Court Opinion

ID: 9831235
Source: CourtListenerOpinion
Date Created: 2023-09-01 20:57:21.77163+00
Date Added: 2024-06-11T07:43:33.009282
License: Public Domain

On Motion for Rehearing.
The statement in our former opinion that there was one note for the sum of $2,028 against the Castro county section of land, we find to have been an error. There appears to have been two notes for that amount against said land. In the former opinion, it appears that we said that the note for $4,500 was executed by Sherk & Stenek, to Easter-wood, and by him transferred to the Western National Bank of Hereford, which bank turned over said note to the appellee bank and for which Sherk & Stenek executed their note for $4,615.25 to appellee. This statement is inaccurate. The record shows the Western National Bank of Hereford purchased the vendor’s lien note for $4,500 from Easter-wood, and that Easterwood by a written transfer conveyed the note and vendor’s lien on the lots in question to the Western National Bank of Hereford, which the bank filed and placed of record. Stenek, acting for Sherk & Stenek, made arrangements with ap-pellee bank to borrow money sufficient to pay off the $4,500 vendor’s lien note and executed to the appellee bank the note for $4,615.25, signing the same Sherk & Stenek, by James Stenek. Fuqua, the president of the appellee bank, testified that Stenek drew his check on appellee in favor .of the Western National Bank of Hereford for the amount of $4,500 and interest, which his bank paid; that he knew nothing of the note further than that he understood the purpose in borrowing the money was to pay off the note held by the Western National Bank; that the note was brought by Stenek to the bank in an envelope with other papers, to be kept by the bank in safe-keeping; that the bank did not take an assignment of the vendor’s lien note and did not hold it as collateral or security for the $4,615.25 note, as at that time Sherk & Sten-ek were regarded good for that amount on their personal note. Appellee did not get the note from the Western National Bank of Hereford, but it was taken to appellee’s bank by Stenek with his other papers to be kept therein. G. A. F. Parker, the president of the Western National Bank of Hereford, testified that it was his recollection that his bank had been notified by appellee bank they would pay the $4,500 note, and his bank sent it over there in a clearance settlement, but he was not clear as to that — it may have been that James Stenek gave a cheek on the First National Bank in payment of this note. Parker testified he placed the following in-dorsement on the back of the vendor’s lien note for $4,500: “This note was paid March 20, 1909, to the Western National Bank of Hereford, but was not marked paid. It was taken up by the First National Bank of Hereford and at their request was marked, ‘Released by us, March 15, 1910.’ ” This witness states no one told him to put the indorsement on the back of the note; that he insisted on putting it thereon before he would release the land; that he knew there was some trouble ; and that he wanted to show why he did it. The appellant, Sherk, testified the Western National Bank bought the note for $4,500 from Easterwood, and that, “We (Sherk & Stenek) borrowed the money from the First National Bank to pay off the $4,500 to the Western National Bank.” The money which he paid the First National Bank was on the note for the sum of $4,615.25, payable to the appellee, and was the note upon which he got the money to pay off the $4,500 note. He further testified that Stenek paid the $4,500 note to the Western National Bank; that he was not present when the $4,615.25 note was executed or the money paid the Western National Bank. It was his understanding that appellee bought the $4,500 note from the Western National Bank, but it did not buy the vendor’s lien prior to the time Stenek executed the $4,615.25 note to appellee for the money. He does not state when or how he got such understanding or from whom he got it. Fuqua further testified that it was not the understanding that Stenek was to taken the money and pay off the vendor’s lien note to Easterwood and have it transferred to the appellee bank, and that it was not the understanding that Stenek was to bring the note to the bank of appellee and leave it there, and he was not asked to leave it there, but he did so voluntarily. Some time in February, 1910, the appellee demanded security from Sherk on the balance due on the $4,615.-25 note executed to the bank by Sherk & Stenek, which was not given. There is a dispute as to whether Fuqua at that time threatened to foreclose a vendor’s lien on the lots for the note then held by it. After *836the appellant paid off the note for $4,615.25, Parker executed a release of .the vendor’s lien, and appellee placed the release of record. To the execution of this release, Sherk, through his attorney, and perhaps personally, objected, and presumably this was when Parker made the indorsement he did on the note. Fuqua at that time had the deed of trust from Stenek to secure his (Stenek’s) individual indebtedness, as stated in the former opinion. Fuqua states that he got the release because Parker wanted to make it. The reason he did not have it released before was he did not know it was in Parker’s name. He said he had it released to clear the record' and did so at the request of Parker and after appellant and his attorney told him not to do so. He told Parker the note held by ap-pellee had been paid off. Appellant in his motion for rehearing asks us to set out the consideration as expressed in the deed from Stenek to Sherk. We think we have done so sufficiently in the former opinion, with the exception of omitting one note for $2,028, assumed by Sherk.
