falling,
after quietly transferring to q favored few
their entire assets by means of assignments
with preferences. We thought if we could
have creditors feel that in case of failure all
would share equally in what was left, it
would do much toward establishing firmly,
the credit Of the country. In fact, some OF
us were prepared to 60 further, and provide
that no preference or security should be al
lowed except for a present consideration.
"a careful reading of the decision does
not create in me the surprise understand
has been expressed by some. The Court
was not dealing with a mortgage OF part
or even of all the debtors property. But
this was followed by an absolute convey
ance of all the debtors property to one
creditor, partly for his own benefit, also for
the incidental benefit of another creditor
The intent to transfer all the property of the
debtor to the exclusion of all his other cred
itors except a selected or preferred few, was
remitted and borne out by the facts. Thls
certainly was a violation of the spirit of the
Act, and might fairly be construed as an as
signment and not embraced in its terms.
"Feeling as I do on the subject, Lam glad
to see that the Court is on the same line as
the Legislature in attempting to preserve
that equality which is equity. And do
not share in the apprehension that it will
unsettle business at all, or do anything ex-
cept aid in purifying commercial morals.
and enforcing fair division of a debtors
property among all his creditors equally.
Major Theodore Barker, another able law
yer, and member of the Charleston bar,
writes the following letter on the subject of
the construction of the Act:
To the Editor of the Ne,cs and Courier: 1t
is unfortunate, especially at the present turn
in the tide of prosperity in South Carolina,
that the opinions of prominent lawyers,
which have been published, should create
doubt in the minds of business men as to
the South Carolina law of mortgages and
other securities, upon which important busi-
ness transactions depend:
1t is evident that no revolution" in the
law of mortgages and collateral securities
has been accomplished by the recent decision
of the Supreme Court on the subject of "as-
signments" to defeat creditors, and we think
none was intended.
The opinion Of majority of the Court is
very carefully confined to the facts admitted
on the record in the particular case before
them.
The Court does say, that if a, knowing
himself to be insolyent, ass gns or transfers
to for the use Of and G, all of his prop
erty, with the intention of preferring them,
and defeating all other creditors of \, and
if B takes such transfer, knowing or having
reason to know of AS insolvent condition,
the Court will construe such a transfer as
equivalent to the "assgnment" forbidden
by Section 2,014 of the General Statutes, and
will declare such transfer null and void,
looking to the substance of the transaction
and without regard to the form of such as
signment and transfer.
The Court does not say that if a makes a
iona ,fde loan for the purpose of enabling
him to conduct his business, and mortgages
his property to secure such loan, that such
mortgage is an assignment" void under
the Act. Nor that debtor may not by a
bona fde mortgage of all his property, raise
money to effect a compromise with his cred
itors.
Nor does the Court say that debtor may
not in good faith mortgage his property to
one creditor to secure at the same time an
antecedent debt and q new loan.
The law, as it stood before Section 2,0l4 of
General Statutes was enacted, protected
creditors against fraudulent" transfers and
assignments; that is, transfers made by
debtors, with the intention of defeating cred
itors, and we cannot see that the Legislature
in that section or the Court in the recent
decision have gone beyond the line Of the
old English Statute of Elizabeth.
If any lawyer has built upon the idea
that, because the General Statutes embod-
led in the law of assignments for benefit of
creditors'' the principle of the Statute of
Elizabeth in Section 2,104, and then express
ly in Section 2,Ol5, declared void convey
ances or transfers made within ninety days
before the void "assignment," his client be-
ing solvent could make a fraudulent trans
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