Court Opinion

ID: 3974119
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:32:17.010038+00
Date Added: 2024-06-11T07:44:04.366706
License: Public Domain

It is well settled, as a general rule, that one who claims property which has been conveyed in fraud of creditors, by a title derived from the grantor subsequent to the conveyance, can not maintain an action to set it aside. In accordance with this rule, it has been repeatedly held in this court, that the administrator of the estate of a deceased person can not recover property fraudulently conveyed by his intestate. Wilson v. Demander, 71 Tex. 603, and cases cited. Since the assignee in a voluntary assignment for the benefit of creditors occupies in this particular no better position than an administrator, it is also held, as we think by the great weight of authority, that he can not maintain an action to set aside fraudulent conveyances made by the assignee before the assignment. Where the assignee is insolvent and the assignment is made under a statute for the benefit of all his creditors, the authorities seem not to be uniform. Some courts hold, that since he is in a sense the representative of the creditors, he may maintain the action. But in Keller v. Smalley, 63 Tex. 512, the following language from Wait on Fraudulent Conveyances is quoted with approval: "Consequently it has been held, that the right to impeach or set aside a mortgage which is fraudulent and void as against the creditors of the mortgagor did not pass to the assignee of the mortgagor by a voluntary general assignment in trust for the benefit of creditors subsequently executed, and unaffected by any statute in force at the time," and the opinion of the court in the case cited seems to have been, that the statute of this State concerning assignments did not confer the right. We think, however, that the determination of the point was not necessary to a decision of the case. But *Page 621 
we are also of opinion that the conclusion is correct. The only provision of the Act of March 24, 1879, in relation to assignments for the benefit of creditors which bears directly upon this question is contained in the ninth section, and reads as follows: "All property conveyed or transferred by the assignor previous to and in contemplation of the assignment, with the intent or design to defeat, delay, or defraud creditors, or to give preference to one creditor over another, shall pass to the assignee by the assignment, notwithstanding such transfer; and the assignee, or in case of his neglect or refusal, any creditor or creditors may, in his name, upon securing such assignee against cost or liability, sue for, recover, collect, and cause the same to be applied for the benefit of creditors as other property belonging to the debtor's estate in the hands of the assignee; but if it shall appear, in such action, that the purchaser of any such property bought the same of the assignee in good faith and for a valuable consideration, and without any reason to believe that the debtor was conveying or transferring the same with the intent or design aforesaid, such purchaser shall be held to have acquired, as against the assignee and creditors aforesaid, a good and valid title to such property." The section quoted only applies in express terms to conveyances made in contemplation of an assignment, and excludes the idea that other fraudulent conveyances were intended to be embraced within its provisions. The first section of the act gives the assignment the effect of transferring all the property of the assignor to the assignee, whether mentioned or not; but comprehensive as this provision is, it is not sufficient to pass the title of property which the former had previously conveyed, though in fraud of creditors. A fraudulent conveyance is valid as between the grantor and grantee. Though void as to creditors, they can not avoid it, except by legal proceedings. Miller v. Koertge, 70 Tex. 162. The grantor, even when acting in their behalf, can not do so.
So much of section 9 as empowers the assignee to sue to set aside conveyances which give preferences, and which have been executed in contemplation of the assignment, is necessary in order to effect the purposes of the act. But why it should have provided that he could sue for property, when fraudulently conveyed in contemplation of making the assignment, while at the time it did not confer the power to recover other property conveyed in fraud of creditors, it is difficult to see. It was certainly not the purpose of the Legislature to enable a fraudulent grantor to assign and thereby to deprive his creditors of the right to subject to the payment of their debts property previously conveyed in fraud of their rights. The act was intended rather to enlarge the rights of the creditors in general and to effect a prompt and equitable distribution of all the assignor's assets; and hence an intention in any manner to restrict the rights of creditors to subject all the property of the assignor which they are entitled to under the statutes in relation *Page 622 
to fraudulent conveyances, to subject to the payment of their debts, can not be imputed to the Legislature. While it must be held that the act in question neither authorizes the assignee to sue to set aside a fraudulent conveyance which was not made in contemplation of the assignment, and that it does not expressly authorize the creditors to do so, we are of the opinion, for the reasons given, that it was not the purpose of the law to deprive the creditors of that right. That creditors may bring suit to subject property fraudulently conveyed by the debtor, to the payment of their debts, without having first acquired a lien thereon, is the settled law in this State (Anderson v. Cassaday, 53 Tex. 527; Shirley v. Railway,78 Tex. 131); and that the creditors of a deceased person may impeach the fraudulent conveyance of the intestate, though the administrator may not, is equally well settled.
We conclude, that the question certified should be answered in the negative.
Delivered April 1, 1895.