Alabama Iron & Steel Co. v. McKeever

McCLELLAN, J. The several motions to dismiss McKeever’s bill and the main demurrers to it proceed upon two grounds, viz.: First, that the complainant lias no lien upon the property he seeks to subject to the payment of his debt, but is only a simple contract creditor without judgment or lien ; and, second, that the property being already in the hands of a receiver appointed at the suit of E. T. Peter, and the receivership having been extended to the case of Fancher and Burk against the Iron & Steel Co., who file their bill as creditors at large for themselves and all other creditors who may come in, make themselves parties, &c., complainant’s remedy is by coming in .under that bill, &o., &c. Wo consider it settled in this court that a simple contract creditor may file his bill to reach and subject assets of his insolvent debtor which have been either fraudulently conveyed, or in respect of which a suit has been commenced, or decree or judgment suffered, with intent to hinder, delay and defraud creditors, at least whenever the effect of the prosecution of the suit, or of the decree or judgment is shown to be hindrance and delay of such creditors, and a fraud upon their rights. — Code of 1886, §§ 1735, 3544; Cartwright v. Bamberger, Bloom & Co., 90 Ala. 405; Gay, Hardie & Co. v. Brierfield Coal & Iron Co., 94 Ala. 303; Alabama National Bank v. Mary Lee Coal & Railway Co., 108 Ala. 288. ' And it is also settled by the decisions of this court that “a pending creditors’ bill filed by complainant for himself and all other creditors who may join therein, is no bar before decree rendered to another bill filed subsequently by another creditor of the same debtor, who was not a party to the first proceeding.” — Hall v. Ala. Ter. & Imp. Co., 104 Ala. 577; Talladega Mercantile Co. v. Jenifer Iron Co., 102 Ala. 259. It is true that the complainants who were thus held to have the right to proceed by original bill liad reduced their debts to judgment; but notwithstanding that fact they had in each of the cases a perfect right to go in under the bill previously filed by another creditor for himself and all other creditors making themselves parties; and it was expressly ruled that this right was not exclusive, but to be availed of only at the election of the judgment creditor, and that while he could get all the relief to which he- was entitled by such intervention, he yet was at liberty to proceed by [144] independent bill. And all this applies with equal force to simple contract creditors ; the fact that they might get the relief to which they are entitled under a bill already before the court does not bar their right to exhibit an original bill to that end. It is not seriously questioned that the present bill sufficiently imputes collusion and fraud to the parties to the bill filed by Peter and also to the parties to the bill filed by Pancher and Burk, and presents all such parties in the attitude of invoking the aid of the chancery court to get all the property of the debtor company in the hands of the receiver to be held and manipulated by him for the benefit of the complainants and respondents in those suits to the exclusion, hindrance, delay and ultimate defeat and destruction of the claims of the complainant in this bill, and other creditors of the Iron & Steel Co. And it is no answer to the equity of such a bill that the property is in the hands of a receiver appointed by the court, such appointment being shown to have been consentive and collusive — the act of the conspiring parties rather than the judgment or order of the court. — Alabama National Bank v. Mary Lee Coal & Ry. Co., 108 Ala. 288. The chancery court having taken possession of the property through the receiver appointed at the suit of Peter, any right of this complainant, in what manner soever asserted, to subject the property to the payment of his debt; must be effectuated by dealing with that possession of the court as an accomplished fact, which it none the less is because of the alleged collusion and fraudulently c-onsentive decrees by which the receivership was' created and extended. The prayer of the present bill for- further extension of the receivership to this case, is in essence a prayer that the character of the court’s possession be changed in respect of its objects and purposes, so that, instead of being held as heretofore for the fraudulent purposes which actuated all parties to the two previous bills in praying and consenting to the appointment of the receiver and the extension of the receivership, it should hereafter be held for the bona fide purpose of paying the debts due from the Iron & Steel Co. out of it. This was but a recognition of the established status of the property and an invocation of the court’s powers to an equitable administration of it; and [145] we are unable to .see that in assuming this attitude the complainant is claiming under the decrees which he alleges to be fraudulent and void as to him and the other bona fide creditors of the corporation. The possession once taken under the present bill, the case will proceed, and, if its averments as to fraud be proved, the property-will be administered under it, as if the other bills had not been filed. The bill is without equity in so far as it seeks to annul and avoid the hypothecation of pig iron, the product of the business which the Iron & Steel Co. was authorized to and did carry on, to or through warrants issued by the American Pig Iron Storage Warrant Co. In the first place the provision in the charter of the Iron & Steel Co. forbidding it to mortgage, convey or pledge its property for the security of debts, etc., “otherwise than by the consent of the holders of the larger part in value of the capital stock, expressed by a vote at a meeting of the stockholders called for that purpose”, in the manner and upon the notice required by the charter, it would seem, has no reference or application to the issues, output or product of the corporate business, but only to the corpus of the corporate property — its plant, or permanent property — as distinguished from its product which is produced only for the purposes of disposition by sale or otherwise. In the next place the provision in question is intended for the benefit and protection of stockholders and not of creditors, and the latter, having no interests to be subserved by its enforcement, cannot be heard to complain of its infraction. — Code of 1886, § 1562; Nelson v. Hubbard, 96 Ala. 251; Pollak v. Barrett, 108 Ala. 390. The decree overruling the several motions to dismiss the bill for want of equity and the several demurrers interposed separately by the respondents will be modified here by sustaining the motion of the American Pig Iron Storage Warrant Co. to dismiss the bill as to it and its assignments of demurrer 3, 4 and 5.; and as thus corrected it will be affirmed. Modified and affirmed.