Craver v. Greer

• Decision Date: 10 November 1915
• Docket Number: (No. 2752.)
• Parties: CRAVER et al. v. GREER et al.
• Court: Texas Supreme Court

179 S.W. 862

CRAVER et al. v. GREER et al.

(No. 2752.)

Supreme Court of Texas.

November 10, 1915.

Certified Question from Court of Civil Appeals of Sixth Supreme Judicial District.

Action by D. C. Craver against T. A. Greer and others, in which the National Bank of Daingerfield, Galt & Galt, and Castleberry, Lawrence & Rodden, and others intervened, and in which receivers were appointed. An order, postponing the liens of plaintiff and the interveners named to the receivers' operating expenses, was affirmed by the Court of Civil Appeals (178 S. W. 699), and that court certified questions to the Supreme Court. Questions answered, adversely to the decision of the Court of Civil Appeals, and also as to the trial court, except as to the National Bank of Daingerfield.

Beard & Davidson, of Marshall, for plaintiff D. C. Craver. F. H. Prendergast and A. G. Carter, both of Marshall, for defendants T. A. Greer and C. A. Wheeler. Henderson & Bolin, of Daingerfield, for intervener National Bank of Daingerfield. Carter & Strength, of Marshall, for interveners Castleberry, Lawrence & Rodden. Lacy & Bramlette, of Longview, for interveners Galt & Galt.

PHILLIPS, C. J.

The appellants, D. C. Craver, National Bank of Daingerfield, Galt & Galt, and Castleberry, Lawrence & Rodden, were contract lien creditors of T. A. Greer, a lumber manufacturer, operating sawmills in Harrison and Marion counties, and a lumber yard in the city of Marshall. The property of Greer upon which their mortgage liens existed had been subjected to a receivership on the order of the district court of Harrison county, the operation of Greer's sawmill and manufacturing business being continued by the receivers at the direction of the court, resulting in a considerable indebtedness being incurred by the receivers in the course of its operation. The appeal was from the final decree rendered in the receivership proceeding, subordinating the claims of the appellants to the proceeds of the property, at the same time directed to be sold, to the costs and expenses of the receivership.

Summarizing the statement made in its certificate by the honorable Court of Civil Appeals, it appears that Craver's claim consisted of purchase-money notes, aggregating $6,000 in amount, given by Greer in payment for the sawmill in Harrison county, certain adjacent tracts of growing trees, and certain standing timber in Marion county, and a number of mules, wagons, etc., secured by a duly registered mortgage lien. Greer's indebtedness to the other appellants, respectively, was likewise secured by chattel mortgage liens on personal property taken charge of by the receiver, each duly registered. Being insolvent, Greer, in October, 1913, made a general assignment of all his property for the benefit of creditors, a large number of whom were unsecured, and the assignee took possession of the property. On the following day Craver filed a suit in the district court of Harrison county against Greer and the assignee, setting up the indebtedness due him, and praying for foreclosure of his lien and order of sale. In this suit, on November 8, 1913, three certain creditors of Greer intervened, for themselves and such other creditors as might enter the proceeding and be responsible for costs, alleging Greer's property to be insufficient to pay his debts unless properly managed; that a creditors' meeting had been held at which a recommendation had been adopted for the making of an application for the appointment of a receiver to operate Greer's sawmills and manufacturing business, which it was believed would prove profitable, and whereby all creditors might be paid; and that if the property was subjected to forced sale to satisfy only the claims of the secured creditors, the result would be its waste and loss to the unsecured creditors. Upon this application the court appointed three receivers, with authority to take charge of all the property and operate the mills. Thereafter the court entered an order requiring all creditors to intervene for the establishment of their claims, by the first Monday in January, 1914, and later made a further order in February, 1914, authorizing a list of 80 creditors to intervene. Following the first order of the court requiring the intervention of creditors, the appellants other than Craver, respectively, filed their interventions, duly pleading the indebtedness due them by Greer and their mortgage liens, and praying judgment for their debts, foreclosure of their liens and for order of sale. Galt & Galt expressly prayed that no part of the proceeds of the property covered by their lien be used to pay any of the expenses of the receivership until the payment of their debt in full, and Castleberry, Lawrence & Rodden, that their claim be classified as preferred.

