Green v. Emens

• Decision Date: 20 November 1902
• Citation: 135 Ala. 563,33 So. 540
• Parties: GREEN ET AL. v. EMENS ET AL. [a1]
• Court: Alabama Supreme Court

33 So. 540

135 Ala. 563

GREEN ET AL. v. EMENS ET AL. ^[a1]

Supreme Court of Alabama

November 20, 1902

Appeal from chancery court, Morgan county; Wm. H. Simpson Chancellor.

Bill by John B. Green and others against W. A. Emens and others. Decree dismissing the bill, and complainants appeal. Affirmed.

E. W Godbey, for appellants.

D. W Speake, for appellees.

TYSON J.

This bill was filed by creditors of one Walden to have declared fraudulent a certain transfer made by him of a stock of merchandise to W. A. Emens & Co., and to hold that firm and the individuals composing it liable, as trustees in invitum, for the value of the goods. Complainants were existing creditors prior to and at the date of the alleged transfer, which it is alleged was without consideration, simulated, fictitious, covinous, and void. It is also alleged that Walden, when he made the transfer, was heavily indebted, and in sore financial straits, if not actually insolvent. The answer admits the transfer or sale of the goods, but denies that it was without consideration. It avers that the sale was for a valuable consideration, to wit, $1,000, which was all that the goods were reasonably worth on the market at the date of the purchase; that Emens & Co. were to pay for the goods $140 in cash, and to execute to Walden their two promissory notes, each in the sum of $430, each maturing in the fall of 1900; that at the time of the sale and purchase Walden was indebted to Brock & Spight, of Decatur, Ala., wholesale grocers, for goods purchased of them, in the sum of $150 or more; that he was also indebted to Davenport Bros., of Chattanooga, Tenn., in the sum of $903 for goods, wares, and merchandise bought of them, and also to Van Valkenburg & Matthews and W. L. Halsey, of Huntsville, Ala., in two different sums, amounting in the aggregate to more than $500; that Walden, immediately after the sale, took the $140, and paid it to Brock & Spight upon his indebtedness to them. He also at once took one of the two notes made to him by Emens & Co., and transferred it to Davenport Bros. upon his indebtedness to them, who took it, and gave him credit for the face value thereof as and for that much money paid them. The other note he transferred to Van Valkenburg & Matthews and W. L. Halsey upon his indebtedness to them, who also took it, and gave him credit for the face value thereof. We have set out the answer thus fully because of the insistence that it fails to distinctly aver the actual payment of $1 as a cash consideration, or the execution of any notes. We think this criticism of the answer hypercritical and unsubstantial.

As to the contention that the answer fails to aver a payment of the notes at maturity, it is needless to say more than that the consideration to be paid for the goods was the $140 in cash and the execution of the notes. This cash and these notes took the place of the goods in Walden's hands, and perhaps, if he had appropriated them to his own use, or rather had not discharged his in debtedness with them, the sale might be successfully assailed as fraudulent, depending upon the state of the proof as to notice by the purchasers of his fraudulent intent to place his property beyond the reach of his creditors. Smith v. Collins, 94 Ala. 394, 10 So. 334; Simmons v. Shelton, 112 Ala. 284, 21 So. 309, 57 Am. St. Rep. 39. But when, as here, the proceeds of the sale was applied by the debtor to the payment of his debts, his intent and purpose become immaterial. And so likewise it is of no moment that the purchasers knew that it was his purpose to sell his property for the purpose of applying its proceeds to the payment of certain debts, to the exclusion of others, if the price paid be reasonably fair, and no benefit was reserved to the debtor out of the transaction. "The law condemns motives and intents only when they are carried into an act which is itself illegal. If the end accomplished be lawful, it is immaterial what may have prompted it, provided the intent itself inflict no personal or pecuniary wrong, and does not aggravate the result. * * * Fraud without injury gives no right of action." Carter v. Coleman, 84 Ala. 256, 4 So. 151. In the case just cited and quoted from, Coleman, a merchant, being insolvent, sold his stock of goods to Lawson, his brother-in-law, who knew of his insolvency, the consideration being in part to pay an antecedent debt due Lawson, and the balance to be used in paying other creditors, and it was so used. This court upheld the transaction. It was there further said: "It is settled by numerous rulings of this court that an insolvent or failing debtor, owing more than he has means to pay, may select and prefer a part of his creditors, pay them in full, exhaust his resources, and thus leave himself without means to pay anything to his other creditors." This principle has been so often declared that it would seem useless to cite authorities to support it. However, see cases collated in 3 Mayfield's Dig. 874, § 400 et seq. In Rankin v. Vandiver, 78 Ala. 562, the purchasing creditor, after satisfying his debt, paid the balance of the consideration to the debtor with the understanding that he was not to retain the money, but was to pay it over to certain named creditors of his, which he did. The court said: "It is our opinion that the payment of the money to the debtor by the appellees [the purchasers] did not render the purchase fraudulent, in view of the fact that it was expressly agreed that it should be paid to the other bona fide creditors, and was so paid to them. There was no semblance of any locking up of the property from creditors for the use of the debtor, nor one dollar's worth of benefit or profit...