This is an appeal by respondents from decree overruling demurrer to a bill in equity. Appeal was taken prior to approval of Act No. 72, 1961 Acts of Alabama, page 1947, amending § 755, Title 7, Code 1940.
Complainant is a natural person. Respondents are the corporation and three natural persons. By implication, it appears that two of these three natural persons were among the incorporators of the corporate respondent in 1959, but the three natural persons are not otherwise shown to have any connection with the corporation.
Complainant alleges that she recovered a judgment against respondent, Boyett's, Inc., a corporation; that said judgment has not been satisfied; that Boyett's, Inc., was the owner of certain personal property; and that subsequent to the judgment, Boyett's, Inc., "deeded" to respondent, "Rena Boyett its entire interest in said personal property by a chattel mortgage."
Complainant prays that said conveyance made by the respondent, Boyett's, Inc., a corporation, to respondent, "Sue Rena Boyett," be declared null and void as to complainant; that if said conveyance be not declared null and void, then that it be declared a general assignment for the benefit of creditors; that respondents be required to make an accounting of the assets of Boyett's, Inc., a corporation; for discovery for the purpose of determining the extent, if any, of the commingling of the assets of the corporation with the assets of the other respondents; for full payment of complainant's claim; and for general relief.
Respondents demurred to the bill as a whole and separately to each of its several aspects. Demurrer to the bill as a whole and to each aspect was overruled and respondents appealed.
The averments of the bill setting out the facts to support the aspect seeking to set
Respondents demurred to this aspect on the grounds that the chattel mortgage sought to be set aside is neither set out in the bill nor its substance alleged, that the tools and equipment alleged to have been conveyed to Rena Boyett are not described, and that the allegation that "Boyett's, Inc., deeded to Rena Boyett its entire interest in said personal property by a chattel mortgage" is a mere conclusion of the pleader.
The reference in the bill to the book and page in the office of the judge of probate is wholly inadequate to make the mortgage a part of the bill, nor does it otherwise appear in the transcript. Jones v. Caraway, 205 Ala. 327, 328, 87 So. 820.
Where a party's right in suit, pro and con, depends directly and primarily upon a designated written instrument, the substance of the instrument should be stated in his pleading, or else it should be attached in copy, with appropriate reference. Roney v. Dothan Produce Co., 217 Ala. 475, 476, 117 So. 36. We are referring here to the mortgage and not to the judgment certificate as appellee, in her brief, seemsto understand. See also: McKenzie v. North River Ins. Co., 257 Ala. 265, 268, 58 So.2d 581; Stephens v. Pleasant Hill Baptist Church, 264 Ala. 394, 88 So.2d 570.
There is no effort to describe the personalty and no indication of any inability on complainant's part to point out more definitely the property alleged to have been fraudulently transferred and which is sought for condemnation to complainant's indebtedness. Watson v. Watson, 229 Ala 570, 158 So. 526.
In the case at bar, we are of opinion that the grounds of demurrer to the aspect seeking to set aside the chattel mortgage, as being without consideration, are well taken, in that the bill fails to describe the property and fails to set out the terms of the mortgage. Overruling these grounds was error.
The aspect seeking to set aside the chattel mortgage rests on two alternative averments, to wit: (1) that the mortgage was given without consideration; or (2) that the mortgage was made with intent to hinder, delay, or defraud complainant. The defects in setting out the terms of the mortgage and in describing the property conveyed appear in both alternatives of this aspect.
The alternative averments to support the aspect seeking to set aside the conveyance as one to hinder, delay, or defraud complainant are set out in paragraph 3 of the bill as follows:
The averments of paragraph 3 are consistent with the theory that the grantee was an existing creditor in an amount equal to the value of the property, and that the conveyance was made to satisfy such debt. If that is true, the fact as alleged that the debtor of complainant making the conveyance intended to hinder, delay or defraud his creditors does not render the conveyance subject to be vacated. Crisp v. First Nat. Bank of Birmingham, 224 Ala. 72, 139 So. 213; Hays v. McCarty, 239 Ala. 400, 195 So. 241; Smith v. Wilder, 270 Ala. 637, 649, 120 So.2d 871.
