
    Loucheim & Co. v. First Nat. Bank of Talladega.
    
      Bill in Equity by Gr editor to Set Aside Deed of Trust on Ground of Fraud.
    
    1. General averments of fraud; the mere, conclusion of the ‘pleader. — The general averments in a bill charging defendants with the purpose of hindering, delaying and defrauding the complainants, aside from the facts alleged, and the circumstances surrounding the transaction, are the mere conclusions of the pleader, and are of no consequence in passing upon demurrers to the bill.
    2. Usury; when it does not vitiate a mortgage. — Usury in a debt does not vitiate the mortgage or deed of trust securing it where the usurious charge was a stipulation incident to, and a part of the contract by which the debt was created, and not added to the debt at the time of the transaction to make it approximate the yalue of the property conveyed.
    3. Mortgage by insolvent debtor to secure a creditor. — A mortgage or deed of trust executed by an insolvent debtor to a preferred creditor, of a stock of goods, with power in the trustee to sell the same at wholesale or retail, and after the payment of the expenses of the trust and the satisfaction of the creditor’s debt, pay the balance over to the debtor freed from the trust, is not a fraud upon other creditors.
    4 Mortgage, with c,Iioses-in-action as additional security. — It does not vitiate the transaction that a debtor, after giving a mortgage to a preferred creditor, should, in addition deposit ehoses-in-action with the mortgagee as further security, which are not named in the mortgage or deed of trust.
    .5. Hame; stipulation as to surplus proceeds.— Nor does a stipulation in a deed of trust that any proceeds in the hands of the trustee after sale of the mortgaged property shall be paid to the mortgagor, invalidate the instrument.
    Appeal from Talladega Chancery Court.
    Tried before the Hon. S. K. McSpadden.
    The bill in this case was filed by Loucheim & Co., a partnership, against E. B. Eulmer, J. E. Denny, and the Eirst National Bank of Talladega, and sought to set aside, as fraudulent and void against the complainants, a deed of trust executed by • said E. B. Eulmer to the said Eirst National Bank of Talladega, conveying a stock of goods in store at Syllacauga, with a provision that said Denny should take charge of the same as trustee, and sell and pay the debts due to said bank by said Eulmer. The facts alleged in the bill, upon which the charge of fraud is founded, are substantially, that one Eulmer became indebted to the Eirst National Bank of Talladega for money loaned him by said bank. Said indebtedness became due, and the said Eulmer was unable to pay it. The amount due said bank was $2,000, and included $60 of usurious interest. Said bank thereupon procured said Fulmer to execute a mortgage upon his stock of goods, which invoiced $1,038, and to place with said bank as collateral $1,100 of open accounts belonging to said Fulmer. The bank also took a new note from said Eulmer, and extended the said indebtedness sixty days. The new note and mortgage was for $2,063 — $2,000 being the original debt, and $50 dollars being attorney’s fees paid by said bank for drawing up said mortgage, and $13 being-interest upon the debt during the time for which extension was given. Said Eulmer was, at the time of the execution of said mortgage, insolvent and such insolvency was known to the bank.
    The Eirst National Bank of Talladega demurred to the bill, assigning as grounds of demurrer (1), that there were no sufficient charges of fraud in said bill; (2), that it was no fraud on the rights of Fulmer’s creditors to include in said mortgage the reasonable expenses of selling the mortgaged property by the trustee; (3), that it was not a fraud on the rights of Fulmer’s other creditors that the bank required him to pay reasonable attorney’s fees for drawing said mortgage; (4), that the giving of further time of payment to Fulmer does not constitute fraud; (5), that the provision in said ■ mortgage for the payment of any balance over on a sale of the goods to Fulmer is not a badge of fraud; (6) and that the charge of $80 -usury in said debt is not a fraud, nor can complainants avail themselves of such usury in this bill.
    The court sustained the demurrer, and the complainants take this appeal, assigning as error the ruling of the court on the demurrer.
    Bishop & Whitson, and E. H. Dryer, for appellant, insisted
    1. That the creditor who purchases property from his insolvent debtor and takes from him security i'or his debt, having knowledge of his insolvency and of his intent to hinder, delay or defraud his other creditors, must do nothing for the benefit, or to favor the debtor, and can go no further than secure the payment of his own debt; citing Levy v. Williams, 79 Ala. 171; Price v. Mazange, 31 Ala. 701; McDowell v. Steel, 87 Ala. 493.
    2. The payment of fifty dollars, at the request of Fulmer, was a benefit to said Fulmer, and being made a part of the mortgage debt, the consideration of said mortgage became partly for a present cash payment, and in part an antecedent debt, and in such case, the securing of a just debt is only a circumstance to be considered in pronouncing upon the good faith of the transaction. — Levy v. Williams, supra; Garter v. G6l.em.an, 82 Ala. 177.
    3. The provision in the mortgage for turning over any surplus to the mortgagor, Fulmer, was an arrangement for shifting so much property of the debtor and placing it beyond the reach of creditors, and is thus at least a contingent benefit to the debtor. — Tompl&ins v. Levy, 87 Ala. 263.
    Browne & Brewer, for appellee.
    1. The facts of Fulmer’s indebtedness to the bank, his inability to pay, and his securing an extension by giving the mortgage and collaterals, when the bank knew he was insolvent, do not constitute fraud. — Perry Lns. & Trust Go. v. Foster, 58 Ala. 512; Globe, &c., v. Thatcher, 87 Ala. 458.
    2. The $80 of usurious interest in the original debt does not constitute fraud, or vitiate the mortgage. It is only when tbe usury is added for tbe purpose of swelling tbe debt to an amount sufficient to cover tbe property conveyed, tbat it renders tbe conveyance fraudulent. — Harris v. Bus-sell, 93 Ala. 59.
    3. ' Tbe taking by tbe bank of tbe collateral security in addition to tbe mortgage, was not fraudulent. — Murray's Case, 86 Ala. 234; Stern v. Fisher, 32 Barb. 198.
    4. Tbe provision in tbe mortgage for paying over any surplus to tbe mortgagor, after tbe payment of tbe mortgage debt, is but stipulating to do wbat tbe law requires shall be done by tbe mortgagee, and a necessary incident to all mortgages. — 83 Ala. 234; 58 Ala. 502; 1 Ala. 258; 5 Ala. 297; 32 Ala. 161; 17 Ala. 659; 11 Ala. 689.
    5. Tbe provision for tbe payment of tbe expenses incident to tbe trust does not vitiate or render fraudulent tbe mortgage. — Bur rill on Assignments, §417; 58 Ala. 514; Cunningham v. Freebord, 11 Wend. 240. Tbe attorney’s fee for drawing tbe mortgage was a part of sucb expense.
    ■6. Tbe bank bad tbe right to embrace in tbe mortgage property fully sufficient to cover its debt under all contingencies. — Bump on Fraud. Con. 46; Burrill on Assignments, § 99.
   McCLELLAN, J.

