Eckert v. Wendel

• Decision Date: 24 June 1931
• Docket Number: No. 5482.,5482.
• Citation: 40 S.W.2d 796
• Parties: ECKERT v. WENDEL et al.
• Court: Texas Supreme Court

Page 796

40 S.W.2d 796

ECKERT v. WENDEL et al.

No. 5482.

Supreme Court of Texas.

June 24, 1931.

Error to Court of Civil Appeals of Fourth Supreme Judicial District.

Suit by Max G. Eckert against Lorenz Wendel and others. To review a judgment of the Court of Civil Appeals [15 S.W.(2d) 1064], affirming a judgment for defendant, plaintiff brings error.

Reversed and remanded to district court, with directions.

J. B. Wieser, of Fredericksburg, and Cunningham, Moursund & Johnson, of San Antonio, for plaintiff in error.

H. H. Sagebiel, of Fredericksburg, for defendants in error.

GREENWOOD, J.

Plaintiff in error, Max G. Eckert, being the owner of a duly abstracted judgment against Lorenz Wendel and another, brought this suit against Lorenz Wendel and Henry M. Wendel to cancel a deed to land in Gillespie county from Lorenz Wendel to Henry M. Wendel, such deed executed after the indebtedness of Lorenz Wendel to plaintiff in error was created, upon the ground that the deed was without consideration and was given in pursuance of a conspiracy to hinder, delay, and defraud the creditors of Lorenz Wendel. Plaintiff in error also sued to establish his judgment lien against said land and for its foreclosure against both Lorenz Wendel and Henry M. Wendel.

Defendants in error excepted to plaintiff in error's petition "in so far as it seeks to set aside the deed dated May 13, 1921, conveying 762 acres of land for the reason that it appears from the face of said petition that plaintiff's cause of action, if any he has, accrued more than four years as to said deed before the filing of his original petition in this cause, and is barred by the four years statute of limitations."

The district court overruled the special exception invoking the four-year statute of limitations (Rev. St. 1925, art. 5529), but, the jury having found that Lorenz Wendel was possessed of property at the date of his deed to Henry M. Wendel which was subject to execution and sufficient to pay his debts, the district court entered judgment for defendants in error.

The Court of Civil Appeals, finding that the evidence was conclusive that the conveyance to Henry M. Wendel was voluntary and fraudulent, and that Lorenz Wendel was at the date of the conveyance wholly insolvent, nevertheless affirmed the judgment of the trial court. The opinion of the Court of Civil Appeals discloses the basis for the court's action in its concluding sentences, reading:

"Appellant was defrauded by means of the conveyance from Lorenz Wendel to Henry M. Wendel of the 762 acres of land, by deed dated May 13, 1921, filed for record June 18, 1921, to set aside which he instituted this suit on January 30, 1928, over 6½ years later. We must hold that his equitable action was barred by the statute of limitation of 4 years. McCampbell v. Durst, 15 Tex. Civ. App. 522, 40 S. W. 315; Vodrie v. Tynan (Tex. Civ. App.) 57 S. W. 680; Central Nat. Bank v. Barclay (Tex. Civ. App.) 254 S. W. 140.

"While appellant has established his case upon every point but one, he failed to file his suit in time, and it is therefore barred by the 4 years' statute of limitation (Rev. St. 1925, art. 5529) from the date of his judgment, which statute applies to equitable titles." 15 S.W.(2d) 1064, 1067.

The single question presented for our decision is whether the action of plaintiff in error was barred by the four-year statute of limitations.

The law is settled in Texas that a creditor, though he have no specific lien, may maintain an action in equity to vacate a fraudulent conveyance of his debtor's land. Until the creditor, in some manner—such as by levy of attachment or execution or by record of an abstract of judgment—acquires a lien, or until he acquires title by sale under execution, his only remedy, as against the grantee in a conveyance of real estate in fraud of his rights, is an action for a decree annulling the conveyance as an obstruction to the collection of his debt. Such an action is not one for the recovery of land, nor is it one to enforce a lien on land, but it is simply an action to cancel a conveyance of land because of fraud, and, no other period of limitation being prescribed for such an action, it comes within the four-year statute. Arbuckle Bros. Coffee Co. v. Werner & Cohen, 77 Tex. 44 to 46, 13 S. W. 963; Cassaday v. Anderson, 53 Tex. 535 to 539; Anderson v. Cassaday, 36 Tex. 652.

