Manchuria S.S. Co. v. Harry G.G. Donald & Co.

• Decision Date: 15 November 1917
• Docket Number: 1 Div. 991
• Citation: 77 So. 12,200 Ala. 638
• Parties: MANCHURIA S.S. CO. v. HARRY G.G. DONALD & CO. et al.
• Court: Alabama Supreme Court

77 So. 12

200 Ala. 638

MANCHURIA S.S. CO. v. HARRY G.G. DONALD & CO. et al.

1 Div. 991

Supreme Court of Alabama

November 15, 1917

Appeal from Circuit Court, Mobile County; Norvelle R. Leigh, Jr. Judge.

Bill in equity by the Manchuria Steamship Company against Harry G.G Donald & Co. and others. From a decree dismissing complainant's bill, complainant appeals. Affirmed.

Harry T. Smith & Caffey, of Mobile, for appellant.

Stevens McCorvey & McLeod, of Mobile, for appellees.

THOMAS J.

The bill was filed in the chancery court by an alleged judgment creditor, to set aside as fraudulent a paper writing executed on February 10, 1910, by H.G.G. Donald, to the McGowin Lumber & Export Company, a corporation.

A portion of the evidence was taken orally, in open court before the chancellor. Gen.Acts 1915, p. 705; Andrews v. Grey, 74 So. 62. By operation of law the chancery court ceased to exist after January 14, 1917; and pending causes were transferred to the circuit court for trial or decision. Ex parte City Bank & Trust Co., 76 So. 372; Ex parte State ex rel. Attorney General, 73 So. 101; Gen.Acts 1915, p. 279.

The rule declared in Andrews v. Grey, supra, has no application to a submission on testimony taken orally, in open court, before the chancellor, where the decree is rendered by the judge of the circuit court, who did not hear such oral evidence. On September 7, 1908, H.G.G. Donald, doing business under the firm name of H.G.G. Donald & Co., entered into a written agreement with the McGowin Lumber & Export Company, whereby the latter was to furnish certain moneys, to be used in the purchase of lumber and logs, and in paying the necessary expenses of the conduct of the sale and export business of the first named. In the text of this opinion these parties will hereafter be referred to respectively as Donald and the McGowin Company.

By the instrument in question, Donald mortgaged to the McGowin Company his boom equipment and office fixtures, which latter were therein described as being in Mobile, Ala. The articles enumerated (constituting the boom equipment), used by Donald in handling, selling, and exporting timber and lumber, were not so described. The instrument, which was to remain of effect till January 1, 1910, was duly acknowledged, and was thereafter filed for record in the probate office of Mobile county on September 9, 1908. After the expiration of this agreement (February 10, 1910), said parties executed a second writing of like general effect, which was also duly acknowledged, and recorded in the office of the judge of probate of Mobile county on February 23, 1910.

The validity of the first instrument is not challenged; the assignments of error being specifically directed to the decree of the court, giving force and effect to the second instrument, and dismissing complainant's bill as last amended. Appellant's counsel clearly state the purpose of the bill with regard to the challenged instrument and the conduct of the business of the parties thereunder. It was to hold the McGowin Company to account for "the proceeds of lumber, timber, and other property which it received from Donald under a contract, partially written and partially verbal: First, because complainant was entitled to a statutory judgment lien, which it is entitled to enforce in equity against the McGowin Lumber & Export Company, who undertook to destroy it; second, because the transfer to the McGowin Lumber & Export Company was void as against the complainant, since it was intended to hinder, delay, and defraud the creditors of Donald."

The amended bill does not aver when his debt became existent, but only that it was reduced to judgment in the United States District Court, in Alabama, on the 29th day of April, 1909; that this judgment was registered in the office of the judge of probate of Mobile county on February 12, 1910, under the provisions of section 4157 of the Code. A judgment, registered as required by statute, is intended to have the effect of an execution in the hands of the sheriff, "as an instrumentality of creating and preserving a lien" ( Reynolds v. Collier, 103 Ala. 245, 15 So. 603; Enslen v. Wheeler, 98 Ala. 200, 13 So. 473; Decatur, etc., Works v. Moses, 89 Ala. 538, 7 So. 637; Street, Ex'r, v. Duncan, 117 Ala. 571, 23 So. 523; Crawford Merc. Co. v. Anderton, 179 Ala. 573, 60 So. 874) "on all the property of the defendant in the county where filed, which is subject to levy and sale under execution" (Code, §§ 4156, 4157; Jordan v. N., C. & St. L. Ry., 131 Ala. 219, 221, 31 So. 566; Duncan v. Ashcraft, Adm'r, 121 Ala. 552, 25 So. 735). Appellee insists that the bill fails to show the lien of a registered judgment, since it is not specifically averred therein that any of the properties in question were ever within Mobile county after the registration of the judgment.

