H. B. Chaflin Co. v. Muscogee Manufacturing Co.

127 Ala. 376

• Court: Supreme Court of Alabama
• Decided: November 15, 1899
• Status: Published

Opinion

MoCLELLAN, C. J.

On January 8th, 1894, the 1-1. B. Claflin Co., Josiah Monts & Co., and Cane, McCaffrey & Co., creditors of the Poliak Co., a mercantile corporation, sued out an attachment against said Poliak Co., and the writs were severally levied on the stock in trade of said company. Immediately after these writs were levied, a resolution was adopted by the 'directors of the Poliak Co. directing Ignatius Poliak, its president, to execute a general assignment of all its property and assets to Pelzer and Roman for the benefit of its creditors, subject expressly, however, 'to the- liens of said attachments, and thereupon immediately a deed of assignment was accordingly executed and the trust thereby created Avas at once accepted by tlie assignees. The Muscogee Manufacturing Co., for itself and other creditors of tlie Bóllale Co. who should come in and make themselves parties, etc., soon afterwards filed this bill against said company, the assignees in the -deed of assignment, -said attaching -creditors, B. J. Baldwin as executor of Josiah M-orris, -deceased, and the sheriff, sotting up that sard attachments were collusive, fraud m lent and void, that they and the deed to the assignees Avere parts of one and the same transaction together constituting a general assignment for creditors, etc., etc., and praying that said writs of attachment he “treated and declared as part of said general assignment and constituting therewith one conveyance of general assignment for the equal benefit of all the creditors of -said Poliak & Co., and that the preferences thereby attempted to be created be declared null and void,” and all the property of said Poliak Co., freed from -said alleged attachment liens, he administered for the equal benefit of all its creditors, etc., etc. The averments of the bill as to the ’collusive character of the attachments, as to the writs being sued -out and suffered or procured as part -of the same transaction in which tbe general assignment was executed, etc., etc., are as foll-oavs: “Orator further avers -on information and belief that at tlie time of making said general assignment, the said Poliak Company owed a large amount of debts to A'-arious -creditors amounting in the aggregate to, to-Avit, oath* two hundred thousand dollars, among AA'liich creditors were Josiah Morris & Co., in the sum of over fifty thousand dollars; the H. B. Claflin Co., in the sum of exceeding thirty thousand dollars; and Cane, McCaffrey & Co. in the sum -of more than tAventy-fivo hundred dollars. That while the execution of said deed of assignment Avas in contemplation by said Poliak Co., and -so knoAvn to be by said Josiah Morris & Co., II. B. Claflin Co., -and Cane, McCaffrey & Co., -said creditors so named and said Poliak Co. en~ tered into an agreement and understanding that a priority or preference should he given by said Poliak Co. to said named 'creditors over -the other creditors of said Poliak Co. by the terms of which the said deed of assignment, although prepared before said attachments were sued out, should be held back from delivery to the trustees and from record until after said attachments should be sued out and levied. And orator avers that pursuant to said agreement, understanding or arrangement the said attachments were sued out by said creditors respectively in the city court of Montgomery, shortly after 7 o’clock a. m. on January 8th, 1894, and were received by the sheriff and endorsed as received by him in the following words: Cane, McCaffrey & Co.’s attachment at 8:15 o’clock on said clay. Josiah Morris & Co.’s attachment at 8 :l(i o’clock on said day, and H. B. Claflin Co.’s attachment at 8:17 o’clock on said day,- and all being so received in the morning of said day. And orator further avers that said attachments were levied by the sheriff in the morning of said day on all the 'stock of goods, wares and merchandise in the storehouses of the said Poliak Co. in the city of Montgomery, Alabama, but at what precise hour they were so levied orator is unable to state. Orator further alleges on information and belief that said Poliak Co. knew before said attachments were sued out that the same were going to be sued out, and the said attaching creditors knew before said attachments were sued out that said assignment was going to be made, and by mutual agreement, understanding or arrangement between all of the parties, the said attachments were issued, received by the sheriff, and levied by him, and the said assignment executed in the order herein averred, and that said attachments were s-o sued out and levied and said assignment so executed thereafter with the intent on the part of all of said parties to have and make said attachments and assignment operate as a preferential transfer of said property so levied on in favor of said attaching «'editors over other creditors of said Poliak Co., -and to further -effectuate said purpose it was provided in said deed of assignment that the same should l)e subject to said writs of attachment; and orator on advice and belief avers that said attachments and deed of assignment together constitute one general assignment for. the benefit of al-1 the creditors of said Poliak Co. equally. Orator avers that in further aid of the preference sought- to be given said attaching creditors, it is provided in said deed of assignment that said assignment is also subject to the landlord’s lien for the rent of said storehouses, which rent, orator avers, amounts to about nineteen thousand dollars.” The answers of the attaching creditors of Poliak Co., and the answer of that company, each and all directly and unequivocally deny any and all collusion, agreement, understanding and arrangement between said creditors and said Poliak Co. and between each and every of them and the. Poliak Co.; and aver that their several claims upon which the attachments were issued were, just debts against said company in the amounts for which the writs were severally sired out, and that the ground -set up in the affidavits respectively for the issuance of the attachments in fact existed; and the bill in no way questions the existence or bona fules Of said debts nor the existence of the ground upon which the attachments were sued out.

