Case ID: sw_141/html/0945-01.html
Source: Caselaw Access Project
Author: {"author": "BROWN, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

McCORD et al. v. SPRINKEL et al.
    (Supreme Court of Texas.
    Dec. 13, 1911.)
    1. Courts (§ 247) — Jurisdiction—Final Decision oe Court oe Civil Appeals.
    Under Rev. St. 1895, art. 941, subd. 8, providing that when the judgment of Civil Appeals reversing a judgment practically settles the case, as shown in the petition for writ of error, the Supreme Court affirming the decision of the Court of Civil Appeals shall render final judgment, a petition for writ of error, which alleges that the judgment of the Court of Civil Appeals practically settles the case, because plaintiffs in error have no defense to the intervention of the defendants in error other than that set forth in their answer, which, in obedience to the decision of the Court of Appeals, must go out on demurrer, and plaintiffs in error concede the fact that defendants in error are interested in the litigation, and that the decision of the Court of Civil Appeals is final, gives the Supreme Court jurisdiction, and it will enter such judgment as the Court of Civil Appeals should have entered.
    [Ed. Note. — For other eases, see Courts, Cent. Dig. §§ 749-765; Dec. Dig. § 247.]
    
      2. Assignments eor Benefit oe Creditors (§ 250) — Administration oe Estate — Rights oe Creditors — Actions.
    Where some creditors of assigning debtors sued to remove the assignees,. and to annul a sale by them, and, after obtaining a judgment -of the appellate court granting them the relief prayed for, they compromised the litigation, ■other creditors who sought to intervene were not required to offer to contribute to the expenses incurred by the former creditors.
    [Ed. Note. — Por other eases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    -3. Assignments for Benefit of Creditors (§ 250) — Rights of Creditors — Actions.
    A suit by creditors of assigning debtors to remove the assignees and annul a transfer by them is a suit for the benefit of all accepting •creditors, and plaintiffs acquire no prior right, but, on a recovery, the fund is for distribution among all the accepting creditors, and intervening creditors need not show that a fund will remain after the plaintiffs have been paid.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    4. Limitation of Actions (§ 133) — Accrual —Claims.
    Where the claims of .creditors of assigning debtors were filed with the assignees within the time prescribed by law, no limitation could accrue thereafter while the estate was in process -of settlement.
    • [Ed. Note. — For ether cases, see Limitation of Actions, Cent. Dig. § 569; Dec. Dig. § 133.]
    5. Assignments for Benefit of Creditors (§ 250) — Actions bit Creditors — Laches.
    The creditors of assigning debtors who sue to remove the assignees and annul a sale by them are trustees for all accepting creditors, and other creditors need not intervene until the trust relation has been repudiated, and a failure to act before that time is not laches.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    6. Assignments for Denefit of Creditors (§ 250) — Actions by Creditors.
    The participation by a creditor of assigning-debtors in a fraud by the assignees is no defense to the assignees against recovery by other creditors for the estate.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    7. Assignments for Benefit of Creditors (§ 245) — Actions by Creditors.
    A creditor of assigning debtors who became a party to a fraud by the assignee by purchasing the property of the debtors, and then fraudulently conveying the same to the assignee, could not recover the property from the as-signee.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 780, 781; Dec. Dig. § 245.]
    8. Assignments for Benefit of Creditors (§ 250) — Actions by Creditors.
    Creditors of assigning debtors who sue to remove the assignees and annul a sale by them have no authority to compromise the rights of the estate, but the suit is for the benefit of the estate, and the fact that a compromise is made is no- defense to an action by intervening creditors who have the same right to recover property for the estate as the creditors originally suing had.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dee. Dig. § 250.]
    9. Assignments for Benefit of Creditors (§ 250) — Actions by Creditors.
    A sale of property of the estate of assigning debtors pending a suit by creditors to remove the assignees and annul a sale and for a receiver does not affect the title, and accepting creditors intervening in the suit may recover it.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    10. Assignments for Benefit of Creditors (§ 250) — Actions by Creditors.
    A settlement of the fee of counsel employed by creditors of assigning debtors suing to remove the assignees and annul a sale by them and for a receiver gives no right to the assignee as against intervening accepting creditors or the estate, but the fee must be settled by the court in adjusting the equities of creditors of the estate, and such claims cannot be adjusted in the suit.
    [Ed. Note. — For other cases, see' Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    11. Assignments for Benefit of Creditors (§ 250) — Actions by Creditors.
    Where creditors of assigning debtors intervened in a suit by other creditors suing for to remove the assignees and for an annulment of a sale by them, on the latter creditors attempting to compromise the litigation, the fact that attorney’s fees had been contracted for by the interveners was not available as a defense in the suit; the estate not being interested therein.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794 r Dec. Dig. § 250.]
    12. Assignments for Benefit of Creditors (§ 250) — Settlement of Estate — Compromise-Effect.
    Where an assignee for the benefit of creditors compromised with creditors, and thereby attempted to settle a suit by them to remove the assignee and to annul a sale by him and for a receiver, the compromise should not be considered in the settlement of the estate, except so far as the assignee had paid such creditors, in which case the assignee should receive credit for the amount paid not to exceed the pro rata share of such creditors.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    13. Assignments fob Benefit of Cbeditoes (§ 250) — Actions by Cbeditoes — Expenses.
    Creditors of assigning debtors who sue to remove the assignee and annul a sale by him and for a receiver are entitled to be reimbursed for attorney’s fees and costs to such an amount only as may he shown to have contributed to the recovery of the funds of the estate, where such creditors attempted to compromise the litigation, and other creditors intervened to protect the rights of all creditors.
    [Ed. Note. — For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 792-794; Dec. Dig. § 250.]
    Error to Court of Civil Appeals of Third Supreme Judicial District.
    Action by W. A. Nabours and others against A. P. McCord and another, in which W. M. Sprinkel and others intervened. There was a judgment of the Court of Civil Appeals (129 S. W. 379) reversing a judgment denying relief to the interveners, and A. P. McCord and another bring error.
    Affirmed and rendered.
    M. M. Crane, T. S. Henderson, Monta J. Moore, Hefley & Watson, Etheridge & McCormick, and D. C. McBride, for plaintiffs in error. W. S. ’ Banks and W. A. Morrison, for defendants in error.
    
      
      For other cases see same topic and section NUMBER In Dec. Dig. & Am. Dig. Key No. Series & Kep’r Indexes
    
    
      
      For other oases see sanie topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   BROWN, C. J.

The writ of error was granted because the decision of the Court of Civil Appeals (129 S. W. 379) practically settled this case. T'he litigation began prior to 1901, and grew out of a deed of assignment made by Crawford & Crawford on March 16, 1896, whereby they conveyed to A. P. McCord and T. S. Henderson the property described therein as assignees, to hold and administer for the benefit of the creditors of Crawford & Crawford. McCord and Henderson qualified under the statute, took possession of the property of the estate, and proceeded with the execution of the trust. The creditors involved in this litigation proved up their claims according to law, which claims were in due time filed with the trustees. The assignees sold the property of the estate in the form and manner required by law, and Bawrence, one of the creditors and a party to this proceeding, purchased the property in controversy, and thereafter conveyed it to A. P. McCord, one of the assignees. A portion of the creditors instituted suit in the district court of Milam county to remove McCord and Henderson as trustees, and to appoint other trustees or a receiver to administer the estate. The case has been in this court three times prior to this. 97 Tex. 526, 80 S. W. 595; 100 Tex. 456, 100 S. W. 1152; 101 Tex. 494, 109 S. W. 913. The litigation resulted in a judgment annulling the sale to McCord and a judgment also against the Milam County Oil Mill Company for certain sums paid to McCord as dividends on stock which belonged to the estate of Crawford & Crawford.

