Van Antwerp v. Van Antwerp

• Decision Date: 18 December 1941
• Docket Number: 1 Div. 158
• Citation: 5 So.2d 73,242 Ala. 92
• Parties: VAN ANTWERP et al. v. Van Antwerp et ux.
• Court: Alabama Supreme Court

5 So.2d 73

242 Ala. 92

VAN ANTWERP et al. v. Van Antwerp et ux.

1 Div. 158

Supreme Court of Alabama

December 18, 1941

Appeal from Circuit Court, Mobile County; J. Blocker Thornton Judge.

H.M Aldridge and Smith, Hand & Arendall, all of Mobile, for appellants.

Hamiltons, of Mobile, for appellees.

FOSTER, Justice.

This is an appeal from a decree overruling demurrer to a bill in equity. We will consider separately the contentions of appellant, whereby the decree is claimed to be erroneous.

1. Multifariousness:

It is immaterial whether the approach to this contention is on principles which relate to a misjoinder of parties complainant, or misjoinder of causes of action which is multifariousness. The nature of the contention invokes the principles of multifariousness.

The bill was filed jointly by two parties on allegations of transactions by which each under the same (not similar) facts and circumstances transferred to respondent corporation the shares of stock each separately owned in the corporation. They claim that the transfer was procured by the same acts of fraud operating upon them at the same time. They are man and wife, and seek to vacate the single transaction by which upon the same inducement they assigned their stock, separately owned, to the corporation in which they were stockholders. The bill was filed after the new equity rules became effective. See Equity Rule 15, Code 1940, Tit. 7, Appendix, page 1055.

The question of multifariousness is largely addressed to the sound discretion of the court. City of Carbon Hill v. Merchants Bank & Trust Co., 237 Ala. 55, 185 So. 387; Littleton v. Littleton, 238 Ala. 40, 188 So. 902.

It is said in City of Roanoke v. Johnson, 229 Ala. 496, 158 So. 182, that when there are several complainants whose equitable rights depend upon the same conditions, contract and its construction, and like injury and damage are alleged, a decree overruling demurrer for misjoinder of parties and causes will not be reversed.

That statement of the principle has full force here. It is said to be largely a matter of convenience which influences an exercise of the discretion. 19 Amer.Jur. 196, section 254.

While these two complainants own their stock separately, their equitable rights are alleged to be controlled by the same facts and transactions, and the relief sought as to each is of the same nature.

2. The second contention made by appellant is that the bill shows that the trustee in bankruptcy of one of the complainants Garet Van Antwerp owns his interest in the claim in suit, and also that the assignment to Frances Van Antwerp by Garet of the shares she claims was in fraud of his creditors and void as against his trustee in bankruptcy who owns such right as was transferred for administration in bankruptcy.

The allegations of the bill touching this question were made incidentally in connection with and in explanation of the claim of fraud set up in the bill. This fraud is the basis on which complainants claim the right to have their stock restored to them upon a cancellation of its assignment to the respondent corporation. The bill alleged in that connection that a suit was filed by the trustee in bankruptcy of Garet Van Antwerp attacking the validity of the transfer which he had made to his wife of the shares which she claimed. That bill also attacked the claim of the respondent corporation that it had a statutory lien on all the stock on account of a debt which it claimed against Garet Van Antwerp of $78,686.14.

The bill in the instant case then alleged that after respondent corporation had procured the assignment to it of the stock of complainants and had refinanced its own "involvements," it made a settlement in full with the creditors of Garet Van Antwerp and of said suit in equity by the trustee. The bill does not distinctly allege the effect of this settlement on the bankruptcy proceeding, nor that the rights and claims of the trustee became divested by such settlement or other reason why he may not prosecute this suit. But the demurrer does not go to such failure. The bankrupt may maintain suit pending bankruptcy with the approval of the bankrupt court upon certain conditions. Crawford v. Horton, 234 Ala. 439, 175 So. 310; Casey v. Cooledge, 234 Ala. 499, 175 So. 557; Wofford Bond & Mortgage Co. v. Adams, 222 Ala. 527, 133 So. 254; 8 Corpus Juris Secundum, Bankruptcy, § 489, p. 1362.

