H.C. & W.B. Reynolds Co. v. Reynolds

• Decision Date: 07 November 1914
• Docket Number: 564
• Citation: 190 Ala. 468,67 So. 293
• Court: Alabama Supreme Court
• Parties: H.C. & W.B. REYNOLDS CO. v. REYNOLDS et al.

67 So. 293

190 Ala. 468

H.C. & W.B. REYNOLDS CO. v. REYNOLDS et al.

No. 564

Supreme Court of Alabama

November 7, 1914

Rehearing Denied Jan. 14, 1915

Appeal from Chancery Court, Bibb County; Thomas H. Smith Chancellor.

Bill by the H.C. & W.B. Reynolds Company against E.D. Reynolds and others, in which the Bibb County Banking & Trust Company filed a bill in the nature of a cross-bill. Decree for cross-complainant, and complainant appeals. Affirmed.

John P Tillman and Henry P. White, both of Montgomery, and Lavender & Thompson, of Centerville, for appellant.

Logan &amp Logan, of Centerville, for appellees.

DE GRAFFENRIED, J.

H.C. &amp W.B. Reynolds Company, a corporation, was, for a long time, engaged in a general mercantile business in Bibb county. The great bulk of the stock of the corporation belonged to H.C. Reynolds, Sr., and to members of his immediate family, among them being his sons, E.D. Reynolds and H.E. Reynolds, deceased.

There appears to have been two mercantile establishments, one at Centerville and the other at Blocton. H.E. Reynolds, deceased, had charge of the business at Centerville, and E.D. Reynolds at Blocton. H.E. Reynolds, deceased, was the treasurer of the corporation, and he seems to have been given a free hand in the management of the mercantile establishment at Centerville.

The evidence all shows that the said H.E. Reynolds (who died in 1911) was a man of excellent character, business ability, and habits, and that he deservedly possessed the confidence and esteem of his father, who was the president of the corporation, and of the other stockholders of the corporation. On this subject we quote with approval the following from the opinion of the chancellor, which we find in the record:

"There is nothing in the evidence nor in this record to justify any imputation of improper motives to H.E. Reynolds or to these complainants. They had the utmost confidence in each other, and no doubt in the world the title was taken in H.E. Reynolds for no ulterior motives or with any but the most correct and upright intentions, and had he lived no litigation would ever have arisen. His widow has acted in the most generous, disinterested manner, and with no other purpose than to carry out the wishes of her husband, and do what she considered just and right, without regard to her own pecuniary interest. Nor do I consider that solicitors for cross-complainants have argued otherwise."

It appears that at the time of his death the said H.E. Reynolds, deceased, thought that he was, and probably was, solvent, His estate, when the bill in this case was filed, was insolvent, and this insolvency may be, and probably was, due to a misfortune to the Cleveland Mercantile Company, in which he was interested at the time of his death, and which misfortune befell the Cleveland Mercantile Company after his death. The said H.E. Reynolds, deceased, at the time of his death, was legally bound to the Bibb County Banking & Trust Company on some of the debts of the Cleveland Mercantile Company, and this liability is the mainspring of this litigation.

It appears that after the formation of the H.C. & W.B. Reynolds Company the said H.E. Reynolds, deceased, bought, with money of said H.C. & W.B. Reynolds Company, certain tracts of land and certain personal property, and took the title in his own name. This property was not bought at one time, but at several different times, stretching over a period of several years; and it is conceded that all of it was paid for out of funds of the H.C. &. W.B. Reynolds Company. It further appears that on the books of the H.C. & W.B. Reynolds Company all of this property was treated as the property of the company. The rents received from the property, the taxes paid out on the property, and the property itself, were, on the books and among the stockholders of said corporation, treated as matters of said H.C. & W.B. Reynolds Company. It is not claimed or suggested that H.E. Reynolds, deceased, took the title to this property--and a large part of it was purchased several years before his death--in his own name for evil or improper purposes. He may have taken the title in this way as a matter of convenience merely, but in his treatment of the property in so far as the outside world was concerned, he treated it, handled it, and spoke of it as his own. The deeds were recorded, and they showed the title to be in him. When any of the property was sold, he conducted the negotiations for, and concluded, the sale. The deeds to such properties were signed by him and his wife, and the purchase money was itself paid to him. If all of the purchase money on such a sale was not paid in cash, notes were made to H.E. Reynolds for the deferred purchase money, and these notes were secured by mortgages to said H.E. Reynolds, and the mortgages were regularly recorded. He rented out the property, assessed it in his own name, was, in so far as his tenants and the world knew, in sole possession of it and the sole owner of it, and he spoke of it as his own. The stockholders of the H.C. & W.B. Reynolds Company knew that he did not own the property, but the business world regarded him as its owner.

