October 29, 1923. The opinion of the Court was delivered by This is an appeal from a decree of his Honor, sustaining the exceptions to the report of J.C. Townsend, Master for Richland County.
Both the report of the Master and decree of Judge Mauldin give a full history of the case and will be reported.
The exceptions, 29 in number, challenge all of the findings of his Honor, both as to facts and his conclusions of law. Appellants before us concede that, since the decree of Judge Mauldin, the warehouse receipts for the ten bales of cotton, mentioned and referred to in the pleadings, and in the exceptions, have been turned over to the attorneys of Moore, in satisfaction and release of the liability of Mrs. Weston, as surety on the bond given in October, 1920, in lieu of receivership, and this renders unnecessary a consideration of exceptions 39, 14, 22, 23, and 27, and except in so far as the dealings of W.W. Arthur, in reference to the cotton, throw light on his purpose and intent in reference to the assignment *Page 87 of the insurance policies, we do not intend to take up the exceptions one by one.
Exceptions 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 24, 25, 26, 28, and 29 raise the question that the assignment was preferential and fraudulent. All of these questions involve the question of the bona fides or mala fides of the assignment of the insurance policies.
Master Townsend, who took the testimony and heard the witnesses, found all of the facts against the validity of the assignment, finding that the assignments of the insurance policies were made with the intent to defraud on the part of the Arthurs; also that there was sufficient evidence to put the assignees on notice.
Judge Mauldin reversed the Master on all of his essential findings.
The statute of the State renders 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, other than the same be distributed among all creditors of said insolvent equally, absolutely null and void and of no effect whatsoever.
I tried the case of Porter v. Stricker, 44 S.C. 190;21 S.E., 635; in 1894, at Chester. Judge Gage was a practicing attorney at that time, and I decided the case under what I conceive to be the law as decided by the Supreme Court in Mitchell v. Mitchell, 42 S.C. 475; 20 S.E., 405. Mannv. Poole, 40 S.C. 1; 18 S.E., 145, 889. An appeal was taken, and my decree was reversed in an opinion which clarified the law and explained some misleading expressions, which arose in these two cases, and cases prior to the decisions previous to Porter v. Stricker, 44 S.C. 190;21 S.E., 635, under this Assignment Act.
The rule laid down in Porter v. Stricker, supra, in reviewing previous decisions is:
"In the light of our decisions, whenever it becomes necessary to canvass the transactions of insolvent debtors with *Page 88 their creditors, who are preferred by receiving a lien upon such insolvent debtor's property to the exclusion of all other creditors, so as to determine whether such preferences are obnoxious to the provisions of Chapter 72 of our General Statutes, the crucial test is this: Was it the intention of the insolvent debtor to honestly secure the debt of one or more of his creditors, by giving a judgment, or a mortgage, or an assignment of certain choses in action, or was it his purpose thereby to give one or more of his creditors a preference over other creditors? Thus the intention of the insolvent debtor must be ascertained, and this presents a question of fact. * * *
"From this review of the cases upon the subject in this State, the following propositions, applicable to the case under consideration, are clearly deducible: (1) 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. (2) 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. (3) That the question as to what was the intention is a question of fact."
It will be seen that it is the intention of the debtor, not the creditors or assignees, which determines thebona fides or mala fides of the assignment. A careful consideration of all the evidence convinces us that in making the assignment the assignment was made for the purpose thereby to prefer the respondents, and the Master was correct in his finding that the assignment was null and void. Under the decisions of this Court in a number of cases the invalidity of such assignment as contemplated in said Statute does not depend upon the fact whether or not the preferred creditor has knowledge of the fraudulent intent of the debtor. The Statute declares the assignment inoperative, and that is its character, regardless of the bona or mala fides of the preferred *Page 89 creditors. Putney v. Friesleben, 32 S.C. 494;11 S.E., 337. Austin-Nichols Co. v. Morris, 23 S.C. 401Porter v. Stricker, 44 S.C. 190; 21 S.E., 635. Avery v.Wilson, 47 S.C. 89; 25 S.E., 286.
These exceptions are sustained. We deem it unnecessary to consider all of the exceptions at length, as we are of the opinion on the whole case that the Master was correct in his conclusions and Judge Mauldin wrong, that Judge Mauldin's decree is reversed, and the Master's report is the judgment of this Court.
In reversing the decree of Judge Mauldin it must be understood, in so far as it effects Weston, Aycock and Edmunds, that it is done under the Assignment Act.
Judgment reversed.
MR. CHIEF JUSTICE GARY and MR. JUSTICE COTHRAN concur.
MESSRS. JUSTICES FRASER and MARION disqualified.