Carolina National Bank v. City of Greenville

April 29, 1914. The opinion of the Court was delivered by This record contains the following statement: "This action was instituted in the Court of Common Pleas for Greenville county, on the 10th day of February, 1912, for the purpose of ascertaining the amount due by the city of Greenville, under its contract with Bowe Page, and requiring the city to pay over to the plaintiff from said balance, the amount due on two notes given to plaintiff by Bowe Page, and an overdraft. On March 9, 1912, the attorneys for the plaintiff consenting, an order was signed by Judge R.W. Memminger, making W.C. Cothran, W.H. Grimball and Charles L. Pearlstine, as trustees of Bowe Page Dray and Construction Company, bankrupt, parties defendant. The case was referred to the master. On November 20, 1912, the master filed his report, in which he recommended that the plaintiff have judgment against the defendant, the city of Greenville, for the sum of $12,899.76, that the defendant, W.C. Cothran, W.H. Grimball and Charles L. Pearlstine, as trustees, have judgment against the defendant, the city of Greenville, for the sum of $982.12, and that the defendant, the city of Greenville, be allowed to retain the remaining $500 for perfecting the paving constructed by Bowe Page, or in keeping it in repair for five years from the date of its completion. Exceptions were taken to the report, and were heard by his Honor, Judge S.W.G. Shipp, at the April, 1913, term. The report was confirmed and judgment entered up in accordance therewith. Within 10 days, notice of appeal was duly given to the attorneys for plaintiff, by the defendants, W.C. Cothran, W.H. Grimball, and Charles Pearlstine, as trustees."

The facts upon which the plaintiff relies will more fully appear by reference to its complaint, which will be reported.

The defendants, city of Greenville and paving commission, by way of defense contended that Bowe Page failed to complete the paving of the streets in accordance with the terms of their contract, and that the said defendants should be allowed to retain a sufficient part of the sum in their hands to defray any costs and expenses they may be compelled to incur in compliance with the terms of said contract.

The appellants thus state the substance of their answer: "We, the trustees in bankruptcy of Bowe Page Dray and Construction Company, and of Bowe Page admit the formal parts of the complaint and the execution of the paving contract, and set up that under the bankruptcy act of the United States we are entitled to all money due by the city of Greenville under the paving contract. We set up the bankruptcy act, and claim that the bankrupt corporation and firm were insolvent, at the time of the notes and overdrafts, and at the time of the execution of the agreement of May 30, 1911, and within four months of the filing of petition in bankruptcy, and that any and all transfers of property by them to Carolina National Bank, within said four months, would be and are preferential transfers, and must be set aside under the bankruptcy act."

The first proposition argued by the appellant's attorneys is that the assignment executed by Bowe Page on the 2d of September, 1910, in favor of the plaintiff, was null and void, on the ground that it was not recorded. Waiving the objection that this question is not properly before the Court for consideration, for the reason that it was not set up as a defense, the Court takes this opportunity to reaffirm the doctrine, already settled in this State, that the assignment of a chose in action, is not embraced within the provisions of the recording acts, as will appear by reference to the cases of Williams Co. v.Paysinger, 15 S.C. 171; Patterson v. Rabb, 38 S.C. 138,17 S.E. 463, 19 L.R.A. 831. The case of Williams Co. v. Paysinger, supra, was cited with approval in Singleton v. Singleton, 60 S.C. at page 235, 38 S.E. 462.

The next proposition for which the appellants contend is that they are entitled to the $500 which the master allowed the city of Greenville to retain, for the purpose of perfecting the pavement and keeping it in repair, for five years from the date of its completion. His Honor, the Circuit Judge, assigned the following reasons for confirming the master's report in this respect: "I am satisfied that the city of Greenville is fully protected for any present or future defects in the paving done by Bowe Page, under the bond given to the city of Greenville to protect it against such defects. The city of Greenville, as it appears to me, never expected to get any other protection than the bond. The contract did not contemplate its withholding any portion of the money to be paid Bowe Page, for five years after completion of the contract as an indemnity against defects in the paving. The master has allowed the city of Greenville to withhold the sum of $500 for any imperfections, and it seems to me that that is a very liberal allowance, in view of what I have just said." We do not draw the same conclusion as the Circuit Judge from the facts just stated. It would violate the terms of the contract to allow the city of Greenville to retain said amount for the purposes mentioned. We are more inclined to adopt this conclusion by reason of the fact that the city of Greenville is protected by the bond of the guaranty company, while the fund retained by the city of Greenville is the only source to which the appellant can resort for payment.

The next question argued by the appellant's attorney is that the plaintiff should have applied the deposits in its hand, to the overdue notes of Bowe Page. The exception raising this question cannot be sustained, for the reason that the terms of the assignments authorized the plaintiff to apply the deposits in the manner which the appellants contend was erroneous.

The last question argued is whether there was error on the part of the Circuit Judge in ruling that the plaintiff could prove the amount due without the production of the checks, on the ground that they were the best evidence as to the disposition of the deposits. It appears that there was no real contest as to the correctness of the amount claimed by the plaintiff. As it has not been made to appear that the ruling was prejudicial, it is not necessary to determine whether it was erroneous.

It is the judgment of this Court that the judgment of the Circuit Court be modified so as to conform to the conclusions herein announced.

MR. JUSTICE WATTS did not sit in this case.

Subsequent to the filing of the foregoing opinion, the agreement of counsel below set out was called to the attention of the Court, whereupon the Court, on May 7, 1914, made the following order: