259 S.W. 563 | Tex. Comm'n App. | 1924
Plaintiff in error T. D. Rowell, having a judgment in the sum of $538.48 against John Spearman, caused an execution to issue thereon, and on July 25, 1919, the same was levied by W. S. Terry, sheriff of Marion county, on a certain sawmill situated in Marion county, Tex. After due notice, sale was made and Rowell became the purchaser. On September 19, 1919, defendant in error Mattie Spearman filed this suit in the district court of Marion county against T. D. Rowell and the sheriff, alleging that the sawmill property which had been levied upon and sold was her property, and sued for the conversion of such propexdy, claiming damages in the sum of $2,500. Rowell and Terry answered, alleging that the property, at the time it was levied upon and sold, was the property of John Spearman and not Mattie Spearman; that the claim of Mattie Spearman to said property was under and by virtue of a pretended sale to her by John Spearman, and which was made to hinder, delay, and defraud the creditors of the said John Spearman. It was also claimed that said property, at the time of the levy and sale, was covered by a chattel mortgage in favor of A. M. Rhyne in excess of the real value. The case was submitted on special issues and judgment rendered in favor of defendant in error for $1,000 damages, the value of the property at the time of levy and sale. This judgment was affirmed by the Court of Civil Appeals. 246 S. W. 103.
Two questions of law are presented for our consideration. The first relates to error on the part of the trial court in submitting special issue No. 2 and the refusal to give an additional instruction in connection therewith.
The evidence showed that some time prior to the levy of the execution in July, 1919, John Spearman had executed a bill of sale of this sawmill property to Mattie Spear-man, his sister. The jury found that John Spearman at that time was indebted to Mattie Spearman in the sum of $3,000. The property was found to be worth $1,500, but it was undisputed that as a consideration for. the transfer Mattie Spearman gave John Spearman credit for $1,000 on his debt and paid him the sum of $500 in cash. The evidence does not disclose what became of this $500. It can hardly be questioned that at the time of the alleged transfer John Spear-man was insolvent, and Mattie Spearman must have known this. Special issue No. 2 and the instruction of the court in connection therewith is as follows:
“Question No. 2. Did John Spearman transfer the property to Mattie Spearman with the intent to hjnder, delay, or defraud his creditors ?
“In connection with question No. 2, you are instructed that John Spearman, although he may have been in failing circumstances, had the right to prefer Mattie Spearman over other creditors. If you find that he was indebted to said Mattie Spearman at the time he made the transfer, he had the right to convey his property to Mattie Spearman for the payment of his indebtedness to her, and the said Mattie Spearman had the right to receive such property in payment of her debt, even though she might have known that the intention and effect of such conveyance was to hinder and delay other creditors of the said John Spear-man in the collection of their debt; but in such case the purchase must have been open, and no more property must have been taken by Mattie Spearman than was reasonably necessary to have paid her debt.”
“Was John Spearman induced to make the transfer by the $500 cash then paid by Mattie Spearman?”
This was refused. It is at once apparent that the trial court took the position that 'Mattie Spearman could be regarded as a preferred creditor of John Spearman, although only a part of the consideration for the transfer was credited on the debt due her. In other words, the trial court seems to have been of the opinion that the payment of the $500 in cash as a part of the consideration was immaterial, provided she obtained no more property than was necessary to pay her entire debt. In this we think the court was wrong.
First, where the purchaser is a- volunteer and not a creditor.
Second, where the purchaser is also a creditor, and the debt is the sole consideration.
Third, where the purchaser is a creditor, and the debt is only a part of the consideration.
The same rules apply to purchasers of the first and third class, but those of the second class are more favored.
We are not prepared to hold, under the facts of this case, that the transfer from John Spearman to Mattie Spearman was fraudulent and void as a matter of law, solely by reason of the payment of a part of the consideration in cash; but we think it clear that the trial court erred in submitting special issue No. 2 as was done, because it authorized the jury to test the conveyance by the rules applicable to preferred creditors, when she should have in fact been treated as a volunteer puschaser. The principles applicable to the three classes of purchasers mentioned above are fully discussed in the case of Jackson v. Citizen Bank & Trust Co.., supra.
On the trial of the case plaintiffs in error offered to prove the existence of a mortgage upon the sawmill property given by John Spearman to A. M. Rhyne prior to the alleged transfer by John Spearman to Mattie Spear-man; the plaintiffs in error having pleaded the existence of this mortgage and that Mattie Spearman’s interest in the property was only an equity of redemption. On objections of defendant in error this proof was not allowed. Motion for new trial in this cause was heard and considered by the court December 6, 1921. At the hearing of this motion it was proven that the mortgage given by John Spearman to Rhyne had been foreclosed by judgment of the district court of Marion county November 29,1921; the judgment being in the sum of $11,358.43, which was far in excess of the value of the property. Although this was set up as a ground for a new trial, the court overruled the motion and permitted the judgment for $1,000 in favor of defendant in error to stand.
It is unnecessary to discuss other assignments raised by' plaintiffs in error, and we recommend that the judgment of the Court of Civil Appeals and of the district court be reversed, and the cause remanded.
The judgment recommended in the report of the Commission of Appeals is adopted, and will be entered as the judgment of the Supreme Court.
We approve the holding of the Commission of Appeals on the question discussed in its opinion.
<§=>For other cases see same topic and KEY-NUMBER, in all Key-Numbered Digests and Indexes
@=>l?or other cases see same topic and KEY-NCJMEER in all Key-Numbered Digests and Indexes