Gulf Pipe Line Co. v. Lasater

• Decision Date: 14 March 1917
• Docket Number: (No. 5800.)
• Citation: 193 S.W. 773
• Parties: GULF PIPE LINE CO. et al. v. LASATER et al.
• Court: Texas Court of Appeals

193 S.W. 773

GULF PIPE LINE CO. et al. v. LASATER et al.

(No. 5800.)

Court of Civil Appeals of Texas. San Antonio.

March 14, 1917.

Rehearing Denied April 11, 1917.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Brooks County; V. W. Taylor, Judge.

Suit by the Gulf Pipe Line Company and others against the Falfurrias Power Company, Ed. C. Lasater, and others, in which certain creditors of the defendant company intervened after the appointment of a receiver. From a judgment decreeing the vendor's lien of Lasater superior to all other claims except one on certain specifically named property, and ordering that his bid for the property be credited on the notes held by him secured by the lien, the plaintiffs and intervener appeal. Reformed and affirmed.

H. D. McDonald and E. P. Scott, both of Corpus Christi, D. Edward Greer, of Houston, A. F. Jatho, of Beaumont, H. L. Stone, Jr., of Houston, Mann & Henry, of Laredo, and Kleberg, Stayton & Picton, of Corpus Christi, for appellants. G. R. Scott and Boone & Pope, of Corpus Christi, Dougherty & Dougherty, of Beeville, and N. C. Abbott, of Houston, for appellees.

FLY, C. J.

At the instance of the Gulf Pipe Line Company and the Gulf Refining Company, claiming to be creditors of the Falfurrias Power Company, a public service corporation supplying light, ice, water, and power to the people of Falfurrias, a receiver of the corporation in the person of Edward Cubage was appointed, who qualified and took possession of and operated the property for about 10 months. The receivership was obtained in a suit instituted by the Gulf Pipe Line Company and the Gulf Refining Company. On November 16, 1912, Cubage, under and by virtue of the order of the court and by agreement of the parties who applied for and obtained the receivership and other creditors, conveyed all of the property to Ed. C. Lasater, who was a defendant in the suit, and who claimed a vendor's lien on the property. The sale was reported and regularly confirmed by the court. The purchase price was secured by Lasater with a bond. In the answer filed by Lasater he alleged that on February 18, 1911, he was the owner and in possession of all the property of the Falfurrias Power Company, by virtue of a valid conveyance of the same from said corporation, as evidenced by a deed of date named; that on the same date he conveyed the property to G. W. Smith for a consideration of $50,000, of which $31,000 was paid, and the balance of $19,000 was evidenced by three promissory notes executed by Smith, which notes were secured by a vendor's lien on the lands and other property described in the deed of conveyance; that the notes had never been paid and the lien was valid on all the property. It was further alleged that after Smith bought the property he conveyed it to the corporation which assumed the payment of the notes given by Smith to Lasater, and which had not been paid. He prayed that an injunction, sued out against him by the Gulf Pipe Line Company and the Gulf Refining Company, be dissolved, and that he be granted the right to foreclose his lien or rescind the contract and take possession of the property. A number of parties joined in a motion to vacate the order appointing a receiver. The motions to dissolve the injunction and to vacate the receivership were overruled, but the court modified the injunction so as to permit Lasater to institute and prosecute any suits against the receiver or the power company and receiver, provided he should not interfere with the possession of the property or its operation by the receiver.

Numbers of parties, claiming to be creditors of the power company, intervened in the suit, and Lasater filed an amended answer, setting out fully the facts concerning the formation and chartering of the power company; that he sold to the corporation land for $38,000 in capital stock of the corporation, upon which the plant was erected, and that he became the owner of all the shares of stock except 2, which were owned by Allen and Miller, who were the other corporators. After the corporation had been in existence about 3½ years, the sales hereinbefore mentioned were made by the corporation to Lasater, by the latter to Smith, and by Smith to the corporation. It was alleged that Smith, believing it to be best to have the business of ginning, furnishing light, heat, and water incorporated, and desiring to avoid the expense of obtaining a charter, requested Lasater to transfer to him the stock of the company, which was done.

The sale by the receiver was made with the consent of Lasater, the plaintiffs, and a number of interveners, and Lasater became the purchaser at the sale, which, as before stated, was confirmed by the court.

