Roden & Co v. Ellis , 113 Ala. 652 ( 1896 )

COLEMAN, J.

Appellants, creditors of Mark 0. Ellis, filed their bill to reach and subject certain property mortgaged by Sarah Ellis, his wife, to the Iron State Building & Loan Company to secure a loan made 'to her. The bill alleges that the property was conveyed to the wife, without consideration and for the purpose of hindering and defrauding the creditors of the husband, all of which was known to the mortgagee, or at least the mortgagee had notice of facts which should have prompted investigation, and which would have led to a discovery of the facts and 'purposes, if proper inquiry had beed made. The title to a portion of the property was already in the wife, and had been for many years prior to the accrual of the claims of the creditors. Although the consideration for the purchase of the property moved from the husband solely, his subsequent creditors can have no claim upon it, except upon proof of actual fraud, of which the mortgagee is chargeable with notice. The evidence falls far short of showing that a joint interest was conveyed to the wife for a fraudulent purpose. The wife and the conveyances to her by the husband, may be eliminated, and we .have the case of a debtor, mortgaging his property to effect a loan. The debts antedated the loan and mortgage. The rules which apply to such cases have been often declared by this court. The consideration for the mortgage being admitted, the burden was on the complainants to establish the necessary facts which reasonably show fraud ; and in the present case, it was incumbent upon them at least to show that M. 0. Ellis was at the time embarrassed financially, and that the mortgagee had notice of it, or knowledge of facts calculated to put him upon inquiry. This burden has not been met by the complainants. True, M. 0. Ellis testifies that he furnished Cabaniss a statement of his indebtedness before the loan was effected, and on direct examination testified, that his property was insufficient to meet his liabilities, but on cross-examination, he swears that his total indebtedness did not exceed $4,200, and that his available assets exceeded $9,000. On the other hand, Cabaniss denies in toto, that at that time, he had any knowledge whatever of the indebtedness of M. 0. Ellis, and to the same effect is the evidence of the officers of the mortgagee company. The evidence of Mr. Hill is, substantially, that the loan had been agreed upon and the mortgage and note for the loan executed, before any statement of the indebtedness of M. 0. Ellis was rendered to Cabaniss, but according to his best recollection, the money had not been actually received by Sarah Ellis, before the statement of Ellis’ indebtedness was furnished to Cabaniss. It is not necessary to consider the question as to whether the notice subsequently given to Cabaniss, in his capacity as attorney for the Loan Company, should be charged to the mortgagee, under the facts of the case ; for, giving complainant the full benefit of a favorable decision of this question, the testimony of Hill is full and clear, that the statement furnished Cabaniss showed that the indebtedness of Ellis was less than $4,000, and his assets were of not less value than $12,000. Although the mortgagee knew that the conveyance from M. O. Ellis to His wife was voluntary and made to enable her to effect a loan in her name, the mortgagee is entitled to the same rights, so far as creditors of the husband are concerned, as if the husband had executed the mortgage personally and effected the loan directly to himself.

Complainants do not seek to redeem the property, but assail the validity of the deed to the wife, and the mortgage executed by her. We will not, therefore, consider the question, as to whether complainants, being creditors of the husband, could redeem, from under the mortgage executed by the wife, property voluntarily conveyed to her by the debtor. There is no difficulty as to the law of the case presented, and we are of opinion the evidence is clearly with the respondents.

Affirmed.