Aldridge v. Pardee

• Decision Date: 30 June 1900
• Citation: 60 S.W. 789
• Court: Texas Court of Appeals
• Parties: ALDRIDGE et al. v. PARDEE et al.<SMALL><SUP>1</SUP></SMALL>

60 S.W. 789

ALDRIDGE et al. v. PARDEE et al.¹

Court of Civil Appeals of Texas.

June 30, 1900.

Appeal from district court, Dallas county; John M. Avery, Special Judge.

Trespass to try title by A. D. Aldridge and others, as trustees for J. E. Downes and others, against Edward H. Pardee and another. From a judgment in favor of plaintiffs as to part of the lands and in favor of defendants as to the balance, both parties appeal. Affirmed as to the judgment in favor of plaintiffs, and reversed as to that in favor of defendants.

Moroney & Love, J. M. Dickson, and W. H. Clark, for plaintiffs. Baker, Botts, Baker & Lovett and W. J. J. Smith, for defendants.

RAINEY, C. J.

This is an action of trespass to try title, brought by plaintiffs below, A. D. Aldridge, A. F. Hardie, and W. G. Mowry, trustees, for J. E. Downes, and associates, against defendants below, E. H. Pardee and Collis P. Huntington, to recover certain lands in Dallas, Kaufman, and Houston counties. It was agreed that the Texas Trunk Railroad Company, incorporated under the General Laws of Texas, November 6, 1879, was the common source of title. Under peremptory instructions of the court the jury found for the plaintiffs for all the land sued for except two tracts, known as the "Hughes and Slaughter Tract" and the "Mays Tract." As to these two tracts various special issues were submitted by the court, and upon the return of the verdict of the jury judgment was rendered in favor of defendants. From this judgment both plaintiffs and defendants prosecute an appeal.

The evidence shows that the Texas Trunk Railroad Company was duly incorporated November 6, 1879, under title 84, Rev. St. 1879. Under this charter there have been three distinct and separate organizations. The original company was sold out under foreclosure sale, and the purchasers reorganized under the original charter. This company was likewise sold out, and the purchasers also reorganized under the original charter. In discussing the questions raised, these organizations will be designated respectively, company No. 1, 2, and 3.

There were two main issues raised by the briefs of the parties. One is the contention of the defendants that the muniments of title relied upon by plaintiffs fail to make a prima facie case. The other is the contention of plaintiffs that the mortgages under the foreclosures of which the defendants claim title did not embrace the lands in controversy, and under which foreclosures the title to the land did not pass. As to plaintiffs' title the record shows that on November 4, 1881, W. F. Thompson brought suit against the Texas Trunk Railroad Company No. 1, and on March 15, 1887, in said suit, judgment was rendered in favor of plaintiff. On March 9, 1895, execution was issued and levied on all the Dallas county land involved in this suit. On August 30, 1895, execution was issued on said judgment to Houston county, and was levied on all the Houston county land involved in this suit. Sales of said land were made by virtue of said execution, and the same was bid in by C. C. Bumpass, as trustee for J. E. Downes and associates, and deeds were made to him by the sheriffs of Dallas and Houston counties respectively. C. C. Bumpass, trustee for J. E. Downes and associates, brought an action of trespass to try title to recover all the land in litigation against John F. Ely, James B. Simpson, D. A. Robinson, and W. L. Cabell, the surviving directors and trustees of the Texas Trunk Railroad Company as originally incorporated, being company No. 1, and John H. Gaston as receiver of the Texas Trunk Railroad, No. 3, appointed by the district court of Ellis county at the instance of the state; and on April 7, 1898, judgment was rendered in favor of said Bumpass, trustee as aforesaid. On January 16, 1896, C. C. Bumpass, trustee for J. E. Downes and associates, conveyed the land in controversy to A. D. Aldridge, A. F. Hardie, and W. G. Mowry, as trustees for J. E. Downes and associates. On December 28, 1897, and after the commencement of the suit of Bumpass, trustee, against Ely, above mentioned, James B. Simpson, D. A. Robinson, John F. Ely, and W. L. Cabell, as surviving directors and trustees of the Texas Trunk Railroad Company No. 1, deeded to C. C. Bumpass, trustee as aforesaid, the Dallas county lands, and on February 4, 1898, said Bumpass deeded to plaintiffs herein, as trustees, the lands involved in this suit. In this connection it is to be noted that the Texas Trunk Railroad Company, as originally organized, had been sold out, and the purchasers had reorganized under the original charter at the time of the institution of the Bumpass-Ely suit and the execution of the conveyances by Simpson and others to Bumpass, trustee, and that said Simpson, Robinson, Ely, and Cabell were the only surviving directors of the original Texas Trunk Railroad Company.

