Case ID: tex_58/html/0371-01.html
Source: Caselaw Access Project
Author: {"author": "Willie, Chief Justice.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. C. Wooters et al. v. S. Hollingsworth et al.
    (Case No. 1547.)
    1: Equity—Promissory note.—The fact that the assignment of one of several promissory notes, all "of which constituted a vendor’s lien on land, was first made, confers on the holder no right to have priority of payment out of the proceeds of the sale of the incumbered property.
    2. Case approved.— Salmon v. Downs, 55 Tex., 243, approved.
    3. Commissioners op appeal.—The conclusion announced by the commissioners of appeal on a cause referred to that tribunal by the supreme court, is, when adopted by the court, as authoritative as any of its own decisions.
    
      Appeal from Houston. Tried below before the Hon. John R. Kennard.
    Suit was brought in the district court of Houston county by appellants, J. 0. Wooters, Collins & Douglas, W. E. Mayes, Estey Melius and Dwight Ripley, against Stephen Hollingsworth and W. A. Davis on certain obligations given for the purchase money of land, and to foreclose the vendor’s lien. Hollingsworth was sued as the maker of the obligations, and Davis was joined as the holder of two of the purchase money notes, given at the same time and to same parties, with those held by plaintiffs. The land had been conveyed to Hollingsworth by W. P. McHenry and wife on the 1st day of June, 1878, and for the purchase money thereof Hollingsworth gave his five obligations, maturing respectively January 1, 1879, 1880, 1881, 1882 and 1883, for twenty bales of cotton each, to be delivered at maturity. Of these obligations four were assigned by McHenry and wife in the same transaction, about July 6, 1878, three of which were thus acquired by the plaintiffs in several shares, and the other was acquired by the defendant Davis. Subsequently the fifth obligation was assigned by McHenry and wife to Davis. The plaintiffs, by their petition, claimed for the four obligations first assigned priority over the one last assigned to Davis, both because of the priority in time of the assignment, and because of an alleged understanding and agreement between them and McHenry and wife in the first assignment, that they should have such priority. Hollingsworth made no defense, and Davis contested only the claim of preference. Judgment was rendered at September term, 1882, against Hollingsworth for the amount of the four obligations then due, and for foreclosure of lien and sale of land, and reservation by sheriff of enough of proceeds to pay the proportion thereof going to the fifth obligation, when it should become due, and establishing equality of all the obligations with respect to the application of the proceeds. From this judgment plaintiffs appealed.
    The notes set up by plaintiffs were first assigned, but there was no agreement or understanding that the same were to have a preference over the last note. The evidence showed the following facts: That the sale of the land was made by McHenry and wife to Hollingsworth, who gave his five obligations, each for twenty bales of cotton, and maturing January 1,1879,1880,1881,1882 and 1883, respectively; that about July 6, 1878, McHenry and wife assigned, at same time, the four obligations first maturing, of which plaintiffs became the owners in several shares of three, and defendant Davis of the fourth; that afterwards the fifth was assigned by McHenry and wife to Davis, who testified that he paid for them valuable consideration, and had no knowledge of any claim of preference by plaintiffs. The written transfer from McHenry and wife to Melius, Trask & Ripley (represented in this suit by Melius & Ripley) recited that they held a judgment against W. P. McHenry for $1,500, on which executions had been issued and levies made on property, and that suits for trial of right to such property were then pending, and that they (M., T. & R.) had agreed to accept in compromise settlement of all the matters the sum of $400, to be paid in two instalments of $200 each, payable January 1,1879 and 1880. The instrument then proceeded to convey to M., T. & R. an interest of five bales of cotton in each ,of the two obligations of Hollingsworth maturing January 1, 1879 and 1880, respectively, as payment and security for said sum of $400, and provided that in case such cotton should more than pay that sum, the balance should be paid to the assignors; and in case it should fall short, the deficit should be paid by the assignors.
    The assignments under which the other plaintiffs claimed were all made as part of the same transaction with that to Melius, Trask & Ripley, and were admitted to be on the same footing with that,
    Nunn, Williams & Corry, for appellant
    I. The court erred in finding, as matter of fact, that in the first assignment of the notes under which plaintiffs claim by McHenry and wife, there was no agreement or understanding that the notes first assigned were to have preference, when the transfers to Melius Trask & Ripley and to the other plaintiffs, it is believed, show on their face that the notes then and thereby assigned should be paid out of the fund before those retained by such assignee were paid.
    II. The court erred in holding that the priority of assignment did not give preference to the notes held by plaintiffs • over that subsequently assigned to defendant Davis, and that the notes were equal in rank. The judge, in his conclusions, held that the priority of the assignment to plaintiffs did not give precedence" to the notes thus assigned to Davis. Paris Ex. Bank v. Beard, 49 Tex., 358; Rogers v. Miller, 49 Tex., 398; Rippetoe v. Dwyer, 49 Tex., 498; McClintie v. Wise’s Adm’r, 25 Gratt,, 448 (18 Am. Rep., 694, 698); Grigsby v. Hair, 25 Ala., 327; Bank of Mobile v. The P. & M. Bank of Mobile, 9 Ala., 645; Cullum v. Erwin, 4 id., 492.
    III. We maintain that the principle underlying the proposition announced by this court in the cases of Miller v. Rogers and Rippetoe v. Dwyer, 49 Tex., supra, that “ where parts of "an estate incumbered by lien are sold at different times, such tracts are liable to be sold in the inverse order of the dates of such sale, the latest first,” establishes the preference for which we contend in this case. See McClintie v. Wise’s Adm’r, 25 Gratt., 448 (18 Am. Rep., 694, 698).
    