In equity, appropriate pleading is as essential to the enforcement of a right as proof is necessary to support such pleading. Proof without pleading is generally ineffectual. Sims' Ch. § 200; Overton v. Moseley, 135 Ala. 599, 33 So. 696; Rapier v. Gulf City Paper Co., 64 Ala. 330; S. & N.A.R.R. Co. v. H.A. & B.R.R. Co., 117 Ala. 395, 23 So. 973; Cockrell v. Gurley, 26 Ala. 405; McKinley v. Irvine, 13 Ala. 693. The cases holding that equity may enforce a lien of necessity deal with existing property, subject to the lien, within the jurisdiction of the court. Wynn v. Bank, 168 Ala. 469, 53 So. 228; Enslen v. Wheeler, supra; Code, § 4157. Though the judgment of complainant is averred to have been registered in Mobile county on February 12, 1910, yet the averment not being specific, that any of the properties sought to be conveyed by the instrument in question, or to be subjected to said judgment, were in said county on or after said date, no lien of a registered judgment is shown to have attached thereto. It is true that the instrument challenged by the bill (that of February 10, 1910) recited that, on the date of its execution the office fixtures were within said county; yet it does not follow that said property remained in said county until the registration of the judgment on February 12, 1910 (though it may be that such was the fact).

However this may be, we will decide the main question presented by the appeal, since, in a proper case, a creditor without a lien may successfully maintain a bill to set aside a fraudulent conveyance. Gurley v. Robertson, 178 Ala. 325, 332, 59 So. 643. But the pleading and proof must bring the right of such creditor within the purview of the statute. In McCrory v. Donald, 192 Ala. 312, 68 So. 306, authorities are collected, to the effect that a subsequent creditor cannot have set aside a conveyance of properties executed by his debtor, as fraudulent as to himself, except upon proof that the conveyance was made with the specific intention to defraud subsequent creditors, and was accepted by the grantee to assist the debtor in his fraudulent purposes, and that a fraud was thus committed which was injurious to the attacking creditors.

The evidence is without conflict that the instrument of date February 10, 1910, was executed for the purpose of continuing in force till January 1, 1912, the original agreement between the parties; it being of practically the same import, except as to period of operation and as to the original instrument's being a first lien on the properties thus conveyed. The substance of this second instrument was that H.G.G. Donald, doing business under the name of H.G.G. Donald & Co., engaged in exporting timber and lumber, was without sufficient capital to carry on that business, and that the McGowin Lumber & Export Company undertook to assist the said Donald financially--by indorsing or otherwise guaranteeing H.G.G. Donald & Co.'s. paper--at such times and in such amounts as the McGowin Company should determine, but only upon receiving the security created or provided by said instrument; that the title to all timber and lumber thereafter purchased by Donald with the funds so loaned or guaranteed should vest and remain in the McGowin Company until the lumber should be loaded upon vessels and bill of lading, with the usual draft attached, obtained, and delivered to the McGowin Company; that Donald and the McGowin Company should negotiate said drafts, and use so much of the proceeds as should be necessary in repaying the loans by the McGowin Company made to Donald and paying all papers indorsed or otherwise guaranteed for H.G.G. Donald or for his firm, and in paying the compensation to which the McGowin Company should be entitled under the terms of the instrument. By the agreement the compensation for all services and aid which the McGowin Company might render Donald under the terms of the instrument was fixed at "5 per cent. of 90 per cent. of the invoice value of each cargo of lumber or timber shipped by the said Donald while this agreement is in force, and also 5 per cent. of the net profit of the charter of each vessel loaded by said Donald while this agreement is in force." The agreement further provided that to secure all liabilities accruing to McGowin Company under said engagement, Donald mortgaged thereby his boom equipment and office furniture, described as follows:

"All of the office furniture and fixtures which he now has in his office in Mobile, Ala., or which he may place therein before January 1, 1912. Also all chains, dogs, ropes and other tools, utensils and appliances, owned by said Donald and used in the business of handling, selling and exporting timber and lumber. Also all other articles of like kind which he may acquire before the 1st day of January, 1912."

It was further covenanted therein that Donald would not purchase or handle any timber or lumber during the life of the contract ...