Barrett v. Pollak Co.

• Decision Date: 19 November 1895
• Parties: BARRETT ET AL. v. POLLAK CO. ET AL. H. B. CLAFLIN CO. ET AL. v. BARRETT ET AL.
• Court: Alabama Supreme Court

18 So. 615

108 Ala. 390

BARRETT ET AL. v. POLLAK CO. ET AL.

H. B. CLAFLIN CO. ET AL. v. BARRETT ET AL.

Supreme Court of Alabama

November 19, 1895

Cross appeal from chancery court, Montgomery county; Jere N Williams, Chancellor.

Bill by H. W. Barrett & Co. against the Pollak Company and others. From a decree sustaining a demurrer to the complaint complainant appeals; and from a decree refusing to dismiss the complaint for want of equity, defendants, the H. B Claflin Company and another, appeal. Reversed on defendants' appeal.

The bill in this case was filed by H. W. Barrett & Co. on March 1, 1894. The allegations of the bill, as amended, were that some years prior to January 8, 1894, to wit, in 1889, the Pollak Company, a corporation, was organized with a capital stock of $150,000, a majority of which stock was taken by Ignatius Pollak. This corporation purchased the stock business, and good will of said Pollak, who had conducted a mercantile business in the same building, and said corporation continued said business. Pollak was the president of said corporation, and had the potential control of its business. The other stockholders were chiefly the clerks and employés engaged in said business. The corporation, for a number of years, conducted a large business in a building rented from Sigmund Roman, and during the prosecution of said business became and were indebted, at the filing of the bill to the sum of more than $200,000. That said corporation was indebted to appellees in the sum of more than $1,400 for merchandise sold and delivered on the 10th day of October, 1893, and prior to that time. That on the 6th day of January, 1894, said corporation had a large stock of merchandise valued at between $50,000 and $109,000, and had due to it a number of debts, consisting of accounts, promissory notes, etc., and said stock of goods and debts due to it, and certain personal property mentioned, situated in said building, constituted the entire property and assets of said corporation, the sum being of value wholly insufficient to pay the debts of the corporation, and said corporation had become and was wholly insolvent, and unable further to conduct its business, or to carry out the object of its creation. That on the 6th day of January, 1894, it became apparent to said Pollak and to said corporation that said corporation was insolvent, and could no longer carry on its business, and had to be wound up, and said Pollak and said corporation had determined to close its said business; and on Saturday, January 6, 1894, pursuant to this purpose, it paid off its clerks and other employés, preparatory to closing its business on Monday morning, January 8th, and on said 6th day of January, 1894, in furtherance of said purpose to stop the business of said corporation, caused to be prepared a deed of assignment to William K. Pelzer and Sigmund Roman, and caused schedules of its assets to be prepared and had the same ready for execution on the morning of January 8, 1894. That said corporation was indebted to Josiah Morris & Co., the H. B. Claflin Company, and Cane, McCaffrey & Co., among other creditors. That great intimacy existed between said Pollak and Billing, a member of said Josiah Morris & Co., and that said Ignatius Pollak was personally liable as an indorser or guarantor of a large part of the indebtedness to said Josiah Morris & Co., and of a large part of the indebtedness to the H. B. Claflin Company, and said Ignatius Pollak had a strong desire to secure to said Morris & Co. and said H. B. Claflin Company payment in full of their respective debts in preference to other creditors. That to secure this preference said Pollak selected William K. Pelzer and Sigmund Roman, confidential and intimate friends of said Pollak and said Billing, to act as assignees,-the said Pollak, Billing, Roman, and Pelzer being general directors in one or more corporations, and otherwise intimately associated in business; and it was agreed between said Pollak, Billing, Roman, and Pelzer, or between Pollak and some of them, that to secure these preferences the said Josiah Morris & Co. and the H. B. Claflin Company should sue out writs of attachment against the Pollak Company and cause the same to be levied on the property of said corporation, and after the levy of said attachments, that Pollak Company should make the assignment to said Pelzer and Roman, reserving in said deed of assignment the lien to be acquired by the levy of said attachments. That on Monday, January 8, 1894, about 15 minutes past 8 o'clock a. m., attachments against the Pollak Company in favor of Cane, McCaffrey & Co. in the sum of $2,447.50, in favor of Josiah Morris & Co. in the sum of $51,186, and in favor of the H. B. Claflin Company for $37,906.58, were delivered to the sheriff of Montgomery county and levied upon said goods; and said sheriff, pursuant to instructions of said plaintiffs in attachment, or their attorneys, indorsed upon the attachment of Cane, McCaffrey & Co. that it was received at 8:15 o'clock and was levied by him at 8:15 o'clock, and indorsed on the attachment in favor of Josiah Morris & Co. that it was received at 8:16 and levied at 8:16, and indorsed on the attachment of the H. B. Claflin Company that it was received at 8:17 o'clock and levied at 8:17 o'clock, on the morning of said 8th day of January, 1894. That after indorsing the levy on said writs of attachment the sheriff took possession of said property, and at 8:30 o'clock a. m. of said January 8, 1894, the deed of assignment of said Pollak Company to said Pelzer and Roman was filed for record in the office of the judge of probate of Montgomery county. That Cane, McCaffrey & Co. were induced by Josiah Morris & Co. and the H. B. Claflin Company to sue out said attachment, and that this was done with the knowledge of said Pollak, Pelzer, and Roman, and was done for the purpose of concealing from the other creditors of the Pollak Company the arrangements to secure preferences to Josiah Morris & Co. and the H. B. Claflin Company, as aforesaid. That the confidential relations existing between said Pollak and Billing have not been disturbed by the issuing of said attachments, although said Billing is surety on each one of said attachment bonds. The ground of attachment, as set forth in the affidavits for the same, was that the said Pollak Company had money, property, or effects liable to satisfy its debts, which it fraudulently withheld; but said alleged ground of attachment had no existence in fact, and the only ground for the making of said affidavit was the voluntary admission by said Pollak, done for the purpose of procuring the issuance of said attachment, and there was no real ground for issuing said attachments, or either of them. That after the filing of said deed of assignment the said sheriff issued garnishments on said writs of attachment against said F. M. Billing, William K. Pelzer, and others, to answer what they were severally indebted to said Pollak Company, and said garnishments were issued with the knowledge and consent of said Pelzer in furtherance of said purpose to secure said preferences, and with the further purpose of concealing from other creditors of said corporation that said attachments were collusive.

