Russell v. Davis , 133 Ala. 647 ( 1901 )

DOWDELL, J.

The present hill is that of a creditor against an insolvent debtor and for the purpose of setting aside certain conveyances made by the debtor as being fraudulent as to creditors, and in this connection to have an accounting by the debtor, E. J. Russell, with the complainant as the administrator of the estate of Eliza Lane, deceased. The equity of the bill was determined by this court on a former appeal from the decree of the chancellor overruling the demurrer to the bill. — Russell v. Garrett, 75 Ala. 348. The present appeal is taken from a final decree on a submission of the cause upon the pleadings and evidence. In this decree the chancellor without passing upon the numerous objections and exceptions to testimony on both sides, and after considering only the competent and legal evidence, as stated in his decree, determined that the complainant wa® entitled to the relief prayed for in the bill. By the decree the following facts also were specially ascertained from the evidence, viz.: That the respondent, E. J. Russell, was indebted to Eliza. Lane at and before the time of the alleged fraudulent transfers, and to the complainant as the administrator of her estate, at the ¡time of the filing of the bill; and that the transfers and conveyances made by the debtor from the first day of January to the 7th day of February, 1882, as alleged in the bill were fraudulent and void as ¡to creditors, and, also, that the said E. J. Russell was insolvent at the time of the said alleged transfers and conveyances of his property. The decree then directed a reference to the register to ascertain the amount of the complainant’s debt, and, also, the description and value of the property so transferred and conveyed, which the decree condemned for the satisfaction of said indebtedness.

The assignments of error go to the chancellor’s conclusions as to the facts from the evidence.

The principles of law applicable to [the present case are plain and practically free from difficulty; indeed, there is little or no controversy as to the law governing the main issues in the case. The testimony taken in the case is voluminous, covering over a thousand pages of the transcript. The objections and exceptions to evidence on both sides are numerous, and much of the same is subject to objection for being either illegal, incompetent, or irrelevant. We concur with the chancellor in the suggestion as to the time it would take to enter' upon a 'discussion of the objections to the evidence ; besides, it would extend this opinion into many pages without subserving any beneficial end. We have given the whole of this testimony ¡a careful reading and after' eliminating the illegal and considering that which is legal, will in dealing with the questions involved, undertake only to state our conclusions as to the facts drawn from the evidence.

The first question of fact presented for consideration is that of indebtedness from the respondent E. J. Russell to the complainant as administrator of the estate of Eliza Lane, deceased. The chancellor in his decree determined from the evidence the existence of an indebtedness, without ascertaining the amount, but referred the question of amount to the register. The appellants assign this finding of fact by the chancellor as error, insisting that on the evidence, the respondent E. J. Russell was and is a creditor of said estate and not a debtor. On this question of indebtedness the burden of proof was on the complainant. It is a conceded fact that the said E. J. Russell was the agent of the said Eliza Lane from some time in the early spring of 1881 until her death on May 16th, 1882, in letting out and collecting the rent on several’ plantations in the county of Limestone, and looking after the repairs on said plantations, and, also, in advancing supplies to tenants on the plantations enabling them to grow -crops on the same, on the credit and responsibility of Mrs. Lane, the said agent being at the time engaged in the business of a merchant in the town of Athens, and realizing the profits on such advances. The said E. J. Russell offered in evidence a -statement of his account as such agent, with credits and debits, showing a balance in his favor of -something over six hundred dollars. Without attempting to ascertain or s-how the amount of the -said Russell’s indebtedness, a matter ito be hereafter determined under the decree of reference, we need only to advert to one item -contained in -said account and the evidence relating thereto to satisfy us of the correctness of the chancellor’s finding of the fact of -said Russell’s indebtedness to said estate. In this account he credits himself with the sum -of two thousand dollars for his services rendered as -such agent. There is no pretense of any contract or agreement between him and his principal of any s-tipulated sum for bis seiwic.es. He simply claims the same as reasonable compensation for services rendered and offered evidence to that end. The great weight of the evidence-, we think, satisfactorily and clearly shows that for the services actually rendered the claim was excessive, and that a fair and reasonable compensation would not exceed three hun-, dred dollars. The amount of the income in the way of rents from ¡these plantations being about twenty-five hundred -dollars, a charge of two thousand dollars for services rendered, which consisted in the main of letting out the lands and collecting the rents and visiting the plantations three or four times during the year, is as -shown by the evidence palpably an inequitable division -of the proceeds by the agent with his principal. With this item of his account -scaled to what 'would be fair and reasonable compensation for his services as agent as shown by the great weight of the evidence, the fact of his indebtedness ¡to the complainant i-s put beyond doubt. But, in addition to this, there is the testimony of several disinterested witnesses to his admission of an indebtedness to the estate of Mrs. Lane, made by him in conversation with these witnesses at different times soon after the death of Mrs. Lane.

The next assignment of error in the decree, like the first, relates to ¡the finding of a fact, viz., fraud in the transfers and conveyances of his property by the said E. J. Russell to his 'several brothers from the first of January up to and including the 7th day of February, following. The making of the several transfers and conveyances to his brothers by the said respondent E. J. assailed by the bill is not denied, but it is claimed by the respondents that these conveyances and transfers of his property were made in good faith and in payment of a pre-existing indebtedness of the said E. J. to each of the several grantees. The existence of a debt to the complaining creditor being shown, the conveyances by the debtor being admitted, the burden of proof is upon the grantees in the conveyances assailed as fraudulent, to show the bona fieles of the transactions. This proposition of law is too familiar to require elaboration in argument, and as for authorities we content ourselves by referring to those cited in brief of appellee’s counsel.

