Cottingham v. Greely Barnham Grocery Co.

Cottingham v. Greely Barnham Grocery Co. Garnishment Prodeedings. 1! Garnishment;'what demands may he reached hy garnishment. ' While promissory notes, accounts due a mercantile firm, or other choses in action belonging to. a defendant, but in the • ■ possession of a garnishee, can not.be reached and subjected by garnishment, still, when it is shown that the garnishee acquired said nqtes, accounts or choses in action by ,a fraudulent transfer and has collected money upon them, the money so collected can be subjected by garnishment. 2. ' Garnishment; admissibility of evidence. — -In a -garnishment proceeding upon the contest of the answer of an garnishee, where, under, the issues presented it is shown that the. defendant transferred, by bill of sale, a stock of goods, notes and accounts due to the defendant as la mercantile firm, and there was evidence introduced tending to show that said bill of sale was fraudulent, it is permissible for the plaintiff to show that the garnishee had collected money upon the notes and accounts so transferred to him. • 3. Garnishment proceedings; charge of court as -to fraud. — In a garnishment proceeding, upon the contest of the answer of the garnishee, where it is shown that the garnishee claimed the property under a bill of sale from the defendant, and there . was evidence introduced by the plaintiff tending .to show that the transfer of the property as evidenced by said bill of sale was actually fraudulent, but the evidence offered in behalf of the garnishee tended to show that he was a bona fide creditor of the defendant in a sum much larger than the value of the property conveyed to him,' it is error for the court tó in- ' struct the jury upon the request of the plaintiff, that if they find that -the defendant was indebted to the garnishee at the date of the transfer to'him in a less sum than that recited in the bill of sale as to amount and the amount recited was put at a larger sum than the debt for the purpose of covering or aiding to cover the value of the property transferred, then the transfer was fraudulent. 4. Same; same. — In such a case, it is error for the,court.to instruct the jury at the request of the plaintiff that if they believe from the evidence that any part or all of the alleged debt due the garnishee by the defendant was simulated or pretended, then they should reach the conclusion that the sale was fraudulent. Appeal from the Circuit Court of Bibb. Tried, before the Hon. John Moore. The appellee, the Greely Barnham Grocery Company, recovered a judgment against E. N. Cottingham and J. L. Suttle, as partners doing business under the name of. E. N. Cottingham & Co. Upon this judgment they sued out a writ of garnishment, which was served upon the appellant, J. M. Cottingham. This writ of garnishment was issued on December 13, 1894, and was executed on the same day by serving a copy thereof on the garnishee. On December 19, 1894, the garnishee, answered denying any indebtedness to- E. N. Cottingham and J. L. Suttie, and further denied that he had in his possession any money or effects which belonged to. the said E. N. Oottingham and J. L. Suttle. On December 19, 1894, the plaintiff filed an affidavit contesting said answer and declaring that in the belief of the affiant said ansAver Avas untrue. At the spring term, 1895, the plaintiff tendered an issue. In the tender of issue made by the. plaintiff, it Avas averred that E. N. Cottingham & Co., prior to December 23, 1892, were indebted to the plaintiff .for goods, Avares and merchandise sold; that this indebtedness Avas reduced to judgment on June 7, 1894, and that said judgment Avas still due and unpaid; that on December 23, 1892, the defendants, E. N. Cottingham & Co., executed a fraudulent bill of sale by Avhich they sold and transferred the goods, Avares and merchandise owned by them, as well as the notes and accounts due to them, to. the garnishee, J. M. Cottingham and Mrs. M. A. Suttle; that the garnishee Avas the father of É. N. Cottingham, and Mrs. M. H. Suttle was the mother of J. L. Suttle; that the recited consideration of the bill of sale was $14,090.50, of which the sum of $8,983.02 is recited to be the amount of the indebtedness due by defendants to the garnishee, and $6,113.50 is recited as the amount of the indebtedness due by the defendants as a firm to Mrs. M. A. Suttle; that in truth and in fact the said defendants as a firm were not indebted to. Mrs. 'Suttle i'i any sum and that said firm was either not indebted at all to the garnishee, or, if indebted in any sum, the amount was greatly less than $8,983.02; that the alleged indebtedness of said firm to the garnishee was in whole or in part simulated and fictitious. It was then further averred in the tender of issue, that the garnishee had, under the bill of sale, taken possession of the stock of goods, wares and merchandise and the notes and accounts sought, to be sold and transferred therein and has retained the same; that the value of the-stock of goods was $10,000; “that said J. M. Cottingham has collected from these notes and accounts due/'to said defendant and transferred to him and Mrs. M'. A. Suttle under the terms of said bill of sale a large sum of money, to-wit, the sum of fivre thousand dollars.” ^Vherefore the plaintiff avers that -it is entitled: tó a judgment -against the garnishee for thd-aono-unt; of its judgment. ’ 'The''garnishee'moved td strike'fi’om the ténder-of issue the portion thereof-which is1 quoted above,'-upon the ground that said tender’ of issue as'framed seeks-to hold the garnishee- liable for-moneys' collected-on Said'notes and■ accounts transferred-fid him underpaid bill of sale white1 in law there' can he no-liability against said garnishee fór said ■ alleged"'collections.