The general averments of tbe bill tbat tbe deed of trust executed by Fulmer to secure certain recited indebtedness to tbe Bank of Talladega was tbe consummation of a plan conceived by all tbe defendants for tbe purpose of hindering, delaying and defrauding tbe complainants and other creditors of Fulmer, are of no consequence in passing upon tbe demurrers to tbe bill, aside from the facts alleged therein as constituting tbe fraud com|)lained of, and relied on as a predicate for tbe relief prayed. Or, in other words, tbe inquiry of fraud vel non on tbe averments of tbe bill is to be determined by a consideration of wbat was done by tbe parties as therein alleged, and tbe circumstances surrounding tbe transaction; the allegation tbat tbe transaction was entered into and consummated to binder, delay and defraud creditors, is a mere ’ conclusion of tbe pleader.' Tbe facts alleged will be indicated in tbe following discussion of them.

2. Usury in tbe debt secured does not vitiate tbe mortgage or deed of trust, where, as in this case, tbe usurious charge was a stipulated incident to, and a part of tbe contract by which tbe debt was created, and not added to tbe debt at the time of tbe transaction, intended to secure it for tbe purpose of swelling its amount so as tbat it would equal or approximate tbe value of tbe property conveyed.—Harris v. Russell, 93 Ala. 59.

