Court Opinion

ID: 4997402
Source: CourtListenerOpinion
Date Created: 2021-09-30 16:23:31.356416+00
Date Added: 2024-06-11T08:16:59.006140
License: Public Domain

On Motions for Rehearing.
Upon grounds and for reasons assigned in an opinion, rendered herein on January 15, 1919, we reversed and remanded this cause. In this disposition we still adhere. We find, however, upon an examination of the pending motions for rehearing, that we failed to make a specific disposition of certain of the issues which, in two inspects at least, we conceive to be material to the rights of the parties.
The first is whether appellant, as purchaser of the properties of the Farmers’ & Ginnners’ Cotton Oil Company and one of the gin properties, would, upon payment of all the primary liens resting against the mill properties which would operate as a discharge of the secondary liens against the gin properties, be entitled, under the doctrine of subrogation, to assert title to such unacquired gin properties.
The second is whether the moneys derived by the appellee Shear, or his predecessors in intei-est, from the sale and rental of designated gin properties, and the collections realized on account of the destruction of certain gin properties by fire, and employed by ap-pellee in effecting the composition with the general creditors of the Farmers’ & Ginners’ Cotton Oil Company, should be deducted from the amount to be paid by appellant by way of redemption, where it appears that the property sold, as well as the property destroyed, was incumbered to secure liens which must must be discharged by appellee as a condition to his exercise of the right of redemption.
Our additional findings of fact upon these respective contentions may be summarized as follows:
1. The Farmers’ & Ginners’ Cotton Oil Company, at various dates prior to November 19, 1915, the date upon which certain of its general creditors filed a petition in involuntary bankruptcy against it, had borrowed on its promissory obligations sums which, with interest and attorney’s fees computed to the date of judgment rendered herein, aggregated some $137,000. This indebtedness was secured, or sought to be secured, by a pledge or hypothecation of all of its assets, consisting of certain acreage, mill sites, improvements, etc., located in the city of Austin. J. L. Hunter, who, as found in the original opinion, was a joint judgment debtor with the Farmers’ & Ginners’ Cotton Oil Company, under which appellant, Houston, *984purchased designated properties, was individually liable upon many of said mill company’s obligations; and on October 1, 1915, but subsequent to the execution of the notes of said Farmers’ & Ginners’ Cotton Oil Company, Hunter, for the purpose of additionally securing or supplementing the security of such obligations of said mill company, conveyed in trust certain gin properties, scheduled as follows:
First. Two acres, constituting the Eel Valle gin.
Second. One and three-tenths acres, constituting the Creedmoor gin.
Third. Lots 6, 7, 8, 9, 10, 11, 12, and 13, block 2, town of Sprinkle.
Fourth. Lots 19 and 20, block 2, town of Sprinkle.
Fifth. Lots 5 and 14, block 2, town of Sprinkle.
Sixth. Lots 19 and 20, block 2, town of Spriukle.
Seventh. Two acres, more or less, constituting the El Roy gin.
Eighth. Lot No. S, known as “gin lot.”
Ninth. Leasehold interest in outlot No. 2, block No. 7, covering all gin stands, gin machinery, etc., located thereon.
At execution sale appellant purchased of the gin properties only the third and fourth items of the foregoing schedules, the property so acquired being commonly known as the “Sprinkle gin property.”
2. From the stipulations and agreements of the parties we adopt the following:
“20. It was further agreed and admitted by the parties that, subsequent to the execution and delivery of the deeds of trust of the Austin National Bank and the Boatman’s Bank, here-inbefore referred to, certain gin property located on said lots in the town of Sprinkle was destroyed by fire, and the sum of $3,306.48 was collected by the owners of the notes secured by liens on said property, as they were entitled to under the provisions of the deeds of trust; also that the sum of $180 was received by G. R. Laws, as rentals from the gin properties here-inbefore referred to, for the ginning season of 1916-1917, and the further sum of $75 was refunded to said C. R. Laws on account of insurance paid on said El Roy gin at the time same was sold to A. W. Johnson.”
It was' further agreed and admitted by the parties that—
“in the purchase of said property by the defendant H. H. Shear it was a part of said trade that he ,was to offer the composition in bankruptcy which was offered, and that $10,000 was deposited by him for said purpose in accordance with said agreement; that the amount of the proceeds of the sale of the El Roy gin, to wit, $S,500, and the $3,306.48 insurance money collected' on the Sprinkle gin, less the amount set out in Exhibit B, aggregating $4,-046.61, was paid to the defendant Shear, as alleged in his first supplemental answer in this cause, akh ¿hat said'net amount, being $7,759.-' 77, constituted a part of the $10,000, and was deposited by the defendant Shear for said composition ; that of the said $10,000 the sum of $9,776.49 was used in effecting said composition, and the balance thereof, to wit, $223.51, is to be returned by the bankruptcy court to the defendant Shear.”
[14] In the original opinion and judgment we held that appellant was entitled to redeem the properties purchased by him at execution salo, provided he discharged all liens and charges existing thereon, if done in accordance with the terms and conditions under which the trial court might authorize the acceptance of payment. It appearing without dispute that both the so-called mill and gin properties were incumbered by the liens and obligations of the Farmers’ & Ginners’ Cotton Oil Company, appellant claims that, upon satisfying these outstanding liens and charges, he should be subrogated to all liens which he has discharged, and upon this theory this would accord him the right to claim all the gin properties, though he only holds title to the one by purchase. This position would be a correct one, if it was shown that appellant, in order to protect his purchase, had to discharge a senior or paramount lien. The principle which lies at the very foundation of the doctrine of subrogation is “that the person seeking it must have paid the debt under the grave necessity to save himself a loss. The right is never accorded to 'a mere volunteer.” Ætna Life Ins. Co. v. Middleport, 124 U. S. 534, 8 Sup. Ct. 625, 31 L. Ed. 537; Sheldon on Subrogation, § 240; 14 New Jersey Equity, 234. The gin properties individually owned by Hunter were, as has been shown, pledged to additionally secure the primary obligations of the mill company. Appellant, to redeem the mill properties, must discharge all liens and charges against these assets. When this is done the primary debt is paid, and this would operate, as we understand the rule, as an ex-tinguishment of all liens resting against either the mill or the gin properties. Such being the operation of the rule, the fact that appellant’s redemption of the properties actually purchased by him would likewise discharge the lions on the unacquired gin properties would mot entitle him to succeed to this ownership by way of subrogation. We therefore hold, under the circumstances, that appellant’s right of redemption is limited and restricted to those properties the legal title to which he acquired at execution sale.
[15] It appearing without controversy, under the stipulations of the parties, that a large part of the fund employed by the defendant Shear in effecting a composition with the general creditors of the Farmers’ & Gin-ners’ Cotton Oil Company, which inured to its benefit, was immediately derived from the sale and rental of certain gin properties, and the collection of insurance indemnities on account of the destruction of certain other *985of said gin properties by fire, that the amount so realized from these two sources should be properly deducted from the amount to be paid by appellant in redemption.
The respective motions are overruled.
Motions overruled.