■ This'motion to strike said portion of'the tender'of issue-was overruled, and to this- ruling- the garnishee duly excepted. ''- Thereupon the garnishee' filed the plea- of the general i’ssu'e-and' several plefis' in' Which 'lie averred that under Said bill of sale heydicl- receive goods,’wares and merchandise, notes "and'accounts belonging to the'firm-Of E. N. Cottingham"& Company, hut that he has paid bona ■fide- creditors' of said firm-full'value fór all-the property of said firm which" came into his possession by virtue of said'bill of'sale or otherwise; that the-said bona fide creditors 'were subsisting creditors-at-the timé ofuald alleged hill of sale'and said payments were-made to said bona "fide creditors'prior tb'the service of the writ of garnishment} and further' that at the time of the deliverv 'to' him' of the property, lie was a bona fide creditor of'the firm of E.’N: Oottinghain & Co-, for the stun of $8,000, whicli was justly'due and payable; that the value of the property so delivered did not exceed the value of $3,000, and in said pleas he1 averred that before the garnishee could he held'-liablé to "the'plaintiff, the value of the property received by him must exceed the amount paid' the creditors of Said firm added to the amount due the garnishee. Issue was. joined upon these pleas . On the trial of the case-the evidence for the plaintiff tended to show- that as a matter of fact the -firm of E. N. Oottinghain & Go. was'not indebted to the' garnishee .or Mrs', guttle at the.time of the execution of said bill of sale; that the consideration expressed therein was simulated' and fictitous;-that said hill of sale was executed for 'the'purpose of bindering, delaying and fiefrauning the creditors ó" v ’ ~ a; that after the executíc-m of said bill-of sale tlie-garnish.ee liad collected-large slims of money upon the notes and accounts transferred to him in- said' bill of sale. • ■ . .. -.-'Upon the plaintiff offering, to prove that the-garnishee had -collected -money on different notes and- accounts which were due to the firm of E: N. Cottingham &''Oo'. and which were transferred'in said bill- of-sale, the • garnishee separately, objected -to each of the questions calling for such proof, and. moved- to exclude the evidence in reference thereto-.- • The court separately and severally overruled -each . said- objection and each motion, and to each of these rulings the garnishee'separately excepted.' ■ • • ■ ■ - -- Upon the introduction of all the evidence the court' at the request of the plaintiff-gave to the jury the following Written charges; to the giving of-each of which Hie-garnishee-- separately -excepted:' (1.) “If the jury- find that the' firm of E. N. Cottingham & Co. were indebted to J'.' M. Cottingham at' the'date of the transfer to him in a less sum than that recited in the bill of sale as to-amount, and the amount recited was’put at a larger sum than the debt for the purpose of covering- or aiding-to cover the-value of the-property'transferred,-then the transfer whs fraudulent-.” (2:-) “I'charge you that if you believe from-the'evidence in this case that any part- or all of the'alleged debt of eight thousaud- dollars due J. M. Cottihgham & Co. was simulated or pretended- then- you will reach the conclusion that-sale was fraudulent.” r There were verdict and judgment for'the plaintiff. The garnishee appeals, and' assigns as error the several rulings of the trial court to which exceptions were -reserved. J. M. McMaster, for appellant. The motion of the garnishee to strike the portion- of the- tender of issue should have been sustained. — Oottingham v. Greely-Barnham Grocery Go., 129 Ala. 200. The charges given at the request- of the plaintiff were erroneous and should have been- refused.- — Broton v. Watson, 71 Ala. 299; Pollock v. Meyer, 96 Ala. 172; Bump on Fraudulent Conveyances (4th ed.), p. 15, §§ 164, 165. Logan & VandeGraaff, contra. The motion to strike the portion of the tender of issue was properly overruled. Likewise it was proper for the court to- allow the plaintiff to' prove that the garnishee had collected money on notes and accounts transferred to him. — Lehman v. Greenhut, 88 Ala. 478; Shealy v. Edwards, 75 Ala. 416. The two charges requested by the plaintiff asserted correct propositions of law under the evidence in this case and were properly given.- — Proskauer v. Bank, 77 Ala. 260; Lehman v. Greenhut, 88 Ala. 478. [MAJORITY — TYSON, J.] TYSON, J. Garnishment by a judgment creditor against a transferee under an- alleged fraudulent conveyance from the debtor. On former appeal in this case, we held thaiti “the effects of the debtor in the possession of the garnishee, in order to' be subjected, must be of such sort as that, when so ordered by the court, he can deliver them to- the sheriff, that the latter may make sale thereof,” and that notes and accounts, being mere choses in action, the court could not direct a sale of them. — Cottingham v. Greely-Barnham Grocery Co., 129 Ala. 200; 30 So. Rep. 560, But this is far from holding that after the ■ garnishee, when shown to have acquired the notes and account by a fraudulent transfer, has collected money upon them, that the money cannot be subjected. In contemplation of law, as against the creditors the money so- collected is the property of the debtor, and therefore subject to- the writ of garnishment. There was, therefore, no; error in the ruling of the court upon the motion to strike a certain part- of the tender of issue, nor in the admission of the evidence introduced by plaintiff to show that the-garnishee had collected certain sums of money upon the notes and accounts, there being evidence tending to show, that the transfer by which he -acquired the ownership from the debtor of these choses in action was actually fraudulent. A misstatement of the consideration in the bill of sale is not. conclusive evidence of fraud, but only presumptive evidence of'it, .which may be rebutted. — Stover v. Herrington, 7 Ala. 142. In view-of the-tendency of the testimony offered in behalf of garnishee that he was a tona fide creditor in a sum much larger than the value of the property conveyed to' him, which if believed by the jury, rendered the conveyance lawful, regardless of the relation of the parties to' it or of the' badges of fraud (Pollock v. Meyer, 96 Ala. 172), the giving of the .written charges at the request of plaintiff was error. Reversed and remanded.