Deposit Bank of Frankfort, Ky., v. Caffee

• Decision Date: 16 December 1902
• Citation: 33 So. 152,135 Ala. 208
• Parties: DEPOSIT BANK OF FRANKFORT, KY., v. CAFFEE ET AL.
• Court: Alabama Supreme Court

33 So. 152

135 Ala. 208

DEPOSIT BANK OF FRANKFORT, KY., v. CAFFEE ET AL.

Supreme Court of Alabama

December 16, 1902

Appeal from chancery court, Lowndes county; W. L. Parks, Chancellor.

Bill by the Deposit Bank of Frankfort, Ky., against Andrew E. Caffee Annie E. Caffee, W. P. Russell, L. B. Jones, and C. W. Jones to set aside and cancel a deed made by Andrew E. Caffee to his wife, Annie E. Caffee, and the mortgage executed by said Andrew and Annie Caffee to W. P. Russell. Decree dismissing the bill, and complainant appeals. Affirmed in part and reversed in part.

It was averred in the bill that complainant was a judgment creditor of Andrew E. Caffee, and that the conveyances sought to be set aside were made for the purpose of hindering, delaying and defrauding the complainant; that each of said conveyances was without consideration, and that the consideration expressed was simulated and fraudulent. The facts relied on by complainant to authorize the relief were averred in detail. It was further averred that the defendants L. B. and C. W. Jones had purchased the plantation conveyed by Andrew E. Caffee to his wife Annie E. Caffee from said Annie E Caffee. In their answer, the defendants denied the averments of fraud. The other facts are sufficiently stated in the opinion.

D. M Powell, for appellant.

Watts Troy & Caffey, for respondents.

HARALSON J.

1. The rule seems to be settled with us, in a suit to set aside a fraudulent conveyance, whether it be constructively fraudulent and therefore voidable as against past due debts, or actually fraudulent, and voidable as to future as well as to past obligations, that the existence of a debt, for the payment of which, except for the conveyance, the property transferred could be made liable to creditors, must appear; and that the grantee in the conveyance must have an opportunity to dispute the debt, and may plead any defense, not merely personal, which the grantor or debtor could have made against it. Yeend v. Weeks, 104 Ala. 332, 16 So. 165, 53 Am. St. Rep. 50; Moore & Handley Hardware Co. v. Curry, 106 Ala. 286, 18 So. 46; Lawson v. Warehouse Co., 73 Ala. 293.

2. The original note in this case was executed by A. E. Caffee on the 16th September, 1892; was for $1,200, payable on the 1st of November, 1893, to R. P. Pepper at the Merchants' & Planters' National Bank, Montgomery, Ala., with interest from date at 6 per cent. per annum,--the consideration being, as recited,--"as partial payment for the purchase of two fillies" (naming them). The note contained the further provision,--"I hereby agree that the title to said fillies shall remain in R. P. Pepper until this note is paid and exchange." It was indorsed, "R. P. Pepper," and "Pay S. B. Marks, Jr. Cashier for collection, acc't of Deposit Bank of Frankfort Ky. H. H. Watson, Cashier."

On the 1st of January, 1894, Caffee gave to the Deposit Bank of Frankfort, his note for $1,059.40, payable at said bank with interest at 8 per cent. per annum after maturity until paid. On the 11th November, 1894, he gave another note for $841.20, payable two months after date to, and at said Deposit Bank, bearing 8 per cent. interest after maturity until paid; and still another, dated January 19, 1895, for $853, payable to and at said bank, two months after date, with interest as in the last note.

In his deposition in the cause said Caffee testified, "These notes [the ones last referred to] were executed under a specific contract in writing with H. H. Watson, cashier of the Deposit Bank of Frankfort, that they were to be collateral to the Pepper note and contract. I had a good deal of correspondence with Watson. I had paid a large amount on the colts, and I appealed to Watson to renew my note without repairing [impairing] my original contract. He replied that he could not renew the note, as Col. Pepper would not agree to it, but that he, Watson, would take another note as collateral, * * * and the collateral note was executed."

Again, on cross-examination he testified, "I gave Pepper a note and contract for $400, and another note for $1,200. This note never did become the property of the Deposit Bank of Frankfort. The cashier wrote me that it was Pepper's property, and that he could not renew it without Pepper's consent, but that he would take my notes as collateral to my original note and contract. Said Deposit Bank of Frankfort never claimed to me, that the note was their property, until I offered to return, and insisted on returning the colts, and I was then notified by Mr. Chin, attorney for the bank, that I must settle or suit would be brought." Caffee, as the proof shows, made several payments from time to time on these notes.

Suit was afterwards, on the 16th day of November, 1896, brought by said bank against said Caffee on the note for $853, the one last above described, on which judgment was obtained in said court, on the 18th of August, 1898, for $1,086.12, besides costs. On this judgment an execution was duly issued against defendant, on the 8th day of September, 1898, which was, on the 16th July, 1899, returned by the sheriff, "No property found."

It thus appears, that the note on which suit was brought and judgment obtained against Caffee, was the last of the three collateral notes above described, and was for the balance due on said original note, of $1,200, payable to said Pepper, the original note never having been surrendered or canceled, and that Pepper was the owner of the note. Whether the Deposit Bank or Pepper ought to have instituted this suit, we do not consider, since it makes no difference for the purposes we have in hand. The fact remains, as shown by the undisputed evidence of defendant's witness, A. E. Caffee, that Pepper was a party beneficially interested in the debt, and having died, as the evidence shows, that his estate is interested in the result of this suit to collect that debt. Caffee, therefore, as objected by complainant, was an incompetent witness to prove the declarations or admissions made by Pepper, in a transaction between himself and Pepper, in respect to an agreement, not appearing in the note itself,--the object of the evidence being to show, that by such declarations of the deceased, Pepper, the indebtedness evidenced by the note had no existence in fact, or, that its consideration had failed. When the lips of Pepper, the beneficiary in the note, were closed by death, Caffee's lips were also sealed as to what occurred between them as to this transaction. Code, § 1794; Key v. Jones, 52 Ala. 238; Boykin v. Smith, 65 Ala. 299. This was the only evidence offered by defendant to prove the nonexistence of said debt. The other evidence clearly and satisfactorily shows, that the note on which the judgment was based, was for a valuable and adequate consideration.

3. The conveyance from Caffee to his wife, executed on the 20th January, 1896, assailed as fraudulent, was a fee simple and with warranty against the claims of all other persons. The consideration, as expressed therein is for the sum of $4,000 "for money received by me belonging

to the separate statutory estate of said Annie E. Caffee, under the laws of this state, said indebtedness having accrued in the following manner: I collected and used for my own purposes, the yearly rental of her plantation in said Lowndes county, the same being four hundred and fifty dollars for each of the several years, 1891, 1892, 1893, 1894, 1895, amounting in the aggregate to the sum of twenty-two hundred and fifty dollars, and said lands having been again leased for five years, at the yearly rental of three hundred and fifty dollars, and five promissory notes executed to evidence the same, payable annually, and said rent notes I have used and transferred for money, which I have applied to my own purposes and transactions, said several sums of money amounting in the aggregate to the sum of seventeen hundred and fifty dollars, all said sums of money thus creating the said indebtedness of four thousand dollars as aforesaid: Now, therefore, I, Andrew E. Caffee, being desirous that the said debt may...