Opinion
8 Div. 247.
November 4, 1943.
Appeal from Circuit Court, Madison County; Schuyler H. Richardson, Judge.
Bill to quiet title to land by Eileen W. Walling against Oliver Farm Equipment Company and others, and cross-bill by respondents. From a decree overruling a demurrer to the cross-bill, complainant appeals.
Affirmed.
The original bill made parties respondents thereto V. Luke Walling, Oliver Farm Equipment Company, Leo Schiffman (doing business as Leo Schiffman Tire Company), Alabama Oil Company, and Kenneth Thomas and Carl B. Thomas (doing business as Thomas Tire Company). It alleges that complainant is in peaceable possession of the real estate specifically described, claiming to own the same in her own right, and that her title thereto is denied or disputed by respondents, who claim or are reputed to claim same right, title or interest in or encumbrance upon said lands; and that no suit is pending to enforce or test validity of such title, claim or encumbrance of respondents. The lands are in several tracts, as to some of which complainant asserts ownership of the entire interest and as to other tracts she asserts ownership of an undivided fourth interest. It is alleged that some of the tracts were a part of the W. J. Walling farm lands which were allotted to complainant by decree of the Circuit Court of Madison County by decree dated January 29, 1942, March 2, 1942 and December 31, 1943, rendered in a certain partition suit wherein this complainant was a party defendant and the children and widow of W. J. Walling, deceased, were either parties complainant or defendant.
It is alleged that prior to her marriage to V. Luke Walling complainant worked for him, and he became indebted to her in a large amount for salary and for money loaned; that after her marriage and prior to the birth of a child, complainant executed a will bequeathing to her husband all of her real and personal property and after the birth of said child (and under date of June 28, 1940), the husband wishing to provide for complainant and their child, executed and delivered to complainant a deed upon the stated consideration of $10 and love and affection conveying to her his undivided one-fourth interest in all the real estate acquired by him under the will of his father, W. J. Walling; that as a part of said transaction complainant (under date of June 29, 1940) executed a deed back to her husband, conveying the identical property, it being understood at the time that said conveyance to him was made to protect him and his heirs against complainant's family who might, in event of her death, inherit the property involved, and said conveyance paid complainant for all wages unpaid and money loaned without an accounting from her husband. It is alleged that after these transactions complainant and her husband were advised that the will of complainant would accomplish the end sought and the husband agreed to tear up and destroy said deed from complainant to him, and that said deed by complainant to her husband was recorded by the husband subsequent to rendition of decree in the partition suit hereinafter mentioned, and was so recorded as the result of a family fuss between the husband and complainant.
It is further alleged that on June 24, 1940, V. Luke Walling and a sister (as joint owners of real estate devised by W. J. Walling) filed a bill in the Circuit Court of Madison County against the other joint owners and widow of W. J. Walling, seeking a partition of the lands, or sale for division; that on June 28, 1940, he executed the above-mentioned deed to complainant, and thereafter complainant was made a party to said suit and her husband stricken as a party; that on January 29, 1942, a consent decree was entered in said cause, vesting in complainant the title to certain of said real estate; and that on March 2, 1942, a further consent decree was entered, to correct an omission in the first degree; and that the decree of December 31, 1942, further recognized complainant's title to share in W. J. Walling's estate.
It is further alleged that on October 28, 1942, respondent Oliver Farm Equipment Company obtained a judgment by default against V. Luke Walling a certificate of which was recorded in the office of the Probate Judge, which purports to be a lien upon the lands of complainant and is a cloud upon her title; that on October 23, 1942, V. Luke Walling filed a debtor's petition in bankruptcy and scheduled as creditors, among others, Oliver Farm Equipment Company, Leo Schiffman Tire Company and Alabama Oil Company; and that on December 9, 1942 complainant obtained a decree of the bankrupt court authorizing and empowering her to bring this suit to quiet title. It is alleged, on information and belief, that the debts or obligations of V. Luke Walling to the creditors listed in his petition were not in existence on June 28, 1940, when he executed and delivered his deed to complainant, but were contracted thereafter, and the creditors made respondents to the bill represent a class of creditors and are made respondents by direction of the Referee in Bankruptcy.
It is prayed that the deed executed by complainant to her husband be declared void and cancelled of record, and that the other respondents be declared not to have any valid claim to any right, title or interest in or encumbrance upon said lands as against the asserted ownership of complainant.
The cross-bill is filed by the respondents other than V. Luke Walling against the original complainant and V. Luke Walling and also against the First National Bank of Huntsville and Jere Murphy, as Trustee, alleged to be holders of mortgages upon certain of the lands involved. It denies validity of the deed executed by Walling to complainant, and denies invalidity of the deed from complainant to said Walling.
It asserts that the decrees in the partition suit were entered by agreement and were in effect voluntary conveyances between V. Luke Walling and complainant, made to hinder, delay or defraud creditors of V. Luke Walling, and seeks to have the said decrees declared fraudulent and void as to cross-complainants, and prays a decree subjecting all of the property of V. Luke Walling to the indebtedness due cross-complainants.
