Case Name: John S. Bird et al. v. John Aitken et al.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1839-02
Citations: 1 Rice Eq. 73
Docket Number: 
Parties: John S. Bird et al. v. John Aitken et al.
Judges: Johnson, Chancellor, concurred. Chancellor Dunkin gave no opinion, having been of counsel.
Reporter: South Carolina Equity Reports
Volume: 14
Pages: 73–79

Head Matter:
John S. Bird et al. v. John Aitken et al.
There is little doubt that if by a conspiracy between a debtor and one of his creditors, an advantage is secured to the debtor at the expense of the other creditors, the transaction may be impeached, although founded on a real debt. The legality and justice of the debt does not justify the employing it as an instrument of fraud.
The giving a priority to one creditor over others, by a confession of judgment, does not constitute an unlawful or fraudulent hinderance, as to the unpreferred creditors. Every preference of one creditor over another, is a hinderance of the unpreferred creditor; but it has always been held that a preference among creditors is no fraud, although it does delay some of them.
If one renders assistance to a removing debtor, with a view to enable him to defraud his creditors, this is a fraud on the part of him who assists, for which he shall be responsible.
Before HARPER, Chancellor, at Charleston, January Term, 1838.
This case came up on an appeal from the decree of his honor, Chancellor Harper, as well on the part of the complainants as the defendants. The decree is as follows:
“ The complainants are creditors of John Aitken, formerly keeper of a coffee house in Charleston. It appears that Aitken came from Philadelphia to Charleston, and remained about eighteen months, apparently doing a good business and in good credit.— Many of the complainants’ demands are for articles-in the line of his business furnished him.
On the 25th January, 1837, Aitken confessed a judgment to the defendant, Margaret Thomas, who is his mother-in-law, in the sum of $3,392, 53, which was signed in Colleton district, on the 30th of January, 1837. On the day after the signing of the judgment, to wit, the 31st of January, Aitken absconded privately, and there is no evidence that he has ever been heard of since. The confession was taken by T. W. Thomas, who is made a party defendant, as the agent of his mother, Margaret Thomas. It is in proof that T. W/Thomas had been here but a few days before the confession. He is proved to have mentioned to a witness, on his voyage hither, that he had business to settle with Aitken. Execution was issued, and the visible property, which Aitken left, sold by the sheriff to the amount of $2,483,52. The proceeds are in the hands of the sheriff, who is made a party. The bill charges that the note of hand on which the judgment was confessed, was without consideration, and the confession fraudulent, and prays that the judgment may be perpetually enjoined, and the funds in the sheriff’s hands be paid into court, to be distributed among Aitken’s creditors.
The defendants, by their answers, deny all fraud; and Mrs. Thomas states, that the note of hand was given to her in Philadelphia, on the 20th December, 1834, (the day it bears date,) for money lent and advanced to Aitken, to set him up in business.
It is very natural that suspicions should have been excited with respect to this transaction, arising from the relation of the parties and the other circumstances. But I do not perceive that there is enough to discredit the answers of the defendants, which are made evidence by the charges of the bill. The circumstance of the judgment being entered up in Colleton, is explained by the fact, that there was at that time, no clerk of the court in Charleston; and the statement of T. W. Thomas, is in some degree confirmed by his having said beforehand, that he had business with Aitken, and tends to show that the fraud was not concocted between himself and Aitken after his arrival here. I must conclude that the note was on full consideration.
But, though founded on full consideration, yet a conveyance, or by parity of reason, a judgment confessed, may be fraudulent as against creditors; and though not without some hesitation, I am of opinion, that this must be so regarded. It is observed by Roberts, in his treatise on Fraudulent Conveyances, p.490, that “although judgment be confessed on a just debt, it may yet be fraudulent ; for though the' debt be bona fide due, the judgment, quoad other creditors, may be mala fide confessed, i. e. may be confessed with intent to delay, hinder, or defraud others of their just and lawful actions, and such intent is to be collected from the circumstances of each case.”
