Opinion
6 Div. 903.
January 14, 1932.
Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.
C. J. Griffith, David J. Davis, and Walter S. Smith, all of Birmingham, for appellants.
Plaintiff in a suit to set aside a conveyance on the ground that it was made to hinder, delay, or defraud creditors must aver and prove facts showing that he occupies the status of a creditor. The averment that he is the owner and holder in due course of a promissory note, payable to another or its order, is a mere conclusion, and does not set up facts showing that plaintiff is a creditor of the maker of the note. 27 C. J. 768; Gibson v. Trowbridge Fur. Co., 93 Ala. 579, 9 So. 370; Lehman, Durr Co. v. Van Winkle, 92 Ala. 443, 8 So. 870; Kelley v. Kelley, 9 Ala. App. 306, 63 So. 740. There must be an averment that the property was conveyed, and the averment that there was an attempted conveyance is not sufficient. 27 C. J. 769; Floyd v. Floyd, 77 Ala. 353. Facts must be averred showing the conveyance was made with intent to hinder, delay, or defraud creditors. 27 C. J. 774; Skinner v. Southern Gro. Co., 174 Ala. 359, 56 So. 916. When a bill contains alternative averments, each alternative must entitle the complainant to relief or no relief can be granted. Shannon v. Long, 180 Ala. 128, 60 So. 273. Making one who has no interest in or connection with the matter involved a party to a suit constitutes a misjoinder. Hyman v. Langston, 210 Ala. 509, 98 So. 564. The only effect of the Bulk Sales Law is, from noncompliance, to raise a presumption of administrative procedure, a rebuttable presumption of law that the sale was fraudulent as to creditors such as wholesalers. Pizitz Mer. Co. v. M. Cohen Sons, 205 Ala. 482, 88 So. 435; Terry v. McCall Co., 203 Ala. 141, 82 So. 171. Fraud, in execution and procurement of bills of sale to stocks of merchandise in bulk, is cognizable in a court of law, and complainant had a plain, adequate, and complete remedy at law. McCormick v. McCormick, 221 Ala. 606, 130 So. 226; Code 1923, § 8041 Johnston Bros. Co. v. Washburn, 16 Ala. App. 311, 77 So. 461; Escalle v. Mark, 43 Nev. 172, 183 P. 387, 5 A.L.R. 1512; Williams v. Bedenbaugh, 215 Ala. 200, 110 So. 286; Cartwright v. Braly, 218 Ala. 49, 117 So. 477.
Murphy, Hanna, Woodall Lindbergh and William H. Ellis, all of Birmingham, for appellee.
A creditor's bill need not aver all matters of evidence necessary to establish fraud; general averments of facts from which, unexplained, a conclusion of fraud arises, are sufficient. Gassenheimer v. Kellogg, 121 Ala. 109, 26 So. 29. A voluntary conveyance, as to existing creditors, is void, irrespective of the grantor's solvency or insolvency. McCrory v. Donald, 192 Ala. 312, 68 So. 306. An averment that one is a holder in due course is but a shorthand statement of facts, the elements of which have been defined by statute and decision. Code 1923, § 9078; Morriss v. O'Connor, 206 Ala. 542, 90 So. 304. That phase of the bill as to the formation of the corporation as a part of the plan to defraud creditors is sufficient. Metcalf v. Arnold, 110 Ala. 180, 20 So. 301, 55 Am. St. Rep. 24. Bills to set aside conveyances as in violation of the Bulk Sales Law are properly cognizable in chancery. Terry v. McCall Co., 203 Ala. 141, 82 So. 171; Code 1923, § 7342, Averment of noncompliance with the Bulk Sales Law alone raises a rebuttable presumption of fraud, and no averment of acts of fraud is necessary, and the burden is then upon respondent to deny the fraud in answer. Terry v. McCall Co., supra. It is not only the creditors of the business sought to be sold, but all creditors of the vendor who are sought to be protected by the Bulk Sales Act. Johnston Bros. Co. v. Washburn, 16 Ala. App. 311, 77 So. 461; McKinster v. Sager, 163 Ind. 671, 72 N.E. 854, 68 L.R.A. 278, 106 Am. St. Rep. 268.
This is a bill filed by appellee as a creditor of A. Crisp to set aside a conveyance of his property consisting of a stock of goods, as a fraud upon its rights as such. It alleges that complainant "is the owner of and holder in due course of the following unpaid promissory note." It also shows that the note was payable to the order of the Bank of Ensley and indorsed by it. Appellant claims that such allegations do not specify the facts on which the ownership is averred, and that such ownership as alleged is but the conclusion of the pleader. It may be conceded that both the legal and equitable owners of commercial paper must be before the court of equity (Chat. Sav. Bank v. Crawford, 206 Ala. 530, 91 So. 316; McGhee v. Importers' Traders' Nat. Bank, 93 Ala. 192, 9 So. 734), and that, when the bill or complaint shows that a note is commercial paper and payable to the order of the payee, the complainant must have title by indorsement, or make the legal owner a party (Clayton v. Bank, 204 Ala. 64, 85 So. 271; Sample v. Bank, 200 Ala. 578, 76 So. 936); but the allegations of the bill which we have stated sufficiently show such title by indorsement. Clayton v. Bank, supra; Sandlin v. Maury Nat. Bank, 210 Ala. 349, 98 So. 190; sections 9077, 9078, Code.
