McDowell v. Steele

• Decision Date: 22 May 1889
• Citation: 87 Ala. 493,6 So. 288
• Parties: MCDOWELL ET AL. v. STEELE.
• Court: Alabama Supreme Court

6 So. 288

87 Ala. 493

MCDOWELL ET AL. v. STEELE.

Supreme Court of Alabama

May 22, 1889

Appeal from chancery court, Wilcox county; THOMAS W. COLEMAN Chancellor.

Suit by C. D. Steele to have certain mortgages executed by John R McDowell-one to D. S. Pritchett, and the other to Harriet McDowell-declared fraudulent and void. Decree for complainant, and defendants appeal.

J N. Miller and Watts & Son, for appellants,

J Y. Kilpatrick, contra.

STONE C.J.

The testimony is very satisfactory in support of the proposition that in March, 1884, McDowell was indebted to Pritchett and to Mrs. McDowell in the sums severally claimed by them. We think, also, that the property mortgaged to them was not excessive in value, taking into the account the amount of the indebtedness. It is also well settled under our system that a failing debtor, who is unable to pay all his debts, may elect whom he will pay, and pay them in full, although he thereby disables himself to pay anything to his other creditors. But this last principle has its limit, which is as well defined and universal as the principle itself. It is this: The arrangement or adjustment by which the creditor secures, or attempts to secure, his own claim must not stipulate, or openly or secretly secure or provide, any benefit to the debtor beyond what the law, without such agreement, would secure to him. If the security transcend this boundary, it is fraudulent as to the failing debtor; and if the secured creditor knows of other debts unprovided for, or, what is the same thing, has information calculated to put him on inquiry which, if followed up, would lead to the discovery of other debts, then it is fraudulent as to him. 3 Brick. Dig. p. 517, § 137; Hodges v. Coleman, 76 Ala. 103; Pole v. Wilson, 7 Ala. 690; Wiley v. Knight, 27 Ala. 336; Reynolds v. Welch, 47 Ala. 200; McWilliams v. Rodgers, 56 Ala. 87; Lehman v. Kelly, 68 Ala. 192; Seaman v. Nolen, Id. 463; Pritchett v. Pollock, 82 Ala. 169, 2 South. Rep. 735; Campbell v. Hopkins, (Ala.) ante, 76; Lukins v. Aird, 6 Wall. 78; 3 Brick. Dig. p. 679, § 10; Tillman v. Thomas, (Ala.) ante, 151.

It is contended that McDowell, after making these mortgages retained sufficient unincumbered property to pay the debt which the bill seeks to enforce. We have examined all the testimony bearing on this question, and, without commenting on it, we hold it wholly insufficient to make this contention good. We hold that, at and before making the mortgages, Mr. McDowell was practically insolvent. Else why want 12 years within which to work out and pay his debts? Is there sufficient evidence that Pritchett had actual knowledge, when he obtained his mortgage, that McDowell was otherwise indebted than to him (Pritchett) and to Mrs. McDowell? Pritchett testifies that at that time he did not know that McDowell owed any other than the two debts,-the one to himself, and the other to Mrs. McDowell, his mother. The questions may naturally arise, why should be demand a mortgage security of McDowell if the latter owed no other debts? and on what principle could he account for McDowell's wish to obtain twelve years' indulgence, and his own consent to grant him more than nine? McDowell (Pritchett's witness) sheds light on this. He testified as follows: "The last of November or first of December, 1883, I had been trying to sell the fail plantation to meet that debt, [the chief consideration of the mortgage made to Pritchett, March 14, 1884,] but could not effect a sale of it, so I proposed to him, [Pritchett,] as he had money, that he would pay up said decrees, and give me time to pay him and to pay up my other debts. He asked what time I wanted. I told him, if he gave me twelve years, I thought I could pay him some along every year, and pay up my other debts. He said, 'No; but I tell you what I will do: If you will give me a mortgage on more lands than the Fail place, I will give...