The creditor's cause of action to annul a fraudulent conveyance accrues when the creditor acquires knowledge of the fraud or would have acquired such knowledge in the exercise of ordinary care. Registration of the fraudulent conveyance at a certain date is merely one circumstance bearing on the creditor's actual or presumed knowledge. Bump on Fraudulent Conveyances (4th Ed.) § 574, p. 559; Smith v. Talbot, 18 Tex. 783; Hudson v. Wheeler, 34 Tex. 367; Kuhlman v. Baker, 50 Tex. 636; Vodrie v. Tynan (Tex. Civ. App.) 57 S. W. 680, 681; Ryman v. Petruka (Tex. Civ. App.) 166 S. W. 711, 712.

In the instant case, plaintiff in error, having obtained a judgment lien on the lands of his debtor, Lorenz Wendel, sued to establish that lien and to foreclose it against both Lorenz Wendel and Henry M. Wendel, the latter alleged to have no right, title, or interest in the lands, save as grantee in a conveyance executed by Lorenz Wendel to Henry M. Wendel without consideration and for the purpose of hindering, delaying, and defrauding the subsisting creditors of Lorenz Wendel, including the plaintiff in error.

A careful analysis discloses that under the decisions of the Supreme Court of this state a suit to enforce a subsisting judgment lien on land against a grantee in a conveyance void under our statutes as to the judgment creditor is not barred until the fraudulent grantee or his assigns acquires "full title" to the land, "precluding all claims," under some statute of limitations which would bar an action for the recovery of real estate.

In Rutherford v. Carr, 99 Tex. 105, 87 S. W. 815, 816, the court approved an earlier decision, saying: "In Belt v. Raguet, 27 Tex. 481, the issue was the right of the creditor to sell property fraudulently conveyed, and the claimant of the property pleaded limitation against the right to have the property sold. In answer to the plea the Supreme Court of this state said: `A fraudulent conveyance is declared void, by the statute, as to the creditors of the fraudulent grantor. As a necessary consequence, no length of possession by the debtor has any effect upon the rights of the creditor, so long as his debt remains unsatisfied, and his remedy for its collection is not lost by his laches; and, as the fraudulent vendee gets no title against the creditor by the conveyance, he can only bar his recovery by such adverse possession as will give him title.' This language distinctly holds that the limitation applicable to that case was that which is invoked by adverse possession."

The opinion in Rutherford v. Carr, supra, plainly construes the Texas statutes as preventing the passage of title out of the debtor, as against the protected creditor, by a conveyance denounced as fraudulent as to such creditor, and as entitling the creditor in any proper action between himself, his debtor, and those claiming under the fraudulent conveyance to establish its true character. The court thus gives effect to the Legislature's denunciation of the fraudulent or voluntary conveyance as void as to creditors within the protection of the statutes. It was therefore decided in Rutherford v. Carr that, without first maintaining an equitable action to cancel a fraudulent conveyance, and subsequent to the time when such an action would be barred under the four-year statute, the creditor could sell the property conveyed, under execution, and acquire such title as would enable him to successfully maintain an action of trespass to try title against those claiming under the fraudulent conveyance, until the action of trespass to try title was barred by adverse possession under the three, five, or ten year statutes (Rev. St. 1925, arts. 5507, 5509, 5510). In speaking of the judgment of the district court, which upheld the title of the grantee in the fraudulent conveyance, the opinion in Rutherford v. Carr, at page 107 of 99 Tex., 87 S. W. 815, 817, concludes: "A fair analysis of this judgment may be thus stated: The plaintiffs [the purchasers at execution sale] have the legal title to the land, but the defendant, who cannot sustain limitation against the right to recover the land, thwarted an attack upon his void deed by pleading limitation that would be a bar to a suit which plaintiffs did not institute. The judgment cannot be sustained."

In a prior part of the opinion, the reason for the decision was given in a quotation from the Supreme Court of South Carolina in Amaker v. New, 33 S. C. 36, 11 S. E. 386, 387, 8 L. R. A. 689, as follows: "I can very well understand how the law, from consideration of public policy, may forbid one from invoking its aid by bringing an action to set aside a deed for fraud, after the time limited for the purpose, but I am unable to understand upon what principle, either of law, equity, or good morals, one who has made out a prima facie case for the relief he demands can be forbidden from showing that the defense set up against his claim is founded in fraud, simply because such fraud had been committed so long ago as to bar an action brought to obtain relief from such fraud."

The precise question before us arose in South Carolina soon after Amaker v. New was decided. Treating that decision as necessarily determining that a fraudulent conveyance was a nullity as to a creditor, so that it could afford no obstacle to a mortgage creditor's foreclosure, though a suit for cancellation of the fraudulent conveyance was barred, the Supreme Court of South Carolina declared:

"But we are of opinion that the statute of limitations is not applicable to the case. This is not an `action for...