Upon the, foregoing statement of the case as presented by the bill and answers, it is obvious that the main issue in the cause is collusion vel non between said creditors and the Poliak Co. in the suing out of said attachments. The chancellor found that issue in favor of the complainant as to Josiah Morris & Co. and the H. B. Claflin Co. and against the complainant as to Cane, McCaffrey & Co., and decreed relief accordingly.

In reviewing this finding no presumption in favor of its correctness can be indulged, the statute providing that “in deciding appeals -from the chancery court no weight shall he given to the decision of the chancellor upon the facts, but the Supreme Court shall weigh the evidence and give judgment as they may deem best,” (Code, $ 3826) ; and-as the evidence before the chancellor was the same and in the same form — depositions and writings — as that before us, there is no room for the application of the doctrine declared in Woodrow v. Hawving, 105 Ala. 240.

On the issue thus made and thus determined by the chancellor and now presented for our determination anew,' the burden of proof throughout was upon the complainant. The rule that on a bill filed to set aside a conveyance of property made by an insolvent and failing debtor in payment of an alleged antecedent debt the onus is on the respondent grantee to specifically allege and satisfactorily prove an adequate, bona, fide consideration, and how, when and in what it was paid, etc., etc., has no application here. In the case stated the burden of alleging- and proving the conveyance by such a debtor is always upon the complainant, and it is only when 'the fact of conveyance has been proved or admitted that the onus shifts to respondent to show the consideration, its payment, etc. 'If property of an insolvent debtor could he efficaciously transferred by him to a creditor in payment of an antecedent debt by means of a collusive attachment, and the fact of collusion in the issuance of such attachment were admitted in a given case, then and thereupon it would be for the attaching creditor to prove the bona fides -and adequacy of his debt and its satisfaction through the attachment; but until the collusive and covinous character of the attachment should be proved or admitted ■the respondent would rest under no burden whatever. And if in such case it were admitted, as it is here, that the asserted debt was jiist and adequate, and that there were grounds for the issuance of the attachments, there would he no occasion, in any aspect possible of assumption by the ease, for the creditor to offer any evidence: the whole case for the complainant would fall of its own weight to the ground. In the, case supposed the collusiveness of the attachment, would have to he proved before the respondent would ho put to any showing whatever; as in the (-ase of an alleged fraudulent conveyance, the fact of the conveyance by an insolvent debtor must he proved before the respondent is called upon to prove anything, before any burden is cast upon him. As a transfer of property even in payment of a valid and adequate antecedent- debt cannot be effected through the procurement of the collusive sufferance of an attachment by the debtor, when such an attachment is attacked by other creditors as constituting in part a general assignment and involving an unlawful preference of the attaching creditor over other creditors, the case for the complainant rests primarily upon the affirmative fact affirmatively alleged by him that the attachment was the result of collusion between the plaintiff in attachment and the debtor, and, of consequence, that the preference secured by the attachment proceeded from the debtor’s own volition and was the giving of a preference by him. Of course, such collusion may be proved by evidence of the circumstances attending the transaction, but until it is proved in that or some other way by the complainant no • case is made for relief; and when it is so proved tluu-e is an end of the case in complainant’s favor. So that there can never be any shifting of the burden of proof to the respondent upon such a bill. If the complainant offers evidence tending to show collusion, the respondent may either submit the cause on the assumption by him that the tendency of complainant’s evidence is not sufficiently strong to justify a finding of collusion, or he may offer evidence of his own in rebuttal of the tendency of the testimonjf on the other side; but in no posture which the case can assume is it possible to say that any burden of proof is on the respondent; and while, if circumstances are relied on by complainant t-o show collusion, and evidence of circumstances which tend to show collusion is adduced, the respondent may by way of reducing the supposed probative force of such circumstances, or of denuding them of all probative force, bring forward evidence to rebut their tendencies, lie cannot be said to rest under any burden of proof in such connection, and it- is entirely inapt and inaccurate to say that he is called upon or that the onus is on him to explain or rebut inconclusive indications of collusion that arise from the surroundings of the main transaction. The charge of collusion is affirmatively made by the complainant. It is a charge of fraud. His whole case rests upon its truth. And from the beginning to the end of the trial the burden of its establishment is upon him. The respondent is not called upon to disprove the charge, - nor .to explain or rebut circumstances which tend to an unsatisfactory degree to prove it. — Moog v. Farley, 79 Ala. 246; First National Bank, etc., v. Kennedy, 91 Ala. 470; A. G. S. R. R. Co. v. Frazier, 93 Ala. 45, 51-2; Tompkins et al. v. Nichols et al., 53 Ala. 197.

