Drain v. F. S. Royster Guano Co.

• Decision Date: 16 January 1936
• Docket Number: 6 Div. 750
• Citation: 165 So. 239,231 Ala. 422
• Parties: DRAIN et al. v. F.S. ROYSTER GUANO CO.
• Court: Alabama Supreme Court

165 So. 239

231 Ala. 422

DRAIN et al. v. F.S. ROYSTER GUANO CO.

6 Div. 750

Supreme Court of Alabama

January 16, 1936

Rehearing Denied April 9, 1936

Appeal from Circuit Court, Pickens County; Benj. F. Elmore, Judge.

Creditor's bill by the F.S. Royster Guano Company against J.D. Drain C.C. Fancher, and Edith Fancher. From a decree overruling a demurrer to the bill, respondents appeal.

Affirmed.

W.A Davis, of Aliceville, and Reuben H. Wright, of Tuscaloosa for appellants.

D.D Patton, of Carrollton, for appellee.

FOSTER Justice.

The bill in this suit was filed by a judgment creditor, whose debt was in existence at the time the mortgage sought to be vacated was made.

In paragraph 4, it is alleged that the mortgage was a voluntary conveyance in its entirety, or, in the alternative, that the recited consideration was, in large part, pretended, simulated, and untrue, and intended to hinder, delay, or defraud creditors. The rules which apply to such a situation are that, if the conveyance is voluntary, it is void as to existing creditors. No other allegations are necessary. So that the first alternative which we have stated is sufficiently alleged. Kratz v. Bonner, 228 Ala. 607, 155 So. 77; Majors v. Killian, 230 Ala. 531, 162 So. 289; Waites v. First National Bank, 227 Ala. 684, 151 So. 847; Kuykendall v. Terry, 227 Ala. 227, 149 So. 687; London v. G.L. Anderson Brass Works, 197 Ala. 16, 72 So. 359. Many other cases are cited in them.

The bill in the second alternative assumes the existence of a debt secured, not to the extent alleged in the mortgage, but that the amount was recited to be excessive in order to hinder, delay, or defraud creditors. The mortgagees were a daughter and son-in-law of the mortgagor, and lived in the house with him.

The rule in respect to mortgages is that the law sanctions it as security for an existing debt even as against other creditors, when it is not a general assignment (section 8040, Code), if it is a "bona fide appropriation of property to secure a debt honestly due. If any part of the purpose of the parties thereto is that it shall avail or be used for the ease or favor of the grantor, it is void as to his creditors." Howell v. Carden, 99 Ala. 100, 109, 10 So. 640, 644; Reynolds v. Crook, 31 Ala. 634.

Such ease and favor occurs when the amount is simulated to create an erroneous impression and so as to hinder the collection of other debts, Hall v. Heydon, 41 Ala. 242, or when such purpose is shown, and with that result pursuant to a plan between the parties in which both participate, Cooper v. Berney National Bank, 99 Ala. 119, 11 So. 760; McDowell v. Steele, 87 Ala. 493, 6 So. 288; Age-Herald Co. v. Potter, 109 Ala. 675, 19 So. 725; Berney National Bank v. Guyon, 111 Ala. 491, 20 So. 520.

The bill in this case alleges that the parties to the mortgage conspired together to place an apparent lien on the lands and place it beyond the reach of creditors. This could be effected as well by simulating a large debt when only a small one existed as where there was no debt at all, all to create the impression of a large debt tending to retard activity by other creditors not knowing that it is largely simulated. Under such circumstances there is a benefit...