The allegation that Crisp attempted to convey his stock of merchandise and in the same paragraph that it "was conveyed or purported to be conveyed to respondent R. Q. Blanton," is not subject to demurrer for failure to allege a conveyance. Aside from the fact that the form of the allegation was doubtless dictated by a cautious effort not to admit the effectiveness of the conveyance, the statute in terms applies to an attempt to transfer or convey. Section 7342.
Allegation that the conveyance of the property was voluntary and without consideration is sufficient averment by an existing creditor to vacate it without regard to any other circumstance. McCrory v. Donald, 192 Ala. 312, 68 So. 306; London v. G. L. Anderson Brass Works, 197 Ala. 16, 72 So. 359. The bill does not in terms allege that complainant was an existing creditor, but shows that it is the owner of a debt which was existing prior to the conveyance. In respect to such a suit, an assignee stands in the shoes of his assignor. Allen v. Pierce, 163 Ala. 612, 50 So. 924, 136 Am. St. Rep. 92; Jones v. Smith, 92 Ala. 455, 9 So. 179; Ruse v. Bromberg, 88 Ala. 619, 7 So. 384.
It has been uniformly held that creditor's bills of this sort must plainly and succinctly state the facts which constitute fraud, and that it is not sufficient merely to say that the conveyance was fraudulent or made with the intent to hinder, delay, or defraud. Skinner v. So. Grocery Co., 174 Ala. 359, 56 So. 916; Ft. Payne Furnace Co. v. Ft. Payne Coal Iron Co., 96 Ala. 476, 11 So. 439, 440, 38 Am. St. Rep. 109; Flewellen v. Crane, 58 Ala. 628.
Tested by that rule of pleading, we think that the first and fourth alternatives in paragraph five sufficiently show a voluntary conveyance in connection with other averments of the bill showing that it was after the creation of complainant's debt, and those alternatives are therefore sufficient.
The second and sixth alternatives are consistent with the theory that the grantee was an existing creditor in an amount equal to the value of the property, and that the conveyance was made to satisfy such debt. If that is true, the fact as alleged that the debtor of complainant making the conveyance was in financial embarrassment and intended to hinder, delay, or defraud his creditors, of which the grantee had notice, do not render the conveyance subject to be vacated. Curran v. Olmstead Sehening, 101 Ala. 692, 14 So. 398; London v. G. L. Anderson Brass Works, supra. If any of the alternative allegations of fraud are insufficient, and the demurrer is addressed to such insufficiency, it should be sustained. Curran v. Olmstead Sehening, supra; Mountain v. Whitman, 103 Ala. 630, 16 So. 15; Taylor v. Dwyer, 131 Ala. 91, 32 So. 509.
"The general rule is well settled that a person cannot settle his estate in trust for his own benefit so as to be free from liability for his debts." 27 Corpus Juris 600; Taylor v. Dwyer, 131 Ala. 91, 32 So. 509; McDermott v. Eborn, 90 Ala. 258, 7 So. 751; Jordan v. Collins, 107 Ala. 572, 18 So. 137; Page v. Francis, 97 Ala. 379, 11 So. 736; Stephens v. Regenstein, 89 Ala. 561, 8 So. 68, 18 Am. St. Rep. 156.
The third and fifth alternatives in paragraph five aver the reservation of such a trust, and are free from the demurrer assigned. Taylor v. Dwyer, 131 Ala. 91, 32 So. 509.
The demurrers were addressed to each alternative separately. They should have been sustained in so far as they relate to alternatives two and six, but were properly overruled in respect to the other alternatives of paragraph five of the bill.
The alternative relief as set out in the fourth paragraph is based upon a failure to observe the "bulk sales" provision of the statute of frauds, which raises a rebuttable presumption of law that the sale was fraudulent as to creditors. Section 8041, Code; Pizitz Merc. Co. v. Cohen Sons, 205 Ala. 482, 88 So. 435; Terry v. McCall Co., 203 Ala. 141, 82 So. 171.
By the facts alleged, the burden is cast upon the purchaser to relieve the sale of the legal imputation of fraud. Authorities supra. The demurrer to that aspect of the bill was properly overruled.
By reason of the allegation that the organization of the corporation "A. Crisp and Company" was a part of the plan to place the property of A. Crisp beyond the reach of creditors, the bill brings into question the good faith of its organization. We cannot say therefore that E. L. Crisp and F. S. Blanton, who, with R. Q. Blanton, were the incorporators, are improper parties so long as that issue is in the case.
For the errors which we have indicated, the decree is reversed and the cause remanded.
Reversed and remanded.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.