LUMBER COMPANY v. EDWARDS

Messrs. McCullough, Martin Blythe, for appellant, submit: Incompetent evidence cannot be admitted because relevant: 20 Cyc. 110; 2 Rich. L. 154; 23 How. (U.S.) 172, 187. Treasurer a mere special and ministerial agent, whose authority must be shown: 10 Cyc. 1060 and 936; 4 Thomp. Corp., sec. 4715; 27 Cyc. 793, 794. His acts and knowledge will not be imputed to corporation: 2 Pom. Eq. Juris., sec. 668; 12 N.D. 110; 95 N.W. 436; 31 Cyc. 1591, note 41; Cook, Corporations (6th ed.), secs. 717 and 726; note 2; A.C. (1902) 117; 8 W. Ph. 7084. But even if the secretary and treasurer had full power to act in regard to this particular matter, the conversations had with Mr. Haynsworth, when such officer was not actually engaged in the transaction, but in mere social intercourse, are not binding on the company and are not regarded as reaching him within the course of his agency, especially those conversations that took place long after the matter was consummated: 2 How. (U.S.) 461; 31 Cyc. 1587, 1590; 69 S.W. 489; Ib. 437; 2 Lead. Cas. in Eq. 179; 74 S.C. 962; 170 U.S. 134; 66 Fed. 216; 13 C.C.A. 402. In this connection we desire to point out to the Court that the mere assumption that Johnston and Kraemer did conspire to bring about this transfer will enable the Court to explain every single circumstance in the case in a manner "consistent with the complete innocence" of the Border State Lumber Company: 20 Cyc. 751; 14 A. E. Enc. of L. 486. As to burden of proof: 20 Cyc. 751; 14 A. E. Enc. of L. 487, 489, 490; 20 Cyc. 756 and 759; 78 Tex. 597; 22 Am. St. Rep. 77; 109 N.C. 628; 14 S.E. 9. Validity of deed from Johnston to plaintiff not involved in this action: 14 A. E. Enc. of L. 280, 281; 20 Cyc. 419; 76 S.C. 432. And necessary parties to determination of that issue are wanting: 56 S.C. 392, 393; 48 S.C. 165; 1 Rich. Eq. Cas. 185; 1 Hill Ch. 338; 1 Wall. 81. In the first place, the Statute of Elizabeth has no application; because the paying of a debt is not within its terms: Civil Code, sec. 3455; 20 Cyc. 406; 35 Vt. 16. The transaction between Johnston and plaintiff was severable: 7 A. E. Enc. of L. 95, 97; 115 N.Y. 539; 12 Am. St. Rep. 832; 117 Wis. 91; 93 N.W. 807; 43 Ga. 305. Plaintiff's legal rights should prevail. There was no actual notice to plaintiff of any intent upon Johnston's part to defraud his creditors, and no actual bad faith on the part of the plaintiff company: 64 S.C. 364; 152 N.Y. 285; 46 N.E. 492; 57 Am. St. Rep. 515; 93 N.Y. 118; 11 L.R.A. 424. There is no estoppel in this case: 57 S.C. 507; 35 S.E. 800; 42 S.C. 348; 20 S.E. 157; 76 S.C. 573; 16 Cyc. 744. Plaintiff's right to subrogation: Bisp. Eq., sec. 27; 37 Cyc. 402, 406, 469, 470; 68 S.C. 439; 4 Cyc. 632, 633; 17 S.C. 123; 4 Cyc. 633; 99 Am. St. Rep. 488, 502 and 507; 2 Green's Ch. (N.J. Eq.) 474; 29 Am. Dec. 723; 77 S.C. 311; 43 Pac. Rep. 669; Drake, Attachments 234.

Messrs. Cothran, Dean Cothran, for respondents, submit: (I) That the plaintiff has not established the agreement alleged in the complaint, i.e., that the plaintiff, on the 15th of December, 1907, concluded an agreement with Johnston to issue him 410 shares of stock in consideration that he cancel the $13,412.42 note and convey to them 3,800 acres of land; that even if this agreement be established it was clearly a scheme of collusion and fraud between them and Johnston to put his property beyond the reach of his creditors; that the manner of the execution of the alleged agreement by Johnston and Kreamer was a fraud upon the corporation which they could have successfully protested against; and the fact that they did not protest against the fraud committed upon them is proof conclusive that they are attempting to shield Johnston. (2) The plaintiff has not shown that it is a bona fide purchaser, not in collusion with Johnston. (3) The issue of the stock under the circumstances of this case, was a fraud upon the corporation and should not have been allowed. (4) The company at least had notice of facts sufficient to put it on inquiry: 97 Ind. 285; 60 S.W. 397; 22 Ky. L. Rep. 1204; 74 N.W. 996; 7 N.D. 276; 66 Am. St. Rep. 642; 66 P. 284; 11 Okla. 16; 2 Pom. Eq. Juris. 210 and 225.

Mr. C.F. Haynsworth, also for respondents, submits: Arnold's agency established: 97 S.C. 150. His statements, tending to show that the transaction was pretensive and fraudulent and thus impeaching the transaction and the title under which the company now claims, were admissible: 5 Rich. Eq. 128; 4 S.C. 256; 4 Rich. 422; 9 Rich. 50. It is the established rule that where fraud is charged great latitude will be allowed in the introduction of evidence: 2 Rich. 154. Burden of proof as to fraudulent intent: 32 S.C. 171; 35 S.C. 431; 52 S.C. 345; 71 Mo. 353; Bump., Fraud. Conv., secs. 67 and 184; 72 Am. St. Rep. 838; 94 S.C. 68; 96 P. 978. Treasurer's knowledge imputable to plaintiff: 216 U.S. 504; 83 A. 817; 82 S.C. 104. Purchaser of stock took subject to equities: Hel. on Stock, secs. 111 and 121; Civil Code 2851. Not purchaser for value without notice: 57 S.C. 21; 133 U.S. 43; 62 P. 652; 80 N.W. 963. Transaction void: 4 S.C. 257; 82 S.C. 97; 20 Cyc. 444; 2 Bailey 324 and 329; 42 S.C. 475; 11 Rich. Eq. 114 and 122; Rich. Eq. Cas. 410; 3 Rich. Eq. 403; 20 Cyc. 354.