He goes on to observe, what cannot be doubted, that the mere preference of one creditor to another, cannot impeach the transaction ; and if there were nothing else in this case, than that Ait-ken had given a voluntary preference by confessing the judgment; that could not be impeached, though he might have foreseen, that the effect would be to defeat other creditors. That would not be a fraudulent, but a lawful purpose. If to induce Aitken to confess this judgment, Thomas had conspired with him to aid his escape from creditors; or if in consideration that he would confess thé judgment, had agreed to forbear issuing process against him, and to connive at his escape ; this, I suppose, would have rendered the judgment fraudulent, though founded on consideration. There are grounds of suspicion in the conduct of Thomas. He lived in the house with Aitken, and would seem to have had an opportunity to know of his preparations for absconding. He laid claim to some articles of property, to a considerable amount, left by Aitken; which claim he afterwards gave up, and from the evidence, it is improbable that the property could have been his own.
But I must suppose, though the other defendants had no fraudulent complicity with him, that Aitken himself had a fraudulent purpose in confessing the judgment. I must infer that he confessed the judgment with a view to his elopement, and they formed, in some sort, parts of one transaction. I must infer also, that he took with him money or property, to no inconsiderable amount. His absconding would otherwise be without object’ or meaning.
He probably confessed judgment to quiet the creditor, who, by his own account, was pressing his demand, who lived in the house with him, and might otherwise have detained or embarrassed him; and the necessary inference is, that he confessed with a view to facilitate his removing himself and his property, out of the reach of creditors. This constituted a fraudulent purpose on his part, though Mrs. Thomas, or her agent, had no accession to it.
Then it seems to come within the principle which is laid down in Smith v. Henry, 1 Hill. 25, “that the fraud of the vendor alone, is sufficient to avoid a conveyance;” and so of a confession of judg ment. 0 So it must be of a conveyance, or confession, made in fraud of creditors, to an infant or idiot, who are incapable of accession to the fraud. This may be impeached. It is certainly subject to the qualifications there expressed, that such construction must not be made as would make innocent third persons sufferers.
If a man buys goods and pays his money at the time, or lends money and takes a confession of judgment to secure it, he cannot be affected by any fraudulent intention on the part of the grantor, or debtor. He would otherwise lose goods and money both, or money and debt both. Not so according to the principle of the case quoted, when it is in payment of, or to secure, an antecedent debt. The infant, or idiot, are not in the case supposed, regarded as sufferers in a legal point of view, though the property be taken from them. They are deprived of nothing which they would have had, but for the fraudulent act of the grantor. So in this case, Mrs. Thomas will lose nothing that she would have had, but for the fraudulent act of the absconding debtor; to wit, the security of the judgment as against other creditors. She will retain her debt as against Aitken, and may pursue him for it, or come in with the other creditors.
It is ordered and decreed, that the funds in the hands of the sheriff be paid into court, to abide the further order of the court; that it be referred to the proper officer of this court, to take an account of the debts due by the absent debtor, John Aitken, and that he give due notice by advertisement for creditors to render in their demands.”
The complainants appealed from so much of the decree in this case, as permits the defendant, Margaret Thomas, to come in as a creditor, for a share of the fund directed to be paid into court; and they move that the same be so modified as to exclude her participation in the said fund. And in support of this motion, they rely upon the following grounds:
1. That the answer of the defendant, Margaret Thomas, was not evidence to establish the debt alleged to be due to her by the defendant, John Aitken; and there was no other evidence of the said debt, which could affect the other creditors.
2. That the evidence was sufficient and conclusive to establish that the judgment confessed by John Aitken to his co-defendant, Margaret Thomas, was without any valuable consideration to support it, but was wholly voluntary, fraudulent and pretensive: and that his honor ought so to have decreed, or have ordered an issue to try the fact.
Hugh Blair & Co., creditors of the said John Aitken, respectfully submit the following, as a further ground of appeal in this cause: That before the bill in this cause was filed, to wit, on the 16th day of February, 1837, these appellants instituted an action at law against the said John Aitken, by process of foreign attachment; in which action an issue was, by order of the court of common pleas, directed to be made up, to try whether the said judgment, confessed by the said John Aitken, in favor of the said Margaret Thomas, was, or was not, fraudulent, and the alleged debt, so confessed, fictitious and pretensive: and that the said issue was yet pending, when this cause came on to be heard, and a decree therein pronounced by his honor, the chancellor; immediately after which, to wit, on the 3d March, 1838, his honor was pleased, on the application of the defendants, to injoin the proceedings at law, whereby these defendants have been deprived of the opportunity of submitting to a jury, the question whether the said supposed debt had any just foundation in fact, or whether the same was not wholly fictitious and pretensive. They therefore submit, that the decree should be opened, and an issue ordered, or the cause re-heard upon evidence; or that the injunction to restrain the trial of the issue at law should be dissolved.