The trustee does not by the bankruptcy acquire the claim of Frances Van Antwerp in this case, unless the assignment to her by her husband is vacated as being a fraud upon creditors. But the bill alleges that the suit of the trustee to that end was satisfactorily settled. The bill certainly does not show directly nor by adverse inferences that the trustee owns her rights here asserted. No one but the creditors or their representatives can complain in respect to such claim of fraud. Heidt v. Wallace, 239 Ala. 246, 194 So. 501.

The demurrer is not addressed separately to the claim of right of the complainants each to proceed, but to the bill as a whole. If it should be amended in respect to the single share of Garet Van Antwerp as affected by the bankruptcy, the demurrer does not properly present the question now.

3. It is next contended by appellant that the demurrer should have been sustained, because the bill shows that complainants have come into court with unclean hands, in that the basis of the claim is that the transaction was intended to work a fraud, in which complainants were in pari delicto with respondent corporation.

The bill seeks to vacate an assignment which complainants made of their shares of stock to the corporation in which they held such shares, and the basis of their claim is a fraud upon them by the corporation.

The contention of appellant corporation now is that the assertion of the facts which justify that claim by complainants includes recitals showing that the corporation was seeking to have said assignment made to present a colorable front to the Union Central Life Insurance Company with which it was negotiating for a large loan for refunding purposes, and that the insurance company was not satisfied so to deal with the corporation in view of the bankruptcy proceeding against Garet Van Antwerp, and the suit by his trustee to vacate the assignment of the stock to his wife. And before the loan was made, in order to satisfy the insurance company, it was represented that if complainants would cooperate with respondents, their individual rights would be adjusted: that the transfer would be a mere formality and an aid in settling its financial difficulties, all to the advantage of the corporation and complainants by causing a settlement of a suit against it and also the suit of the trustee to set aside the assignment of the stock by Garet Van Antwerp to his wife: that the transfer would only be temporary and stand only until the corporation had succeeded in getting its affairs in order.

The bill also sets up confidential relations between complainants and the president of the corporation who was a trusted brother and who negotiated the transaction. It was a closely owned corporation by the Van Antwerp family. And that he falsely and fraudulently misled, tricked, deceived and defrauded them into making such assignment for that purpose, in full reliance upon his statements and promises, which were never intended to be carried out, and were made with the intent to defraud complainants of said stock.

Appellants have taken a wide range in the discussion of this principle. One contention is that they should have advised the trustee in bankruptcy of the value of this equity and have unclean hands in not doing so, and in permitting defendant to settle with him for the paltry sum of $10,000 when their equity was worth some $65,000.

The trustee is not complaining of this. There is no showing that complainants misled him in making the settlement. The right of the trustee is not so simple as is contended. Mrs. Van Antwerp assumed the payment of $78,000 to the corporation as a consideration for the transfer. The fact that she did not pay her husband anything else does not stamp the transaction as voluntary. There was present value by assuming the debt. If that value was less than the value of the stock, that alone is not sufficient to vacate the transaction. For to vacate the conveyance when present value is paid or promised, the question of fraud in fact by the grantor must exist. There must be an intent to hinder, delay or defraud entertained by the grantor of which grantee had notice. The principle of a bona fide purchaser for value has application. Federal Land Bank v. Rowe, 222 Ala. 383, 133 So. 50; Rogers v. Conaway, 226 Ala. 334, 147 So. 152; Hewitt v. First National Bank of Birmingham, 235 Ala. 301, 178 So. 533.

The trustee received and accepted $10,000 rather than assume the hazard of such litigation. We see no unclean hands of complainants in so agreeing. Moreover, the unclean hands must be in respect to the controversy between complainants and respondents and not something remotely incidental.

It is the transaction between complainant and defendant which must have such reproachful sting to support the sanction against complainant of unclean hands. Relief will not be denied because of complainant's wrongdoing in the course of another transaction between him and a third person. 19 Amer.Jur. 327, section 473, note 10. The wrongdoing of complainant to bar him from relief on the ground of unclean hands "must have some relation to the rights of the parties (then in litigation) arising out of the transaction." Carpenters' Union v. Citizens' Committee, 333 Ill. 225, 164 N.E. 393, 63 A.L.R. 157.

Again it is thus expressed, "The principle must be confined to...