Eicks v. Copeland

Bonner, Associate Justice. The deed of assignment under which appellee Copeland, plaintiff below, claimed the property in controversy was made part of his petition. Appellants Eicks & Co., defendants below, contend that this deed was void upon its face by reason of the following clause: “And my said trustee is hereby directed, when he shall have realized cash from said assets in such sums as he may deem proper, that he pay out the same pro rata to the said creditors by installments or dividends, or he may retain the same until all the assets are converted, then pay out the whole and close up the entire matter at once.” Appellants assign as error the refusal of the court below, under their demurrer, to decide as a question of law that the deed was void. The same question was also raised by their objection to its introduction in evidence. 1. It should be borne in mind in the examination of many of the decisions from other states upon the question of fraudulent conveyances, that they were rendered in suits in equity, in which the whole case, both upon the law and the facts, was tried before a chancellor without a jury. It has been repeatedly decided by this court, that where a debtor, by written instrument, has conveyed or incumbered his property, and the same is sought to be avoided by a creditor because made in fraud of his rights, that if there is apparent upon the face of the instrument by its express terms, or as the indisputable legal presumption therefrom, either such actual fraud in fact or such constructive fraud in law as should avoid it, then it is the duty of the court to so construe the instrument and declare its legal effect; otherwise it is a question of intention to be decided by the jury. Baldwin v. Peet, 22 Tex., 708; Bailey v. Mills, 27 Tex., 434; Van Hook v. Walton, 28 Tex., 59; Peiser v. Peticolas, 50 Tex., 638; Crow v. R. R. Co. Bank, 52 Tex., 362; Scott v. Alford, ante, p. 82. We are of opinion that the clause under consideration is not of itself necessarily so inconsistent with fair dealing and the just rights of creditors as to constitute such fraud per se, as [590] would have authorized the court, as to them, to declare the deed null and void; and hence that the court did not err in overruling the demurrer to the petition, or in permitting the deed to be read in evidence. That the assignee had the right to sell for cash or on a credit, was but a badge of fraud. Baldwin v. Peet, 22 Tex., 708. It might in many cases be both expensive and quite inconvenient to require an assignee to distribute among several creditors the proceeds of the sales of such articles as are embraced in this assignment, as they might come into his hands from time to time, and often, when the property would be insufficient to pay in full the claims, he could not until all the assets had been converted into money, and the costs and expenses paid, determine without risk the proper pro rata to each creditor. In some cases the assets might readily be converted into money, and final distribution made at an early day; in others it might be necessarily longer delayed. Hence, under the circumstances of this particular case, a sound discretion might often well be confided to the assignee, either to pay in installments or to await until ready for final distribution. Although any improper delay on the part of the assignee might render him liable in damages, or subject him to removal at the suit of the creditors, it would not follow that in this possible dereliction of duty the deed itself would be void. Burrill on Assignments, § 214. The limitation upon the discretion of the assignee in this case is quite different from that in D’Invernois v. Leavitt, 23 Barb., 80, relied on by counsel for appellants, which gave the assignee the right to withhold the distribution, not until the assets were converted into money, but for any length of time which he in his discretion might think proper. This case would also be very different had the property been conveyed to Copeland absolutely, ostensibly for his own use and benefit, and he was withholding its sale or the collection of the proceeds for the benefit of Chiles and in fraud of his creditors. As presented, however, Chiles, so far from being benefited, [591] would be injured by delay upon the part of Copeland, as in the meanwhile interest would be running against him, and the assets which he had set apart for the payment of his indebtedness be subject to waste. 2. Under the deed of assignment, the property was conveyed by Chiles in trust for his creditors generally, and he parted with both the title and control. This, then, is virtually a contest by which one creditor seeks, as against all the other creditors, to subject the property exclusively to his own benefit, and in which the debtor, Chiles, is but incidentally interested. Thus considered, the testimony sought to be elicited from, the assignee, Copeland, as to how many of the notes and accounts he had collected to the date of trial, was immaterial to the true issue between the real parties, however material it might have been had Copeland in his own right fraudulently claimed it as against the creditors; and hence it was not error to exclude this testimony. If the assignment for the creditors was valid otherwise, it could not have been rendered invalid by the subsequent neglect of the assignee, Copeland, inconsistent with the proper discharge of his duties. Burrill on Assignments, § 351. 3. The fifth, sixth and seventh assigned errors relate to the refusal of the court to give certain special charges asked by defendants. The third special charge asked, was to the effect that if the evidence showed that Chiles had failed to place all his property subject to execution in the deed of assignment, that this would render it void as to creditors. If it be conceded that it was a badge of fraud on the part of Chiles that his deed of assignment may not have conveyed all his property subject to execution, this would not be sufficient to entitle one of the several creditors for whose general benefit the assignment was made, to have it declared absolutely void for his sole benefit. Wilson v. Forsyth, 24 Barb., 105; Bump on Fraud. Con., 336, 371. The remaining property not embraced in the assignment [592] would not be affected by it, and it could still, as was done in this case, be levied upon. The court, however, instructed the jury that if a portion of the property of Chiles was withheld from the assignment, that this was a badge of fraud to be considered by them. Upon a careful comparison, we are of opinion that the general charge of the court embraced substantially the other special charges asked, and that it was not error to refuse to repeat them. 4. Chiles and Copeland both testified to the good faith of the transaction, and although there may have been many badges of fraud surrounding it, and which, in a contest between the creditor and Copeland in his individual capacity, might have resulted in a different verdict, yet, under the charge of the court and the conflicting testimony in the case, we cannot, by well established rules of practice, say that this conflicting testimony so greatly preponderates in favor of appellants as to warrant us in deciding that the court erred in not granting a new trial. Affirmed. [Opinion delivered October 12, 1880.]