      J. R. Burnett, for appellee.
    Appellee Davis being an innocent purchaser for value and without notice of any claim of preference, and before the maturity of the note, was properly protected, even if such agreement for priority had been established. Appellee’s testimony that he paid a valuable consideration for the last note, and without notice of any claim of preference, was not contradicted.
   Willie, Chief Justice.

In this case it appears that Hollingsworth purchased a tract of land from McHenry and wife, and executed in payment therefor five promissory notes falling due at different dates, in each of which he promised to deliver to the payees twenty bales of cotton, or one hundred bales in all. McHenry being indebted to the appellants, transferred to them an interest in ■ the four promissory notes first falling due, and to the appellee Davis the note that matured last. The question for our decision is, Are the appellants entitled to have their notes first satisfied out of the proceeds of the sale of the incumbered land, by reason of the fact that their assignment was prior in time to that made to Davis?

This precise question was decided in the case of Salmon v. Downs, 55 Tex., 243, in which it was held that no such preference existed in behalf of the first assignor.

We are requested to reconsider that decision, because made by the commissioners of appeals, and to overrule it. • That case was referred -to the commissioners under the act of February 9, 1881, and their opinion when adopted by the supreme court became as authoritative as any of its own decisions. Whilst we decline'to disturb the decision made by the commissioners in that case, it is but proper to add that if the question were an open one, our conclusion would be the same as that arrived at by the commissioners. The weight of authority as shown by the decisions of our sister states sustains their view, although there are some cases which hold to the contrary. See Donley v. Hays, 17 Serg. & Rawle, 400; Henderson v. Herrod, 10 Sm. & Mar., 633; Mohler’s Appeal, 5 Barr, 418; Johnson v. Candage, 31 Me., 28; Philan v. Olney, 6 Cal., 478. And although the question had not been directly decided in our state before the case of Salmon v. Downs, yet the tendency of our own decisions has been in the same direction. See Delespine v. Campbell, 52 Tex., 12, and other authorities cited in Salmon v. Downs.

[Opinion delivered January 23, 1883.]

It ivas attempted in the court beloiv to show that a preference was given by the assignee to the holders of the four notes first transferred, in the instrument by which they were assigned. But the proof shows that the attempt was not successful. Had proof of such fact been made, the case Avould have presented a different question. It has been held in several instances that the assignor can by express Avords give the right of priority to his assignee, Avhich will be good against a subsequent purchaser of other notes secured by a contemporaneous lien on the same property, who has notice of such preference. The very fact that this case of express contract for priority is treated as an exception, goes far to establish the general rule to be, that no preference would exist when no such agreement Avas made. Be this as it may, the rule in our own state is now fully established in the case of Salmon v. DoAvns, and we are not disposed to disturb it, or' the rights Avhich may have grown up under it, and the judgment is affirmed.

Affirmed.