McDermott v. Eborn

Decision Date01 May 1890
Citation7 So. 751,90 Ala. 258
PartiesMCDERMOTT ET AL. v. EBORN ET AL.
CourtAlabama Supreme Court

Appeal from city court of Birmingham; H. A. SHARPE, Judge.

Creditors' bill to set aside for fraud a sale of a stock of goods. The debtor borrowed money of a blank, and gave a bill of sale as security. He was left in possession, and permitted to sell at retail, and to dispose of the proceeds. The bank, hearing that an attachment was about to be issued, demanded possession, and left a representative in the store, while its attorney brought detinue for the goods. This bill was filed and, after the bank was cited to appear, the detinue suit was dismissed, and an attachment in its favor levied. The chancellor held the sale void as to existing creditors, and dismissed the bill as to subsequent ones, who appeal.

Mountjoy & Tomlinson and Sayre, Stringfellow &amp Le Grand, for appellants.

R. H. Sterrett, W. C. Ward, and Webb & Tillman, for respondents.

SOMERVILLE J.

Section 1730 of the present Code of Alabama, (1886), corresponding to section 2120 of the Code of 1876, provides that "all deeds of gift, all conveyances, transfers, and assignments verbal or written, of goods, chattels, or thing in action, made in trust for the use of the person making the same, are void against creditors existing or subsequent of such person." In the case of Benedict v. Renfro, 75 Ala. 121, 51 Amer. Rep. 429, and again in Murray v. McNealy, 86 Ala. 234, 5 South. Rep. 565, we had occasion to discuss at some length, in connection with the above section of the Code, the subject of mortgages on stocks of merchandise, where the mortgagor was permitted to remain in possession, and to sell the goods, in due course of trade, for his own benefit. We held that such transfers were virtually "made in trust for the use of the person making the same," within the meaning of this statute, their inevitable tendency being to hinder and delay the creditors of the mortgagor. They were said, therefore, to be fraudulent per se as against such creditors. As said by the United States supreme court in Robinson v. Elliott, 22 Wall, 513, where the subject is fully discussed, such a transaction on its face shows that the legal effect of it is to delay creditors, and for this reason "the law imputes to it a fraudulent purpose." The statute in question makes transfers of this character void equally against subsequent creditors as against those who exist at the time of the transaction. It is sufficient, without more, that such is the legislative fiat, apart from any satisfactory policy which, in the opinion of the courts, might justify the enactment of such a law. There is ample reason, however, for such an enactment. The apparent evidence of ownership in the mortgagor tends to disarm suspicion, and to draw subsequent creditors into lending their money, or selling their goods, to one who is thus armed by the mortgagee with means of practicing a deception. The transfer of the grantor's stock of merchandise, made to the Jefferson County Savings Bank by Eborn, on June 7, 1886, was in form a bill of sale, but the evidence clearly shows that it was intended as a security for a debt of $1,500, and it was therefore but a mortgage. There is no controversy on this point. The mortgagor was permitted to remain in possession of the goods for over three months, and to daily sell and appropriate the proceeds of sale to his own use. The evidence satisfies us, moreover, that there was an implied agreement to keep the matter secret, and not register the mortgage upon the pbulic records. The chancellor, as we understand his opinion, held that there must have existed an actual intention to defraud, established by evidence extrinsic to the transaction itself in order to defeat the transfer as...

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13 cases
  • Hasbrouck v. LaFebre
    • United States
    • United States State Supreme Court of Wyoming
    • 13 Octubre 1915
    ...... 63 N. J. Eq. 151, 51 A. 1011.) In Alabama such mortgages are. held to be absolutely void. ( Owens v. Hobbie, 82. Ala. 466, 3 So. 145; McDermott v. Eborn, 90 Ala. 260, 7 So. 751; O'Neil v. Brewing Co., 101 Ala. 388, 13 So. 576; Christian & Craft G. Co. v. Michael, 121 Ala. 84, 25 So. ......
  • Crisp v. First Nat. Bank, 6 Div. 903.
    • United States
    • Supreme Court of Alabama
    • 14 Enero 1932
    ...own benefit so as to be free from liability for his debts." 27 Corpus Juris 600; Taylor v. Dwyer, 131 Ala. 91, 32 So. 509; McDermott v. Eborn, 90 Ala. 258, 7 So. 751; Jordan v. Collins, 107 Ala. 572, 18 So. Page v. Francis, 97 Ala. 379, 11 So. 736; Stephens v. Regenstein, 89 Ala. 561, 8 So.......
  • Abbeville Live Stock Co. v. Walden
    • United States
    • Supreme Court of Alabama
    • 26 Abril 1923
    ......Decisions to. like effect in this jurisdiction are Deshazo v. Lewis, 5. Stew. & P. 91, 24 Am. Dec. 769; Acker v. Bender, 33 Ala. 230; McDermott v. Eborn, 90. Ala. 258, 7 So. 751; Carpenter v. Murphree & Jones,. 49 Ala. 84; Davis v. Hubbard, 38 Ala. 185;. Barker v. Bell, 37 Ala. 354; Booker ......
  • Gray & Dudley Hardware Co. v. Guthrie
    • United States
    • Supreme Court of Alabama
    • 12 Abril 1917
    ...... authorities are to the same effect: Benedict v. Renfro, 75 Ala. 121, 51 Am.Rep. 429; Owens v. Hobbie, 82 Ala. 467, 3 So. 145; Bank v. Eborn,. 84 Ala. 529, 4 So. 386; Woodall v. Kelly, 85 Ala. 368, 5 So. 164, 7 Am.St.Rep. 57; Murray v. McNealy,. 86 Ala. 234, 5 So. 565, 11 Am.St.Rep. 33; McDermott v. Eborn, 90 Ala. 258, 7 So. 751; Pugh v. Harwell,. 108 Ala. 486, 18 So. 535. . . Though. a mortgage may be valid on its face, it may ......
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