Lehman-Durr Co. v. Griel Bros.

McCLELLAN, J. It is said in the brief of counsel for appellees, who are complainants below, and it is apparent upon tbe bill, that the effort of complainants was and is to present a case under tbe act of February' 16, 1897, “To further define general assignments and to prevent tbe fraudulent disposition of property.” To that end ,the bill is wholly lacking in equity and insufficient to support tbe appointment of a receiver which was made upon it. Tbe transactions alleged in tbe bill did not, in form, constitute a general assignment by which a preference or priority was given to one or some cred [268] itors over others. The bill does not show that the several conveyances made, attachments procured, etc., etc., were so connected as to constitute but one transaction, nor make any attempt in that direction. Nor does it attempt to show that the conveyances, transfers and attachments covered all or substantially all of the debtors’ property. And finally it does not show or attempt to show that any of the numerous conveyances and transfers alleged to have been made by the debtors to secure antecedent debts were ma.de after the enactment of the statute referred to. And beyond all this, there is a failure to show a necessity for the appointment of a receiver in that it is nowhere averred that either the debtors or the alleged preferred creditors are insolvent, though if it were made to appear that the transactions amounted to a general assignment of substantially all the debtor’s property it would not be necessary to aver the insolvency of the debtor. On this state of averment, it is , most obvious that the receiver should not have been appointed in the first instance, and that the chancellor erred in overruling the motions of the respondents to vacate the order of appointment and to discharge the receiver. Upon the same ground, that the bill is wanting in equity, the motions to dissolve the injunction issued against the attaching creditors should have been granted. On the two questions we have considered, the overruling of the motions to discharge the receiver and to dissolve the injunction, respectively, the bill must be looked to as it is, and it is of no consequence that it may be capable of such amendment as will justify and authorize the appointment of a receiver and the issuance of an injunction. — Harwell et al. v. Potts et al., 80 Ala. 70. A different rule obtains in respect of the motion to dismiss the bill for want of equity. That motion should not prevail when a bill is or may be susceptible of amendment which will give it equity. This bill is of that sort; and the chancellor properly overruled the motion to dismiss for want of equity. At the time the decree below was made and at the time this appeal was taken, no appeal from an order refusing to discharge an injunction could be taken to [269] this court. We, therefore, do not consider the court’s action in that regard. We do not understand that collusion among preferred beneficiaries in a general assignment, or between them and the assigning debtor to the end of securing preferences, is at all essential to a case for administering the assignment for the equal benefit of all creditors. It is the fact that a preference has been attempted and not the knowledge or intent with which it was made or accepted that brings the statute into operation. And all this is as true where the transaction is not in form a general assignment, but involves two or more transfers to different creditors made under such circumstances as that the law holds them to constitute but one act. In such case it is not material what the transferees knew as to the debtor’s purposes or what they intended as to the result of his acts, nor whether they combined or colluded one with another to induce the debtor to dispose of or incumber substantially all of his property to them severally. These might be evidential considerations going to show that it was the debtor’s purpose, running-through all the conveyances and transfers, to put all his property in the hands of preferred creditors by a series of conveyances, and that all of the transfers were so made in line with such purpose as that they constituted but one transaction, in effect a general assignment with attempted preferences. But this purpose on the part of the debtor may exist and its execution in the manner indicated may be attempted, and both the purpose and its attempted execution may be fully proved without any reference to the knowledge or intent of the grantees and transferees in such a transaction. And when it does so exist and is so attempted to be carried out, and these facts are made to appear, the statute converts all the conveyances and transfers into a general assignment for the equal benefit of all creditors, hoAvever ignorant the grantees or transferees may have been of the debtor’s intent or the effect of his acts, and in AAdiatever good faith each one of them may have accepted the conveyance made to him. And so there need be no fraud, or simulation-of consideration or the like. The law acts upon transactions by which a debtor denudes himself of substantially all his property in preferential payment or security of some of his creditors to the exclusion of [270] others, and converts them into a general assignment, not because there is any fraud on the part of such preferred creditor or even on the part of the debtor; but solely upon a consideraton of the wrong and injustice to other creditors which would be wrought by allowing the debtor to devote all his effects to one or more creditors, leaving others, equally meritorious, nothing out of which to satisfy their demands. And so, too, of the debtor’s insolvency and notice thereof to the preferred creditors. If they severally take transfers covering all his property, made by him in pursuance of a design to devote all his property to their preferred debts, or to securing their payment, the statute applies whether they had notice of his insolvency or not and whether, indeed, he was insolvent. Nor is it essential to the operation of the statute, of course, that substantially all of the debtor’s property should be conveyed or transferred to any one of his creditors. If the separate transfers to any number, to the exclusion of other creditors, together cover all his property and they are all made under such circumstances as to show that all are referable to a purpose on his part to so dispose of all his property liable to execution, they fall within the operation of the statute and are to be considered a general assignment to be administered for all creditors alike. Of course, as we have already seen, when the effort is to bring the case within the influence of the act of 1897, it must be shown that the conveyances, or transfers made, attachments procured, etc., etc.,' were made or procured after the enactment of that statute. And where the procurement by the debtor of an attachment to be levied on his effects is one of the means adopted by him to the devotion of substantially all his property to the payment of some of his debts in preference or priority to others, it is, in our opinion, sufficient in averment to follow the'language of the statute, and to allege that the debtor procured the issuance and levy of the writ. The foregoing views have reference to the several assignments of demurrer interposed by the Lehman-Durr Co. and to the action of the court thereon. They serve to show our ruling upon each of said assignments; and, without particularizing, it will appear from what we have said that certain of the assignments of demurrer [271] which were sustained by the chancellor should have been overruled, and that certain of them overruled should have been sustained. The decree of the chancellor, in so far as it overrules the motion to dismiss the bill for want of equity, is affirmed. Upon the demurrer of the Lehman-Durr Co. and in refusing to dissolve the injunction, and in overruling the motion to vacate the order appointing and to discharge the receiver, the decree will be reversed; and a decree will be here entered sustaining the demurrer, dissolving the injunction, and discharging the receiver. Complainants have thirty days in which to amend their bill; and when it is so amended, if it can be, in accordance with this opinion, they may, of course, renew their application for injunction and receiver. Affirmed in part, and reversed and rendered in part.