Rike v. Ryan

• Decision Date: 04 April 1906
• Citation: 147 Ala. 497,41 So. 959
• Parties: RIKE ET AL. v. RYAN ET AL.
• Court: Alabama Supreme Court

41 So. 959

147 Ala. 497

RIKE ET AL. v. RYAN ET AL.

Supreme Court of Alabama

April 4, 1906

Rehearing Denied June 30, 1906.

Appeal from Chancery Court, Morgan County; W. H. Simpson Chancellor.

"To be officially reported."

Bill by M. Ryan and others against J. N. Rike and others. From a decree in favor of complainants, defendants appeal. Reversed and bill dismissed.

This was a bill filed by numerous creditors seeking to have set aside and annul as a fraud on creditors certain mortgages and sales made by Rike to the other parties named as respondents and for receiver to take charge of the property. The accounts alleged to be due were variously made between the dates of October 6, 1901, and March 24, 1902. The bill alleges the execution by Rike to Gunn of a mortgage dated May 19, 1902 for $790 on certain property described therein, and also alleges that the indebtedness was fictitious, and that it was without consideration, and was executed to hinder, delay, and defraud creditors. That on February 28, 1902, the said Rike being heavily embarassed, sold and conveyed to one John Patgens a half interest in Rike's saloon business, stock, trade, and fixtures; that this sale was wholly without consideration, and that Falk claims the mortgage on an undivided half interest in a steamboat; that the date and amount of said mortgage complainants are unable to give. It is further alleged that Falk has taken no control or management of said steamer. The other facts sufficiently appear in the opinion.

Wert & Wert, C. C. Harris and John Eyster, for appellants.

E. W. Godbey and A. J. Harris, for appellees.

SIMPSON J.

This was a bill filed by the appellees, who are creditors of the appellant Rike, to set aside and declare fraudulent certain sales and mortgages of personal property made by said Rike at different times to the other appellants severally.

Each transaction then necessarily stands on its own basis, and must stand or fall alone. It will be noticed that the mortgage made to Falk was made before any of the debts were created, so that, in order to set aside that mortgage as fraudulent, the burden rests upon the complainant to show an actual fraudulent intent participated in by both mortgagor and mortgagee. 3 Mayfield's Dig. p. 875, No. 36; 5 Mayfield's Dig. p. 476, No. 13. The cases of McDermott v. Eborn, 90 Ala. 258, 7 So. 751, and Christian & Craft Grocery Co. v. Michael & Lyons, 121 Ala. 84, 25 So. 571, 77 Am. St. Rep. 30, rest upon the familiar principle that a mortgage of goods which are to be retained and used up by the mortgagor, such as a stock of goods, or lumber which he is constantly selling, is fraudulent per se. On the other hand, the very essence of a mortgage of ordinary property, is that the property remains in the possession of the mortgagor until the mortgage is foreclosed by the mortgagee. In the case of Howell v Carden, 99 Ala. 111, 10 So. 645, the court says: "The mere retention of possession by the mortgagor, or a provision in the mortgage to that effect, is not such a reservation of a benefit to him as invalidates the instrument against his existing or subsequent creditors." Upson v. Raiford, 29 Ala. 188. And while in that case the mortgage was recorded, in another case this court has held that unless the mortgage is purposely withheld for the purpose of concealment, and to give the mortgagor a false credit, the only effect of it would be to postpone it to after acquired liens. Lehman Durr & Co. v. Van Winkle & Co., 92 Ala. 443, 450, 8 So. 870. There is no proof in the record to show any such fraud as the law requires to...