Court Opinion

ID: 3937435
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:01:49.504632+00
Date Added: 2024-06-11T14:16:54.139649
License: Public Domain

In support of the motion for a rehearing in this case, counsel for plaintiffs in error has presented a formidable array of authorities to sustain the proposition that the burden was upon defendant in error to show the validity of the debts which the mortgage purported to secure. We are not satisfied with our ruling upon the point. Accordingly the motion for a rehearing is granted, and the submission of the case is set aside, with request that counsel for defendant in error furnish the court with a citation of authorities in support of the counter-proposition. The cause will be set down for resubmission on the 10th day of January, 1895, and will be heard on that day unless another day be agreed upon by counsel.
Delivered December 3, 1894.
John L. Dyer, for defendant in error. — In response to the request of the court, contained in its order granting a rehearing in this cause, counsel for defendant in error begs leave to submit the following abstract of points and authorities in support of the decision of the Court of Civil Appeals in this case (25 Southwestern Reporter, 441), and in the opinion of this court affirming the judgment of said Court of Civil Appeals (27 Southwestern Reporter, 121). And defendant in error submits the following counter propositions:
1. The burden was not, in this character of case, upon the defendant in error to show the validity of the debts which the chattel mortgage secured herein, for the following express reasons:
First. Because this was an action, under the statute for the trial of right of property, by the defendant in error, as a mere naked trustee, holding the property for the benefit of the beneficiaries whose debts were secured, and as the plaintiff in error, in his pleadings or tender of issues, affirmatively charged that the debts were fictitious, the burden on this issue, in this character of case, should be imposed on the plaintiffs in error; and for the reasons: (1) the beneficiaries in the mortgage were not before the court, other than by the trustee, to prove their indebtedness; (2) because it must be presumed in this case, in the absence of any such question raised to be passed upon, that the creditors as such, secured by the mortgage, had duly accepted same to secure their debts; (3) and the deed of trust, or mortgage containing the admission of the mortgagors that they owed such debts, with the presumption of the acceptance of the mortgage by the beneficiaries therein, relieved the trustee from making further investigation concerning the validity of such secured debts, so far as he stood in relation to such trust; and (4) he, the trustee, having no superior knowledge of such indebtedness (occupying the position of a mere trustee) to the plaintiffs, or means of knowledge respecting the validity of the same, would certainly not cause plaintiffs' averment that the secured *Page 56 
debts were "fictitious," and therefore fraudulent, to be taken as true, as contended for by counsel for plaintiffs in error. However the rule might be in a direct contest with the mortgagee before the court when his debt might be thus assailed, certainly the rule is otherwise in such a case as this. And for this reason this court and the Court of Appeals held rightly that the burden was upon the plaintiffs in error, who had alleged the affirmative fact, that the debts secured were fictitious, to prove such fact. Montgomery v. Culton,18 Tex. 745; Bump on Fraud. Con., 2 ed., p. 358; Kerr on Fraud and Mistakes, p. 382; 2 Cobbey Chat. Mort., sec. 761.
2. An examination of the authorities cited by the plaintiffs in error will disclose that they arose in cases dissimilar to the case at bar, and in cases where the evidence was peculiarly in the knowledge of the party charged with fraud, and generally, as in the case of Cox v. Shropshire, 25 Texas, where the defendant had set up that he was a purchaser in good faith or for a valuable consideration, and where he had rested his case on the recitals in his deed, and had failed to make proof of consideration, etc., to sustain allegations so made. And furthermore, in all the cases cited by counsel, there had been made out such suspicion against the title alleged to be fraudulent as to call for some proof by the adverse party showing good faith, etc. Such case was not made out in the case at bar.
Even if Eaton, Guinan  Co., the mortgagors, were insolvent, and conveyed all of their property to a trustee to secure preferred creditors, the proof of these facts would not have authorized an overthrow of the mortgage or trust deed, or demanded evidence from the trustee to overthrow such suspicion. Hudson v. Eisenmayer, 79 Tex. 401.
                          ON REHEARING.