Mobile Sav. Bank v. McDonnell

• Decision Date: 08 April 1890
• Citation: 8 So. 137,89 Ala. 434
• Parties: MOBILE SAV. BANK v. MCDONNELL.
• Court: Alabama Supreme Court

8 So. 137

89 Ala. 434

MOBILE SAV. BANK v. MCDONNELL.

Supreme Court of Alabama

April 8, 1890

Appeal from circuit court, Mobile county; WILLIAM E. CLARKE, Judge.

This appeal is prosecuted by the plaintiff, and the affirmative charge of the court, the refusal of the several charges requested by the plaintiff, the purport of all of which are sufficiently described in the opinion, and the admission of the evidence objected to, are now assigned as error.

T A. Hamilton and S. P. Gaillard, for appellant.

G L. & H. T. Smith, for respondent.

McCLELLAN J.

This is an action of ejectment prosecuted by the Mobile Savings Bank against Kate McDonnell et al., who claimed through James McDonnell, deceased. The bank was a creditor of John O'Donnell on July 30, 1885, at which date he conveyed the land in controversy to said James McDonnell, upon a consideration which, according to the leading recital of the deed, was $1,644.50 in money paid; but this recital was qualified by a subsequent clause of the instrument, which is in the following language: "This conveyance is made in payment of a debt due by said John O'Donnell to said James McDonnell for the sum of sixteen hundred and forty-four and 50-100 dollars." Subsequent to the execution of this conveyance the claims of the bank against O'Donnell were prosecuted to judgment, and at a sale under execution issued on the judgment the bank became the purchaser, and received the sheriff's deed to the property. It appeared in evidence that O'Donnell continued in possession of the land, exercising acts of ownership over it, up to the time of the sheriff's sale; but on the other hand, evidence was introduced, which tended to explain this fact, and to show that O'Donnell's continued possession was as the agent of McDonnell. The facts above outlined, as also the deed of the sheriff to the bank and of O'Donnell, to McDonnell, were adduced in evidence by the plaintiff on the trial below, and, on the assumption that the consideration of the deed from O'Donnell to McDonnell was the payment of an antecedent debt, a prima facie case was thus made out entitling the plaintiff to a verdict without further proof, unless the defendants showed that the consideration which passed from McDonnell to O'Donnell was both valuable and adequate. Hodges v. Coleman, 76 Ala 103; Pollak v. Searcy, 84 Ala. 259, 4 South. Rep. 137; Roswald v. Hobbie, 85 Ala. 73, 4 South. Rep. 177; Morrison v. Morris, 85 Ala. 196, 4 South. Rep. 667.

In discharging the onus thus cast upon them the defendants introduced evidence which tended to show that the consideration consisted of the extinguishment of the grantor's liability on two certain notes. One of these notes was made by the grantor, indorsed by the grantee, and payable to one Kapahn. The other appears to have been a note executed by Peter Burk, indorsed by the grantor, and payable to the grantee. The Kapahn note was $1,644.50. The agreement between O'Donnell and McDonnell, which the evidence tends to establish with respect to this note, was that the former should reduce the amount by payment to $1,000, and that the latter should assume the payment of that balance. There was no evidence that this balance had ever been paid, or that the payee ever released O'Donnell from liability for it; but, on the contrary, it appears that the note for the reduced amount was renewed subsequent to the conveyance of July 30, 1885, by O'Donnell, and the renewed paper indorsed by McDonnell, as had been the original. It will have to be considered, therefore, that the tendency of the evidence, with respect to this liability of O'Donnell, goes no further than to afford a basis for the inference that as between him and his indorser, McDonnell, the debt was to be solely that of the latter, but that they both remained bound to Kapahn; and that the consideration of the conveyance, so far as it resulted from that transaction, was the obligation of the grantee to pay this debt of which the grantor primarily, and himself as surety, owed to Kapahn. The rulings of the trial court, on instructions given and refused, raise the inquiry whether this was a valuable consideration for the conveyance. In our opinion, it was. It has been several times ruled by this court that a conveyance made in consideration of the grantee's discharging a debt due from the grantor to a third person should be upheld when assailed for fraud on the alleged infirmity of a lack of a valuable consideration. Eskridge v. Abrahams, 61 Ala. 134; Rankin v. Vandiver, 78 Ala. 562.

It is equally well settled that the fact that the purchase money of property sold by an insolvent debtor has not been paid, but, on the contrary, time is agreed on in which it should be paid, and notes executed for its payment at such time, do not subject the transaction to an imputation of fraud or invalidate it as against creditors of the vendor. Shealy v. Edwards, 75 Ala. 411, 78 Ala. 176; Caldwell v. King, 76 Ala. 149.

It would seem to logically result from these two established propositions that a sale of property by a debtor in failing circumstances will be sustained, so far as the character of the consideration is concerned, against the attacks of creditors, when it appears that the grantee has legally obligated himself to pay a debt due by the grantor to a third person; and, on principle, it would further appear to be immaterial whether such third person had assented to the substitution or not, since in any event the grantor would have the purchaser's obligation to pay the sum agreed on. But the conclusion need not be rested on deduction from other adjudged propositions. The question itself has been the subject of judicial inquiry and determination. Thus in Indiana, under statutory provisions similar to those in Alabama, it has been held that "where a surety assumes the debt of his principal, and mortgages his real estate to secure it, and, in consideration of these acts, personal property is conveyed to him by the principal, the transaction rests upon a valuable consideration; and the conveyance cannot bet set aside, unless it be made to appear that both buyer and seller were guilty of fraud." Powell v. Stickney, 88 Ind. 310. In discussing a like question, RICE, C.J., in Reynolds v. Crook, 31 Ala. 637, says: "We do not doubt that a valid conveyance of personal property, to provide indemnity for the sureties on a guardian's bond, may be made." But under our statutes, "it is essential to the validity of such a conveyance that at least its whole purpose should be the devotion of the property, bona fide, to the indemnification of the sureties. If a part of its purpose is that it shall avail or be used for the ease or favor of the grantor, it is void as to creditors." And in that case, the conveyance was held void, because of the reservation of a benefit; while the doctrine that the assumption of liability by the surety for the debt of the grantor constituted a valuable consideration was fully recognized. That, it would seem, is the principle involved here, and it is further and more directly supported by later adjudications of this court. This agreement, with respect to the Kapahn note, in our opinion, therefore, was a valuable consideration for the conveyance. Whether it was such a consideration as could be relied on, in view of the recitals in the deed of a different consideration, is a question which the assignments of error require us to determine. The rule appears to be well settled that a consideration, differing in kind from that recited in the deed, as where the recital is of a good consideration, and it is proposed to show a valuable consideration, cannot be proved. Houston v. Blackman, 66 Ala. 559; Potter v. Gracie, 58 Ala. 307. But it is equally well settled that, under a deed reciting a money consideration, or a consideration resting in the payment of a debt, or any other valuable equivalent, it is competent to support the conveyance by parol proof of any consideration, however differing from the recital, which is valuable as distinguished from a merely good consideration, since thereby the effect and operation of the instrument is not changed, and the rule against varying or altering writings by parol testimony is not offended. Wait, Fraud. Conv. §...