That the respondent E. J. Russell was insolvent during the period of time from January 1st to February 7th, 1882, covering the conveyances attacked by the bill and held fraudulent by the chancellor, we think the evidence clearly establishes. Counsel for appellant concede in argument, that during this time he was being harassed by, some of his creditors and was financially embarrassed. The grantees in the alleged fraudulent conveyances were the brothers of the grantor, the embarrassed and failing debtor, and that they knew of his insolvency, we think under the evidence, is beyond doubt. They were intimate as brothers, and had frequent interviews and consultations during the time covering the making of the alleged fraudulent transfers. • Two of the brothers were at the time in ¡the employment of the grantor, and another had his office in the store where the grantor carried on his merchandise business. In determining the bona fides of a transaction assailed as fraudulent, ¡the fact that such transaction was had between parties nearly related, is a circumstance which naturally calls -for closer scrutiny than where the transaction is between strangers. In the present case the transfers of his property by the said E. J. Russell to his several brothers, when taken in the aggregate amounted to about ten thousand dollars, and, outside of his exemptions, embracing substantially all of his visible tangible assets. That it was- the purpose of E. J. Russell in making these transfers of his property to hinder, delay, and defeat other creditors in the collection of their -debts, we think the evidence establishes beyond question, and our conclusion from the evidence is, that his brothers, the grantees, shared in this purpose. The evidence, in our opinion, warranted the conclusion reached by the chancellor of the existence of a common purpose on the part of the debtor and the grantees respondents in the bill, to defeat the creditors of the said E. J. Russell, and such being the -case the several conveyances, which were made in "the months of January and February, 1882, though separate as to the -several grantees and made at different times will be regarded and treated as a single transaction. And although the conveyances are -separate, and -executed on different dates, if done in pursuance of a purpose common to- the grantor and the grantees to defrau-d, any fact that would vitiate any one of said conveyances as fraudulent, would be visited upon all. Throughout these transactions from the first of January to ¡the 7th of February, -on which latter date, the last -of his visible assets consisting of -his -stock of merchandise in his Athens store was conveyed in bulk, the evidence discloses many circumstances denominated in the books as badges of fraud. But it is insisted that these transfers of his property by the debtor to the respective brothers, were made in satisfaction and payment of antecedent bona fide debts due and owing by him to the said grantees, and for that reason the conveyances should be upheld regardless of the intent or motive. At the time of th-e making of these conveyances, which was- prior to the enactment of the present statute (Code, 1896, § 2158L a debtor though in failing circnmstances or insolvent, had the right to prefer one or more of his creditors over others to the extent of conveying his entire estate, and to the end of defeating such other creditors in the collection of their debts. But even then to support such conveyance, the same must have been absolute,and without reservation of any benefit, to the grantor; the debt or demand a bona fide preexisting debt; the property conveyed, on a fair and reasonable valuation, not unreasonably excessive of the demand. On thé other hand, if the conveyance was nO|t absolute, or benefit reserved, or if the property 'conveyed was -materially in excess -of the demand, or if the debt was simulated or fictitious in whole or in part, or if the purchasing creditor gave in part any cash consideration in obtaining -¡the conveyance, it rendered the same void as to other, creditors. When' tested by these principles, the burden resting upon the respondents to show by clear and satisfactory proof the bona fides of the transactions assailed, we are unable from all of ¡the evidence to say that the burden has been discharged. As to the question of indebtedness to the respective grantees, in support of the testimony of the grantor and each of the grantees as to his particular debt, the books of ¡the debtor grantor were offered in evidence to show the amount and that the debt was an antecedent debt. The entiles in the debtor’s books relative to the indebtedness showed very suspicious irregularities as to debts and in the order in which they were made, and also contained evidence of a number of erasures. This evidence tended very materially to weaken the testimony of the grantor and the grantees as to the bona fide existence of the alleged indebtedness. There is also other evidence which throws suspicion on the alleged claims of -one or more of the grantees. There is likewise, evidence which shows a reservation to the grantor in the transfer of some of his assets, or a pretended and not an absolute transfer. The evidence shows the grantor -subsequent to the alleged transfers in the possession of choses in action, trying to collect the same. There is also evidence going to show during the time covering the transactions assailed in the bill transfer and sale by the debtor to one of the grantees of choses in action for a present cash consideration. Besides the circumstances adverted to above, there are others shown in the evidence relative to the actions, conduct, and statements by the said E. J. Russell and his said brothers, which taken in connection with what we have mentioned, go not only strongly to show a common design on the parf of the grantor and grantees to defeat other creditors in the collection of their debts, but also to impeach the bona fides of the alleged indebtedness of the grantor to the several grantees. To say the least of it, the evidence of the respondents, in face of so many suspicious circumstances disclosed, falls short of that clear and satisfactory proof required under the law and necessary to satisfy a court of equity of that good faith in the transaction between persons so intimately and nearly related when assailed for a fraud. On.account of the number of witnesses examined, the wide range taken in the testimony, and the voluminousness of the evidence, we have felt justified in this opinion in referring to it in a general way. And our conclusion from the whole evidence is, that-¡the decree of the chancellor is free from error, and is here affirmed,

McClellan, <3. J., not sitting.