Roden v. Norton

• Decision Date: 23 January 1901
• Citation: 128 Ala. 129,29 So. 637
• Parties: RODEN ET AL. v. NORTON ET AL.
• Court: Alabama Supreme Court

29 So. 637

128 Ala. 129

RODEN ET AL. v. NORTON ET AL.

Supreme Court of Alabama

January 23, 1901

Appeal from chancery court, Jefferson county; John C. Carmichael Judge.

Bill by F. F. Norton and others against B. F. Roden and others. Decree for defendants, and plaintiffs appeal. Affirmed.

The bill in this case was filed by simple contract creditors of W. J. Kelso for themselves and all other creditors of Kelso who made themselves parties to the bill, attacking as fraudulent and void a mortgage by Kelso to Roden & Co., on a stock of merchandise, and a subsequent agreement between them, whereby the stock was disposed of by Kelso for a reward from and as the agent of Roden & Co., and for the latter's benefit, and seeking to hold the latter accountable as trustees in invitum for the value of the stock converted by Roden & Co.

The material averments of the bill are that on January 25, 1893 Kelso was indebted to appellees on account of goods and merchandise bought, in the sum of $182.10; that Kelso being then insolvent, mortgaged his stock of goods and fixtures to Roden & Co., who knew of his insolvency; that said mortgage was executed to secure the payment of a promissory note for $762.67 due February 18, 1893; that said stock of goods was worth materially more than the amount of the notes to Roden &amp Co.; that said indebtedness was, wholly or in part simulated; that the said mortgage provided that if Kelso failed to pay said note, Roden & Co. were authorized to take possession of the stock and foreclose the mortgage; that there was no other provision in said mortgage concerning the possession or disposition of said stock; that subsequent to the execution of said mortgage, and on the same day, Kelso and Roden & Co. entered into a written agreement whereby Kelso undertook for a compensation of $50 per month to sell said stock of goods, and pay the proceeds to Roden & Co. to be credited on the mortgage debt; the agreement to remain in effect until the debt to Roden & Co. was paid. Said mortgage was recorded, but the subsequent agreement was not and was kept secret. After said mortgage and agreement were entered into, Kelso continued to carry on his mercantile business under said mortage and agreement until, to wit, May 12, 1893, he had paid Roden & Co. $762.67. Roden & Co. at the time of the execution of said mortgage and agreement undertook to continue to sell on credit such goods to Kelso as would conserve his business and they did so sell goods to him, until his entire indebtedness was discharged.

The bill further alleges that Kelso executed said mortgage and agreement with the intent to defraud his creditors, and that such intent was participated in by Roden & Co. Other mortgages second to the mortgage of Roden & Co. were also executed by Kelso to other creditors on the same stock and what remained of said stock became subject to said second mortgages after Roden & Co. was paid. It was also averred in the bill that the indebtedness of Kelso to the complainants was evidenced by a note in which Kelso waived all his right to exemptions of personal property and agreed to pay reasonable attorney's fee for the collection of said note.

The prayer of the bill was as follows: "That said mortgage executed by said W. J. Kelso to said B. F. Roden & Co. may be decreed to be a fraud on the rights of the creditors of said W. J. Kelso, and as against them invalid, and that the defendants B. F. Roden, J. N. Didlake, and J. D. Harris, both as individuals, and as the firm of B. F. Roden & Co., be held as trustees in invitum for such creditors for the amount of the value of said stock of goods on the 25th day of January, 1893, and a decree may be rendered against them, individually and as such firm, for said amount, with interest from said day; that a reference may be ordered to the register of your honor's court, to ascertain the amounts due to be paid out of the proceeds of such decree to the several persons who shall have shown themselves entitled to share in the same, and also the amount of a reasonable fee to be paid to complainants' solicitor for prosecuting this bill, and that such fee may be decreed to be paid out of the proceeds of such decree."

The defendants Roden & Co. answered the bill, and denied therein all of the charges of fraud or that they were aware of any intention on the part of Kelso to defraud his creditors, or that there was any benefit reserved to Kelso in the transactions. The facts of the case as disclosed by the evidence are sufficiently stated in the opinion.

On the final submission of the cause on the pleadings and proof, the chancellor granted the relief prayed for, and ordered that a reference be held to ascertain the amount of the complainants' debt and of the debts of the other creditors of Kelso that were in existence on January 25, 1895, who intervened in the cause before the execution by reference and to ascertain what was a reasonable allowance to complainants' solicitors for the prosecution of this suit.

Upon the report of the register upon the reference, a decree was rendered confirming the same. The present appeal is prosecuted by the defendants, who assign as error the rendering of the final decree granting the relief prayed for.

Felix Blackburn and James E. Webb, for appellants.

Lee C. Bradley, for appellees.

HARALSON J.

On the 25th January, 1893, as the evidence shows without dispute, Kelso was indebted to Roden & Co. in the sum of $762.67; that prior to that date, he was indebted to them in the sum of $1,163.96, but paid them a sum on or about that date which reduced his debt to them to the amount above stated; and on the 25th January, he gave defendants his note for that sum, payable on the 18th February following. Kelso testified for defendants, that he had a visit from Didlake of defendant firm, on the 25th January, who told him that that would not do, referring to the note he had given, and that he, Kelso, had to make a payment on that debt, for which the note was given; that he went to Birmingham with Didlake that day, and had an interview with him and Harris, another member of said firm, and gave them the mortgage in question on his stock of goods, etc. The mortgage contained the condition,-to quote its language,-"that if I pay said note to the said B. F. Roden & Co. or their assigns, with interest, this note to be void; but if I fail to pay said note in whole or in part at maturity, then B. F. Roden & Co., their agents or assigns, are authorized to take possession of said property, and after giving ten days' notice, by posting notices in three public places in said county, to sell the same at auction to the highest bidder for cash," and after paying expenses of sale and an attorney's fee for foreclosing it, to pay the balance due on said note, and the surplus, if any, to the mortgagor.

The law day of the mortgage having been fixed in the mortgage at a future day, when the mortgagee might take possession of the mortgaged property for the purposes of foreclosure, the mortgagor was impliedly left in possession of the property which was a stock of goods in store, with...