The defendants also appealed and moved the court to reverse the decree:
1. Because this court is bound by the law, and a creditor is at liberty to reduce his debt to judgment, or take what security he pleases from the debtor, and the preference thus obtained cannot be disturbed in equity if the debt is real.
2. Because the answers of the defendants, as to the bona tides of the transaction sought to be impeached, have not been discredited; and this court being bound by the judgment and execution under which the levy and sale were made, the bill should have been dismissed.

Opinion:
Cuma, per Johnston, Ch.
There is little doubt that if by conspiracy between a debtor and one of his creditors, an advantage is secured to the debtor at the expense of the other creditors, the transaction may be impeached, although founded on a real debt. The legality and justice of the debt does not justify the employing it as an instrument of fraud — nor can it sanction the fraud when perpetrated. Whether, if the advantage is secured to the debtor, by his own act, unaided by the creditor to whom he conveys his property, or confesses a judgment, this court would not take care to distinguish between the guilty and innocent, by securing the latter, while it strips the former of his unlawful spoils, is a question of greater difficulty, and one which the circumstances of this case do not render it necessary for the court to determine.
The complaint of the plaintiffs here is, that they have been delayed and hindered in the enforcement of their demands, by the act of the defendants. If they have, the impediment, so far as the court can discover, consists merely in the priority of the judgment which the common debtor has confessed to the defendants, by way of preference. But this is not an unlawful or fraudulent hinderance. Every preference of one creditor over another, is a hinderance of the unpreferred creditor. But it has always been held that a preference among creditors is no fraud, although it does delay some of them; because the pre-existence of the debts fa-voured by the debtor, serves as a consideration to prevent the preference from being regarded as a voluntary act, and saves it from the stigma of mala fides. The motive is not to hinder any, but to pay some. Vaughan v. Evans, 1 Hill. Ch. 414; Niolan v. Douglas, 2 Ibid. 443.
In the case before us, the court does not perceive any thing to condemn. It does not perceive how the confession of the judgment to Mrs. Thomas, disabled the other creditors from bringing or maintaining suits for their debts, as freely as they could have done before it was taken; nor do they see that it was imparting ability to the debtor to abscond, or created, or increased, a motive on his part to do so. The real cause of complaint is, that the plaintiff's debtor has withdrawn himself from the action of their pro cess. There is no doubt that if one renders assistance to a removing debtor, with a view to enable him to defraud his creditor, this is fraud on the part of him who assists. So it was determined in Pickett v. Pickett, 2 Hill. Ch. 470; the principle of which decision is as old as Twine's case, that he who aids another to commit a fraud, is himself guilty of one. But there should be evidence, not only of the aid, but of the motive. Here there is none. The only thing which Mrs. Thomas' agent seems to have done, or neglected to do, to the prejudice of the plaintiffs, was, that after he had obtained a satisfactory arrangement of this debt, he did not detain the debtor for the benefit of the other creditors. But even if he knew of his purpose to abscond, he had no power, nor was he bound by duty to do so. Suppose a creditor pursues' a debtor, actually flying, arrests and obtains a conveyance of property left behind, or a judgment to make it liable, and being thus satisfied, releases him — shall these be vacated because he does not bring the debtor back and surrender him to the other creditors ? The bona fides of the debt being established by the decree, satisfactorily to this court, we are of opinion, that it was no fraud to take a confession for it, which appears to be all that the defendants did or intended to do.
Bailey, Dawson & Brewster, for complainants.
O. M. Smith & Hunt, for defendants.
The motion to dismiss the bill is granted. The costs of the sheriff, who is a stake holder, to be allowed out of the fund.
Johnson, Chancellor, concurred. Chancellor Dunkin gave no opinion, having been of counsel.