Court Opinion

ID: 6510898
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:22:15.85701+00
Date Added: 2024-06-11T15:54:52.562951
License: Public Domain

SOMEBYILLE, J.
— Tlie only assignment of error presented by the record in this case is, that the Chancellor erred in declaring the mortgage executed by J. S. Shirley and wife, on January 5th, 1877, to J. A. Henderson & Co., to be a general assignment. The consideration of the mortgage is recited to be a debt due by Shirley to the mortgagees “by crop-lien note,” of even date with the instrument, for the sum of $1,200, and “ to further secure the payment of said sum, together luith any amounts that may be advanced under said lien note.” The pleadings and proof show that this note was intended to secure the balance due from Shirley to the mortgagees upon an old indebtedness, and whatever additional sum might be advanced during the current year to enable Shirley to make a crop.
It is a plain and well settled proposition of law that a mortgage, or deed of trust, which conveys substantially all the debtor’s property for the security of one or more particular creditors, to the exclusion of others, the intention of which is to secure a preference or priority of payment to the former over the latter, operates as a general assignment under the statute, and enures to the benefit of all the creditors of the grantor equally.. — Code, (1876), § 2126; Warren v. Lee, 32 Ala. 440; Stetson & Co. v. Miller, 36 Ala. 642; 1 Brick. Dig. p. 130, § 97.
The purpose of the statute (Code, § 2126) is to prohibit a debtor from exercising the right which he had at common *452law to prefer one creditor to another, where he seeks to do so by disposing of all of his property by mortgage or other like security. Its policy is similar, in nature and design, to that of all bankrupt laws, which is to secure a pro rata distribution of the assets of insolvent debtors equally among all his creditors. The fact that all of the grantor’s property, or, substantially all, is included in the conveyance, seems, in such cases, conclusive of the fact of his insolvency.
The fact is not denied, that, in this case, Shirley included all of his property in the mortgage to Henderson & Co. The instrument was clearly a general assignment, and is none the less so by reason of being executed to secure, in part, moneys promised to be advanced to the mortgagor by the mortgagees in futuro. The statute prohibits the giving by a debtor of a preference or priority of payment, by general assignment, to one or more creditors. It makes no distinction between the creditor of a day and one of an hour. The age of the debt is not material. — Code, 1876, § 2126; Lovelace v. Webb, 62 Ala, 271.
It is urged, however, by the counsel of the appellant, that this mortgage cannot be held a general assignment as to any property conveyed by it, which is shown to be exempt from execution in behalf of the debtor, at the time of its date and delivery. We think the principle invoked is a sound one, because no creditor can be considered as suffering prejudice by a sale or mortgage of such property. — Lehman, Durr & Co. v. Bryan, (MSS. present term.) It cannot be contemplated that the statute under consideration intended to interfere with, or restrict the well established rights of a debtor in disposing of his exempt property. No conveyance or transfer of property of this description would, in our opinion, be such a preference as to come within the evils designed to be prohibited by the legislature. The debtor is authorized bv law to claim his exemptions against all of his creditors. We cannot appreciate the force of the logic which would convert a special waiver in favor of one, into a general waiver in favor of all. — Thomp. Homst. & Ex. § 421; Burrell on Assign. § 96-7; Bump on Fraud. Con. § 2681
But the evidence does not clearly show that the property conveyed by the mortgage, and that described in the schedule of exemptions is identical, nor is there any sufficient averment to that effect in Shirley’s answers. It is manifest, however, that some of it appears to be the same. We cannot conclude, therefore, that the Chancellor erred in simply declaring the mortgage a general assignment, for the conclusion would be proper if it conveys any property not exempt from legal process issued to enforce the mortgagor’s *453debts. So far as the exempted property is concerned, it remains unaffected by the decree, the question of such a claim being a matter for future determination, and a proper subject of reference to the register, under appropriate instruction from the Chancellor.
The decree is affirmed.