It is unnecessary to state the facts, except those on which this proceeding is based. When this case was before us the third time, this court entered the following order therein: “It is ordered that the judgment of the Court of Civil Appeals reversing and remanding this case be affirmed, and that this case be remanded to the district court of Milam county, to be tried in accordance with the opinion of the Court of Civil Appeals, as modified by this opinion. It is further ordered that the defendants in error recover of the plaintiffs in error the costs of the Court of Civil Appeals, and that the plaintiffs in error recover of the defendánts in error the costs of this court.” 101 Tex. 494, 109 S. W. 918. After the case was returned to the district court, C. W. Lawrence, J. P. Scarbrough, W. M. Sprinkle, and others, all defendants in error, filed petitions of intervention, setting up the facts necessary thereto. The dates of filing the petitions are not important. All except Lawrence joined in an amended petition of intervention.

The defendants in the original suit filed exceptions to the pleas of intervention to this effect: (1) Interveners do not offer to do equity, in that they do not offer to contribute to tlie expenses incurred by the plaintiffs. (2) That they do not show that after the original plaintiffs’ claims are paid there will be a balance available to them. (3) That it appears that each claim was barred by the statute of limitations of two and four years. (4) That interveners have been guilty of such laches and delays as to preclude them from any right in the recovery. (5) That Lawrence was a party to the fraud. These exceptions were sustained by the court, from which judgment the appeal was taken.

Instead of proceeding according to directions given by this court, the plaintiffs compromised with McCord and the mill company, and were proceeding to appropriate the proceeds to themselves and their attorneys, which caused the intervention by defendants in error.

The plaintiffs in error allege in their application for writ of error that the “judgment of the said Court of Civil Appeals practically settles the case, for that plaintiffs in error have no defense to the intervention of defendants in error other than that set forth in their answer thereto, which answer must, in obedience to the decision of the said Court of Civil Appeals, go out on demurrer, and plaintiffs in error concede the fact that defendants in error are ‘accepting creditors of. the assigned estate,’ and the said decision of the said Court of Civil Appeals Is final, and therefore, because both of the finality of such decision and of the fact that it practically settles the case, this court has jurisdiction.”

Jurisdiction of this case is conferred-upon this court by subdivision 8 of article 941 of the Revised Statutes of 1895, which reads as follows: “When the judgment of the Court of Civil Appeals reversing a judgment practically settles the case, and this fact is shown in the petition for writ of error, and the attorneys for petitioners shall state that the decision of the Court of Civil Appeals practically settles the case, in which case, if the Supreme Court affirms the decision of the Court of Civil Appeals, it shall also render final judgment accordingly.” Under the allegations and the admissions in the application, this court will proceed to enter such judgment as the Court of Civil Appeals should have entered. The only fact left open to inquiry by the judgment of the Court of Civil Appeals being admitted, this court will enter final judgment affirming the judgment of the Court of Civil Appeals unless it appears that the judgment is erroneous as a matter of law.

The exceptions of the defendants McCord and the Milam County Oil Mill Company were improperly sustained by the trial court, and the exceptions of the interveners to the special pleas of the defendants except as to the claim of Lawrence should have been sustained.

We will briefly examine the questions presented by the exceptions, all of which have been correctly decided by the Court of Civil Appeals, but a restatement here is necessary that the action of this court may be understood from this opinion.

(1) In no phase of the case were there any equities in favor of McCord and the oil mill company due from the interveners, hence no offer to do equity was appropriate.

(2) The original plaintiffs represented the estate of Crawford & Crawford, and did not acquire a prior right in the subject-matter of the litigation, which, upon recovery, will become a fund for distribution by the court among the accepting creditors. The original plaintiffs having no preference, there was no necessity to allege that there would be a balance after paying plaintiffs.

(8) The claims of interveners having been filed with the assignees within the time prescribed, no limitation could accrue thereafter while the estate was in the course of settlement.

(4) The original plaintiffs being the representatives of the estate and the interveners, there was no necessity for interveners to take action until the plaintiffs repudiated the trust relation and undertook to appropriate the assets to themselves, there being no need for action. A failure to act does not constitute laches.

(5) Certainly Lawrence’s participation in the fraud can furnish no defense for Mc-Cord against recovery by other creditors for the estate, but will be considered as to Lawrence himself.

The suit by the original plaintiffs was for the benefit of the estate; that is, for all accepting creditors. Nix & Storey v. Dukes, 58 Tex. 96; McCord v. Nabours, 101 Tex. 494, 109 S. W. 913, 111 S. W. 144. The plaintiffs having abandoned the case, the inter-veners had the same right to recover the property for the estate that the plaintiffs had.

