Coal City Coal & Coke Co. v. Hazard Powder Co.

• Decision Date: 16 January 1896
• Citation: 108 Ala. 218,19 So. 392
• Parties: COAL CITY COAL & COKE CO. ET AL. v. HAZARD POWDER CO.
• Court: Alabama Supreme Court

19 So. 392

108 Ala. 218

COAL CITY COAL & COKE CO. ET AL. v. HAZARD POWDER CO.

Supreme Court of Alabama

January 16, 1896

Appeal from city court of Birmingham; William W. Wilkerson, Judge.

Action by the Hazard Powder Company against the Coal City Coal &amp Coke Company and others to have a trust deed of the defendant company's property to secure its bonds, and the bonds issued thereunder, declared void and canceled as in fraud of creditors. From a judgment for plaintiff, defendants appeal. Affirmed.

Hawkins & Selheimer, for appellants.

Lane &amp White, for appellee.

McCLELLAN J.

This bill is filed by the Hazard Powder Company against the Coal City Coal & Coke Company, the trustee in a deed of trust executed by said company to secure bonds to be issued by it and certain holders of some of said bonds. The complainant is a judgment creditor of the said coal and coke company, having perfected its lien on the property of said company by registering the judgment in the office of the judge of probate as provided by statute. The judgment was recorded and registered subsequently to the execution of said deed of trust. The purpose and prayer of the bill are to enjoin the disposition of the bonds proposed to be issued under said deed of trust; to require said company and the trustee and the other defendants, to deliver up for cancellation any of said bonds in their hands, respectively; to declare said deed of trust fraudulent and void as to complainant; to require the trustee to deliver the same to the register for cancellation; and, upon his failure to do so, to require the register of the court to cancel the same on the records of Walker county, etc. The deed of trust conveying all the property of the coal and coke company to E. W. Rucker in trust to secure said bonds to the amount of $50,000, payable at 10 years, and setting forth the form of said bonds and the interest coupons to be thereto attached, is made an exhibit to the bill. Two sets of demurrers were assigned against the bill. The coal and coke company and Rucker, the trustee, jointly demurred for that the bill failed to aver any facts which constitute fraud in the execution of the deed of trust. The Alabama National Bank, the Birmingham National Bank, and E. E. Bryant, who are brought in as holders, respectively, of some of said bonds, jointly demur on the ground that there is no averment of bad faith on their part in the acquisition of such bonds, nor of any knowledge or notice on their part of the alleged bad faith of the coal and coke company in executing the deed of trust and issuing said bonds, nor of their participation in any fraudulent intent on the part of said company. There are other grounds of demurrer assigned by the coal and coke company and Rucker, but they are too obviously without merit to require discussion. Both demurrers were overruled by the city court, and from that decree all the respondents appeal.

The bill shows, as we have seen, that complainant had recovered a judgment against the coal and coke company, which, having been registered, constituted a lien upon the property of the company. It further shows that this judgment was for the sum of $2,571.49, and was recovered on February 18, 1892, the debt having been contracted during the summer of 1891. It further shows that the deed of trust was executed on February 1, and filed for record on February 4, 1892, and that the suit in which said judgment was rendered was pending and being pressed when said deed was made. The averments as to the execution of the deed are as follows: "That after said suit was begun, and shortly before judgment was obtained, the said defendant, the Coal City Coal & Coke Company, knowing that said suit would be pressed to judgment made and executed to E. W. Rucker, trustee, a deed of trust upon all the property of said defendant; *** that said company is insolvent, and was insolvent at the time said deed of trust was executed, and said deed of trust has ten years to run from its date, and in the meantime said Coal City Coal & Coke Company is permitted to remain in possession of said property;" that said deed is on record in the county of Walker, where grantor's property is situated, "and is an impediment to the sale at its value of the lands, tenements, goods, and chattels of said company, and, so long as said deed of trust is outstanding, it will prevent complainant from making its money on said judgment; *** that although said deed of trust purports to secure bonds to the amount not to exceed fifty thousand dollars, none of said bonds have ever been sold, and no rights have been acquired under said deed by bona fide purchasers paramount to the rights of complainant under said judgment, but that said deed was executed, and the same is now being held outstanding, to hinder and delay this complainant from enforcing and collecting its said judgment, the Coal City Coal & Coke Company having control and possession of the property named in said deed, and the said Rucker exercising no control over the property whatever; that complainant is informed and believes, and upon such information charges, that no legal...