We are, therefore, of opinion that the court erred in overruling grounds 2, 3, and 6 of the demurrer to that aspect of the bill which seeks to set aside the conveyance as being fraudulent for that the averments are insufficient to show fraud, are mere conclusions of the pleader, and do not show that the consideration for the conveyance was inadequate.
Appellant points out in brief, we think correctly, that the aspect seeking cancellation of the chattel mortgage rests on two alternative averments, namely, that the chattel mortgage was without consideration or that the chattel mortgage was made with intent to hinder, etc. The rule is:
Countering the rule of Hays v. McCarty, supra, complainant cites the following cases: Fife v. Pioneer Lumber Co., 237 Ala. 92, 185 So. 759, which was an action at law and the question was the sufficiency of a plea of res judicata; Lewis v. Alston, 184 Ala. 339, 63 So. 1008, a suit in equity to cancel a deed as cloud upon title, where, because of the "peculiar circumstances" of that case, which do not exist in the case at bar, this court refused to apply the rule against inconsistent alternative averments; Cox v. Parker, 212 Ala. 35, 101 So. 657, a suit in equity to cancel a deed, where this court held that upon averment and proof to support the main equity of the bill on the grounds of undue influence, cumulative averments and proof of mental incapacity are allowable and relief by cancellation is properly granted, but in the case at bar the main equity supporting the right to cancellation is not supported by the averments in either alternative and there is no question of merely allowing a cumulative averment; Hard v. American Trust & Savings Bank, 200 Ala. 264, 76 So. 30, a suit to cancel a conveyance, where this court held that the bill was not rendered multifarious by the fact that it sought alternatively the relief desired under different phases of the bill, but the question there was not, as it is here, the sufficiency of each alternative averment to support the aspect of the bill to which the alternative averment was directed; and Stephens v. Stephens, 251 Ala. 431, 37 So.2d 918, a suit commenced by bill in the nature of a bill of review, where this court expressly recognized and quoted the rule of Hays v. McCarty, supra. The cases cited by complainant do not abrogate, or forbid the application of, the rule requiring each alternative averment to be sufficient.
Because, in the instant case, the alternative seeking cancellation for want of consideration is insufficient as a ground for such relief, that aspect of the bill fails to make out a case of equitable right, even if the other alternative should be sufficient. We have indicated that we think the other alternative insufficient because the averments supporting the other alternative fail to show that the consideration was inadequate.
Respondents argue that the court erred in overruling the demurrer to the aspect of the bill which seeks to have the chattel mortgage declared a general assignment. As pertinent to this aspect, the bill recites:
This aspect appears to be under § 9, Title 20, Code 1940. To come within the provisions of that statute, the sale or security of practically all of the debtor's property which is subject to execution or to
The averments as to this aspect fail to show clearly that the chattel mortgage was given to pay or secure a pre-existing debt, and because of such failure, the demurrer to this aspect should have been sustained. The contrary ruling was error.
The averments of the bill pertinent to the aspect seeking an accounting and the aspect seeking a discovery, together with the prayer, recite as follows:
As to an accounting, the prayer is that the individual respondents be required to produce their books and records for the last five years, which we take to mean five years before the bill was filed June 16, 1961. This prayer thus calls for an accounting for 1956, 1957, and 1958, although it is averred that the debtor was incorporated October 13, 1959. We do not understand the bill to show any right whatever to compel respondents to produce records for the period prior to the date the corporate debtor came into existence.
We are of opinion, however, that the aspect of the bill as for an accounting, standing alone, is insufficient.
The instant bill wholly fails to show mutual accounts, or an account of a complicated nature, or any necessity for an accounting in equity apart from the alleged necessity for discovery.
If the averments are sufficient to support the aspect seeking a discovery, the demurrer to the aspect seeking accounting was correctly overruled, but if the aspect seeking discovery is not sustained by the averments of the bill, then the court should have sustained the demurrer to the aspect for an accounting.
