London v. G.L. Anderson Brass Works

• Decision Date: 20 April 1916
• Docket Number: 6 Div. 80
• Citation: 197 Ala. 16,72 So. 359
• Parties: LONDON v. G.L. ANDERSON BRASS WORKS.
• Court: Alabama Supreme Court

72 So. 359

197 Ala. 16

LONDON v. G.L. ANDERSON BRASS WORKS.

6 Div. 80

Supreme Court of Alabama

April 20, 1916

On Rehearing, June 30, 1916

Appeal from City Court of Birmingham; H.A. Sharpe, Judge.

Ejectment by John London against the G.L. Anderson Brass Works. From a judgment for defendant, plaintiff appeals. Affirmed.

Anderson C.J., dissenting on rehearing.

London & Fitts, of Birmingham, for appellant.

Allen Fisk & Townsend, of Birmingham, for appellee.

SOMERVILLE J.

The controlling issue in this case is whether plaintiff's title to land by purchase under an execution sale against one G.L. Anderson, on April 3, 1911, shall prevail against defendant's title derived from said Anderson by conveyance from him to his wife, Lula Anderson, on October 22, 1910.

The debt upon which the execution sale was founded was due from Anderson to London & Fitts in April, 1910, and the general contentions of plaintiff are: (1) That the conveyance from Anderson to his wife was a voluntary conveyance, and therefore void as to this debt, regardless of good faith; (2) that, though there was a valuable consideration therefor, the conveyance was nevertheless void unless defendant showed that the consideration was also reasonably adequate, which it failed to do as matter of law; (3) and that, in any case, the consideration recited as paid was so grossly inadequate that as matter of law, the conveyance must be branded as fraudulent and void.

1. The deed from Anderson to his wife recites a consideration of "one hundred dollars and love and affection to him in hand paid." The land conveyed was of the value of $10,000, or a little more, and then carried an incumbrance of $5,000. If the valuable consideration recited were merely nominal--as $1--and for the self-evident purpose of coloring a gift as a sale, the deed would be construed as a voluntary deed, as to creditors, and parol evidence of a substantial valuable consideration would not be admissible to support it. Houston v. Blackman, 66 Ala. 559, 565, 41 Am.Rep 756. But $100 cannot be regarded as nominal, however inadequate it may be.

"In the application of the principle that voluntary conveyances are, as matter of law, conclusively presumed fraudulent and void as to existing creditors, the definition of a 'voluntary conveyance' must be steadily kept in view. It is a conveyance founded merely and exclusively on a good, as distinguished from a valuable, consideration, on motives of generosity and affection, rather than on a benefit received by the donor, or detriment, trouble, or prejudice to the donee. If the donor receives a benefit, or the donee suffers detriment, as the consideration of the conveyance, the consideration is valuable, not good merely. However inadequate such consideration may be--however trivial the benefit to the one, or the damage to the other--the conveyance is not voluntary. The inadequacy is a circumstance which, with other facts, may import an actual intent to hinder, delay, and defraud the creditors of the grantor, but it does not change the character of the conveyance--does not convert it into a voluntary conveyance. Bump on Fraud. Con. 262." Bibb v. Freeman, 59 Ala. 612; Pippin v. Tapia, 148 Ala. 353, 42 So. 545.

See, also, Pickett v. Pipkin, 64 Ala. 520, 524; Bradley v. Ragsdale, 64 Ala. 558; Early & Lane v. Owens, 68 Ala. 171, 174.

It must be conceded that this court has sometimes treated executor trusts (Kinnebrew v. Kinnebrew, 35 Ala. 628, 637), and even conveyances of chattels (Felder v. Harper, 12 Ala. 612) and land (Goodlett v. Hansell, 66 Ala. 151, 160), as voluntary with respect to other adversely interested parties, even upon recited considerations of $5 or $10; and these cases have been later cited with approval in York v. Leverett, 159 Ala. 529, 531, 48 So. 684, 685, where it was said:

"When a court of chancery is called upon to set aside a conveyance upon the ground of fraud, it takes judicial notice that such a pecuniary consideration as $2 is merely nominal, when there is a transfer of so much value ($1,500) as in the conveyance under consideration."

So, also, in Folmar v. Lehman-Durr Co., 147 Ala. 472, 477, 41 So. 750, it was said, without other comment, that a deed made for love and affection and $2 was voluntary on its face, and void as to existing creditors.

It appears from these cases that the technical definition of a "voluntary conveyance" in Bibb v. Freeman, 59 Ala. 612, has not been strictly applied in all cases, and that this court has taken judicial notice that the recital of any trifling sum (from $1 to $10) as a pecuniary consideration for the grant of property of large value does not necessarily show as to third persons that the conveyance is other than voluntary; especially where it is coupled with a recital of the consideration of love and affection, and the grantee is a near relative of the grantor.

