Love v. Gamer

LATTIMORE, Justice. Appellees Charles Gamer and Charles J. Gamer, father and son, sought an injunction against appellants to restrain a sale under an execution levied on certain real estate lots. Appellants filed an answer and cross-action which prayed in part that defendants “recover of and from plaintiffs the amount of their debt as evidenced by said judgment above described,” and that the lien created by the levy of execution be established and foreclosed, that the injunction be denied, and that the lands be seized and sold to satisfy said judgment. The appellees presented a general demurrer to said cross-action which was sustained and the cross-action dismissed. We therefore consider the facts pleaded in said cross-action as true. On and prior to March 11, 1925, the Gamer Paper Company was a corporation which, owned the valuable real estate in question and nothing else of substantial value and had ceased doing business but had not dissolved. Charles Gamer owned all the stock except three shares, two of which were owned by his son, appellee Charles J. Gamer, and the latter’s wife, both of whom were directors in said corporation. In 1921 appellants sued the Gamer Paper Company and on March 11, 1925, obtained a verdict thereon on special issues which entitled them to a judgment against the Gamer Paper Company for debt. In June, 1925, the Gamer Paper Company by Charles Gamer, president, conveyed the real estate in question, being substantially all the assets of the corporation, to the said Charles Gamer as an individual; the only consideration being that Charles Gamer was the sole owner of the stock of the corporation. In November, 1925, judgment was rendered for appellants on said special issue verdict against the corporation. That judgment is still alive and unpaid. In April,' 1927, appellants levied execution under said judgment upon said real estate. In May, 1927, Charles, Gamer deeded said real estate to Chas. J. Gamer, who at the time knew all the facts above stated and that the deed executed by Charles Gamer as president to himself as an individual was done to defraud appellants. The deed to Chas. J. Gamer was without consideration. The learned trial court, while considering the general demurrer to appellants’ cross-action, required tfye latter to state whether they sought a personal judgment against the Gamers or only to sell the real estate to satisfy their judgment. Under such compulsion appellants stated they sought to sell. The deed from the corporation to [395] Gamer, Sr., could have been, as appellants pleaded, inspired by one of two causes: (1) The corporation was not doing business and Gamer as sole stockholder in fact bore the brunt of winding up its affairs and would eventually receive the net assets. (2) The corporation seeking to place its real estate beyond the reach of its creditors conveyed the property to Gamer, Sr., and thence to Gamer, Jr. Now bearing in mind that the directors in winding up the affairs of such a company are trustees, then if for any reason appellants should fail in enforcing their execution, the Gamers as directors of the corporation would in either instance have by their affirmative acts diverted all the corporate assets from the payment of debts and would thereby be personally liable to the value of the assets thus lost to the creditors. Articles 1388, 1392, R. S.; Carter v. Forbes Lithograph Mfg. Co., 22 Tex. Civ. App. 549, 56 S. W. 227. On the other hand, the right of a creditor to pursue the property of the corporation into the hands of the only stockholder and his assignees with notice is well settled. Panhandle Nat. Bank v. Emery, 78 Tex. 505, 15 S. W. 23. In Sanger v. Upton, 91 U. S. 56, 60, 23 L. Ed. 220, it is said: “If diverted, they [creditors] may follow it as far as it can be traced, and subject it to the payment of their claims, except as against holders who have taken it bona fide for a valuable consideration.” The learned trial court was thus without authority to require any such election in considering a general demurrer. See the discussion of such matters by Prof. Keeton in XI Tex. Law Review, 287; Edgar v. Galveston City Co., 46 Tex. 421; article 1997, R. S. The defendants were entitled to levy on property fraudulently conveyed to another by the judgment debtor with intent to defeat his creditors without previously attacking such conveyance. Lynn v. LeGierse, 48 Tex. 138; Rutherford v. Carr, 99 Tex. 101, 87 S. W. 815. Article 3996, R. S. (as amended by Acts 1927, c. 30, § 1 [Vernon’s Ann. Civ. St. art. 3996]), says the same as to such persons as appellants “shall be void.” We note that appellees have by their own pleadings admitted insolvency of the corporation, the real estate in question aside, and cessation of business. Caulk v. Anderson, 120 Tex. 253, 37 S.W.(2d) 1008. With these elements, the case, on the pleadings, is sufficient. From what we have said it follows that the trial court should not have sustained the general demurrer to appellants’ cross-action. It may be that rights of other creditors could intervene, but no such rights will be presumed to exist in passing on a general demurrer. The judgment of the trial court is reversed, and the cause is remanded.