A careful examination and consideration of the evidence in this ease fails to reasonably satisfy us that the attachments were sued out and levied under any agre, .nent,' understanding or arrangement between the attaching creditors and the Poliak Co., or that there was collusion in any form between them, or even that the Poliak Co. knew said creditors were about to sue out the attachments and delayed the execution of the assignment in order that they might secure a preference by the levy of the attachments, or that said credi tors knew that the Poliak Co. was contemplating making an assignment. Upon the direct inquiry of collusion •r,el non the complainant itself examined Billing of the firm and the manager of the business of Josiah Morris & Oo., and the sole representative of that firm having any connection with this transaction, and Knowles, the secretary and treasurer of the Poliak Co. These witnesses testified roundly and particularly and circumstantially, so to speak, to the effect that there was no agreement, no understanding, no arrangement, no collusion between the attaching creditors and the Poliak Co. in respect to the attachments, that the creditors never communicated their purpose to attach to said company, that it knew of no such purpose, and that the creditors knew nothing of the contemplation of the company to make a general assignment in the event attachment should be levied. There is no suggestion nor room for suggestion in the case that the witnesses Billing and Knowles thus introduced and examined by the complainant testified otherwise than complainant expected they would. Complainant was of' course at liberty to show that the facts werq other tiran as deposed by them; hut their introduction by the complainant involved some assurance that they were not unworthy. of belief, and estopped complainant to impeach them. — 1 Green Ev. § 422. Billing and the representatives of Cane, McCaffrey & Co. and the H. B. Claflin Co. acted together in and abont suing out the attachments from the time those representatives arrived in Montgomery till the writs were levied, and he was thus in a position to testify as to the purposes, knowledge, etc. common to them all. The only other witnesses examined who were connected with the suing out and levy of the attachments were Cane, of the firm of Cane, McCaffrey & Co. and their sole representative in this matter, and Frank, who ivas the sole representative of The H. B. Claflin Co. They were introduced by the respondents, and each of them testified fully and unequivocally to the entire absence of all agreement, understanding and arrangement; and to facts wholly negativing any collusion, between the attaching creditors and the Poliak Co. in respect of the suing out and levy of the attachments. They had no knowledge of the intention of the Poliak Co. to make a general assignment, nor did 'they communicate the purpose of these creditors to sue out attachments to the Poliak Co. directly or indirectly. These witnesses and Billing, of course, knew whether there was any agreement, understanding or arrangement between their principals and the Poliak Co. They, of course, were able- to say positively that they did not know that the Poliak Co. contemplated making a general assignment and hence could not have sued out the attachments with reference to such intention. They, of course, knew whether the Poliak Go. had received any intimation from these creditors that they were going to attach. Unless, therefore, we convict them of willful false swearing — and this though the complainant itself vouches for the credibility of one of them who deposes substantially to the same facts as the other two — we must hold that these attachments were sued out on a sufficient ground solely for the collection of just and honest debts with no ulterior purpose and without any shadow of collu■sion with the Poliak Oo. Yet we are asked to hold to the contrary and the chancellor did hold to the contrary, the holding involving