To support discovery, the bill should allege the existence of property of the debtor and that is nature and character or location are unknown to him and concealed from him. Davenport & Harris Funeral Homes v. Kennedy, 243 Ala. 613, 615, 11 So.2d 379. The bill should show the necessity for discovery by alleging the existence of assets or property of the debtor which cannot be subjected to legal process because it is concealed from the creditors and that such assets can be rendered availing to the creditors by means of the discovery sought.
". . .
In the instant bill, the showing, that property exists which can be subjected to complainant's judgment, is not clear. Complainant alleges that the debtor sold certain old automobiles for an unknown amount, but the existence of the automobiles or the proceeds of the sale is not shown. It is not alleged that respondents, or any of them, have secreted the automobiles or the proceeds of sale.
In paragraph 6, complainant alleges that since the incorporation of Boyett's, Inc., in 1959, the assets of the corporation have been "dissipated, conveyed and secreted" for the purpose of defrauding complainant. For aught that appears, however, the corporate assets had been dissipated prior to the creation of complainant's claim against the corporation. For aught that appears, complainant possesses information as to the character and location of the corporate property. Construing the bill against complainant, and indulging no inferences favorable to the pleader, we are of opinion that the bill fails to show clearly and positively the existence of property subject to complainant's debt, or the necessity for discovery to subject such property to the satisfaction of complainant's judgment.
Respondents demurred to the aspect seeking discovery on the further ground that the bill is not sufficiently verified in that the verification does not state that the affiant has been informed that the facts alleged on information and belief are true. The verification recites:
The verification is deficient in the particular challenged by respondents and the court erred in overruling ground 2 of section F of the demurrer which recites:
This holding is supported by Burgess v. Martin, 111 Ala. 656, 20 So. 506; Schilcer v. Brock, 124 Ala. 626, 27 So. 473; Cleveland Storage Co. v. Guardian Trust Co., supra; Brooks v. Everett, 271 Ala. 380, 385, 124 So.2d 100; Equity Rule 12.
For future guidance, we here set out what we conceive to be a sufficient verification of a bill of complaint wherein some facts are alleged on information and belief, to wit:
This form is substantially Form 114, in Alabama Form Book, Mayfield, 1924, page 80. See: Lambert v. Anderson, 227 Ala. 222, 149 So. 98.
Complainant does not, as we understand her brief, contend that the verification is sufficient, but relies on the principle that where the discovery aspect of the bill is incidental to other equitable relief, the bill need not be verified at all. Gordon v. Gleason, 267 Ala. 351, 353, 101 So.2d 542.
In Gordon v. Gleason, supra, this court said that the allegations that the debtor had transferred certain stock to his wife without consideration were sufficient to give equity to the bill. In that case, discovery was merely incidental and auxiliary, and the equity of the bill did not depend on the discovery aspect alone. In the instant case, as we have undertaken to show, the other aspects are insufficient to give equity to the bill. In that situation, when a demurrer is separately directed against the discovery aspect, the equity of the bill must depend on the discovery aspect alone, and we are of opinion that the bill must be sworn to in order to withstand the demurrer.
We are of opinion that the court erred in overruling the demurrer to the aspect seeking discovery, and, therefore, that it was error to overrule the demurrer to the aspect seeking an accounting.
In the demurrer to the bill as a whole, respondents assign, separately and severally, each and every ground which is assigned to the several aspects as already discussed. Because every aspect is subject to demurrer, complainant does not show that she is entitled to any relief in equity, and the demurrer to the bill as a whole should be sustained.
All authorities cited by complainant have been carefully examined. To discuss them one by one would serve no useful purpose. We do not think that any of them is contrary to the conclusions we have reached in the case at bar.
The decree overruling the demurrer is reversed and a decree will be here rendered sustaining the demurrer to the bill as a whole and to each of the several aspects as herein discussed. The complainant is allowed thirty days after the day on which the certificate of this court is received in the office of the register of the circuit court, inequity, in which to amend her bill of complaint as she may be advised, and the cause is remanded.
Reversed, rendered, and remanded.
LIVINGSTON, C. J., and GOODWYN and HARWOOD, JJ., concur.