Williams v. Ellington

• Decision Date: 17 December 1936
• Docket Number: 4 Div. 901
• Citation: 233 Ala. 638,172 So. 903
• Parties: WILLIAMS, Superintendent of Banks, v. ELLINGTON et al.
• Court: Alabama Supreme Court

172 So. 903

233 Ala. 638

WILLIAMS, Superintendent of Banks, v. ELLINGTON et al.

4 Div. 901

Supreme Court of Alabama

December 17, 1936

Rehearing Denied March 18, 1937

Appeal from Circuit Court, Crenshaw County; A.E. Gamble, Judge.

Creditor's bill by J.H. Williams, as Superintendent of Banks liquidating the Bank of Luverne, against W.J. Ellington and others. From a decree dismissing the bill, complainant appeals.

Reversed rendered and remanded.

W.H Stoddard, of Luverne, and Powell & Hamilton, of Greenville, for appellant.

Little & Lightfoot, of Luverne, for appellees.

GARDNER Justice.

The original bill, filed in April, 1934, attacked as fraudulent and void a conveyance of certain described real estate made by W.J. Ellington to his wife, son, and daughter, bearing date January 5, 1934.

Ellington at that time was indebted to the Bank of Luverne (now in liquidation) in an amount slightly in excess of $2,600, money borrowed from the bank at various times, beginning in October, 1930, and through February 2, 1931, evidenced by several promissory notes.

In the deed, the wife, Irene Ellington, was given an estate to continue during the life of W.J. Ellington in the property conveyed, consisting of 221 acres of land, a warehouse in Luverne, and the residence in Luverne, constituting all the real estate owned by the grantor at the time of the execution of the deed; and upon the death of the grantor, W.J. Ellington, the deed provided that the said property should belong in fee simple to the wife, son, and daughter, share and share alike.

Defendants answered in May, 1934, admitting indebtedness, though denying in general terms the actual sum claimed as due and denying any fraud in the transaction, but insisting that the deed was executed upon consideration of $1,000 cash paid by Irene Ellington to W.J. Ellington, borrowed by defendants from one Compton, and for which they executed their promissory note in the amount of $1,500.

On February 4, 1935, E.R. Ellington, brother of W.J. Ellington, filed an intervention petition, setting up that he held a mortgage for $7,500, executed by W.J. Ellington and wife to him on May 30, 1932, embracing the identical property covered by the above-noted deed, and sought to have its superiority declared. And on February 6, 1935, defendants to the original bill amended their answer so as to aver that at the time of the execution of this deed there was an outstanding mortgage of $7,500 on the property to E.R. Ellington.

The bill was amended so as to attack both the deed and mortgage as fraudulent and void, and as to the mortgage, whether valid or not, was subordinate to complainant's lis pendens lien because not recorded until September 21, 1934, several months following the filing of the bill and the lis pendens notice, and that complainant had no notice thereof.

All of these issues were appropriately presented by the pleadings, and the questions here to be considered are questions of fact, as to which very brief discussion is to be indulged, in accord with the invitation to that end found in section 10336, Michie's Code, following the Act of 1915 (General Acts 1915, p. 594). Williams v. Dent (Ala.Sup.) 170 So. 202.

As to the deed, it is to be observed that at the time of its execution the grantor was largely indebted to the bank, and the conveyance is to the wife, son, and daughter. The burden of proof was then shifted to defendants to establish by strong and convincing evidence that an adequate and valuable consideration was paid for the conveyance. Watters-Tonge Lumber Co. v. Knox, 206 Ala. 183, 89 So. 497; Allen & Co. v. Sands, 216 Ala. 106, 112 So. 528; Harrison v. American Agricultural Chemical Co., 220 Ala. 695, 127 So. 513; Merchants' Bank v. Parrish, 214 Ala. 96, 106 So. 504; Woody v. Tucker, Willingham & Co., 215 Ala. 278, 110 So. 465.

True, the relationship is not within itself a badge of fraud, but under all the authorities, supported by reason and common sense, transactions between such relatives are to be jealously watched, and must be subjected to closer scrutiny than would be required of a stranger. Murphy v. Pipkin, 191 Ala. 111, 67 So. 675; Buell v. Miller, 224 Ala. 566, 141 So. 223; Federal Land Bank v. Rowe, 222 Ala. 383, 133 So. 50.

As to the property conveyed, we are persuaded that a valuation of $10,000 would be a conservative estimate on the proof here submitted.

In filing the original answer, there was no indication that the property was purchased subject to a mortgage, but only that $1,000 was paid. Subsequently the mortgage of E.R. Ellington was introduced into the case, and the proof was that the purchase was subject thereto. The $1,000 is said to have been paid by the wife to the husband. The answer stated that defendants executed their note to Compton who made the loan, but the evidence indicates the loan of $1,500 to the wife, and that she alone signed the note. The evidence is somewhat confusing as to the use of the sum borrowed, but as best we understand W.J. Ellington's testimony (the wife's evidence is meager in this regard), $1,000 was paid to him in cash, and the wife paid the remaining $500 on his debt, or perhaps on interest he owed his brother. But in any event, the parties only claim $1,000 as paid on the consideration of the deed in question. Compton was Mrs. Ellington's brother-in-law, had married her sister, lived in Dallas, Tex., was on a visit and loaned the money out of cash he had brought with him on his person. He was a Pullman conductor, and his present address defendants do not seem to know. He took no security other than a note from his sister-in-law. She had no property other than that acquired by the deed. She was not asked for other security, nor was her husband asked to sign the note. Compton does not testify, and the note was not produced. He was, under the proof, not available for examination by complainant, and the case of Elyton Land Co. v. Vance, 119 Ala. 315, 24 So. 719, is here without application.

Clearly the mortgage matter aside, the consideration of $1,000 was wholly inadequate. Buell v. Miller, supra. But other considerations enter into the case which bear upon the result. Upon execution of this deed, the wife was entitled to the possession, use, and profits of the property. But it is clear that the grantor continued in the use, management, and enjoyment of the property exactly to the same extent as if no deed had been made, and the circumstances all lead to the conclusion that this was so...