Mary Lee Coal & Ry. Co. v. Knox

• Decision Date: 31 July 1895
• Citation: 110 Ala. 632,19 So. 67
• Court: Alabama Supreme Court
• Parties: MARY LEE COAL & RAILWAY CO. v. KNOX ET AL.

19 So. 67

110 Ala. 632

MARY LEE COAL & RAILWAY CO. v. KNOX ET AL.

Supreme Court of Alabama

July 31, 1895

Appeal from city court of Gadsden; John H. Disque, Judge.

Action by the Mary Lee Coal & Railway Company against the Etowah Furnace Company, in which an attachment was issued. E. L Knox & Co. intervened, and from a judgment in its favor, on a trial of the right of property, plaintiff appeals. Affirmed.

Smith &amp Lowe and Goodhue & Sibert, for appellant.

Denson Bilbro & Burnett, for appellees.

COLEMAN J.

The Mary Lee Coal & Railway Company sued out an attachment against the Etowah Furnace Company, which was levied upon certain pig iron as the property of the defendant in attachment. E. L. Knox & Co. interposed a claim to the property; and under the direction of the court, an issue was made up for the trial of the right of property. The case was tried without the intervention of a jury, and the court found the issue for the claimants. The plaintiff introduced proof of its demand, and that the pig iron was manufactured by the Etowah Furnace Company. The claimants deduced title from an agreement between themselves and the Etowah Furnace Company and the Etowah Mining Company, and the delivery of pig iron to claimants in pursuance of said agreement. The evidence for the claimants, if true, showed that the Etowah Mining Company was indebted to claimants; that the Etowah Furnace Company was indebted to the Etowah Mining Company; and that, by a mutual agreement between the three parties, the debt of the Etowah Furnace Company and the debt of the Etowah Mining Company to the claimants were to be paid and satisfied by the sale and delivery of the pig iron to the claimant, and that this agreement was concluded and fully performed at least a month before the issue and levy of the plaintiff's attachment. The evidence showed that one George Nixon was the general manager and superintendent of both corporations, the Etowah Furnace Company and the Etowah Mining Company, and a director and stockholder in both, and represented both corporations in the sale and delivery of the pig iron, and in the payment and satisfaction of the debt of the furnace company to the mining company, and of the mining company to the claimants. The evidence shows that this transaction was consummated by the authority of, or subsequent ratification of, a majority of the directors and stockholders of both debtor corporations. The claimants, E. L. Knox & Co., had no interest in either corporation as directors or stockholders, but were simply creditors of the mining company. The members of the partnership of E. L. Knox & Co. were brothers-in-law of George Nixon. There was evidence tending to show that, at the time of the sale of the pig iron, the Etowah Furnace Company was insolvent, and it is insisted in argument that, from the circumstances of the case, the claimants had notice of the insolvency of the furnace company. The claimants controvert both of these charges. The plaintiff in attachment contends also that the debt claimed by E. L. Knox & Co. was not a bona fide demand, but manufactured to defraud the creditors of the Etowah Furnace Company.

There are but three questions in the case: First. Did the Etowah Mining Company owe claimants? Second. Was the debt paid by the sale and delivery of the pig iron? Third. Whether the Etowah Furnace Company could prefer a debt due the Etowah Mining Company to the other creditors of the furnace company, the directors and stockholders of the two corporations being the same persons.

As to the first proposition, the books of the two corporations were in evidence. A very strong argument is made by appellant based upon erasures, interlineations, and irregularities in the manner of keeping the accounts and books, and which would have great force if the appellant was in a position to avail itself of these circumstances. The balances struck show that the debts were due. The parties testified to the correctness of the demands and of the books in their then condition. Those who kept the books were examined as witnesses, and were kept in the court room. The erasures, interlineations and irregular entries, as entered, led to the balances. The plaintiff, in its cross-examination, did not call for explanations or make any references to the matters now complained of. If the witnesses had been called upon to explain the alterations of items in the books and irregular entries, and had failed to make satisfactory explanation, a different inference would be authorized. We do not find an entry or correction or change made in the books that is necessarily inconsistent with the positive testimony of the indebtedness claimed to be due. We would not be justified in holding that the suspicious circumstances appearing in the books were sufficient to overcome the direct, positive evidence of so many witnesses, without calling their attention to the circumstances, and giving them an opportunity to explain, as should have been done on cross-examination. We do not doubt that the facts of the sale and delivery constitute a payment. The amount entered on the books of the Etowah Mining Company to the credit of the Etowah Furnace Company, and also the credit entered on the account of indebtedness to E. L. Knox & Co., showing payment...