The recovery in this case rests upon the fact that the conveyance by Henderson and McCord to Lawrence and the conveyances by which it was returned to McCord constituted a fraud in law and was void.

We' are of opinion that Lawrence cannot recover property from McCord which he, Lawrence, had fraudulently conveyed to McCord.

The plaintiffs in the original suit had no authority to compromise the rights of the estate, and the fact that it was so made constitutes no defense to this action. Its terms cannot affect this case.

The mill stock still belongs to the estate of Crawford & Crawford, unaffected by any sale made during the pendency of this suit.

The settlement of the fee of counsel employed by plaintiffs gives no right to McCord against the interveners or the estate. That must be settled by the district court in adjusting the equities of the creditors of the assigned estate, if the facts require its adjustment. Such claims constitute no defense to this action, and cannot be adjusted in this suit.

The attorney’s fees which may have been contracted for by any of the interveners cannot be set up as a defense in this suit. It is a matter in which the estate is not interested, and should be settled with those parties, and not permitted to complicate this proceeding. The special pleas of plaintiffs in error presented no defense to this proceeding.

We have gone over the ground covered by the excellent opinion of Chief Justice Key in order to connect witfi our judgment the facts upon which it must rest, and to express the reasons which lead to our conclusions.

It is ordered that McCord be, and he is hereby, removed as assignee of Crawford & Crawford, and it is further ordered that the judge of the district court of Milam county appoint a suitable disinterested and competent person to be receiver for the estate of Crawford & Craw'ford, such receiver to qualify and give bond as the law requires; that said receiver shall take charge of the assets of said estate, and shall demand and receive of McCord all of the property of the estate which he conveyed to Lawrence which was reconveyed to him. Said receiver may claim and take the property in kind, or he may demand and recover the value of the same.

It is ordered that judgment be, and is hereby, entered that Lawrence take nothing by this action, and that he shall receive nothing in the distribution of the assets hereby adjudged to the estate of Crawford & Crawford, and that said Lawrence pay all costs which have accrued or may accrue by reason of his intervention herein. It is further adjudged that the interveners, except Lawrence, recover of McCord and the Milam County Oil Mill Company their costs accruing in the prosecution of their interventions. The receiver will recover from McCord all dividends which have been paid to him upon the oil mill stock within less than four years prior to the institution of this suit, and shall recover from McCord and the Milam County Oil Mill Company all dividends declared and paid upon the said stock since the time notice was served upon said oil mill company of the filing of the amended petition, which made it a party to this suit with legal interest. McCord will be entitled to receive credit in this proceeding for so much of the money received from Lawrence as was by him paid to the accepting creditors and also for the services rendered by him to the estate, as assignee, exclusive of the sale to Lawrence as has not been heretofore allowed. The district judge will cause the clerk of the district court of Milam county to certify to this court the name of the receiver who shall be appointed and the fact of his qualification to be filed with the record in this court. The receiver in this case shall be under the control of the judge of the district court as in other cases.

In the settlement of the estate the compromise between McCord and the mill company and the original plaintiffs will not be considered except that if McCord has settled with the said plaintiffs, or any one of the creditors of the estate, McCord should receive credit for the amount paid to such creditors, not to exceed the pro rata to which such creditor or creditors may be entitled to receive from said estate. McCord and the mill company may pay the debts of the accepting creditors and all costs and charges against said estate, and receive a discharge from liability to said estate, and, if this is done, to be certified to us.

The original plaintiffs will be entitled to be reimbursed for attorney’s fees and costs in their proceeding to such amount only as may be shown to have contributed to the recovery of the funds of the estate. In the settlement of the estate and distribution of the funds the district court will be governed by the principles of law announced by this court in this and former opinions.

It is further ordered that the judgment of the honorable Court of Civil Appeals be affirmed, and that this case be remanded to the district court of Milam county to be proceeded with in accordance with this opinion. The defendants in error will recover of Mc-Cord and the Milam County Oil Mill Company all costs of all of the courts.