The defendants complain of the court for overruling defendants' special demurrer to plaintiffs' first amended original petition, the ground of demurrer being that it appears from plaintiffs' petition that plaintiffs are not actually interested in the subject-matter of this suit, and are assuming to represent and sue in behalf of others, whose names and interests are not disclosed. The proposition of defendants is that "a mere naked trustee, without interest or legal duty with respect to the subject-matter of litigation, and appointed only for the purpose of acting as plaintiff, and without power to direct the litigation, is not authorized to prosecute it." The petition alleges as follows: "Plaintiffs, as sole trustees of the legal title to the lands and premises hereinafter described, bring this suit for the use and benefit of J. E. Downes and associates, who were creditors of the Texas Trunk Railroad Company, as formerly variously organized, and their privies and assigns who are beneficially interested in said legal title, and being all such creditors who have authorized and contributed to the expense of this suit; and also for the use and benefit of such other general creditors, if any, having enforceable demands against said company as are entitled to participate in the benefits of what may be recovered herein, and who shall, in like manner, contribute to the expense of this suit, and ratify and adopt said trusts. This suit is brought and prosecuted under the direction of Dickson & Moroney, who, as attorneys for J. E. Downes and associates, are authorized to direct such trustees in the recovery, by suit or otherwise, of any of said property that may be held adversely, or to which any person or persons may assert any adverse claim." The foregoing allegations show that plaintiffs, as trustees, held the legal title to the land, which gives them the right to prosecute suit. It is well settled that one who has a legal title as mere naked trustee may sue in his own name, though the entire equitable title be in another. Thompson v. Cartwright, 1 Tex. 87; McMillan v. Croft, 2 Tex. 397; Knight v. Holloman, 6 Tex. 153; Wimbish v. Holt, 26 Tex. 673; Zachary v. Gregory, 32 Tex. 452; Price v. Wiley, 19 Tex. 142; Martal v. Somers, 26 Tex. 551; Smith v. Wingate, 61 Tex. 54; Cooke v. Avery, 147 U. S. 375, 13 Sup. Ct. 340, 37 L. Ed. 209. The allegation that certain attorneys were authorized to direct the trustees in the litigation is immaterial, and does not affect the right of the trustees to recover. The court did not err in overruling the demurrer.

The objection is made by defendants to the action of the court in permitting plaintiffs to introduce in evidence the judgment rendered in favor of W. F. Thompson against the Texas Trunk Railroad Company, and executions issued by virtue thereof, and sales thereunder, and the conveyances of the sheriffs by virtue thereof; the contention being that said proceedings are null, as said corporation had been dissolved prior thereto by the foreclosure under a mortgage and sale thereunder of its franchises. If it be conceded that the contention of defendants is correct, it becomes immaterial in view of the judgment in the case of Bumpass, trustee, against Ely, above referred to. In that action the court decreed the title of the land to be in Bumpass as trustee, and such judgment was an adjudication to Bumpass, as trustee, of such title as the original company had to the land at that time. Under article 682, Rev. St., upon the dissolution of a corporation the property belonging thereto passes to the directors, to be held in trust by them for the benefit of corporation creditors. When the original corporation was dissolved by the sale of its franchises, etc., under the foreclosure of the International Trust Company's mortgage, the title to all the property not transferred by the foreclosure sale vested in said directors, as trustees, for the benefit of the corporation creditors; and we are of the opinion that, when one or more of the directors die, the survivors take the whole title subject to the trust (Rev. St. 1879, art. 4264; Perry, Trusts [2d Ed.] §§ 343, 412, 492, 493, 499), and that the surviving trustees of the original company were authorized to deal with said property after its dissolution as they deemed proper for the best interest of the company. Especially is this correct when the creditors consent to such action, as in this case. The transfer of the land by Bumpass, trustee, to plaintiffs was done by virtue of an understanding and agreement between the creditors of the original company and the surviving directors thereof. This was done in the interest and for the benefit of the creditors, and defendants have no ground for complaint in this regard. We therefore hold that plaintiffs are entitled to recover all the land sued for that did not pass by the sale under the mortgage.

This brings us to the consideration of the question whether the Hughes and Slaughter tract and the Mays tract were embraced in the mortgage given by company No. 1 to the International Trust Company. The record shows...