Southern Railway Co. v. Hartshorn

DOWDELL, J. The appeal in this case is prosecuted from the decree of the chancellor overruling respondent’s demurrer to the hill and motion to dismiss the same for want of equity. The bill is one by creditors, and is filed under section 818 of the Code of 1896. The demurrer is addressed to the bill as a whole. The averments of the biil, as to the alleged fraud, are made in the alternative. The bill, among other things, alleges that the complainants are judgment creditors of the respondent the mayor and council of the city of Decatur, a municipal corporation? The bill does not purport to be filed by the complainants as judgment creditors with lien, but as simple contract creditors, under section 818 of the Code. The bill avers that the land sought to be subjected to complainant’s claims, and which was conveyed by Couch and others to the defendant the Southern Railway Company, was so conveyed at the instance of the defendant the mayor and council of the city of Decatur. The bill avers the purchase price, the consideration of the land so conveyed, was paid by the defendant the mayor and council of the city of Decatur, and was in fact, and so intended to be a gift or donation by the defendant the mayor and council of the city of Decatur to the defendant the Southern Railway Company. It cannot be doubted, if the respondent municipality were an individual person, and, ivhile indebted, paid the purchase price of the lands conveyed to the Southern Railway Company, as here charged, intending Hie same as a gift or donation, the transaction would be deemed fraudulent as to creditors, and the case would fall directly within the principles* stated in McAnally v. O’Neal, 56 Ala. 302, and Pickett v. Pipkin, 64 Ala. 526. Can there. be any difference in principle under the facts stated in the present bill, for the reason that the debtor making the gift or donation is a municipal [221] corporation? Under the facts averred it is evident that the land sought to he subjected to complaintant’s claims was never held or intended to be held by the municipality for governmental purposes. It can hardly be questioned that property, owned and held by municipal corporation other than for governmental purposes, may be levied upon for the payment of -debts.—Equitable Loan & Security Co. v. Edwardsville, 143 Ala. 182, 38 South. 1016, 111 Am. St. Rep. 34. A court of equity, in dealing with a transaction, disregards mere forms, and always looks to the substance. If we regard the substance of the present transaction, the case as made by the bill would be the same as if the municipal corporation had held and owned the land in question, and other than for any public or governmental purpose, and, being indebted to the complainants, had made a deed of gift and thus donated the same to- the defendant railroad company. It can hardly be questioned that such a voluntary conveyance would be a fraud in law upon existing creditors, and void as to such. That the complainants may have a remedy at law by mandamus does not prevent the jurisdiction of a court of equity attaching in such a case.—Henderson v. Farley, 123 Ala. 555, 26 South. 226, 82 Am. St. Rep. 140; Carter v. Coleman, 82 Ala. 181, 2. South. 354; Lehman v. Meyer, 67 Ala. 402. The grantors in the conveyance here assailed were not necessary parties defendant. — Bump on Fraudulent Convej’ances, p. 550. We find no error in the ruling of the chancellor, and his decree will be affirmed. Affirmed. Tyson, C. J., and Anderson and McClellan, JJ., concur.