Court Opinion

ID: 7362132
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:48:03.450862+00
Date Added: 2024-06-11T16:20:40.294126
License: Public Domain

SIMPSON, J.
This was a bill filed by the appellees, who are creditors of the appellant Rike, to set aside and *499declare fraudulent certain sales and mortgages of personal propertjr m'ade by said Bike at different times to the other appellants severally.
Each transaction then necessarily stands on its own basis, and must stand or fall alone. It will be noticed that the mortgage made to Falk was made before any of the debts were created, so that, in order to set aside that mortgage as fraudulent, the burden rests upon the com-. plainant to show an actual fraudulent intent participated in by both mortgagor and mortgagee. — 3 Mayfield’s Dig. p. 875, No. 36; 5 Mayfield’s Dig. p. 476, Ao. 13. The cases of McDermott -r. Eborn, 90 Ala. 258, 7 South. 751, and Christian & Craft Grocery Co. v. Michael & Lyons, 121 Ala. 84, 25 South. 571, 77 Am. St. Rep. 30, rest upon the familiar principle that a mortgage of goods Avhicli are to be retained and used up by the mortgagor, such as a stock of goods, or lumber Avhicli lie is constantly selling, is fraudulent per se. On the other hand, the very essence of a mortgage of ordinary property, is that the property remains in the possession of the mortgagor until the mortgage is foreclosed by the mortgagee. In the case of, Howell v. Carden, 99 Ala. 111, 10 South. 645, the court says: “The mere retention of possession by.the mortgagor, or a provision in the mortgage to that effect, is not such a reservation of a benefit to him as invalidates the instrument against his existing or subsequent creditors.” —Upson v. Raiford, 29 Ala. 188. And Avhile in that case the mortgage Avas recorded, in another case this court has held that unless the mortgage is purposely Avithheld for the purpose of concealment, and to give the mortgagor a false credit, the only effect of it rvould be to postpone it to after acquired liens. — Lehman Durr Co. v. Van Winkle & Co., 92 Ala. 443, 450, 8 South. 870. There is no proof in the record to sIioav any such fraud as the law requires to set aside this mortgage.
“To authorize a conveyance or sale made by a debtor to be pronounced fraudulent, two things must concur. The transaction must be sliOAvn to be infected with a fraudulent intent on the part of the grantor, and this must be participated in by the grantee.” — Shealy & Finn *500v. Edwards, 75 Ala. 411, 416; Howell v. Carden, supra; 3 Mayfield’s Dig. pp. 876-7, No. 42. A debtor may prefer Ms creditors if tlie debt he bona fide, the payment absolute, and the property not materially in excess of the debt. — 3 Mayfield’s Dig. p. 874, No. 34. “The rule is that when the payment of a valuable consideration is shown, the burden is cast upon the complaining creditor to prove the existence of a fraudulent intent, and that such intent was known to the.grantee of the conveyance assailed'.” — Allen v. Riddle, 141 Ala. 621, 626, 37 South. 680; Morrow v. Campbell, 118 Ala. 330, 340, 24 South. 852.
Referring to the mortgage of-Rike to Gunn (May 19, 1902) the testimony o-f Gunn shows that he had-loaned various sums to the defendant Rike, from time to time; that Rike was running a saloon, also operating a steamboat and barges; that the' debt was finally secured by the mortgage in good faith; that he did not know and had no reason to believe that Rike was embarrassed, and there is no proof to contradict this, or even to show that Rike was embarrassed at that time. On the contrary, his credit seems to have been good at that time, as the complainants were selling him goods on credit about that time. Under the authorities above cited the court erred in declaring this mortgage fraudulent.
' With regard to the saloon fixtures, the testimony of Falk is clear that he bought them and placed, them in the store'which he rented to Rike; that Rike agreed to pay him $5 per month as rent for the fixtures and did pay said rent, and that he told him that whenever he wished to buy them he could do so for $225. The receipts are produced and identified corroborating his statement, and it is further shown that when Rike sold out his business the fixtures remained, and his successor paid the same rent. The discrepancies in Rike’s testimony are not sufficient to overturn Falk’s testimony. Rike testified that he was first in partnership with Patjens, then sold him the “white side” of the saloon, and these fixtures went to him. Patjens corroborates Rike about purchasing the “white side” of the saloon with the fix*501tures, and lie was to pay Falk the $225 and have the fixtures.
In addition to all this, we think the evidence shows that the fixtures belonged to Falk, and all the other prop, erty did not amount to the $1,000, which Bike had a right to claim and did claim under the exemption laws. .
The decree of the court is reversed, and a decree will be here rendered dismissing the bill.
Weakley, C. J., and Tyson and Simpson, JJ., concur.