Nashville Milk Producers, Inc. v. Alston

• Decision Date: 03 May 1957
• Parties: NASHVILLE MILK PRODUCERS, Inc. v. Ivo ALSTON, Louise Allen Alston, and Richard Douglas Alston.
• Court: Tennessee Court of Appeals

Page 66

307 S.W.2d 66

43 Tenn.App. 257

NASHVILLE MILK PRODUCERS, Inc. v. Ivo ALSTON, Louise Allen Alston, and Richard Douglas Alston.

Court of Appeals of Tennessee, Middle Section.

May 3, 1957.

Certiorari Denied by Supreme Court July 29, 1957.

Ernest C. Matthews, III, Nashville, for complainant.

Hooker, Keeble, Dodson & Harris, Nashville, for defendants.

SHRIVER, Judge.

I History of the Case and Pleadings

The original bill in this cause alleges that Ivo Alston is indebted to the complainant in the amount of $1,228.63 for dairy feed used in the operation of a dairy during the months of July, August, September, October and November 1954. Complainant is a cooperative marketing association of which Ivo Alston was a member, and, by virtue of that membership and Federal Milk Marketing Order No. 78, promulgated under the Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C.A. § 671 et seq., complainant was entitled to collect from the Market Administrator the proceeds from the sale of milk by said defendant. The bill further alleges that the parties are operating under an agreement, pending this litigation, which allows complainant to hold $100 per month out of the Alston milk check, with the understanding that this is without prejudice to their rights.

It is alleged that on or about December 1, 1953, Ivo Alston, purported to transfer the herd of dairy cattle described in the bill to his wife, Louise Allen Alston. Again, on or about February 26, 1955, Louise Allen Alston purported to transfer said dairy herd to their son, Richard Douglas Alston, and both of the alleged transfers of title were made in return for no consideration or for a consideration that was not fair, equitable and adequate in law; that these alleged transfers rendered the grantors insolvent and execution proof, and that both of said conveyances were a part of a general scheme contrived by all three defendants in fraud, covin, collusion and guile, for the purpose and intent to delay, hinder and defraud both the existing and subsequent creditors of the said Ivo Alston, and more especially to hinder, delay and defraud complainant in the collection of its debt of $1,228.63.

The bill further alleges that, at the time of these purported transfers, Ivo and Louise Allen Alston were indebted to numerous and sundry creditors and were threatened with a number of lawsuits, and the dairy herd in question was subject to a chattel mortgage in the original amount of $3,600, in favor of the Broadway National Bank of Nashville, Tennessee, which said chattel mortgage was recorded in the Register's Office of this county.

The three defendants filed answers in which they generally denied any fraud, and asserted that the transfer of the dairy herd from Alston to his wife was made in March 1953 and was not for the purpose of hindering, delaying or defrauding creditors.

The answers further allege that the transfer from Louise Allen Alston to her son, Richard Douglas Alston, took place on February 21, 1955 and it was denied that this transfer was fraudulent or for the purpose of hindering and delaying creditors.

The answers aver that these two transfers were for a sufficient and valuable consideration in each instance, but they do not explain the reason for the transfers nor is any information given as to what the consideration was.

It is to be noted that none of the three answers are sworn to.

It was stipulated that the cause be tried on oral testimony and it was, accordingly, heard before the Chancellor on the testimony of witnesses in open Court.

It is to be noted, further, that none of the defendants below testified, nor was any evidence adduced in their behalf.

It was admitted by Ivo Alston that he was indebted to the appellant in some amount but he did not state how much the indebtedness was.

The Chancellor heard the case on the 11th and 12th of June 1956 and, thereafter, on June 26, 1956, entered a decree, the essential provisions of which are as follows:

'That the defendant Ivo Alston, purchased feed from the complainant, Nashville Milk Producers, Inc., during the months of July to November, 1954, for which he is presently indebted to the complainant in the amount of Twelve Hundred Twenty-Eight and 63/100 ($1,228.63) Dollars.

'That the transfer of the dairy herd by the defendant Ivo Alston to his wife, in either March or December 1953, was not fraudulent in law as to complainant, because complainant's debt did not exist at the time of the transfer and did not come into being until at least seven months thereafter; and that the transfer of said dairy herd from Mrs. Alston to her son Richard Douglas Alston on, or around, February 26, 1955, likewise did not constitute fraud in law as to complainant, because complainant did not have an indebtedness against the defendant Mrs. Alston, and was not a creditor of Mrs. Alston at the time of said transfer; and because the proof does not establish that at the time of said conveyances the defendants making the conveyances were or were not, thereby rendered insolvent.

