Biccochi v. Casey-Swasey Co.

• Decision Date: 29 November 1897
• Citation: 42 S.W. 963
• Parties: BICCOCHI v. CASEY-SWASEY CO. et al.
• Court: Texas Supreme Court

42 S.W. 963

BICCOCHI v. CASEY-SWASEY CO. et al.

Supreme Court of Texas.

November 29, 1897.

Error to court of civil appeals of Second supreme judicial district.

Action by L. Biccochi against the Casey-Swasey Company and others in the nature of trespass to try title and to remove cloud. A judgment for defendants was affirmed by the court of civil appeals (40 S. W. 209), and plaintiff brings error. Reversed.

John W. Wray, for plaintiff in error. Ross & Terrell, for defendants in error.

BROWN, J.

In this case the court of civil appeals adopted the findings of fact filed by the judge of the trial court, from which we make the following condensed statement of the case: In October, 1889, L. Biccochi bought the lot in controversy from R. E. Maddox for the sum of $1,150. One-half was paid in cash at the time by Biccochi, and for the other half of the purchase money D. Mazza gave his note, which note was afterwards paid by plaintiff in error. The deed to the lot was made by Maddox to D. Mazza upon the agreement and understanding between Biccochi and Mazza that the latter should hold the title for the former until such time as it should be desired by Biccochi, when Mazza should convey the land to him. Mazza married the sister of the plaintiff in error. Within a short time after the purchase of the lot, Biccochi caused a house to be built upon it at a cost of $3,500. For some time he rented out the lower room of the house, collecting the rent therefor himself, and used the upper story of the building for sleeping rooms for himself. During the four years preceding April, 1895, Biccochi had carried on a business of his own upon the ground floor of this building, and had used and occupied the upper story for himself; and during all the time since he purchased and built upon it he had the actual possession of the property himself, or was holding it by tenant to whom he rented it. The property was insured and assessed for taxes in the name of D. Mazza, but the premium for insurance and the taxes were paid with money furnished by Biccochi. At the time that the plaintiff in error bought the lot, and had it deeded to Mazza, he was a married man, and has so continued ever since; but his wife at that time lived in the city of New Orleans, in the state of Louisiana, where she has continued to live, and he then, and has since, resided in the city of Ft. Worth, Tex. They had one child, a daughter, who was with the father in Ft. Worth, and kept at a boarding school in that city. The court of civil appeals finds that the deed was made to Mazza in anticipation of divorce proceedings by the wife, and for the purpose of defrauding her of her interest in the lot or the money invested in it. The title to the lot remained in the name of Mazza until April 3, 1895, when he conveyed it to Biccochi in compliance with his agreement, and without other consideration. During the time that the title remained in the name of Mazza, plaintiff in error borrowed money from a loan company in Ft. Worth, for which Mazza gave a mortgage upon the lot to secure the payment of a note given by the latter for the money so borrowed, but the note was paid by Biccochi himself. During all the time between the making of the deed to the lot in question in the name of Mazza and the time that he conveyed it to Biccochi, the former was a grocer and retail liquor dealer in the city of Ft. Worth. The Casey-Swasey Company was a corporation engaged in the mercantile business in the said city of Ft. Worth, and between December 1, 1894, and April 3, 1895, sold to Mazza goods for which the debt sued upon as hereafter stated was contracted. In August, 1894, Mazza made a report of his financial condition to Bradstreet's Agency, which was doing business in the city of Ft. Worth, and in that report, in writing, represented that he was the owner of the property in question, which he valued at $4,000, and in January, 1895, he made a statement of his financial condition to the Casey-Swasey Company, in which he represented that he owned the said property, and valued it at $5,725. The goods which were purchased by Mazza from the Casey-Swasey Company were sold by them upon the faith of the representations made by Mazza that he owned the property aforesaid as well as other property. In 1894, D. Mazza, being indebted to the Texas Fixture Company, a corporation doing business in the city of Ft. Worth, for fixtures sold by that company to him, gave his note for the amount of his indebtedness, and executed a chattel mortgage to secure the same upon the fixtures so purchased by him, and he requested that the mortgage should not be placed upon record, representing that he owned the property in controversy, as well as other property, and was entirely solvent; and, relying upon the representations so made, the Texas Fixture Company did not place the mortgage of record. On the 6th day of April, 1895, D. Mazza made and delivered a mortgage on all of his property subject to execution, in which he preferred certain creditors, among whom was Biccochi, who was preferred for a debt of $3,000 due to him from Mazza, and also a bank of Ft. Worth was preferred for a note of $2,000 on which Biccochi was the surety of Mazza. This mortgage did not include the property in controversy, without which the property of D. Mazza was inadequate to pay his debts. On the 8th day of April, 1895, the Casey-Swasey Company and the Texas Fixture Company instituted suits in the county court of Tarrant county against D. Mazza for the debts due each, and in each suit caused an attachment to be issued and levied upon the property in controversy. Judgment was rendered in each case for the debt and foreclosing the lien of the attachment upon the lot. Biccochi, not being a party to the suits above named, instituted this suit after the judgment had been rendered foreclosing the lien upon the lot, for the purpose of removing the cloud cast upon his title by the said judgments; and upon a trial in the district court of Tarrant county without a jury the court gave judgment for the defendants, which judgment was affirmed by the court of civil appeals.

