Roden & Co. v. Norton & Co.

HARALSON, J. On the 25th January, 1893, as the evidence shows without dispute, Kelso, was indebted to Roden & Co. in the sum of $762.67; that prior to that date, he was indebted to them in the sum of $1,163.96, but paid them a sum on or about that date which reduced Ills debt to them, |to the amount above stated, and on the 25th January, he gave defendants his -note for that sum, payable on- the 18th February following. Kelso testified for defendants, that he had a visit from Didlake of defendant firm, on the 25th January, who itold him that that'would not do-, referring to the note lie'had' given, and that he, Kelso, had to make a payment on that debt, for which the-note was given; that he went to Birmingham with Didlake that day, and had an interview with him and Harris, another member of said firm, and gave them the. mortgage in question -on his stock of goods, etc. The mortgage contained the condition, — to quote its language, — “that if I pay said note to the said B. F. Roden & Co. or their assigns, with interest, this- note to be void; but if I fail to pay said note in whole or in part at maturity, then B. F. Roden & Co., their agents or assigns, are authorized t-o take possession -of said property, -and after giving ten days notice, by posting notices- -in three public places in said county, to -sell the same at auction [to the highest bidder for cash,” and after paying -expenses of sale and an attorney’s fee for foreclosing it, to pay the balance -due bn said note, and the surplus, if any, to the -mortgagor.” — 135 — The law day of the mortgage having been fixed in the mortgage at a future day, when the mortgagee might take possession of the mortgaged property for the purpose of foreclosure, the mortgagor was impliedly left in possession of the property, which was a stock of goods in store, with implied power to sell them. The mortgagee’s right to take possession was, by clear implication, deferred until the maturity of the note. This was a reservation of benefit to the mortgagor, which stamped the mortgage as fraudulent in law against creditors, notwithstanding an agreement entered into privately, that the proceeds of the sale should he paid over to the mortgagee.—Owens v. Hobbie & Teague, 82 Ala. 466; O'Neil v. Brewing Co., 101 Ala. 383; McMillan v. Otis, 74 Ala. 560; Heflin v. Slay, 78 Ala. 180; Benedict H. & Co. v. Renfro, 78 Ala. 121. As is shown, about a half hour 'after ¡the mortgage was executed, an agreement in writing was entered into by and between Koden & Co. and Kelso, stipulating as follows: “The undersigned, W. J. Kelso, agrees to take charge of and sell for said B. F. Roden & Co. the stock of goods, ivares and merchandise this day mortgaged by him to said B. F. Roden & Oo., the same being situated in his store house at Pratt Mines, Alabama, he acting as the agent of the said B. F. Roden & Oo., the mortgagees in said mortgage. It is further 'agreed, that all money arising from the sale of said goods shall immediately be the property of the said B. F. Roden & Oo., the mortgagees in the mortgage referred to, and shall be paid over to them by tlie said W. J. Kelso, on tlie last day of each month, beginning-on January 31st, 1893, or oftener, if required, and Shall go as credits on the mortgage debt.. It is expressly agreed and understood, that [the said W. J. Kelso, the mortgagor in said mortgage referred to, renounces and releases all benefit he may have in said stock of goods, and that -all sales shall be for and on account of said mortgagees, B. F. Roden & Oo. It is further agreed, that if any of the goods and merchandise are sold on credit, [the accounts also are to pass to the mortgagees, B. F. Roden & Co. as their property, and be credited — 136 — as so many payments on the mortgage debt. This agreement to hold and be in effect till the mortgage debt with interest thereon is paid in full. It is agreed further, that the said W. J. Kelso 'shall receive for his services fifty ($50)' dollars per month to be paid by the said B. F. Roden & Co.” The mortgage was duly acknowledged and filed for record, on the day of its date, in (the probate office, and recorded the following day. The said subsequent agreement was never recorded. This transaction is fairly open to two conclusions, either of which on the attack of a creditor is fatal toil'. The first is, that it was a part of the original agreement, that both papers should be separately executed, the mortgage to be placed on record and the subsequent agreement withheld therefrom, the intention of the second being, to secure a benefit to the mortgagor, in the way of enabling him to continue business and work out his debt to defendants, and, meantime, secure wages at $50 a month. As it turned out he did both, and as •between him and defendants, it promised to be very beneficial to him. On the 13th of May, 1893, by the means employed, defendants’ debt was paid in full, their mortgage cancelled and given up to Kelso, and he went on in business as before. Kelso testified, that the stock of goods mortgaged, was worth about $800 to $850, and that he thought the stock in the store,— to use his own language, — “would' be about as good when I got from under the debt of Roden & Co. as when I took hold of it.” Again, he stated, somewhat in contradiction of the above statement: “I don’t know how much of the old stock of goods I sold. I had as much as half the stock on hand when I got out from Roden & Co. of the stock in the mortgage. I believe more than half, but would not make an estimate.” As further tending to show the intended benefit of this arrangement to the mortgagor, it further, appears that after the mortgage, Roden & Co. consigned goods to Kelso for sale to near the amount of $2,400, 