[7, 8] In appellant’s motion for rehearing, he urges for the first time in this court that the trial court and that we were in error in not holding that he had a vendor’s lien on the lots for the money paid by him in the discharge of the note to the appellee, for the sum of $4,615.25. It will be seen by his petition he alleges that he paid off the vendor’s lien note for $4,500, payable to Easter-wood and by him transferred to the Western National Bank. He only prays to have a partnership lien decreed and for general relief. The facts introduced and sworn to by appellant show that Sherk & Stenek paid off that note with money obtained from appellee upon the note executed by Sherk & Stenek. If appellant had a lien on the land, it was by virtue of the law and rules of subrogation. It has been said that subrogation is not a universal remedy for parties who have F their money. Before subrogation can be decreed, the facts on which it arises must be distinctly and appropriately alleged and shown, and the equity therefrom must plainly appear. Appellant should have plainly alleged the facts which gave him the right of subrogation and should have asked for such relief in his petition. Crow v. Fiddler, 3 Tex. Civ. App. 576, 23 S. W. 17; Wilkin v. Owens, 102 Tex. 197, 114 S. W. 104, 115 S. W. 1174, 117 S. W. 425, 132 Am. St. Rep. 867; 37 Cyc. 390. In presenting the case to this court, he nowhere, by assignment, proposition, or authority cited, requested a consideration of the question of his now contended for vendor’s lien, but upon his motion for new trial he urges that we should nevertheless have considered the question and given a judgment on such lien. The facts proven in this case show that appellant did not pay off the vendor’s lien note for $4,500; 'but, on the contrary, the firm of Sherk & Stenek paid off the lien out of money borrowed from appellee on their joint note for $4,615.25. If the lien was in any way preserved by appellee bank for its security for the money loaned and thereby became part of the security for the note which appellant afterwards paid, the facts which subrogate the bank to such lien and entitled appellant to be subrogated to its lien should have been specifically alleged. This appellant did not do. It is now urged by him that under his prayer for general relief he was entitled to that remedy. We cannot agree with appellant. If the appellee paid the vendor’s lien note merely as an advancement to Sherk & Stenek, upon their note for $4,615.25, and upon their personal responsibility and relied upon their promise to pay, then the vendor’s lien was extinguished and no subsequent act of appellee or Sherk could revive it. Smith v. Morrison, 29 S. W. 1116; Fievel v. Zuber, 67 Tex. 275, 3 S. W. 273. Unless there was some agreement or understanding that the appellee should be subrogated to the rights of the lienholder when the vendor’s lien note was paid or the money advanced to pay the same, then the payment absolutely extinguished the debt and the lien on the land. A new debt and obligation was thereby created upon the part of Sherk & Stenek without any lien on the land, and, when Sherk paid off this personal obligation of the partnership, he was only subrogated to such debt and only entitled to contribution as a partner out of the firm assets when the partnership 'should be settled between themselves, which in this case occurred when appellant took over all the firm property in consideration of his payment or assumption of the debts due by the firm. 37 Cyc. 376. The doctrine upon which are based our conclusions is stated in Gadsden v. Brown, Speers, Eq. (S. C.) 37-41, which case seems to be the leading case on this question. We quote as follows: “The doctrine of subrogation is a pure, unmixed equity, having its foundation in the principles of natural justice and from its very nature never could have been intended for the relief of those who were in a condition in which they were at liberty to elect whether they would or would not be bound, and, as far as I have been able to learn its history, it never has been so applied. If one with the perfect knowledge of the facts will part with his money or bind himself by his contract in a sufficient consideration, any rule of law which would restore him his money or absolve him from his contract would subvert the rules of such order. It has been directed in its application exclusively to the relief of those that are already bound who could not but choose to abide the penalty. * * * But I have seen no case, and none has been referred to in the argument, in which a stranger, who was in a condition to make terms for himself and demand any security he might require, has been protected by the principle.” *837The case of Ætna Life Insurance Co. v. Middleport, 124 U. S. 534, 8 Sup. Ct. 625, 31 L. Ed. 537, quotes the above case in approval and says: “This is perhaps as clear a statement- of the doctrine of this subject as is/ to be found anywhere. • * * Subrogation as a matter of right as it exists in the civil law from which the term has been borrowed and adopted in our own is never applied in aid of a mere volunteer.”
