Muscogee Const. Co. v. Peoples Bank & Trust Co.

• Decision Date: 16 July 1970
• Docket Number: 3 Div. 450
• Citation: 238 So.2d 883,286 Ala. 258
• Parties: MUSCOGEE CONSTRUCTION CO. et al. v. PEOPLES BANK AND TRUST CO.
• Court: Alabama Supreme Court

Page 883

238 So.2d 883

286 Ala. 258

MUSCOGEE CONSTRUCTION CO. et al. v. PEOPLES BANK AND TRUST CO.

3 Div. 450.

Supreme Court of Alabama.

July 16, 1970.

Rehearing Denied Aug. 27, 1970.

Richard M. Jordan, Montgomery, for appellants.

George B. Azar, Montgomery, for appellee.

MADDOX, Justice.

Peoples Bank and Trust Co., appellee here, filed a declaratory judgment action in the Circuit Court of Montgomery County, In Equity, against appellants, Muscogee Construction Co. and W. G. Salter and his wife, Dorothy Kovacs Salter.

Complainant alleged that it had obtained a judgment in a suit on a note against Muscogee Construction Co., a Georgia corporation, and against W. G. Salter through the Circuit Court of Montgomery County, and that a parcel of real estate located on South Court Street in Montgomery was sold in satisfaction of this judgment. Peoples Bank was high bidder at the sale and received a Sheriff's deed. Legal title to the property in question at the time of the sale was in the name of Dorothy Kovacs Salter.

Peoples Bank alleged that W. G. Salter had paid for the property in question, but that the original deed was in the name of Dorothy Kovacs and that all equitable interest and ownership of the property was vested in W. G. Salter at the date of the Sheriff's sale. Complainant says that by virtue of the Sheriff's deed, it obtained not only the equitable title but the legal title which was held by Dorothy Kovacs Salter. Mrs. Salter denied that Muscogee or W. G. Salter ever held or owned any right or interest in said property.

Briefly, the facts are that Dorothy Kovacs, an unmarried woman living in Montgomery, signed a purchase agreement to buy the house and lot in question. She was to pay $15,000 for the property--$300 earnest money and $700 down at the time of closing. The sale was completed and Kovacs received a deed to the property on December 16, 1963, which was recorded the next day in the office of the Probate Judge of Montgomery County.

The evidence is in dispute relative to the payment of the earnest money, but Mrs. Salter (formerly Dorothy Kovacs) claims that she personally paid the $300 earnest money, borrowed the $700 down payment from W. G. Salter, her present husband, which she claims she later repaid to Salter, and executed a $14,000 note in her name individually for the balance of the purchase price and secured it with a real estate mortgage, which she executed individually.

In December of 1963 Mrs. Salter (then Dorothy Kovacs) made arrangements to have the house remodeled in order that she could open an interior decorating business. Upquestionably, the evidence shows that W. G. Salter was a close confidant in the making of the contract for the remodeling work and that Salter actually paid for the costs of the work. Mrs. Salter claims that as consideration for the payment by Salter of the cost of repairs she transferred to Salter 5,000 shares of stock in a Georgia insurance corporation valued at approximately $1.15 per share. The evidence shows that the 5,000 shares were originally transferred from Salter to Dorothy Kovacs on August 30, 1963. There was no showing relative to the consideration which was paid for the transfer.

On February 20, 1964, Muscogee, acting through Salter, made a note for $5,000 with Salter endorsing the note individually at Peoples Bank. It was this note on which Muscogee defaulted, on which Salter defaulted, on which Peoples brought suit, recovered a judgment, and on which levy was made on the house and lot in question.

Kovacs and Salter were married later, and Mrs. Salter continued to make the mortgage payments on the house and lot each month. The interior decorating business was never set up and the house was rented by Mrs. Salter; and she was living in Columbus, Georgia, with her husband.

The evidence was presented solely by depositions. Two depositions taken in the trial of an action filed by Salter and Kovacs in the United States District Court for the Middle District of Alabama against the individuals doing the remodeling work on the house were also introduced into evidence.

The trial court made extensive findings. Summarized, these findings were to the effect that a justiciable controversy existed between the parties, that Muscogee and Salter paid the purchase price and the costs of repair for the house in question, that during the time when the house was purchased and the repairs were made that Salter was in poor financial shape, that the transfer of the stock by and between Salter and Kovacs was for their own purposes in 'an apparent effort to hinder, delay or defraud their creditors.' The court further found that Salter and Muscogee actually paid the initial $1,000 toward the purchase price and for the repairs to the house. The court then found:

'* * * The Court further finds that Respondent Dorothy W. Kovacs held title to said above described real estate and continued to hold the same in name only and as nominal owner only, and as trustee in fact, for the said W. G. Salter and Muscogee Construction Company, Inc., and that the said Dorothy W. Kovacs did not pay any of the purchase price or consideration for said above described property and that the conveyance of the legal title to her was made on the direction of Respondent, W. G. Salter and Muscogee Construction Company, Inc., for the purpose of hiding the true ownership of said property and with the intent to hinder, delay or defraud creditors of the said W. G. Salter and Muscogee Construction Company, Inc. of their lawful suits, damages, forfeitures, debts or demands, and that the said W. G. Salter and Muscogee Construction Company, Inc. are the true and real owners in fact of said above described property and that all of the equitable title and ownership of said above described property including all gain, increase in value, and rents was and is in the said W. G. Salter and Muscogee Construction Company, Inc. and so remained up to and including the date on which the indebtedness to Complainant, Peoples Bank and Trust Company was created and up to and including the date on which the indebtedness to Complainant, Peoples Bank and Trust Company was created and up to and including the date on which the judgment of the Circuit Court of Montgomery County, Alabama against the said Respondents Muscogee Construction Company, Inc. and W. G. Salter was entered and up to and...