Commercial Bank of Selma v. Brewer , 71 Ala. 574 ( 1882 )

STONE, J.

The debtor firm in this case, Hirscher Brothers, ■conveyed a stock of merchandise to certain named trustees, to secure the payment of certain enumerated debts, amounting to twelve or thirteen hundred dollars. The trust deed bears date April 1, 1882, describes the debt's as all due or past due at the date of execution, and was signed without subscribing witnesses. The description in the deed of the property conveyed is, “ all the stock of merchandise, goods and chattels now contained in the storehouse where said Hirscher Bros, are now doing business in the town of Columbiana, Alabama; also all the merchandise and goods which may hereafter be brought by said Hirscher Bros, into said storehouse, for the purpose of increasing, replenishing, or keeping up said stock of goods.” The deed declares that the conveyance is in trust as follows: “ It is hereby agreed that said party of the first ]jart is to have and retain possession of said property until the first day of November, 1882.” It then” provides that if the enumerated, secured debts are paid by that time, the conveyance was to be null and void. There was a power of sale in case of default. This deed was filed for record November 22nd, 1882.

The present bill was filed by certain named, non-secured creditors, and seeks to have said conveyance declared a general assignment, for the equal benefit of all the creditors. This bill was filed December 19th, 1882. Among other averments, it charges that when the existence of said deed of trust became known, by its registration, November 22nd, 1882, certain other named non-secured creditors of Hirscher Bros.- — a third class, different from the two classes above named — sued out attaach-ments at law, and had the goods levied upon. In addition to the prayer to have the said deed declared a general assignment, the bill prayed that said property and its proceeds be apportioned among all the creditors of Hirscher Bros. The bill avers that when said deed was made- — April 1st, 1882 — Hir-scher brothers were in fact insolvent, but their credit was good, and^their insolvency unknown, until the said deed was recorded. There was a demurrer to the bill, and the chief ground relied on is, that under the stipulations in the deed, and under the averments of the bill, the deed is shown to be fraudulent, and can not be established as a valid conveyance against the attaching creditors. There can be no question that if, under the averments of the bill, the deed of trust be fraudulent as against the non-secured creditors, the present bill must fail. A fraudulent deed can not be upheld as a general assignment, against a creditor who attaches, or attacks the deed for the fraud.

We think the terms and ¡purpose of the present deed place it substantially within the category of the conveyances which were declared fraudulent in Tickner v. Wiswall, 9 Ala. 305; Constantine v. Twelves, 29 Ala. 607; Price v. Mazange, 31 Ala. 701. In the case of Constantime v. Twelves, it was said: “We can not pronounce the deed fraudulent wpon its face, because it does not distinctly appear from it, that there were other creditors of the Wests at the time it was executed, that Y. L. West was at the time wholly insolvents that the deed embraced all the unencumbered property owned by Penelope West, and that its inevitable-tendency was to delay and hinder these other creditors.” The, deed we are considering, and the averments of the bill supply every one of the enumerated facts, the absence of which, it was said in Constantine v. Twelves, alone saved that instrument from being declared fraudulent on its face. The bill avers that Hirscher Bros, were insolvent, that they owed other, many other enumerated debts; that the deed conveyed their entire property; and the face of the deed shows its “ inevitable tendency was to delay and hinder those other creditors."—Bump, on Fraud. Conveyances, 400; Bodley v. Goodrich, 7 How. (U. S.) 276; Cheatham v. Hawkins, 76 N. C. 335; Holmes v. Marshall, 78 N. C. 262; National Bank v. Ebbert, 9 Heisk. 153; McClasly v. Hasslock, 4 J. Baxt. 1. We might possibly go further, and hold that the deed, under the circumstances shown in this record, is fraudulent, because it reserves a benefit to the grantors.—Sims v. Gaines, 64 Ala. 392; Seaman v. Nolen, 68 Ala. 463 ; Clow v. Woods, 9 Amer. Dec. 346.

If it be contended that inasmuch as it is not shown that the trustees or beneficiaries under the deed had notice that Hirscher Bros, were insolvent when- they made the conveyance, they stand in the relation of innocent purchasers, the answer to this is, if answer be necessary, that they are not purchasers in the sense, that want of notice will protect them. As the case now appears, the beneficiaries were antecedent creditors, no indulgence was stipulated — that is, the secured creditors were not bound to extend them indulgence — and no present, or new consideration' was parted with. Delay of the right to foreclose the mortgage was no extension of the debt.—Sweeney v. Bixler, 69 Ala. 539.

The chancellor-should have sustained the demurrer; but, as there may be a motion to amend, which can only be entertained in the court below, we will simply reverse and remand the cause, to be further proceeded in according to the principles declared above. We confess we can not perceive how the bill can be made good; but we may not be able to see the case in all its bearings.

^Reversed and remanded.