Court Opinion

ID: 3909722
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:38:36.77127+00
Date Added: 2024-06-11T14:16:01.490565
License: Public Domain

J. V. and B. E. Procter, doing business as retail merchants under the firm name of Procter Bros., in the town of Hillsboro, made a transfer of their entire stock of goods under circumstances which gave rise to this lawsuit. On the 1st day of February, 1887, J. V. Procter sold to his partner his interest in the business in consideration of $75, secured by the promissory note of B. E. Procter, and the assumption on the part of the latter of the debts of the firm. Thereafter, on the 4th day of said month, B. E. Procter sold and delivered the *Page 659 
entire stock of goods, valued at $6685.12, to appellant, the Blankenship  Blake Co., in settlement of a debt owed by said firm to appellant of $6535.49, and for the further consideration that appellant would pay to J. V. Procter the $75 note and a debt of $33 owed by said firm for clerk hire, which sums appellant did afterwards pay. The transaction was accomplished by appellant through its agent, Owen Burnett. Thereafter, on the 7th day of February, appellees, P. J. Willis  Bro., who were also creditors of said firm, seized under attachment a portion of said stock of goods, which were claimed by appellant under the statute for the trial of the right of property; and from a verdict and judgment in favor of appellees as to the property so claimed this appeal is prosecuted.
The evidence discloses the insolvency of Procter Bros. at the time of these transactions, and there seems to have been no dispute on this point in the trial court. A letter was read in evidence, dated February 9, 1887, from appellant to appellees, containing, among other things, in speaking of the failure of Procter Bros., this statement: "Our agent, Mr. Burnett, happened there, and found that they really were in bad shape, and found that one of the brothers had bought the other out and was running the firm in an insolvent condition." It also contains statements showing that the purpose of appellant and its agent in the transaction was to secure its debt. We conclude from the statement quoted above, there being nothing in the record in conflict with it, that appellant's agent had notice at the time he acquired the stock of goods of the undisputed insolvency of Procter Bros.
It also appears from the evidence that Burnett knew of the existence of appellees' debt, but it does not clearly appear from the evidence that he took more goods than were reasonably required to satisfy appellant's claim under the circumstances; and if so, that this was knowingly done. There is some evidence of a purpose on the part of Burnett to have that part of the transaction concealed in which he agreed to pay money as a part consideration.
The court refused to permit appellant to prove by the witness Burnett that his sole motive or purpose in making the purchase of the stock of goods was to collect the indebtedness against Procter Bros., and upon this the first error is assigned.
It is no longer an open question in this State that such testimony is admissible. Hamburg v. Wood, 66 Tex. 168; Sweeney v. Conley, 71 Tex. 543; Brown v. Lessing,70 Tex. 544.
Complaint is also made of the action of the court in giving and refusing charges, and we are of opinion that some of the charges given contained error.
It is well settled by numerous decisions of our Supreme Court, that where an insolvent debtor pays one of his creditors in property, and more *Page 660 
property is conveyed than, under all the circumstances, would be reasonably required to pay the debt, and such creditor has knowledge of the insolvency, the existence of other creditors, and the excess in value of the goods received, the transaction is such as the law condemns, whether this excess is appropriated by the creditor to his own use or is paid to the debtor in money or negotiable paper. Elser v. Graber, 69 Tex. 222, and cases there cited. These cases, however, do not hold that where a preferred creditor pays money or executes a negotiable note to the insolvent debtor as part consideration for the transfer, the transaction will be declared fraudulent in law, where it is not made to appear that more goods have been knowingly received than are reasonably required to pay his debt. The true distinction applicable to the facts of this case is made in the case of Oppenheimer v. Halff  Bro., 68 Tex. 409.
Where the property received by the preferred creditor is no more than is reasonably required to satisfy his debt, taking into consideration the expense incident to a conversion of the property into money, the invalidity of the transfer must result from proof of a fraudulent intent in fact on the part of the debtor and preferred creditor, which would taint the entire transaction. The testimony excluded, as to the intention of Burnett, was therefore material; and the charge should have properly submitted to the jury whether or not, under all the proof, more goods were knowingly received by appellant than were reasonably required to satisfy its debt; and if not, whether the transaction was open and fair, solely for the purpose on the part of appellant and its agent of collecting a just debt; or whether there was also a fraudulent purpose, to which appellant's agent was privy. One of the charges complained of, in effect took the case from the jury, and held the transaction in question to be fraudulent, provided Burnett knew that the $75 note which he assumed was given in consideration of the sale of the goods from B. E. to J. V. Procter. The charge given at the request of appellees is subject to a like objection.
For the errors in excluding above evidence and in the charge of the court, the judgment will be reversed and the cause remanded.
Reversed and remanded.
Chief Justice TARLTON did not sit in this case. *Page 661