Upon the facts of this case the following legal questions are presented for our determination: (1) Was the conveyance of the property by Mazza to Biccochi made without consideration? (2) Did the creditors of D. Mazza, the defendants in error, acquire a right in the property in controversy which they could enforce against the land after it was conveyed to Biccochi?

Article 2544 of the Revised Statutes of 1895 reads as follows: "Every gift, conveyance, assignment, or transfer of or charge upon any estate, real or personal, every suit commenced, or decree, judgment, or execution suffered or obtained, and every bond or other writing given with intent to delay, hinder or defraud creditors, purchasers, or other persons of or from what they are or may be lawfully entitled to, shall, as to such creditors, purchasers or other persons, their representatives or assigns, be void." Under this statute we do not consider it material to determine whether the wife could be considered a creditor or not, because she, having a community interest in the land, would be embraced in the language, "or other persons of or from what they are or may be lawfully entitled to"; and if it be true that Biccochi, in causing the deed to be made to Mazza, intended thereby to defraud his wife of her community rights in the property, or the money paid for it, then the conveyance to Mazza would come within the terms of the article above quoted. We shall therefore consider the question as if it were a transaction made and entered into by the parties for the purpose of defrauding the creditors of Biccochi. If Biccochi purchased and paid for the property, and caused the same to be deeded to Mazza for the purpose of defrauding his wife, and Mazza accepted it knowing the intention of Biccochi, the ownership of the property was not in fact vested in Mazza; but the law, in order to discourage such transactions, would refuse to interfere to aid either party to the fraudulent transaction, and, the legal title being by the deed vested in Mazza, the property could be subjected to his debts by his creditors while it so remained, and he could have transferred the property to any other person. The ground upon which the creditors of a fraudulent grantor can subject the property in the hands of the fraudulent grantee to their debts is that the title does not pass by the conveyance, but really remains in the grantor himself. In the case of Bank v. Lyle, 7 Lea, 431, the question of the relative rights of creditors of the fraudulent grantor and fraudulent grantee of the property was ably discussed and decided. In that case one O'Neal had made a fraudulent conveyance of his property to Lyle, and the creditors of the latter had levied attachments upon it, thereby securing a lien upon the property. The plaintiff bank, which was a creditor of O'Neal, intervened in the suit, and claimed priority in the distribution of the funds derived from the sale of the property. The court held that the plaintiff, the creditor of O'Neal, was entitled to the preference over the creditors of Lyle. The court said: "It being decided that his pretended purchase was void, O'Neal had parted with nothing by his pretended sale, and the debt due to him stood as though there had been no transfer by him." Although the courts will not interfere and aid a fraudulent grantor to enforce the promise to reconvey on grounds of public policy,—that is, to discourage such transactions, —yet if the grantee, in compliance with such agreement, has reconveyed the property to the grantor, such reconveyance will be upheld. Courts of equity recognize that there is a moral obligation resting upon the fraudulent grantee to execute the trust which he has undertaken, and, although they will not enforce its execution, they will uphold it when performed. In the case of Swift v. Holdridge...