incidentally, as we have suggested, the conviction of these witnesses of false swearing, upon certain circumstances — in connection. with the gratuitous assumption that these creditors Avere called upon to explain them — Avhich are either satisfactorily explained, or AAdiich, so far as they remain unexplained, Avould not justify the conclusion to Avhich it is sought to bring us even in the absence of the testimony of these Witnesses. Unexplained the most potent circumstances relied upon are those immediately connected with the preparation and execution of the deed of assignment. Tbe Poliak Oo. Avas insolvent and in a failing condition. It contemplated making a general assignment in a certain contingency. The deed of assignment was executed, as avc have said AAdthin one-half an hour after these attachments Avere levied. T.n it the fact and date of the levies is recited and the conveyance is made subject to the lien of the leAdes. The instrument ivas prepared or partially prepared by the company’s attorney and by him delivered to Knowles, the company’s secretary and treasurer, on Saturday night before the attachments Avere levied about 8:20 o’clock on Monday morning. As soon as the attachments were levied a meeting of the company’s board of directors Avas called and assembled, the directors being employes in the 'company’s business and in the house at the time, and passed a resolution authorizing and directing the execution of the deed of assignment, and it AA'as thereupon executed by the president of the company. But Knoivies, the secretary and treasurer of the company, ivas introduced as a witness by the complainant itself, and he explains the facts ‘to AAdiich ive have just adverted. He says the companA’' Avas being severely pressed by its creditors, that it apprehended attachments, that it had concluded to make a general assignment in the cwent any of its creditors did attach, and to this end its attorney had been instructed t-o draw up a deed of general assignment to be executed in the event attachments Avere sued out, that in pursuance of these instructions the attorney drew up the deed and delivered it to him, Knowles, on Saturday night before the attachment, that the instrument was typewritten, that it contained the reference to attaching creditors when it was so delivered to him, but not their names or the date of levy, but that blanks were left for the insertion of this date and the names of any creditors who should attach, that the president of the company had gone home for the night 'when this paper was handed to him, that the attorney told him the instrument was to be executed only in the event attachments were levied, and that if attachments were levied he should thereupon have the board to direct the execution of the deed, that the blanks referred to should then be filled in and the deed executed, that in consonance with these directions he assembled the board of directors immediately upon the levy of these attachments, that the resolution to execute the deed Avas then passed, that the president of the company thereupon filled in said blank with the names of these attaching creditors and the date of the levies, and executed the deed of assignment in accordance with the said resolution. Thus explained these facts, as to the time of the preparation of the deed and as to the insertion therein of the names of these attaching creditors, etc., etc., do not show that the Poliak Co. knew before these attachments Avere sued out and levied that they were going to be sued out and levied, and delayed the execution of the deed in order to give these creditors a priority over others. And even any tendency they might otherwise have had to show such knowledge on the part of the Poliak Co. is rebutted by the testimony of KnoAvles to the effect that it had no such knowledge and by that of Billings, Cane and Frank that no intimation of the purpose to attach was ever conveyed by these creditors to that company or to anybody else.