It is further alleged that there was an agreement between the three attaching creditors, made prior to the levying of said attachments, as to the proportion in which they are to severally share what may be realized, and that all of said attachments were sued out and delivered to the sheriff at the same time, and levied at the same time, and the agreement as to the proportion in which the proceeds of said attachments were to be shared was known to said Pollak Company before said attachments were issued. That said Pelzer and Roman accepted the said trust on the 8th day of January, 1894, and on the 13th day of January, 1894, said Roman, as landlord sued out an attachment against said Pollak Company for the rent of said buildings, to the amount of $9,727.44, alleging, as ground for said attachment, that Pollak Company had made a general assignment, and the said attachment was levied by said sheriff on the same property upon which the other attachments had been levied. That the interest of said Roman, as attaching creditor, was adverse to the rights of appellees and the other creditors of said corporation. In the said deed of assignment, the following language is found as a resolution, purporting to have been passed by the board of directors of said Pollak Company, to wit: "This corporation is unable to meet and pay its liabilities now due and becoming due, and is insolvent and unable longer to carry on its business, its stock in trade having been attached." That said recitals were true, except that its stock in trade had been attached, but said resolution was in fact adopted by said corporation before its stock in trade was attached. Said deed of assignment was in fact executed by the Pollak Company and accepted by said Pelzer and Roman before said stock in trade was attached, and the statements in said deed of assignment that said stock of goods had been attached was inserted in said deed of assignment for the purpose of preventing said Pelzer and Roman, as assignees, from making defense against said attachments. That on or prior to January 8, 1894, the Pollak Company had attempted to pledge as collateral security certain choses in action and securities to said Josiah Morris & Co. and the H. B. Claflin Company. That in said deed of assignment it was alleged that the only interest of said Pollak in said choses in action and securities was that of pledgor, for the purpose of preventing said Pelzer and Roman, as assignees, from raising any question as to the validity of such hypothecation. It...