[9] We held in this case, in the opinion heretofore rendered, that the sale of Sherk & Stenek dissolved the partnership and thereby extinguished the quasi lien of the partners in the partnership effects as such. We think we were correct, and the authorities there cited sustain the proposition, as well as many of the authorities cited by appellant in his motion for rehearing, especially the case of Johnston v. Standard Shoe Co., 5 Tex. Civ. App. 398, 24 S. W. 581, and the authorities cited therein, some of which are Stansell v. Fleming, 81 Tex. 298, 16 S. W. 1033; Kendall v. Hackworth, 66 Tex. 499, 18 S. W. 104; Weaver v. Ashcroft, 50 Tex. 427; Willis v. Thompson, 85 Tex. 311, 20 S. W. 155. In the cases upon which appellant appears mostly to rely a distinction is easily made, but which, as we view this case, is unnecessary at this time to take the time or space necessary to do. In nearly, if not all, the cases cited, the property was then under administration of the court, or the sale of the partnership property or assignment thereof by the individual members for individual debts was attacked for fraud or because conveyed without the consent of the other members of the firm. In this case appellant asks the court to declare his partnership lien a preference lien over the mortgage lien of appellee upon Stenek’s undivided interest. He, at the time he brought suit, had no. partnership iien to foreclose. He waived it by having the partner transfer all the assets to him by deed long before he brought suit and thereby dissolved the partnership, and, even before that, he had given notice of such dissolution. The court could not decree a lien ,wbieh appellant did - not have, and, if he ever had, had waived. He does not even allege that Stenek executed the mortgage of the lots without his knowledge or consent, or that he did so with the intent to hinder, delay, or defraud the creditors of the partnership or appellant. If he had made such allegation, he might have been in a better position. He was invoking the powers of a court of equity to cancel the deed of trust and to enforce a lien which on the face of the transaction appears to have been waived by him, and if for any reason the execution of the deed of trust was inequitable, such as the unauthorized act of Stenek in mortgaging his interest to appellee, or in fraud of his rights, he should have specifically alleged such facts in his petition and should have established the same by proof. This he did not do. On the contrary, when he took the transfer to himself of all the assets, the law charged him with notice of such mortgage. If he wished the court to administer the partnership assets so as to give the partnership creditors and himself preference, he should, before waiving the lien given him in equity, have invoked its aid; but he saw proper to pursue a different course and took the property in his individual right and upon his own account, assumed the debts, and without going into a court with all the property and asking that it be distributed according to justice and right. He does not in this action even offer to turn over all the assets and request an accounting by the court. He himself undertook to settle all equities, not only of the partnership effects and creditors, but also the individual creditors of Stenek. Having assumed to do so, he should not complain that when he took the lots in question they were charged with a lien. We think he should be held to his election and its consequences.
In the case of Wiggins v. Blackshear, 86 Tex. 665, 26 S. W. 939, Judge Stayton, speaking for the court, said: “When, however, the property of a partnership passes into the custody of a court for administration, as in cases of bankruptcy or assignments made by an insolvent firm, then the court will administer it as was the right of the several parties to have it administered while controlled by themselves. In such cases the court’s action is based as fully upon the rights of the partners as between themselves as upon the rights of creditors, and, when the result of a proceeding is to discharge partners from further liability, then the first theory before referred to may have been given weight in establishing an administrative rule in such cases.” The rule referred to is: “That the partnership property is presumed to have been obtained though credits given to the firm and that for this reason partnership creditors ought to be preferred in the distribution of its assets.” Further, in speaking of this case, 1;he court said: “In accordance with the general rule before stated, it has been steadily held that one partner may in good faith convey his interest in partnership assets to another, and that thereby all equities of such partner of all partnership creditors to subject such assets first to the payment of their claims is thereby lost. * * * It has been held that one member of an insolvent partnership, all of the members being insolvent, may transfer in good faith, with the concurrence of the other partners, his interest in the partnership property to an individual creditor, and that for this simple contract the creditor cannot maintain a bill to subject the property to the payment of a debt due to him by the firm. Case v. Beauregard, 99 U. S. 119 [25 L. Ed. 370]. As priority of right of *838partnership creditors over creditors of the individual members of the firm rests on the right of the partners themselves, can there be any doubt, if an insolvent partnership be dissolved by mutual agreement of its members and its property be divided between them in accordance with their several interests, that partnership creditors would lose all right to priority of payment out of the property so distributed? Members of a partnership having thus voluntarily surrendered their right so as to have the assets appropriated, each would hold property received in distribution in his separate right, subject alike, however, to the claims of all creditors, both individual and partnership. Such transaction would not be fraudulent as to either class of creditors unless some further fact intervened, for the property in the hands of each partner would be subject, as before, to the claims of partnership creditors as well as others.”
We are of the opinion that we were correct in affirming the case originally and find no grounds stated in the motion for rehearing sufficient to change our views as therein expressed.
We therefore overrule the motion.