Court Opinion

ID: 6515120
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:25:54.825057+00
Date Added: 2024-06-11T15:54:59.852430
License: Public Domain

McCLELLAN, J.
The general averments of tbe bill tbat tbe deed of trust executed by Fulmer to secure certain recited indebtedness to tbe Bank of Talladega was tbe consummation of a plan conceived by all tbe defendants for tbe purpose of hindering, delaying and defrauding tbe complainants and other creditors of Fulmer, are of no consequence in passing upon tbe demurrers to tbe bill, aside from the facts alleged therein as constituting tbe fraud com|)lained of, and relied on as a predicate for tbe relief prayed. Or, in other words, tbe inquiry of fraud vel non on tbe averments of tbe bill is to be determined by a consideration of wbat was done by tbe parties as therein alleged, and tbe circumstances surrounding tbe transaction; the allegation tbat tbe transaction was entered into and consummated to binder, delay and defraud creditors, is a mere ’ conclusion of tbe pleader.' Tbe facts alleged will be indicated in tbe following discussion of them.
2. Usury in tbe debt secured does not vitiate tbe mortgage or deed of trust, where, as in this case, tbe usurious charge was a stipulated incident to, and a part of tbe contract by which tbe debt was created, and not added to tbe debt at the time of tbe transaction, intended to secure it for tbe purpose of swelling its amount so as tbat it would equal or *525approximate tbe value of tbe property conveyed.—Harris v. Russell, 93 Ala. 59.
'3. It seems that Fulmer, tbe failing debtor, became and was at tbe time tbe mortgage was executed indebted to certain attorneys in tbe sum of fifty dollars for services in connection with that transaction. This sum was paid by tbe bank io the attorneys, and included in tbe amount secured by tbe mortgage. There was no fraud in this. Nothing was paid to the debtor. This payment to tbe attorneys did not place in bis bands money which be could withhold from bis creditors. It was not pro tanto a cash consideration for the conveyance in trust, but at most was tbe assumption and payment by tbe bank of a debt due from, Fulmer to a third person, as a part of tbe consideration for tbe mortgage. That this involves no vitiating consequences 'has more than once been declared by this court. — Mobile Savings Bank v. McDonnell, 89 Ala. 434, and cases there cited.
4. We do not understand tbe deed of trust to authorize tbe trustee, Denny, to sell in any manner — at wholesale of retail — any more of tbe property covered by tbe instrument than would suffice to pay tbe costs, incident to tbe execution of tbe trust, and tbe secured debt. Hence we do not concur in tbe insistence of complainants’ counsel that tbe mortgage or deed of trust authorized a sale of tbe property in bulk by tbe trustee, and that, of consequence, tbe trust might have been executed by an immediate sale of tbe whole property for a sum in excess of tbe secured debt and charges, and tbe payment of this sum to tbe debtor, thereby putting it in bis power to defeat other creditors. To tbe contrary, we construe tbe deed to have this effect: that any surplus of tbe property remaining after tbe trustee bad realized a sufficient sum from sales to discharge tbe trust and thus exhausted his authority, reverted to Fulmer, and in bis bands, discharged of tbe trust, could be subjected to bis other debts with as much facility as if this transaction bad never occurred. Moreover, in determining tbe amount to be realized out of tbe property, regard was necessarily to be bad to tbe amount of tbe secured debt at tbe time of realization from tbe sale or sales of tbe goods. If the bank bad collected any of tbe choses in action delivered to it by Fulmer as collateral security, tbe money derived from this source would go in diminution of tbe sum to be collected through sales of tbe property. So that tbe apprehension suggested in briefs of counsel, “that tbe bank might have collected a good portion of its debt out of such collateral before it was due, or to tbe extent of such collateral, then its agent and trustee, in tbe *526exercise of the power to sell at wholesale, could, have converted the entire stock at once into cash, thus shifting any surplus beyond the reach of his creditors,” is, to our minds, unwarranted.
5. 'With respect to the effect to be accorded the fact that Fulmer gave the bank certain dioses in action as additional security for its debt, and these collaterals are not mentioned in the deed of trust, the law is settled in this court against the vitiating consequences for which counsel contend.— Perry Ins. & Trust Co. v. Foster, 58 Ala. 502.
6. Nor does the stipulation that upon a sale by the mortgagee after the law-day of the whole property, any surplus of the proceeds should be paid to the mortgagor, invalidate the instrument. This stipulation is but the expression of the legal effect of the conveyance, and does not avoid it.— Perry Ins. Co. v. Foster, supra, and cases there cited.
7. The proposition that the provisions of the deed of trust for the payment of the reasonable expenses of its execution out of the property covered by it vitiates the instrument, is not insisted on in argument, though advanced by the bill as stamping fraud upon the transaction. The proposition is manifestly unsound.
What we have said, it is believed, disposes of all the matters relied on in the bill of complaint to taint the deed of trust and mortgage — for in some aspects the instrument is both — with fraud. The facts alleged do not make out a ease of fraud. The case is a stronger one for the appellees than that of Murray, Dibbrell & Co. v. McNealy et al., 86 Ala. 234, if it differs at all from that case in principle. The decree of the chancellor is supported by that case and authorities there cited, by the case of Globe Iron Roofing & Corrugating Co. v. Thacher, 87 Ala. 458, and many others, and is affirmed.
Affirmed.