146 S.W. 239 | Tex. App. | 1912
Appellants answered that they were not, at the time when said writ was served on them, nor at the time of answering the same, indebted to C. K. Sweet in any amount, and that they did not have any of his effects in their possession. Appellee contested this answer, alleging both that appellants were indebted to said Sweet and that they had effects of said Sweet in their hands at the time said writ was served, in that they purchased the stock of goods hereinbefore referred to without complying with the terms of said Bulk Sales Law.
The court rendered judgment against appellants for the sum of $1,094.02, the aggregate amount of cash paid by them to said Sweet, and the note given him, with interest thereon at the rate of 6 per cent. per annum. The court filed the following conclusions of law: "That the sale by defendant Sweet to McIntosh Warren of the stock of merchandise was in violation of the law known as the Bulk Sales Law, and therefore was fraudulent and void as to plaintiff, and that garnishees are liable to the extent of $1,094.02 (being the amount of cash and note given defendant for the merchandise), notwithstanding garnishees had disposed of all the goods; and judgment is therefore rendered for plaintiff and against garnishees for $1,094.02, as will more fully appear from the decree in this case rendered and entered."
The opinion heretofore rendered in this case is withdrawn, and the following, which does not change the judgment of this court in this case, is filed in lieu thereof.
Upon such assumption it follows that as against Sweet's creditors the appellants acquired no title to the goods, in excess of the debts owing on said goods and paid by them. Had appellants been in possession of said goods when the writ of garnishment was served on them, for the purpose of this suit, it is conceded that it must have been held that they were in possession of effects belonging to Sweet.
In this state it may be shown in garnishment proceedings that a sale is fraudulent as to creditors. Armstrong v. Elbert,
Such being the law, was appellee entitled to judgment against appellants, they having paid full value for the goods, there being no intentional fraud in said sale, and they having none of said goods in their possession when the writ of garnishment was served upon them?
It seems to be the settled law of this state, and this is conceded by appellee, that a plaintiff cannot, in a direct proceeding against one who purchased goods from an insolvent debtor for the purpose of hindering, delaying and defrauding the creditors of such debtor, obtain a personal judgment against such purchaser, unless he has obtained a lien upon such goods by attachment or otherwise. Le Geirse v. Kellum,
Garnishment is a creature of the statute, and liability under it must be determined by the statute. Given v. Taylor,
Appellee, in support of the judgment herein, cites Wait on Fraudulent Conveyances, § 177, Bump on Fraudulent Conveyances, 567, 14 Am. Eng. Ency. Law, 790 and 792, Moore on Fraudulent Conveyances, vol. 2, p. 743, and 20 Cyc. 663. The statements of the writers above referred to and the cases cited in support of the text are practically the same. We quote from Cyc. as follows: "Where property or choses in action have been conveyed or transferred for the purpose of defrauding creditors, the grantee or transferee may, in many jurisdictions, be held to the liability of a garnishee or trustee on account of the property so conveyed, or the proceeds, if he has disposed of the same." (Italics ours.)
If by the language used by these text-writers is meant a transferee who has not paid value, or one who has participated in the intended fraud, some of the cases cited support the text. But the text does not say that, in all cases where a sale would be void as to creditors by reason of constructive fraud, the transferee, though he may have paid full value, and had no actual intent to defraud, will be held liable in garnishment for the proceeds, where he has sold the goods prior to the service of the writ upon him, nor will the authorities cited support such contention.
The case of Armstrong v. Elbert,
We make the following summary of the other cases cited in support of the text: In Cottingham v. Grocery Co.,
At the risk of being tedious we have thus reviewed these cases, and we find that they support the text that the holder under a fraudulent transfer can be held under a writ of garnishment for the proceeds of the goods transferred to him, only when he has not paid value, and therefore is in fact indebted to seller in the amount of such proceeds; or where he is a trustee, either in fact or by virtue of a secret agreement with the seller.
There is one other case cited by said text-writers, to which we have not referred, viz., Hawes v. Mooney,
The only case directly in point, cited by appellee, is Kohn v. Fishback,
There is a dictum in Willis v. Yates (Sup.) 12 S.W. 232, which would seem to support appellee's contention. The statement is clearly dictum, in as much as it did not appear that the garnishee had sold any of the goods. Yates bought the goods December 3d, and the writ was served on him on the 9th of the same month. Our Supreme Court in Holloway Seed Co. v. Bank,
We here remark that the appellee, in contesting the answer of the garnishees, did not allege that they had disposed of the goods, but that they were indebted to Sweet, and had effects belonging to him in their possession.
In Willis v. Heath,
A purchaser of goods from an insolvent debtor may in fact hinder, delay, and defraud his creditors, though full value be paid, for the reason that money in the pocket of the debtor is beyond the reach of the law.
In such case if the purchaser knew, or is chargeable with notice of such fraudulent intent by fiction of the statute of frauds, the wisdom of which has met with approval since its passage in 13 Elizabeth, the title, as to creditors, remains in the fraudulent creditor, and such goods may be seized under execution or attachment, or a lien may be fixed upon them by garnishment while they remain in the hands of the fraudulent purchaser. But there is no statute in this state which gives a creditor any title to the proceeds of such goods. To say that the purchaser who, in good faith, has paid full value for such goods, without any intent to defraud, though such purchase be a constructive fraud by virtue of some such statute as the Bulk Sales Law, holds the proceeds of such goods in trust for creditors, would indeed be a fiction of law, and one that we are not prepared to announce. The purchaser who pays full value for goods does not in fact hold them in trust for the seller, nor for his creditors, but for himself and against everybody. That he is estopped to set up such claim where he has participated in the fraudulent intent of the seller is by force of the statute, and where the statute halts the courts must halt.
If it be said that our decision herein shortens the arm of the bulk sales statute, we reply, not so; we leave it just as the Legislature fashioned it. We have no power to lengthen it.
Appellants in their answer to the writ of garnishment, after denying liability, alleged that they had been compelled to employ attorneys to defend them in this suit, and asked that they be allowed a reasonable attorney's fee. If they are not liable (and we hold that they are not) they are entitled to such attorney's fee.
For the reasons herein stated, the judgment in this case is reversed and remanded with instructions to the trial court to enter judgment for the garnishees, and also to allow them a reasonable attorney's fee.
Reversed and remanded with instructions.