Nevertheless, there must be a limit somewhere; and, without undertaking now to define such a limit, we are unwilling to say that the instant deed, reciting a consideration of "$100 and love and affection," is upon its face a purely voluntary conveyance. It was therefore properly admitted in evidence.

2. A laborious survey of the numerous decisions and opinions by this court on the burden, nature, and effect of proof with respect to the consideration paid by an alleged fraudulent grantee, where his conveyance is attacked by a pre-existing creditor, exhibits inconsistencies which cannot be reconciled. We think, however, that the following principles must be regarded as settled by the weight of the adjudications: (1) If the consideration paid by the grantee was an existing debt due to him from the grantor, he must not only show its bona fide existence, but must also show that it was adequate; that is, that the value of the property was no more than a fair equivalent for the amount of the debt. If this is shown, the intention of the parties to thereby hinder, delay, or defraud is wholly immaterial, and cannot defeat the conveyance. Crawford v. Kirksey, 55 Ala. 282, 293, 28 Am.Rep. 704; Moore v. Penn, 95 Ala. 200, 203, 10 So. 343; Chipman v. Glennon, 98 Ala. 263, 265, 13 So. 822; Wood v. Riley, 121 Ala. 100, 25 So. 723; and innumerable

other cases. (2) But if the consideration paid is a new one, not resting on past indebtedness, a different rule prevails. When the complainant shows that his debt antedates the conveyance, the grantee must then show that he paid a valuable consideration--substantial and not merely nominal. Thereupon the complainant must show that the grantee had notice of an intent by the grantor to hinder, delay, or defraud his creditors.

In Borland v. Mayo, 8 Ala. 104, 117, the rule was stated as follows:

"Inadequacy of consideration, where the vendor is greatly indebted, is recognized as a mark of fraud. *** True, it might not be sufficient per se to authorize the sale to be annulled, unless the disparity between the true value of the property, and the price paid, or agreed to be paid, was so great as to strike the understanding at once with the conviction that such a sale never could have been made bona fide. But it may be a mark of fraud where the difference is not so great, and, when other circumstances are associated with it, they may be conclusive."

In Bibb v. Freeman, 59 Ala. 612, 616, it was said:

"However inadequate such consideration may be--however trivial the benefit to the one, or the damage to the other--the conveyance is not voluntary. The inadequacy is a circumstance which, with other facts, may impart an actual intent to hinder, delay, and defraud the other creditors of the grantor; but it does not change the character of the conveyance, does not convert it into a voluntary conveyance. *** The intent of the party making it determines its validity or invalidity, whatever may be its form, or the consideration it recites."

In Early & Lane v. Owens, 68 Ala. 171, 174, it was said:

"The adequacy of the consideration is not a matter of inquiry; that is material only as evidence of a fraudulent intent."

So, in Gordon v. Tweedy, 71 Ala. 202, 213, it was said:

"Inadequacy of price is usually denominated a badge of fraud, and it is often asserted that no fixed rule can be declared, by which to determine what disparity between the real value of property and the consideration paid will vitiate a conveyance for fraud. We think it settled, however, that fraud may be inferred from the inadequacy of the price alone, where it is so great as to shock the conscience."

In Little v. Sterne, 125 Ala. 609, 615, 27 So. 972, 974, it was said:

"If complainants were existing creditors, Mrs. Little, as a purchaser from the debtor for a valuable, though inadequate consideration, would be protected unless she had knowledge, actual or constructive, that he was insolvent or in failing circumstances, or unless she had knowledge of and participated in a scheme on his part to hinder, delay, and defraud his creditors."

It has been several times said that, "Where a valuable consideration has been paid for property," creditors cannot impeach the conveyance without showing knowledge or participation by the grantee in the grantor's fraudulent intent. Pippin v. Tapia, 148 Ala. 353, 354, 359, 42 So. 545; Simmons v. Shelton, 112 Ala. 284, 21 So. 309, 57 Am.St.Rep. 39; M.-M. Mfg. Co. v. Leith, 162 Ala. 246, 258, 50 So. 210.

In Tyson v. South. C.C. Co., 181 Ala. 256, 262, 61 So. 278, 280, we said:

"Notwithstanding complainant is an existing creditor, if Mrs. Tyson was a purchaser for value, though the consideration was inadequate, she would be protected, unless the consideration was so grossly inadequate as to constitute fraud in and of itself, or unless she had knowledge, actual or constructive, that the grantor was

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