Kimbrough v. Alred

• Citation: 80 So. 617,202 Ala. 413
• Decision Date: 21 November 1918
• Docket Number: 8 Div. 127
• Parties: KIMBROUGH v. ALRED et al.
• Court: Supreme Court of Alabama

80 So. 617

202 Ala. 413

KIMBROUGH v. ALRED et al.

8 Div. 127

Supreme Court of Alabama

November 21, 1918

Rehearing Denied Dec. 21, 1918

Appeal from Circuit Court, Morgan County; Robert C. Brickell, Judge.

Suit by P.G. Kimbrough, trustee, for J.R. White, bankrupt, against L.T. Alred and others. From the decree, plaintiff appeals. Affirmed in part; reversed and remanded in part.

The substance of the bill, which is filed by Kimbrough as trustee in bankruptcy for J.R. White, is that in 1915 White was considerably involved, most of which was unsecured or inadequately secured, and that he owned a certain municipal lighting plant in Hartselle, consisting of machinery and appliances and certain valuable franchises, and that he executed to his brother-in-law, one L.T. Alred, a mortgage on this property for the sum of $6,000. Alred is described as a small farmer, living some distance from any town or village and in the wilds of Cullman county. The detail of the mortgage is not stated, as it is stated that it has been withheld from record and carried around by White; that after the execution of the mortgage White remained in possession of the properties, receiving the incomes, which were lucrative and that it was understood when the mortgage was executed that White should retain it and the property, and he did so and carried the mortgage around with him, putting it up with banks for the purpose of getting money on it, and it was withheld from record for these purposes.

The consideration for the mortgage is denied, and it is alleged That Alred never had that amount of money to lend, and could not have raised it at any time during his career without the aid of said White, and that said mortgage was made a secret trust for the greatly embarrassed White to shield his property and revenue from clamorous creditors, several of whom were suing him at the time. That in August, 1915, White sold out said plant and equipment to the Alabama Power Company for the sum of $8,000, prior to the payment of which sum White made an affidavit as to incumbrances, disclosing in said statement said mortgage. The Alabama Power Company in paying for said plant made out a check for $6,000 to his order, which he paid to said Alred really in trust for himself, and to screen the same from his creditors. The Alabama Power Company is charged with notice of the fraudulent designs of White and Alred, the unrecorded mortgage, and all the facts above set out as to the actions of White and Alred. That in making said check payable to White and requiring that he pay same to Alred the Alabama Power Company participated with knowledge of the fraudulent design and purpose of White and Alred.

It is further alleged that A.B. Turney is a small merchant, having in stock at no time more than $1,000 of goods, also a bankrupt, and being involved in several sets of bankruptcy cases, and that White executed to him a mortgage for $2,000, which was devoid, or almost entirely devoid, of consideration, and conveyed thereby certain real estate, which is set forth. White, being greatly indebted to the First National Bank of Hartselle and being embarrassed, procured Doss and Day to indorse for him, and executed to Doss a mortgage on certain real estate for the purpose of securing an indebtedness of $3,089.42, due January 1, 1917.

It is alleged that the consideration for this mortgage was largely simulated, and that really only a small amount was due while the other was for advances which were never really made; that for reasons best known to themselves said White and Doss concocted and antedated, as of July, 1915, a certain previous equitable mortgage which was without consideration, and which was given for the same indebtedness as the last above set out mortgage; that in February, 1916, White made a fraudulent arrangement with the Hoods, father and son, by which they took over the Hartselle Heading and Stave Mill, White as general manager, and Archie Hood, a minor, the sole owner, and doing those things that required personal responsibility, and together they obtained large profits, which were divided, and doctored the accounts, and covered up the transactions in such a way that it appeared that the enterprise was run at a loss, when in fact it was profitable; that by such methods and by one S.E. Stewart, a ground floor mortgagee of the series, coming into the arrangement further, other profits were suppressed, said Stewart availing himself of a watchman, who stalked the works at intervals as an excuse for the claim of Stewart that he was in possession of the property. About this time White concluded it was best to be adjudged a voluntary bankrupt, and it was arranged in order that White and the Hoods might find shelter under the ample folds of the Stewart mortgage from the bankruptcy sequelæae, to acknowledge Stewart's possession and to attorn to him, and Stewart agreed to pose as possessor and protector for an agreed stipend to be paid at the rate of $75 per month for the time that the mill should operate.

Other matters are alleged not necessary to be here set out. The prayer is to cancel the alleged mortgages from White to Alred, to Doss and to Turney as fraudulent and simulated, and to require Alred to account for the money paid him by the Alabama Power Company for White; to hold the Alabama Power Company jointly and severally liable for the said sum of $6,000, and to render a decree against each of them personally, and to enjoin said Turney and Doss from receiving any of the proceeds of the pretended foreclosure of their pretended mortgages; to set aside and annul the arrangement between White and the Hoods, for an accounting and general relief.

The bill was amended by setting forth additional derelictions of the Hoods and White in the management of the Heading and Stave Mill.

E.W. Godbey, of Decatur, for appellant.

Sample & Kilpatrick, of Cullman, Eyster & Eyster, of Albany, and Thomas W. Martin, of Birmingham, for appellees.

GARDNER J.

The bill in this case is filed by plaintiff as trustee in bankruptcy of the estate of J.R. White, and seeks to set aside, as in fraud of creditors, certain conveyances and declare certain transactions void, and to hold the parties accountable therefor. The substance of the bill's averments will not be here stated in this opinion, but will be sufficiently set out by the reporter in his report of the case. We will only state so much thereof as suffices for a general understanding of the questions here determined.

It is earnestly insisted in the first place by all the respondents that the bill is multifarious, in that it seeks to have the transfer of the payment of $6,000 by the Alabama Power Company to Alred declared fraudulent and void as against creditors; and likewise to have declared fraudulent and void the business arrangement made by the bankrupt with the respondents Milton and Archie Hood in the business known as the Hartselle Stave & Heading Company, and also seeks to have set aside the mortgages to the respondents Doss and Turney as fraudulent and void as against creditors. It is further insisted there is no connection as to any of these transactions, one with the other, and that therefore the bill is multifarious citing, among other authorities, Truss v. Miller, 116 Ala. 505, 22 So. 863; Hitt Lbr. Co. v. Cullman Property Co., 189 Ala. 22, 66 So. 720; A.G.S.R.R. Co. v. Prouty, 149 Ala. 71, 43 So. 352; Ford v. Borders, 75 So. 400; Bentley v. Barnes, 155 Ala. 659, 47 So. 159.

We are of the opinion, however, that the bill sufficiently shows a scheme on the part of the bankrupt to defraud his creditors and that resort was had to the various transactions, as set up in the bill, for the consummation of this one purpose; and that the bill is not multifarious for having made respondents those parties charged with participation or knowledge of the fraud, although in separate transactions which had no connection one with the other. We think the bill in this respect comes within the influence of the following authorities, and that the demurrer taking this point should not be sustained: Henderson v. Farley Nat. Bk., 123 Ala. 547, 26 So. 226, 82 Am.St.Rep. 140; N.W. Land Ass'n v. Grady, 137 Ala. 219, 33 So. 874...