'3. It seems that Fulmer, tbe failing debtor, became and was at tbe time tbe mortgage was executed indebted to certain attorneys in tbe sum of fifty dollars for services in connection with that transaction. This sum was paid by tbe bank io the attorneys, and included in tbe amount secured by tbe mortgage. There was no fraud in this. Nothing was paid to the debtor. This payment to tbe attorneys did not place in bis bands money which be could withhold from bis creditors. It was not pro tanto a cash consideration for the conveyance in trust, but at most was tbe assumption and payment by tbe bank of a debt due from, Fulmer to a third person, as a part of tbe consideration for tbe mortgage. That this involves no vitiating consequences 'has more than once been declared by this court. — Mobile Savings Bank v. McDonnell, 89 Ala. 434, and cases there cited.

4. We do not understand tbe deed of trust to authorize tbe trustee, Denny, to sell in any manner — at wholesale of retail — any more of tbe property covered by tbe instrument than would suffice to pay tbe costs, incident to tbe execution of tbe trust, and tbe secured debt. Hence we do not concur in tbe insistence of complainants’ counsel that tbe mortgage or deed of trust authorized a sale of tbe property in bulk by tbe trustee, and that, of consequence, tbe trust might have been executed by an immediate sale of tbe whole property for a sum in excess of tbe secured debt and charges, and tbe payment of this sum to tbe debtor, thereby putting it in bis power to defeat other creditors. To tbe contrary, we construe tbe deed to have this effect: that any surplus of tbe property remaining after tbe trustee bad realized a sufficient sum from sales to discharge tbe trust and thus exhausted his authority, reverted to Fulmer, and in bis bands, discharged of tbe trust, could be subjected to bis other debts with as much facility as if this transaction bad never occurred. Moreover, in determining tbe amount to be realized out of tbe property, regard was necessarily to be bad to tbe amount of tbe secured debt at tbe time of realization from tbe sale or sales of tbe goods. If the bank bad collected any of tbe choses in action delivered to it by Fulmer as collateral security, tbe money derived from this source would go in diminution of tbe sum to be collected through sales of tbe property. So that tbe apprehension suggested in briefs of counsel, “that tbe bank might have collected a good portion of its debt out of such collateral before it was due, or to tbe extent of such collateral, then its agent and trustee, in tbe exercise of the power to sell at wholesale, could, have converted the entire stock at once into cash, thus shifting any surplus beyond the reach of his creditors,” is, to our minds, unwarranted.

5. 'With respect to the effect to be accorded the fact that Fulmer gave the bank certain dioses in action as additional security for its debt, and these collaterals are not mentioned in the deed of trust, the law is settled in this court against the vitiating consequences for which counsel contend.— Perry Ins. & Trust Co. v. Foster, 58 Ala. 502.

6. Nor does the stipulation that upon a sale by the mortgagee after the law-day of the whole property, any surplus of the proceeds should be paid to the mortgagor, invalidate the instrument. This stipulation is but the expression of the legal effect of the conveyance, and does not avoid it.— Perry Ins. Co. v. Foster, supra, and cases there cited.

7. The proposition that the provisions of the deed of trust for the payment of the reasonable expenses of its execution out of the property covered by it vitiates the instrument, is not insisted on in argument, though advanced by the bill as stamping fraud upon the transaction. The proposition is manifestly unsound.

What we have said, it is believed, disposes of all the matters relied on in the bill of complaint to taint the deed of trust and mortgage — for in some aspects the instrument is both — with fraud. The facts alleged do not make out a ease of fraud. The case is a stronger one for the appellees than that of Murray, Dibbrell & Co. v. McNealy et al., 86 Ala. 234, if it differs at all from that case in principle. The decree of the chancellor is supported by that case and authorities there cited, by the case of Globe Iron Roofing & Corrugating Co. v. Thacher, 87 Ala. 458, and many others, and is affirmed.

Affirmed.  