McGregor v. Alabama Bank

SAXRE, J. On the dissolution of an insolvent corporation, the Edgewood Amusement. *308 Company, and the distribution of its assets' among creditors in tbe circuit court, in equity, it was decreed tbat a dividend to tbe amount of $1,426.01 claimed by appellant A. S. McGregor out of tbe insolvent estate, and previously allowed by tbe court in confirmation of tbe register’s report, bad been transferred to said A. S. McGregor by G. M. Mc-Gregor in fraud of tbe Alabama Bant, a creditor of G. M. McGregor and tbe corporation, and tbat tbe dividend due on tbe claim be paid to tbe bank. A. S. McGregor appeals. Appellant insists for one thing tbat the bank was not properly allowed to raise tbe issue of fraud in "the transfer of the claim in question, for tbe reason tbat it made no-objection to appellant’s claim at tbe bearing before tbe register or when tbe register’s report came on to be heard before tbe court. We discover no element of estoppel, and all decisions were in fieri until tbe decree making a final disposition of tbe cause. It was within tbe power of tbe court to allow tbe filing of tbe petition in which tbe bank contested tbe transfer to appellant. Tbe effect of tbe decree subsequently rendered was to set aside tbe decree by which appellant’s claim bad been allowed, to declare tbe invalidity of the transfer as against creditors, and to direct payment of tbe disputed dividend to tbe bank in payment, or part payment, of its claim against tbe estate of tbe insolvent corporation. On October 7, 1924, the bill in this cause was filed. At tbat time, it is conceded by tbe parties, tbe corporation was indebted to R. R. Rochell in tbe sum of $7,-134.34, G. M. McGregor and R. R. Rochell owned a majority of tbe stock of tbe corporation and had been in control of its affairs. They bad agreed to a sale of their stock and all tbe corporate property to appellant A. S. McGregor for tbe sum of $16,000. This sale was conditioned upon its ratification by tbe directors and stockholders “in tbe manner provided by law,” meaning, as we infer, tbat tbe sale should be authorized by two-thirds of tbe directors and by four-fifths in value of the stockholders. Code, § 7036. Appellant had a purchaser in waiting who bad promised to pay him $21,000 for tbe property. This proposed sale failed of consummation because minority stockholders would not agree and filed tbe present bill, among other things, to enjoin the sale. Thereupon, the day after tbe bill was filed, Rochell and G. M. Mc-Gregor executed to appellant McGregor their joint note for $5,000 to make good tbe profit of $5,000 which bad been lost to him by tbe failure of tbe agreement of sale. Appellant’s claim against tbe corporate property to tbat amount was disallowed, and we are of tbe opinion tbat a statement of tbe facts is enough to show tbat bis claim to tbat amount as against tbe fund for distribution was without consideration and was properly disallowed as a claim in competition with tbe bona fide creditors of tbe corporation; i. e., of tbe fund for distribution. It appears tbat appellant also claimed tbat tbe dividend on $5,000 should have been decreed to him instead of to R. R. Rochell, to whom it was decreed. It will be observed tbat tbe corporation, or the fund held by tbe court for distribution among its creditors and stockholders, bad no interest in this controversy as to tbe dividend on $5,000 mentioned above. Tbe real controversy as to tbat was between appellant and Rochell; but Rochell has not been made a party to this appeal, and tbe court is without authority to adjudicate tbe claim as against him. As for tbe item of $1,426.01, mentioned in the outset, tbe proposition of tbe appeal is tbat there is no proof of tbe transferor’s insolvency or of bis intent to defraud, and hence tbat bis transfer of tbe claims on which tbe disputed dividends were declared cannot be set aside as made in fraud of creditors of tbe corporation or of G. M. McGregor. Tbe amusement company was indebted to tbe bank in tbe sum of $7,000. Rochell and G.. M. McGregor were indorsers and sureties on tbe company’s note to tbe bank, G. M. Mc-Gregor transferred bis claims against tbe corporation to appellant, and this transfer is tbe subject of attack in this cause. Out of it arises tbe contest as to tbe ownership of tbe item of $1,426.01. Tbe evidence has bad due consideration. It leaves appellant’s case under gravest suspicion in every respect. A debtor, though possessed of ample means to settle all demands against him, may be guilty of a fraudulent intent in disposing of bis property of which creditors and others in tbe situation of -the stockholders in this cause may avail themselves. Teague v. Bass, 131 Ala. 427, 31 So. 4; Sutterer v. Morris Fertilizer Co., 208 Ala. 688, 95 So. 166. In this connection it is proper to note tbe fact tbat tbe transaction by which appellant came into tbe ostensible ownership of tbe items of claim in controversy was between near relatives, brothers, and tbat so much of it as put appellant in possession of bis claim ^f $5,000 against tbe corporate property was wholly lacking in valuable consideration moving to tbe corporation, as of course appellant knew — a circumstance to be considered. But, apart from tbat, tbe bank’s debt antedated tbe transfer by G. M. McGregor to appellant. This put upon appellant tbe burden of showing tbat be paid a valuable and adequate consideration for the transfer now immediately in question, viz. tbe transfer of tbe claim for $1,-426.01. Moog v. Farley, 79 Ala. 252; Zelnieker v. Brigham, 74 Ala. 598; Merchant’s Bank v. Parrish, 214 Ala. 96, 106 So. 504; London v. Anderson Brass Works, 197 Ala. 16, 72 So. 359. This burden tbe appellant failed *309 to sustain, with result that decree went against him. The decree is affirmed. ANDERSON, O. J., and GARDNER and MILLER, JJ., concur.