But even if the Poliak Co. had reason to believe that these creditors were going to attach, or even knew it, and delayed the execution of the deed until they had attached, and thereby acquired a priority, the rights of the creditors under their attachments would not he affected unless they colluded with the company to that end — had some agreement, understanding or arrangement with the company to that effect. This is true in this case because the bill alleges such agreement, understanding or arrangement, and upon the case so alleged complainant must recover if at all; and it is true as a general proposition of law because these creditors, having just debts against the Poliak Coi and a ground upon which to resort to attachment for'their collection, had such unqualified right to invoke that remedy and acquire thereby a prior and preferential lien as that no act or intent on the part of the company in which they did not participate could destroy their lien or convert it into a transfer for the equal benefit of all creditors. In such case the lien does not proceed from the volition of the Poliak Oo., but from the lawful and adversary act of the attaching creditors; and such act cannot be emasculated of its lawful and adversary, character by the mere fact that the company refrained from taking steps it might have taken to prevent the lien attaching even with the intent to have the lien attached, when the attaching creditors had no part or concern in the act or intent of the company.

The fact that respondents failed to examine Poliak, the president of the company defendant in attachment, and White, its attorney, is not proper matter for consideration against them. To make it pertinent the theory would be, of course, that Poliak and White knew the facts as to collusion vel non, and that they must have known there was collusion, else respondents would have examined them. These witnesses were equally accessible to the complainant, and it would seem more pertinent to say, since the burden to prove collusion was on the complainant, that the latter knew they would testify there was no collusion else it would have examined them. But no legitimate deduction can .be drawn from such failure to examiné witnesses accessi ble to both sides, as has been expressly decided by this court in Brock v. State, 123 Ala. 24, and in Coppin v. State, 123 Ala. 58.

We do 110't find that the attaching creditors participated in any scheme evolved subsequent to the attachment to rehabilitate Poliak and set him up in business again] but if the evidence showed to the contrary— that they did aid Altmeyer, or even Poliak as an individual, to purchase the attached property with a view to Poliak’s going into trade with it — this would not invalidate their attachments, and it would not afford a sufficient basis for an inference of collusion in suing out the attachments — certainly not one of sufficient strength to prevail against the direct testimony of all the witnesses examined both by complainant and re: spondent in this connection to the contrary. It dees not appear that any of the attaching creditors had' any interest in Poliak’s acquiring the attached property and going into business with it, except Morris & Co. Poliak individually owed them a considerable debt. I-Ie was doubtless insolvent, and their only hope of collection lay in opportunity being afforded him to get again into a business out of the profits of which he could pay this debt. It was, therefore, but natural that Morris & Oo. should have desired that he should acquire this stock of goods. That they took any steps to that end there is no positive evidence, and the circumstances relied on to so prove cannot be said to do so satisfactorily. But conceding they did, there is no evidence 'that the other plaintiffs in attachment participated therein: They certainly had no interest 'to subserve by such a course. And as to Morris & Oo. themselves, the concession involves little if any 'tendency to show the collusiveness of their attachment since the fact is consistent with good faith in suing out the process. They hád the same interest to subserve in this connection whether the suits -were commenced in' good faith or eollusively. Whatever action they took in respect of the sale toward giving Poliak the control of the property may well have been actuated by considerations existing after the attachments were sued out and having no relation to the inception of the proceedings. And to impute to them collusion in instituting the proceedings upon circumstances subsequently transpiring and in themselves consistent with good faith, would be to strain for and force a conclusion of fraud.

Numerous and various other circumstances are supposed by counsel for appellee to have a tendency to prove the averments of the bill as to collusion, etc. between the attaching creditors and the Poliak Co., and whatever weight these are set forth as having inherently is supposed to be greatly augmented by the alleged failure of the creditors to explain them. We shall not enter upon a discussion of these supposed circumstances. They have each been considered by the court, or, to speak more accurately, the court has considered the argument of counsel as to each of them in connection with the evidence; and we find that conceding that each of them has some support in the evidence and allowing for every legitimate inference in support of the bill which may be drawn from' them they do not prove the collusion alleged in the bill, and very clearly they utterly fail in that behalf when considered in connection with the positive testimony of witnesses to which we have adverted going directly to show that the respondent creditors acted well within their absolute rights, in good faith and without collusion with the Poliak Oo. in suing out their attachments. So far as the argument of counsel proceeds on the theory that these respondents were under the burden of explaining anything that occurred — and_ it does proceed on that theory to a great-extent — it is untenable. There was no such burden on them, but they had a right to sit still and say nothing until the complainant proved its bill.

The foregoing discussion will serve to indicate the considerations upon which we reach the conclusion that the complainant has not proved the case made by its ■bill. The decree entered below must, therefore, be reversed, and a decree will be here entered, denying relief and dismissing the bill.

Reversed and rendered.