Danner Land & Lumber Co. v. Stonewall Insurance

SOMERVILLE, J. The bill is filed by certain creditors of the Danner Land and Lumber Company, for the purpose of having declared fraudulent and void, as against them, a certain conveyance made by the defendant corporation to one Jordan, and bearing date the fourth of August, 1884. The conveyance is on its face a mere deed, absolute and unconditional. The effort of the conplainants in the bill is to show that there was an understanding between the parties, at the time of its execution, that it should operate only as a mortgage given as a security for borrowed money, or else as in the nature of a conditional sale, by which the vendor orally reserved the right to re-purchase the property conveyed. It is insisted that this was such a secret reservation of an interest in the vendor as to vitiate the conveyance, because its effect was to hinder, delay, or defraud the creditors of the grantor. — Sims v. Gaines, 64 Ala. 392. The rule is, that where a conveyance is on its face an absolute deed, it will not be declared a mortgage, or conditional sale — • in contravention of its express terms — unless the evidence supporting this conclusion is clear and convincing. — Turner v. Wilkinson, 72 Ala. 361; Parks v. Parks, 66 Ala. 326. The rule is analogous to the principle, that a court of equity will [188] not decree the reformation of a written instrument on the ground of mistake, on parol evidence only, unless the mistake is plain, and is clearly established by full and satisfactory proof. — Marsh v. Marsh, 74 Ala. 418. The reason of the rule is unimpaired, where the result is to render the conveyance fraudulent, because the law never strives to force conclusions of fraud, and if the facts in evidence are fairly susceptible of an honest intent, that construction will be placed upon them. — Crommelin v. McCauley, 67 Ala. 542; Thames v. Rembert, 63 Ala. 561. 2. The unsworn answers of the defendants, Duncan and Mrs. Jordan, are clearly inadmissible against their co-defendants, Strong and the Danner Land and Lumber Company. We can not, therefore, look to any admissions contained in them, with the view of allowing these admissions any weight in considering the question in issue. — Thames v. Rembert, 63 Ala. 561; Adam’s Eq. (7th Am. Ed.), 20. 3. The declarations of Danner, who was president and business manager of the Danner Land and Lumber Company, made to Davis and others, several days after the delivery of the deed in question, were inadmissible against either the company or the defendant Strong, its assignee, for the purpose of showing that the contracting parties intended sucli deed to operate either as a mortgage or a conditional sale. The declarations and admissions of any agent of a corporation stand clearly on the same footing with those of an agent of a natural person. “To bind the principal, they must be within the scope of the authority confided to the agent, and must accompany the act or contract which he is authorized to make.” — Angell & Ames on Corp. (11 Ed.), § 309; Marlett v. Levee & Cotton Press Co., 29 Am. Dec. 463. As said by this court, in Smith v. Plank-Road Co., 30 Ala. 650, 667, “ a corporation is not bound by the declaration's of its officers, unless made when acting for it, and about the business which they are transacting for it.” It certainly is not within the scope of an agent’s authority to bind his principal by admissions and declarations having reference to by-gone transactions. Such declarations, to be admissible, must have been made while the agent was in the discharge of his duties as agent, and be so clearly connected with the main transaction, which is sought to be elucidated or explained by them, as to constitute a part of the res gestae of such transaction. — Ala. Gt. So. R. R. Co. v. Hawk, 72 Ala. 112, 117; 1 Greenl. Ev. § 113; Mateer v. Brown, 52 Amer. Dec. 303. These declarations of Danner were not made while in the discharge of his duties as agent of the company, duly authorized to execute the deed to Jordan. This transaction was completed, and the declarations were merely narrative of it; and for this reason they were inadmissible. [189] 4. Discarding the admissions of Duncan and of Danner, we find no other decisive evidence in the record bearing on the question under consideration, except the deed itself, followed by an agreement on Jordan’s part, entered into a few days afterwards, to sell the same property back to the vendor for the same price; and the testimony of Danner himself, in full explanation of the entire transaction. Danner shows that he had express authority from the board of directors of the company to sell and convey the land in question to Jordan, absolutely and unconditionally, and that this was done in pursuance of such authority. He had no authority to mortgage the land, or to contract for its re-purchase; and he testilies that ho did not do so, expressly or by implication, at or before the time of the sale. He admits he had both the hope and the expectation of re-purchasing, but that no legal obligation rested on Jordan, who, it seems, was the mere agent of Duncan, to permit this; nor was there any understanding to this effect, until the new agreement was made on the eighth of August, — four days after the date of the deed of conveyance to Jordan. The evidence, in our judgment, decidedly preponderates in favor of this version of the transaction. The retention of the premises' by the vendor is suflicently explained by proof of an agreement to pay rent to the vendee. And the agreement of Jordan to withhold the deed from the record, — which seems not to have been carried out, upon his being informed by counsel of the hazard attending it, — was a mere badge of fraud, which is fully explained by a desire on his part not to injure the credit of the vendor. This agreement injured no one, because no one was induced to extend credit to the grantor on the faith of it. — Bump on Fraud Con. (3rd Ed.), 38-40. The complainants, who are creditors, can not, for this reason, make it the grmamen ’of any legal complaint. The decree of the chancellor, adjudging the conveyance in question to be fraudulent and void as against the complainants, is not, in our opinion, supported by the evidence. The decree is, therefore, reversed, and a decree will be rendered in this court, dismissing the bill of the complainants, who will be taxed with the costs incurred in this court and in the court below.