* * *

* * *

'It is, therefore, ordered, adjudged and decreed that the complainant be and it is hereby awarded a judgment against the defendant Ivo Alston in the amount of Twelve Hundred Twenty-Eight and 63/100 ($1228.63) Dollars.

'It is further ordered that the attachment heretofore issued in this cause be and the same is hereby dissolved.

'It is further ordered that the injunction heretofore issued be and the same is hereby dissolved, except the injunction restraining Richard D. Alston from proceeding further with his suit in General Sessions Court shall remain in effect pending and during appeal.

'It is further ordered that complainant's bill insofar as it seeks to set aside the transfers of the said dairy herd from defendant Ivo Alston to the defendant Louise Allen Alston, and from the defendant Louise Allen Alston to the defendant Richard Douglas Alston, upon the ground that the said transfers were fraudulent as to complainant's rights, be and the same is hereby dismissed.

'The costs of this cause to date are taxed against the defendant Ivo Alston, and an execution may issue if necessary for the collection of such costs and the judgment rendered against him.'

II

Nashville Milk Producers, Inc., is a cooperative marketing association organized under state and federal laws. It acts as marketing agent for dairy farmers throughout middle Tennessee and provides milk testing and other service and sells live stock feed to its members.

In March 1946 Ivo Alston became a member of complainant association and availed himself of its services. During the months of July through November 1954 he bought cow and dairy feed on credit of thirty (30) days from complainant.

The account became delinquent and, on March 7, 1955, Mr. Alston executed a note to the complainant as evidence of his indebtedness.

There was no appeal from the judgment of the Chancellor against Ivo Alston for $1,228.63 representing the balance of this indebtedness.

It was not until after the first of September 1955 that the complainant, through its secretary-treasurer, Mr. Glenn G. Summers, learned that the dairy herd had been transferred by Ivo Alston to his wife Louise Allen Alston and, subsequently, in February 1955, by Mrs. Alston to their son, Richard Douglas Alston.

The debt for which suit was brought and judgment obtained herein, was incurred, as aforesaid, in the Summer and Fall of 1954. At this time Mr. Summmers, Secretary-Treasurer of the complainant, was aware that the milk account, as carried on the books of the Federal Milk Market Administrator, had been charged to the wife and later to the son. Mr. Summers testified that, when he questioned Mr. Ivo Alston about the transfer of the dairy account to the name of his son, Mr. Alston told him that it was all right as it was still in the family and that it was done merely to keep his son out of military service.

When a dispute arose over the payment for the feed purchased by Mr. Alston, he and Mrs. Alston agreed with Mr. Summers that complainant might pick up the milk check and make a deduction therefrom to be credited on the account, and a letter was prepared in the office of Mr. Summers, copy of which is exhibit No. 4 to his testimony, for the signature of Mr. and Mrs. Alston, and while they took the letter with the agreement that they would sign it and mail it to the Market Administrator, this was never done.

Thereafter the bill in this cause was filed.

The record herein indicates that the value of the herd of cows was approximately $8,000.

It was stipulated that certified copies of warrants showing proceedings in several cases in the General Sessions Court of this County could be filed as evidence. These warrants disclosed that there was a judgment in favor of Paragon Mills against Ivo Alston on February 15, 1954, for $138.07; a judgment in favor of Dr. W. O. Green against Ivo Alston rendered September 29, 1954, for $80; a judgment in favor of Polly's Department Store against Ivo Alston on December 30, 1954, for $29.66; a judgment in favor of Crabtree Grocery against Ivo and Louise Alston on February 14, 1955, for $61.30; and a judgment in favor of Paragon Mills against Mr. and Mrs. Ivo Alston on March 4, 1955, but the amount is not shown.

There were a number of other judgments obtained against Ivo Alston during 1954 and 1955 for feed bills, hauling charges, veterinary fees, insurance premiums and other debts incurred in connection with the dairy.

Mr. Herbert F. Wallace, Sr., owns the farm on which the Alston dairy is located. He testified that the land was originally leased to Ivo Alston for a dairy operation and had been under yearly written leases to him for several years. The contract each year was with Ivo Alston. The last contract entered into was dated October 1, 1955 and was a contract between Herbert Wallace, Sr., as lessor, and Ivo Alston, lessee.

It was stipulated that bills...