Jere Murphy, of Huntsville, for appellant.
The bankruptcy court had exclusive jurisdiction of the matters asserted by the cross-bill. Bankrupt Law, Ch. XII, § 411, 11 U.S.C.A. § 811. The bankruptcy court could not surrender its control of the administration of Walling's estate. U.S. Fidelity Guaranty Co. v. Bray, 225 U.S. 205, 32 S.Ct. 620, 56 L.Ed. 1055; Isaacs v. Hobbs Tie Timber Co., 282 U.S. 734, 51 S.Ct. 270, 75 L.Ed. 645. Complainant is in possession under at least color of title and is entitled to a plenary suit, and secured permission to bring this suit to quiet title as against an outstanding conveyance or color of title in V. Luke Walling. Mueller v. Nugent, 184 U.S. 1, 22 S.Ct. 269, 46 L.Ed. 405. The cross-bill denies title in complainant but bases its prayer upon the premise that she has the title. It is not consistent with the original bill, and does not warrant affirmative relief. Ex parte Conradi, 210 Ala. 213, 97 So. 569; Lowery v. May, 213 Ala. 66, 104 So. 5; Wilson v. Henderson, 200 Ala. 187, 75 So. 935. The cross-bill does not set forth the respondents' title, claim or encumbrance as required by the statute. Code 1940, Tit. 7, § 1110; Stacey v. Jones, 180 Ala. 231, 60 So. 823; Adler v. Sullivan, 115 Ala. 582, 22 So. 87; Vaughan v. Palmore, 176 Ala. 72, 57 So. 488. Respondents are common creditors of V. Luke Walling and their claim is not such as is contemplated in a proceeding to quiet title. Code, Tit. 7, § 1111; Carr v. Moore, 203 Ala. 223, 82 So. 473; Weaver v. Eaton, 139 Ala. 247, 35 So. 647; Maryland Casualty Co. v. Holmes, 230 Ala. 332, 160 So. 768. The judgment obtained by Oliver Farm Equipment Company being within four months of bankruptcy of Walling, was void. Bankruptcy Act, § 67, 11 U.S.C.A. § 107. Cross-bill is in its nature defensive and if its object and effect be not to defeat recovery by complainant in whole or in part or to modify relief that complainant obtains, then it is not defensive in purpose and is not germane to the bill. Maryland Casualty Co. v. Holmes, supra. The decrees of the circuit court did not put the title to the real estate involved in appellant; she already had title under her deed of June 28, 1940. Equity grants partition only of property held in cotenancy. 5 Pomeroy's Equity, §§ 701, 704; Russell v. Beasley, 72 Ala. 190.
Watts White and Griffin Ford, all of Huntsville, for appellees.
The cross-bill is not multifarious. Equity Rules 15, 26, Code, Tit. 7, pp. 1055, 1065. All conveyances made with interest to hinder, delay or defraud creditors of a grantor, and decrees or judgments suffered with like intent against persons who are or may be so hindered, delayed or defrauded, are void. Code, Tit. 20, § 7. Builders' Painters' Supply Co. v. First Nat. Bank, 123 Ala. 203, 26 So. 311. As to creditors a fraudulent conveyance is voidable and not void. Robins v. Wooten, 128 Ala. 373, 30 So. 681. As between the parties such transactions are valid, whether voluntary or actually fraudulent. King v. King, 61 Ala. 479; Gilliland v. Fenn, 90 Ala. 230, 8 So. 15, 9 L.R.A. 413; Glover v. Walker, 107 Ala. 540, 18 So. 251; Perkins v. Perkins, 206 Ala. 571, 91 So. 256. A voluntary conveyance is void as to existing creditors regardless of the financial circumstances or intent of the grantor. Wood v. Potts Potts, 140 Ala. 425, 37 So. 253; First Nat. Bank v. Love, 232 Ala. 327, 167 So. 703. Creditor without lien may file bill to subject to payment of his debt any property which has been fraudulently transferred or conveyed by his debtor. Code, Tit. 7, § 897. This is a plenary suit in which jurisdiction of the court is full and complete and made so by submission of the parties after consent given by bankrupt court to make the bankrupt a party. The order of the referee cannot be attacked collaterally in this proceeding. Maynor v. Schaefer, ante, p. 111, 11 So.2d 846; 6 Am.Jur. 557. Where demurrer is addressed to bill as a whole and not severally to particular aspects, the demurrer is appropriately overruled, although the bill is defective in every aspect. Thompson v. Brown, 200 Ala. 382, 76 So. 298.
This is an appeal from a decree overruling the demurrer of appellant to the cross-bill of appellees. Eileen W. Walling (appellant) filed her original bill against her husband, V. Luke Walling, and certain of his unsecured creditors (appellees), to quiet title to certain lands described in the bill. The bill was filed pursuant to the statutes which provide for such bills, Code of 1940, Title 7, § 1109 et seq., and contains the requisite statutory allegations. In addition thereto the bill sets forth the source of complainant's (appellant's) title and prays among other things that a deed executed and delivered by complainant to her husband, V. Luke Walling, be declared null and void and a cloud upon her title. The deed here referred to, dated June 29, 1940, purported to reconvey to him the real estate involved in this litigation which her husband had previously deeded to her on June 28, 1940.