1. The original bill of complaint in this cause was filed by the H.C. & W.B. Reynolds Company against the administrators of the estate and the heirs and distributees of the said H.E. Reynolds, deceased, and prayed that the legal title to the property, to which we have above referred, be divested out of them and vested in the complainant. The theory of the complainant is that, as the property was bought with the money of complainant, the property was and is the property of the complainant, and that said H.E. Reynolds, deceased, was, and after his death his personal representatives and heirs were, the holders of the legal title for the benefit of complainant.

The bill of complaint, of course, contains equity; and the personal representatives and heirs of said H.E. Reynolds, deceased, in no way dispute the right of the complainant to the relief prayed for in its bill of complaint.

2. Upon the application of the Bibb County Banking & Trust Company, leave was given the bank to assert its rights in this matter by an original bill in the nature of a cross-bill. Some discussion is had in briefs of counsel as to whether the Bibb County Banking & Trust Company had the right to file in this cause the pleading which it has filed upon leave of the chancellor, but we think that the cases of Renfro v. Goetter, Weil & Co., 78 Ala. 314, and Ex parte Gray, 157 Ala. 363, 47 So. 286, 131 Am.St.Rep. 62, cited by the chancellor in his decree upon the petition of said bank to be allowed to intervene, are decisive of that question. In this case the bank was not a party to the original cause, and there was no privity between it and the complainant in the original cause. It was interested, however, in, but possessed no lien upon, the subject-matter of the suit. Leave to file a bill in the nature of a cross-bill was, under our practice, therefore, necessary, and such a pleading furnishes the appropriate remedy for said bank. Ex parte Gray, supra.

3. This entire litigation, in so far as this appeal is concerned, grows out of the pleading which was filed in this cause by said bank, and to which all of the parties to the original cause were made parties.

In its bill in the nature of a cross-bill the bank denies that the purchase money of the property described in the original bill was furnished by complainant, claims that the original bill was filed to divest the title of the personal representatives and heirs of H.E. Reynolds, deceased, to the property described therein, for the purpose of defrauding the bank, and then, in the alternative, alleges that, if the money which was used by H.E. Reynolds in buying the property was in fact the money of the said H.C. & W.B. Reynolds Company, then the said H.C. & W.B. Reynolds Company is estopped from setting up its claim to the property as against the debt of the bank, because, so the bill in the nature of a cross-bill alleges, the said H.C. & W.B. Reynolds Company permitted the said H.E. Reynolds, deceased, to hold himself out to the world as the owner of said property, and upon the faith of his ownership of the property the bank had extended to him credit and permitted him to contract the indebtedness to the bank. The bill in the nature of a cross-bill alleges that if the complainant is granted the relief prayed for in its bill of complaint, and the property described in the original bill is declared to be the property of the complainant, then the estate of H.E. Reynolds in insolvent.

We can see no reason why, in such a cross-bill, reference may not be had to the original bill, and we see no reason why, in such a cross-bill, matters of description in the original bill may not be referred to and, to save unnecessary repetition adopted as a part of the bill in the nature of a cross-bill. Such a cross-bill is allowed by the court for the purpose of enabling one not a party to the original suit to come into the cause and, by appropriate averments, show his right to be heard in the cause, and by appropriate process in his matter bring before the court those parties who claim interests adverse to him. The prominent distinction between an original bill in the nature of a cross-bill, and a mere cross-bill, is that a cross-bill is filed in a cause by a party to the cause and seeks the enforcement of an equity touching, germane to, or springing out of the subject-matter of the original bill, while an original bill in the nature of a cross-bill is a pleading filed by leave of the chancellor, by a person not a party to the original suit, and between whom and the complainant there is no privity. In such a pleading the...