Court Opinion

ID: 4896877
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:59:20.458178+00
Date Added: 2024-06-11T08:12:46.740589
License: Public Domain

ON REHEARING.
GAINES, Associate Justice.
—We are of the opinion that the motion for a rehearing in this case should be granted. We still concur in all the rulings of the former opinion, except as to the question whether or not the trial judge was correct in his conclusion that the appellee is to be deemed a bona fide purchaser for value. Under the facts of this case the correctness of that conclusion depends upon the determination of two questions. First. It being determined that the sale to appellee was fraudulent as to the creditors of the sellers, W. C. McDavid & Co., and that appellee had no notice of that intent, was it necessary that he should have paid or given his negotiable promissory notes for the consideration in order to protect him against a recovery ? Second. If that proposition be answered in the affirmative, upon whom did the burden rest to show whether or not the consideration was so paid or so promised?
The appellee testified that he gave two notes, each for $550, and paid $400 before he had any notice of the sellers* in tent to defraud their creditors.' He did not testify whether the notes were negotiable or not. The rule we think universal that a grantee under a junior deed in order to hold land as abona fide purchaser for value must show that the consideration has been actually paid, or that he has given a negotiable note therefor, which in this court at least is deemed equivalent to the same thing.
We have had some difficulty in determining whether or not a different rule should prevail as to one setting up the defense of an innocent purchaser as against a creditor seeking to set aside a fraudulent conveyance. But after a careful examination of the authorities we have found none that recognize the distinction. On the contrary, there are quite a num*601her of cases in which it has been pointedly held that in order for the purchaser to make the defense it must appear that the consideration has actually passed. Daugherty v. Cooper, 77 Mo., 532; Arnholt v. Hartwig, 73 Mo., 485; Dixon v. Hill, 5 Mich., 404; Bush v. Collins, 35 Kans., 535. Such is the doctrine recognized by this court in Belt v. Raguet, 27 Texas, 471, and in King v. Russell, 40 Texas, 124, although neither called for a decision upon the point.
We therefore conclude that the appellee can only be protected to the extent of the money actually paid at the time he received notice of the fraudulent intent of his vendors in making the sale, unless the notes given by him were negotiable by the law merchant.
This brings us to the second question: Did appellee have the burden cf showing that the notes were negotiable?
In McAlpine v. Burnett, 23 Texas, 649, it is held that the burden is upon the holder of a note claiming a vendor’s lien against a purchaser from his vendee to show that the latter either had notice of the lien at the time of the purchase or that he had not paid value. This is put upon the ground that he is seeking to enforce an equity against the legal title. But in the same case it is said that as to a party claiming to be an innocent purchaser upon the ground that he bought without notice of the prior conveyance a different rule prevails, and the burden is upon him to show not only that he had no notice, but that he has paid value. This is because he is seeking to set up an equity against the legal title. Neither of these rules enables us to decide the present question.
Article 2465 of the Be vised Statutes declares in effect that a conveyance intended to defraud creditors is void as to them, and in a distinct sentence adds the following provisions: “This article shall not affect the title of
a purchaser for a valuable consideration, unless it appear that he had notice,” etc.
The order of these several provisions seems to indicate how it was intended the burden of proof should shift during the progress of the trial: (1) The creditor, in order to defeat the conveyance, is bound to show the fraudulent intent; (2) when such intent is shown, the purchaser, in order to sustain the transaction, must show that he has paid value; (3) this being shown, the burden again shifts, and the creditor, in order to prevail in the action, must prove that at the time of the payment the purchaser had notice of the fraud. This seems to us the most reasonable and satisfactory rule. Another argument in its favor is that the payment of the purchase money is a fact peculiarly within the knowledge of the purchaser. 1 Stark. Ev., 421. This reason is especially applicable to the present case. The appellee testified in his own behalf that he gave two notes for the agreed price of the goods, but did not say whether they were negotiable or not. The appellant did not know the truth of the matter. Under such *602circumstances it would be unreasonable to place the burden of proof upon the creditor and compel him to go to his adversary for his evidence.
It is unnecessary to retain the case for further consideration. The judgment is therefore reversed and the cause remapded.

Reversed and remanded.

Delivered November 21, 1890.