The answer and cross-bill in effect denied complainant's title to the lands and took the position that V. Luke Walling, her husband, was the owner of the lands and, accordingly, such lands should be subjected to the payment of the debts owing to appellees as creditors of her husband. In order to reach this end, the answer and cross-bill denied the invalidity of the deed dated June 29, 1940, from complainant to her husband and attacked as a fraud on creditors, Code of 1940, Title 20, § 7, the deed dated June 28, 1940, from V. Luke Walling to complainant and also attacked on the same ground certain consent decrees rendered January 29, 1942, and March 2, 1942, by the Circuit Court of Madison County whereby title to part of the lands was sought to be vested in complainant.
The appellant complains that the relief sought by appellees in the cross-bill is beyond the scope of the statutory system for quieting title which she has invoked by her original bill. This contention is not sound. It is true that as unsecured creditors of V. Luke Walling, appellees have no "right, title, interest in or incumbrance upon" the lands, which could be set up in an answer to the bill. But this does not preclude appellees by cross-bill from seeking affirmative relief beyond the relief afforded by the statutory system. The cross-bill does this by the assertion of an independent equity. Manning v. Manning, 203 Ala. 186, 82 So. 436; Dodd v. Deepwater Coal Iron Corp., 233 Ala. 392, 171 So. 732; Chestang v. Bower et al., 224 Ala. 469, 140 So. 537; Hinds v. Federal Land Bank of New Orleans, 235 Ala. 360, 179 So. 194.
It is further insisted by appellant that the cross-bill is multifarious in that in one aspect it asserts title in V. Luke Walling by reason of the validity of the deed from complainant to her husband and in another aspect attacks as fraudulent the deed from V. Luke Walling to complainant. While the issue of the validity vel non of the deed from complainant to her husband would, we think, be determined on the issues made by the original bill and the answer, still there would be no multifariousness even if this issue is made by the cross-bill. The sole purpose of the cross-bill is to establish title in V. Luke Walling so that the property may be subjected to his debts. This can obviously be attained either by establishing the validity of the deed from complainant to her husband or by setting aside his deed to her. The lands described in both deeds were identical. The cross-bill is not multifarious. Smith v. Young, 173 Ala. 190, 55 So. 425; Equity Rule 15, Code 1940, Tit. 7, Appendix.
To avoid any misunderstanding, it should be understood that in the event title is held good in V. Luke Walling either by reason of the invalidity of the deed from him to his wife or by reason of the validity of the deed from her to him, it will still be necessary for cross-complainants to set aside the consent decrees, entered in 1942, in order to reach that part of the lands affected by these decrees. The attack on the decrees as fraudulent is another phase of the cross-bill. Attack on the decrees is authorized by Code of 1940, Title 20, § 7.
It is further insisted by appellant that there is no allegation in the cross-bill that cross-complainants (appellees) were creditors of V. Luke Walling at the time he executed and delivered the deed to his wife on June 28, 1940. (It is alleged that cross-complainants were creditors of V. Luke Walling at the time the decrees were suffered in the partition proceeding.) It was not necessary, however, that appellees be creditors of V. Luke Walling at the time of the execution and delivery of the deed, provided actual fraud was perpetrated with the intention of defrauding subsequent creditors. McCrory et al. v. Donald, 192 Ala. 312, 68 So. 306. There was no ground of demurrer attacking the cross-bill in this regard. Besides, the several grounds of demurrer were addressed to the cross-bill as a whole and not to any particular aspect of the cross-bill. Thompson v. Brown, 200 Ala. 382, 76 So. 298; Birmingham Trust Savings Co. et al. v. Cannon, 204 Ala. 336, 85 So. 768. The court was not in error in this regard.
Finally, appellant denies the jurisdiction of the court to determine the matters presented in the cross-bill on the theory that V. Luke Walling being in bankruptcy, the bankruptcy court has sole jurisdiction. The original bill alleges that V. Luke Walling had filed a voluntary petition in bankruptcy and further that the institution of the present suit against the creditors was authorized by the bankruptcy court. The cross-bill alleges that the referee in bankruptcy, having jurisdiction of the debtor's petition, has made an order authorizing the institution of the cross-bill.
Accordingly, appellant has no ground for grievance, as the proceedings were not a denial of the jurisdiction of the bankruptcy court. The right to institute such proceedings in the state court were expressly conferred by the bankruptcy court, as it had the right to do. And the orders of the bankruptcy court cannot be collaterally attacked. Maynor v. Schaefer, ante, p. 111, 11 So.2d 846; Farkas v. Katz, 5 Cir., 54 F.2d 1061; 6 Am.Jur. 557; Remington on Bankruptcy, 4th Ed., Vol. 1, § 465, p. 581.
There was no error in the decree of the lower court overruling the demurrer to the cross-bill.
Affirmed.
GARDNER, C. J., and BOULDIN and FOSTER, JJ., concur.