Gilreath v. Union Bank & Trust Co.
| Decision Date | 18 April 1899 |
| Citation | 121 Ala. 204,25 So. 581 |
| Court | Alabama Supreme Court |
| Parties | GILREATH ET AL. v. UNION BANK & TRUST CO. |
Appeal from chancery court, Jefferson county; John C. Carmichael Chancellor.
Bill by the Union Bank & Trust Company against Belton Gilreath and wife and the Gilreath Coal & Iron Company. From an order appointing a receiver for defendant company, defendants appeal. Reversed.
The averments of the bill are substantially as follows: That the complainant has recovered its judgment on the 18th day of January, 1898, in the city court of Birmingham, for the sum of $7,838.50, against said respondent Belton Gilreath, on a bond or bill single owing by said Gilreath to said complainant, and which said indebtedness accrued some time in the year 1896; that a certain deed from A. C. Howze assignee, had been executed to Belton Gilreath, trustee, on the 31st day of December, 1897, for certain real estate and personal property described therein, for a consideration of $14,168.50, and that thereafter, on the 11th day of January 1898, the said Belton Gilreath executed a deed to his wife Julia M. Gilreath, of the same property. Both deeds are attached as exhibits to the bill, which show a conveyance of 400 acres of mineral lands in Walker county, besides machinery suitable for the operation of the coal land; also a stock of goods, wares, and merchandise, and other specific items of personal property,-all of said property being in Walker county, Ala. The deed from Belton Gilreath, trustee to Julia M. Gilreath, recites that the said Belton Gilreath trustee, purchased the property with the funds of Julia M. Gilreath, with the understanding that he, as such trustee, should afterwards convey the property to the said Julia M. Gilreath. The bill also alleges that on the 22d day of January, 1898, the Gilreath Coal & Iron Company was incorporated under the laws of Alabama, with a capital stock of $25,000, consisting of 250 shares of the par value of $100 each, and that Julia M. Gilreath subscribed for 148 shares, Belton Gilreath 1 share, and E. H. Cabaniss 1 share; that the share subscribed for by Cabaniss was paid for by Belton Gilreath, and that this was done in order to procure the required number of persons under the law to perfect the organization; that Julia M. Gilreath paid her subscription in real estate and personal property described in the deed shown as exhibits to the bill, and which was at that time valued by all the stockholders at $14,800; that there were only three stockholders in said corporation, to wit, Julia M. Gilreath, Belton Gilreath, and E. H. Cabaniss; that said stockholders met, and elected themselves a board of directors, and the board of directors elected Belton Gilreath president and general manager, which said office he is now filling, and is conducting the business of the corporation; that the said Gilreath Coal & Iron Company was never organized in good faith, and for an honest purpose, and that it was a fraud on the corporation laws of Alabama; that the said Belton Gilreath caused the same to be organized for the purpose of introducing a new person or entity as the owner of the property and business to be carried on, prompted by the conception that by this means he could cover up and hide out his property, and with the purpose to hinder, delay, or defraud his creditors, and the complainant in particular; that said Belton Gilreath is the real beneficial owner of the entire capital stock of the said Gilreath Coal & Iron Company. The bill acquits Cabaniss of any knowledge or participation in the fraudulent purpose of Belton Gilreath, and charges that the $14,168.54 paid to A. C. Howze, assignee, by Belton Gilreath, for said property, was in fact the money of Belton Gilreath, and not of his wife, and that the taking of the deed to Belton Gilreath, trustee, was a scheme on his part to conceal and cover up his property, and to hinder, delay, and defraud his creditors, and the complainant in particular. The bill also avers "that the entire capital stock, and both the real and personal property of the Gilreath Coal & Iron Company, belong absolutely to Belton Gilreath, and he is hiding out said stock and property for the sole purpose of defeating your orator and other creditors in the collection of their demands against him." The bill also avers that all the property which ostensibly belongs to the Gilreath Coal & Iron Company is being used for the purpose of mining, such as raising coal; that said company also runs a commissary, wherein is kept a stock of general merchandise, and that said company is constantly buying and selling goods and wares for and from said commissary; that the lands are daily having coal taken from them in large quantities, and being shipped and sold throughout the country, through the sole management and direction of Belton Gilreath; that said Gilreath Coal & Iron Company is absolutely under the sole control and management of Belton Gilreath; that he is taking in and receiving all cash money and funds that are being paid to said Gilreath Coal & Iron Company, and appropriating it for his own individual use and purpose, not accounting to any one for any of said funds; that by reason of the daily and constant mining of the coal on the said lands, which gives to said lands their real value, the said Belton Gilreath is working an irreparable injury to same, and, further, by his taking and appropriating all the receipts and funds of said Gilreath Coal & Iron Company, whether from the sale of the said coal or the commissary, he is defrauding his creditors, and the complainant in particular, in the enforcement of its just demands, and that it is necessary that a receiver be appointed to take charge of all the property, both real and personal, and particularly that property described in this bill; that the property described in this bill and the exhibits thereto is practically all the property that complainant can subject to the payment of its judgment and execution, and it is unable, after diligent search in all the avenues open to it, and which could be discovered by due and proper diligence, to make such discovery of property to subject it to the payment of its demands; and that said property is in great danger of being lost, destroyed, squandered, or so impaired or decreased in its value by the raising and selling of said coal, and the use of...
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