'and these goods were placed in store and sold, as is fairly inferable; and between January 25th and May 22d, 1893, — 137 — Kelso paid Roden & Co. $3,184.79. J. M. Didlake, one of the firm of Roden & 'Co., testified, that after the mortgage, they did not sell goods (to Kelso, bnt consigned them to him for sale without commission, as his salary covered that, — meaning commissions; that the goods on -consigned account, and everything else was paid up when the papers were turned over to him, and ¡that they -consigned the goods to him at a certain price. The answer of defendants states, that they consigned to him these goods as their agent, and his compensation was to be what he could sell them for above the price they authorized him to sell at. He shows, however, that what he called consigned goods, may well be considered and treated as goods really sold to Kelso, for be says: “I .don't know the value of the goods consigned to him. We sold him $300 or $400 a month— consigned that much,—and that 'after April 25th, he desired Roden & Co. to continue selling goods to him, but they would not.” He here shows, that what he called a -consignment of goods, was in -substance and effect a sale of them to Kelso. This discussion of the evidence tends strongly to show, that the whole scheme in its execution was beneficial to Kelso and was so intended, and contemplated his continuance in business after as before the mortgage. The law will not enter into nice calculations of the value of the benefit such debtor has reserved.—Sims v. Gaines, 64 Ala. 392. The other view open to be taken of the case, is the -one indulged by this court, when this same transaction was -before the -count in another connection, in which case, the court declaring-the mortgage fraudulent a's t-o ’conditions, said, in speaking of -this second agreement: “It is clear this agreement was a modification of the contract of the parties, as -set forth in the mortgage, binding upon both parties. It was a substitution in the mortgage, of the new provisions for the provisions therein, which were inconsistent with (them. As such, the new agreement became essentially a part of the mortgage, of like practical and legal effects as if if had been set -out therein, and the first inconsistent provisions omitted. By it, an entirely new and different defeasance — 138 — and new and different methods of disposition of the g-oods were created, which, being withheld from the record whilst the original was put upon the record as representing the 'contract of the parties, became and was a secret agreement. To all the world, therefore, the contract was represented to be, that Kelso’s right and possession should terminate on February 18th, 1893, and Roden & Co. should be then empowered to take and sell the goods at auction, etc., while the real agreement, known only to the parties themselves, created the relation of pricipal and agent between themselves, removed all limitation upon the time of Kelso’s right to possession, empowered him to sell the goods at private sale, and entitled him to recover for his services at $50 per month.”—Birmingham Dry Goods Co. v. Roden & Co., 110 Ala. 511; Stephens v. Regenstein, 89 Ala. 561; Tryon v. Flournoy, 80 Ala. 321. On either of these two theories, therefore, the mortgage was fraudulent as to complainants. Section 2150 of the Code avoids, as against creditors, all conveyances, transfers and assignments of goods and chattels made in trust for the use of the person making the same, notwithstanding there may have been no actual intent to hinder, delay or defraud creditors; but because such is the inevitable consequence of such a transaction, the law condemns it.—Sims v. Gaines, 64 Ala. 392. Nor does its fraudulent operation depend upon the insolvency of the grantor; and it is unnecessary in a bill filed for relief, for it to aver his insolvency. The creditor has a right to pursue and subject property conveyed by his debtor or its proceeds, to the latter’s use and benefit, notwithstanding the debtor may have property subject to the payment of his debt. O’Neil v. Brewing Co., 101 Ala. 383; Lehman v. Meyer, 67 Ala. 397. The evidence, however, tends to show quite conclusively, if that were important, that Kelso was insolvent at the time of making the mortgage, and, as was said in the case of Birmingham Dry Goods Co. v Roden, supra, "It would be idle to contend that Roden & Co. were not put on inquiry as to Kelso’s true condition.” — 139 — The complainants in their hill claim a reasonable solicitor’s fee for the prosecution of this case for the collection of tlieir debt. While Kelso’s note to complainants was lost, the proof shows, clearly enough, that Kelso in the note waived his right of exemptions as to personal property, and agreed, in the same, to pay a reasonable attorney’s fee for its collection. The register ascertained and reported that $100 was a reasonable attorney’s fee, and to this finding the defendants made no exception. There was no error in its allowance by the court. While the proof shows satisfactorily, that Kelso- was insolvent, it is also sufficient to show that he owned personal property in value -over $1,000; and it fails to show that at any time has he ever made selection of any particular property he would retain as exempt, as it was his duty to do, if he claimed and desired it -to remain exempt to him.—Nance v. Nance, 84 Ala. 375; Jackson v. Wilson, 117 Ala. 432. Furthermore, the bill alleges that Kelso waived his exemptions to personal property in the note he executed to -complainants, and the defendants in their answer denied this averment of the bill; but the proof satisfactorily establishes its truth. Finding no error in the decree of the chancellor, it must be affirmed. Affirmed.