July 5, 1902. The opinion of the Court was delivered by This is an action by the plaintiff, a judgment creditor of the defendant, W.J. Ponder, to set aside a deed to 370 acres of land, executed by the said W.J. Ponder to his wife, Nancy E. Ponder, on the 22d day of January, 1895, on the grounds that the said deed is void under the assignment law and also under the Statute of Elizabeth. The facts are set forth in the decree of his Honor, the Circuit Judge, which will be reported. The complaint was dismissed.
We will first consider whether the Circuit Judge erred in holding that the deed was not void under the assignment law. Sections 2146 and 2147 of the Revised Statutes are as follows: "2146. Any assignment by 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. *Page 361 or creditors of the said debtor by the terms of the said assignment over any other creditor or creditors other than as to any debts due the public, or in which any provision or disposition of property so assigned is made or directed other than that the same be distributed among all creditors of said insolvent debtor equally in proportion to the amount of their several demands, and without preference or priority of any kind whatsoever save only as to debts due the public, and save only as to such creditors as may accept the terms of such assignment and execute a release of their claim against the debtor, and except as hereinafter provided, such assignment shall be absolutely null and void and of no effect whatsoever." "2147. If any person, being insolvent, within ninety days before the making of any assignment by him or her of his or her property for the benefit of his or her creditors, with a view to give a preference to any creditor or person having a claim against him or her, or who is under any liability for him or her, procures or suffers any part of his or her property to be attached, sequestered or seized on execution, or makes any payment, pledge, assignment, transfer or conveyance of any part of his or her property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, assignment, transfer or conveyance, or any part of his or her property, or to be benefitted thereby or by such attachment, having reasonable cause to believe such person to be insolvent, and that such attachment, sequestration, seizure, payment, pledge, assignment or conveyance is made in fraud of the provisions of this chapter, the same shall be void, and the assignee may recover the property or the value of it from the person so receiving it or so to be benefitted. Nothing, however, in this section shall be construed to invalidate any loan of actual value, or the security therefor, made in good faith, and upon a security taken in good faith on the occasion of the making of such loan, or any security bona fide made for advances." In Verner v. McGhee, 26 S.C. 248, 2 S.E. R., 113, the Court says: "The assignment act has no application *Page 362 unless there is either an actual assignment or a state of facts fully proved or admitted, which in conscience and equity are tantamount to an assignment with unlawful preferences." Mr. Chief Justice McIver reviews the authorities in Porter v. Stricker, 44 S.C. 183, and concludes the opinion of the Court in the following language: "From this review of the cases upon this subject in this State, the following propositions applicable to the case under consideration are clearly deducible: 1st. That an insolvent debtor may, by a bona fide mortgage, which is intended merely as a security for a just debt, prefer one of his creditors. 2d. That if the mortgage is really designed to operate, not as a security merely but as a means of transferring the debtor's property to the favored creditor in preference of the other creditors, then it is void under the assignment law. 3d. That the question as to what was the intention is a question of fact." The Court, in Finley v. Cartwright, 55 S.C. 198, 33 S.E.R., 359, says: "In order to set aside a conveyance as void under sec. 2147, Revised Statutes, it is necessary to show (1) that the grantor was insolvent at the time of the conveyance; (2) that the conveyance was made with a view to give an unlawful preference; (3) that the grantee had reasonable cause to believe that the grantor was insolvent at the time of the conveyance; (4) that the grantee had reasonable cause to believe that the conveyance was made in fraud of the assignment law; (5) that the conveyance was executed within ninety days previous to the execution of a valid deed of assignment." Citing Haynes v. Hoffman, 46 S.C. 166. In Lamar v. Poole, 26 S.C. 441, 2 S.E.R., 322, the Court uses this language: "The action below assailed the paper in question as a violation of sec. 2014, General Statutes. It should be remembered that the question of fraud is not involved under that section. A paper may be fraudulent at common law or under the Statute of Elizabeth, and might be avoided on that ground by proper proceedings to that end, and yet it might stand free from attack under sec. 2014, supra. Two things must concur under *Page 363 that section to render an instrument void: 1st, an assignment, and 2d, a preference given in said assignment; and it is the preference which the act inhibits, whether that preference be founded upon a bona fide claim or a fraudulent one." By reference to sec. 2146, it will