At the January, 1914, term of the court Craver presented a motion, alleging that the proceeds of the timber on which his lien existed were likely to be dissipated by the indebtedness created by the receivers, and asked that they be required to desist from cutting any of it; but if such should be permitted, that a special fund be created in the hands of the clerk of the court to represent the value of the timber which was cut. An order was entered on February 20, 1914, creating such fund and providing that it should not be used for any other purpose. On March 20, 1914, judgment was entered in Craver's favor for his debt and for foreclosure of his lien. At the same time similar judgments were rendered in favor of the other appellants. An interlocutory decree was entered on the same date, making a classification of claims, Class A to include court costs and expenses of administration, with salary for the attorneys of "the applicant" and the receiver; Class B, the claims of laborers; Class C, mortgages, vendor's liens, and other contract liens; Class D, materialmen's liens adjudged to have a lien under the statute; and Class E, the unsecured debts. In the judgment rendered in Craver's favor it was recited that the court reserved the right to sell the property in pursuance of the foreclosure decreed, and that until the satisfaction of Craver's debt the receivers should pay, as a separate fund, into the hands of the clerk of the court $1.50 per thousand feet, to stand in the place of the timber, and to be exempted from all other charges and expenses; and as to the timber thereafter cut from the land, it should be adjudged as an operating expense of the receivers.

The receivers operated the plant until August, 1914, at a loss, the operation being discontinued by an order of the court at that time. At different times personal property belonging to the estate, and covered by the appellants' liens, was sold by the receivers under the court's orders. Debts were incurred by the receivers, under the authority of the court in the necessary operation of the plant and business, amounting to approximately $6,500, of which about $800 represented the claims of laborers, all of which were unpaid at the time of the rendition of the final decree. The estimated value of the assets of the estate on hand is about $10,000, materially less than Craver's judgment and the debts of the receivership, practically all of the property on hand being that impressed with the liens of the respective appellants. The claims of creditors in Classes C, D, and E, according to the order of the court, aggregate more than $22,000.

On May 30, 1914, Craver presented a motion asking that the court order the operation of the plant to be discontinued, and that the property subject to his mortgage be sold to satisfy his judgment. This was opposed by the receivers, and the motion was thereupon denied. In July, 1914, he filed another similar motion, which was also denied. The appellants Castleberry, Lawrence & Rodden at one time joined other creditors in an application for the appointment of a master in chancery, but it was dismissed without action by the court.

At the creditors' meeting held prior to the filing of the application for the appointment of the receivers, about 80 per cent. of Greer's creditors were present and represented. Craver was present, but did not vote or participate in the discussion of the plan for a receivership. It appears that he said nothing at the meeting. The cashier of the appellant bank was present as its representative, participated in the proceedings, and acted as one of the committee appointed to select the person to be recommended to the court for appointment as the active receiver. One of the firm of Galt & Galt was present but in the proceedings neither objected nor consented to the proposal for a receivership. No member of the firm of Castleberry, Lawrence & Rodden was present, nor were they represented.

The final decree was rendered after a hearing before the court, and a motion for new trial was not filed by either of the appellants. The assignments of error in the Court of Civil Appeals assailed the ruling of the trial court in classifying the debts of the receivership as superior to the mortgage debts of the appellants, and ordering their payment out of the proceeds of the property directed to be sold, accordingly.

Four questions are certified by the honorable Court of Civil Appeals as follows:

"(1) Whether or not, under the statute and the present rules for the courts of the state, it was necessary for appellants to have made a motion for new trial in the trial court in this cause to entitle them on appeal to a revision of the judgment, either as pertaining to question of fact or question of law, or as well to questions of law as to questions of fact involved in the case. (`A fundamental error' excepted from the question.)"

And in the event of negative answer to the foregoing:

"(2) Whether or not the evidence, which is fully set out above, when considered with reference to the pleadings and motions in intervention of each of the appellants, is sufficient to...