Cooper v. Berney National Bank

THORINGTON, J.

The principles of law which govern the material questions raised on this appeal have been clearly settled by recent decisions of this court; testing the provisions of the mortgage, attacked by appellants as frau*123cliilent and void, by these decisions we must affirm that it is not vitiated by anything appearing on the face of the instrument. '

That the mortgage by its terms provides for the retention of the property by the mortgagor and the use thereof until the law-day of the instrument, does not, in view of the nature of the property, invalidate the mortgage as to existing or subsequent creditors of the mortgagor, there being nothing on the face of the mortgage to indicate an intent on the part of the mortgagee to use the instrument to hinder, delay or defraud the mortgagor’s creditors.

The statutory provisions regulating the registration of mortgages of personal property, by implication, recognize the right of the mortgagor to stipulate in the instrument for his retention of possession of the mortgaged property. As was said in Howell v. Garden, ante p. 100; 10 So. Rep. at p. 644, “The courts cannot pronounce a recorded mortgage of personal property void, as against unsecured creditors, merely because the mortgagor is left in possession; for the law permits that to be done, the recording being regarded as a substitute for a change of possession.”

It is unnecessary to discuss the rulings of the Chancery Court upon the specific grounds of demurrer to the bill of complaint and the objections to testimony. The validity of the mortgage both as matter of law, upon an inspection of the instruments and upon the testimony, is clearly sustainable on the authority of the case of Howell v. Carden, supra.

The mortgage being a valid security there was n$ error in the ruling of the court striking the appellant’s plea from the file on appellee’s motion. The attachment and sales thereunder could not avail appellants against the paramount lien acquired by appellee through its mortgage, and which lien, under the facts alleged, authorized the appointment of a receiver to take charge of the property notwithstanding its sale under attachment.—Dollins & Co. v. Lindsey & Co., 89 Ala. 217.

We can not consider the proposition urged by appellant, that the two mortgages of Aug 8, 1887, and Dec. 20, 1887, must be construed together as one general assignment enuring to the benefit of all the creditors of the mortgagor alike. Appellant has elected to attack the last mentioned mortgage as fraudulent and void; in doing that he claims against the mortgage and not under it. If the two instruments were executed under circumstances which would authorize the court to declare them one general assignment for the benefit of all the mortgagor’s creditors, appellants have not pursued *124the proper course to have them so declared. They can not be heard to claim both under and against the mortgage. Hatchett v. Blanton, 72 Ala. 423.

When we speak of the validity of the mortgage being established by the testimony, our meaning is that such must be the conclusion when tested by the principles declared in the case of Howell v. Carden, to which we have above referred. Among other things, it is said : “When the attacking creditor proves the existence of his debt at the time the mortgage was executed, the onus is then cast on the mortgagee to show that the debt, which the mortgage purports to secure, was justly due at the time of its execution. If this proof is made, and the evidence stops here, the attack upon the mortgage is not sustained. But the assailing party may go further, and prove that the mortgage was made with intent to hinder, delay or defraud the creditors or the mortgagor. In this inquiry as to the intent, the burden of proof is shifted upon the complaining creditor.” And again: “Though the effect of the transaction was to hinder, delay or defraud the grantor’s creditors, and though he executed the instrument with that purpose, yet if the grantee did not participate in such intent, but accepted the conveyance for the sole purpose of securing a bona fide debt of the amount, named in the instrument, then the security could not be pronounced invalid because of its effect upon the rights of other creditors, or because of the fraudulent purpose of the grantor.”

That a bona fide debt is established by the proof, for the security of which the mortgage was given, can not be doubted; and there is an absence of any affirmative proof, on the part of appellants showing actual fraud, which could be imputed to either the mortgagor or the mortgagee, unless it exists in the permissive retention and use of the personal property by the mortgagor after the law-day of the mortgage had passed. This fact, however, could not operate to invalidate the mortgage, unless it was within the agreement of the parties, at the time the mortgage was executed, that such possession should continue after the law-day of the mortgage for the purpose of benefitting the mortgagor, or of hindering, delaying or defrauding his other creditors in the collection of their debts. We find nothing in the proof to warrant such an inference.

The contention of appellants that the mortgagor was a resident of Jefferson county, and that, therefore, the mortgage should have been recorded in that county in order that it might be self-proving, and also, operate as constructive notice as to the personal property embraced therein, is not *125sustained by the proof. It sufficiently appears that the mortgagor, Dunn, was a non-resident of this State when the mortgage was executed; that his family’ and home were in Mississippi, and that he was not a resident of Jefferson county, but there temporarily for business purposes. His brother, E. J. Dunn, in answer to the 2d cross-interrogatory propounded to him by appellants, says: “Thomas H. Dunn lived at Columbus, Miss, on- the 29th day of December, 1887.” There is proof tending to show that he lived in Birmingham, Ala in December, 1889; but that is not contradictory of the statement of his brother as to his residence in 1887, nor is there anything in the testimony to overcome that statement. The record of the mortgage was properly made, therefore, in the county where the property was situated at the date of the mortgage. — Code of 1886, § 1806.

It appearing from the proof that the property covered by the mortgage was in Calhoun county at the date of the mortgage, and the latter having been properly acknowledged and recorded within twelve months, there was no error in admitting it in evidence without proof of its execution. Nor was there error in that part of the decree of the Chancery Court referring it to the register to ascertain and report a statement of the personal property covered by the mortgage. The mortgage embraced real estate and certain designated personal property, “and other implements” constituting a mining outfit, and described as “now being at the mine known as the “Pendergrass mine.” The description of this mining outfit in the mortgage does not of itself identify all the personalty included in its general terms, but is sufficiently definite to render the property referred to capable of certain ascertainment, and was a proper matter of reference to the register for that purpose.

There was no error in the proceedings and decree of the Chancery Court from which injury could have resulted to appellants ; and its decree is accordingly affirmed.