be seen that the statute renders null and void any assignment by an insolvent debtor of his property for the benefit of his creditors, in which any preference or priority is given to any creditor of the debtorby the terms of the assignment over any other creditor other than as therein provided; nevertheless, the doctrine is settled beyond controversy by the decisions of this Court, that a deed or other instrument of writing which is intended to have the force and effect of a formal assignment for the benefit of creditors, is as obnoxious to the provisions of the statute as if the insolvent debtor had attempted by the terms of a formal assignment to give the preference prohibited by the assignment law. It will also be observed that sec. 2147 is not, in express terms, made applicable to cases in which the debtor did not make a formal assignment for the benefit of creditors within ninety days after the execution of the deed or other instrument intended to give the preference prohibited by that section. The necessity for the party attacking the deed to show (1) that the grantor was insolvent at the time of the conveyance, and (2) that the conveyance was made with a view to give an unlawful preference, arises whether the case comes within the provisions of sec. 2146 or sec. 2147, by the terms of said sections. While it is true that the requirements that the party attacking the deed must show (3) that the grantee had reasonable cause to believe that the grantor was insolvent at the time of the conveyance, and (4) that the grantee had reasonable cause to believe that the conveyance was made in fraud of the assignment law, are not applicable in the absence of a formal assignment within ninety days after such deed, these requirements are, however, but the declaration of salutary rules which equity and good conscience demand should be enforced, whether the case arises under sec. 2146 or sec. 2147. Applying *Page 364 these principles to the facts of the case, this Court is satisfied that the testimony fails to show that either the first, second, third or fourth of said requirements was sustained by the evidence.
We will next consider whether the said deed was void under the Statute of Elizabeth. The rule is thus stated inMagovern v. Richard, 27 S.C. 286, 3 S.E.R., 340: "Was the mortgage void under the statute of fraud? To be void under said statute or at common law, it should be made to appear that it was either without consideration or that it was mala fide, one or both. In other words, for a paper of the kind to be invulnerable, it should be based upon a valuable consideration and be a bona fide transaction. Now, there can hardly be a doubt — in fact, it is not denied — that Bollman Brothers held a large claim on Richard, which this mortgage was intended to secure; so that one of the elements necessary to sustain it is present. Was it bona fide or was it mala fide as to both parties to the instrument? because this is necessary to avoid it. What ismala fide? It must be an intent not simply to assert one's own rights, but, in addition thereto, to defeat the rights of another, participated in, as we have said, by both parties to the instrument." The last mentioned case is cited with approval in the recent case of McElwee v. Kennedy, 56 S.C. 154, 34 S.E.R., 86, in which the Court also uses this language: "To annul for fraud a deed based upon a valuable consideration, it must not only be shown that the grantor intended thereby to hinder, delay or defraud creditors, but it must also appear that the grantee participated in such fraudulent purpose. Even if we were to assume that there is evidence of mala fides in the grantor, yet if the sole purpose of the grantee was to secure her claims, having no intent to hinder, delay or defeat other creditors, her title cannot be affected by the mala fides of the grantor. The evidence fails utterly to show any intent on the part of the grantee to defraud her husband's creditors, and merely shows a purpose to secure her own bona fide claims. Conceding *Page 365 the insolvency of the firm of which the grantor was a member, it does not appear that the grantee was aware of it; and if she was aware of it, that would not show fraud in her, since a bona fide creditor has the right to obtain a transfer of property from an insolvent debtor at a fair price, for the sole purpose of securing or paying the debt." This Court is satisfied that the testimony fails to show such facts as constitute fraud, and that the Circuit Judge was not in error in concluding that the deed was not void under the Statute of Elizabeth.
These views practically dispose of all the exceptions except the tenth, which is as follows: "X. Error in holding that the recital in the deed of 109 acres from Nancy E. Ponder to W.J. Ponder, to the effect that W.J. Ponder had paid for the land, c., is only in the nature of a receipt or admission, which can be explained, and that it had been conclusively explained. Whereas, he should have held that she, as well as those who claim under her, are estopped now from disputing said recital." The cases of Daniel v. Moses, 12 S.C. 138-9, and Moffat v.Harden, 22 S.C. 27, and 20 A. E. (1st ed.), 459, et seq., show that this exception cannot be sustained, for the reasons stated by the Circuit Judge.
It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.