Curran & Co. v. Olmstead & Scheuing

101 Ala. 692 | Ala. | 1893

STONE, O. J.

In November, 1891, Olmstead made a transfer in writing to the First National Bank of Anniston, purporting to be an absolute sale of the merchandise and stock in trade of the former, in payment of an admitted past-due indebtedness to the latter. The business had been conducted in the name of. Olmstead & Scheuing, as partners ; but claiming that the latter was only-a salaried clerk or salesman, he released all his interest to Olmstead. Thereupon he, Olmstead, executed a bill of sale or conveyance of the entire stock' to the bank. F. Curran & Co. were antecedent creditors of Olmstead & Scheuing, and they filed the bill in the present case against Olmstead & Scheuing and the bank, for the purpose of enforcing the collection of their claim out of the assets so conveyed by Olmstead. The bill assails the bona fides and validity of the said conveyance to the bank.-

The principles of law which must control this case— made as it was in November, 189 L — have been too often declared to need elaboration. They permitted a failing or insolvent debtor to pay one or more of his creditors in full, even though the known effect of such payment would be to leave the debtor without means to pay his other liabilities. The conditions were, that the debt must be absolute,-and if paid in property, it must be received at its reasonably fair market value ; and no benefit must be secured to the debtor beyond a release from the debt. And when the transaction is assailed by an antecedent creditor, the burden rests on the creditor who has been preferred to prove the existence, amount and justness of his claim ; and when paid in property, he must also prove that the property was taken at a price not materially below its fair market value. These are the general rules ; but there are exceptional cases, arising out of the relations of the parties, which sometimes impose additional burdens. There are not shown to be any exceptional features in. this case. — Lehman, Durr & Co. v. Kelly, 68 Ala. 192; Hodges v. Coleman, 76 Ala. 103; Meyer v. Sulzbacher, Ib. 120; Pritchett v. Pollock, 82 Ala. 169, 2 So. Rep. 735; McDowell v. Steele, 87 Ala. 493, 6 So. Rep. 288; Chipman v. Stern, 89 Ala. 207, 7 So. Rep. 409; Dollins v. Pollock, Ib. 351, 7 So. Rep. 904; Rochester v. Armour, 92 Ala. 432, 8 So. Rep. 780; Beachman v. Koch, Ib. 452, 8 So. Rep. 707; Robinson v. Moseley, 93 Ala. 70, 9 So. Rep. 372; First National Bank v. Smith, Ib. 97, 9 So. Rep. 548; Pollak v. Scarcy, 84 Ala. 259, 4 So. Rep. 137; Calhoun v. Hannan, 87 Ala. 277, 6 So. Rep .291.

The statute allowing failing debtors to give preferences in the payment of their debts has been materially changed since this sale was made. — Acts of 1892-3, p. 1046.

The proof in the present record is very full that Olmstead & Scheuing, the failing debtors, were indebted to the First National Bank in the sum of seven thousand, seven hundred dollars. The goods were sold and bought at the price of five thousand, one hundred dollars. We have read the testimony with care, aud our conclusion is, that it shows the market value of the merchandise did not exceed the price agreed on, and for -which amount the bank cancelled the indebtedness of Olmstead & Scheuing. In this estimate we have not computed the landlord’s rent-charge, which had a lien on the goods. Talcing that into the estimate, they were taken at a price greatly in excess of their available value. Nor is there any testimony that Olmstead, or Olmstead & Scheuing secured any benefit to themselves in the transaction.

The gravamen of the bill is that the conveyance from Olmstead to the bank was fraudulent. The charge is made in the disjunctive; that is, that the conveyance Avas either one thing, or another — executed Avith one intent, or another. When this form of pleading is resorted to, eaclx alternative averment must, for obvioixs x'easons, express a sufficient cause of action. — 3 Brick. Dig., 378, §§ 168, 169. The language employed by the pleader in this case is, ‘ ‘that said bill of sale axxd transfer by said Percy Olmstead to said First National Bank was voluntary, and the consideration of $5,100 is simulated in Avhole, or ixx a large measure; or, if your orators are mistaken as to said consideration being simulated, then your orators allege that said bill of sale xvas made by said Percy Olmstead to said First National Bank for the purpose of hindering, delaying and defrauding his creditors, and the creditors of said Olmstead & Scheuing, and the said First National Bank of Anniston participated with said Percy Olmstead in said intention of hindering, delaying and defraudixxg said creditors. ” The second of these alternative averments is manifestly insufficient. To be sufficient, the facts which constitute the fraud must be stated ; bxxt it is not necessary to state the evidence which goes to prove those facts.' The first and fourth grounds of demurrer should have beexx sustained. We base our conclusion, however, on the merits of the case as disclosed ixx the testixnony.

Affirmed.