The trial of the cause was begun before a jury, but after proceeding for a while, by agreement of all the parties, the jury was discharged and the cause was tried by the court, resulting in favor of the plaintiffs, the Gulf Pipe Line Company and Gulf Refining Company, for their debts against the corporation and in favor of the interveners, of which there were quite a number, for their several debts, in favor of Lasater as against the plaintiffs, in his favor as against Smith and the power company for the full amount of the notes and the foreclosure of the vendor's lien, decreeing the same to be superior to all other claims, except that of the York Manufacturing Company on certain specifically named property. It was further ordered that Lasater's bid at the receiver's sale should be credited on the notes held by him, and that a certain bond given by him for the purchase money at said sale should be canceled. The plaintiffs, Gulf Pipe Line Company and Gulf Refining Company, and interveners, First State Bank of Corpus Christi, Magnolia Petroleum Company, Duke Wittenbert, Ed Cubage, receiver, G. W. Smith, Rio Grande Coal Company, and Santo Tomas Coal Company, perfected an appeal to this court.

The plaintiffs in the lower court and six interveners have, as appellants, filed elaborate briefs, the first presenting 12 assignments of error on 67 printed pages, and the latter, 74 assignments on 179 pages of printed matter. We will consider the brief of the plaintiffs first, the consideration of their claims disposing of assignments of error of the interveners raising the same points. The appellants, the Gulf Pipe Line Company and the Gulf Refining Company, will be designated plaintiffs, for convenience, and the other appellants will be designated as interveners. Ed. Lasater and the York Manufacturing Company are the only appellees who have filed briefs in this court.

The first, second, third, and fourth of plaintiffs' assignments of error assail the conclusions of the court that the deeds of the Falfurrias Power Company to Lasater and the latter to Smith were valid and passed the title to the properties, and in holding that Lasater had a valid vendor's lien on the properties of the power company, and in crediting the $15,000 bid by him on the property at the receiver's sale, on his debt against the property. The only point raised by the four assignments is as to the power and authority of a corporation like the Falfurrias Power Company to convey all of its property to an individual to be used by him in any manner he may see proper. As bearing upon this point, the statement of facts shows that the power company was chartered in 1907, with a capital stock of $75,000, divided into 750 shares of the par value of $100 each. One of the purposes of incorporation was "the manufacture and supply to the public, by any means, of ice, gas, light, heat, water and electric motor power," and at the time the deed was executed to Lasater the corporation was "engaged in the furnishing of water, electric lights and ice to the citizens of Falfurrias." There was no other electric plant in Falfurrias, and no other water or ice plant serving the public. The property conveyed by the corporation to Lasater comprised all of its assets. The only consideration paid by Lasater to the corporation was $17,000 of debts of the corporation paid by him. As to the remaining $33,000 of the money agreed to be paid by Lasater, he stated in his answer:

"That said consideration was not paid by said Lasater to said corporation in the sense that it was actually turned into the treasury of the corporation, but, with the consent of all stockholders and directors, was retained by said Lasater in the sense of a dividend paid to him, and to which he was entitled as owner of all the stock, after payment of all indebtedness."

Lasater owned 498 shares of the stock of the nominal value of $49,800, the other $200 worth of stock being owned by Lawrence D. Miller and James J. Allen. Only 500 shares of stock had been issued. On the same day, that is, February 18, 1911, on which the property was conveyed by the corporation to Lasater, he conveyed it to G. W. Smith for a recited consideration of $52,000, of which $30,986.21 was recited as paid in cash, and the balance of $19,013.79 was evidenced by three notes of $6,337.93 each, executed by Smith to Lasater, and a vendor's lien was reserved on the property to secure payment of the notes. The $30,986.21 was not paid in cash, but in land conveyed by Smith to Lasater. The latter, on March 15, 1911, delivered his shares in the corporation to Smith. On April 19, 1911, Smith conveyed the property to the corporation for a recited consideration of $52,000, of which it was recited that $32,986.21 was paid in cash and $19,013.79 was paid in an assumption of the three notes executed by Smith to Lasater.

At the time that the corporation made the deed to Lasater, it had no money or other assets except its plant which had been running at a continuous loss, and it owed Lasater $17,000 for the debts that he paid in cash for it. At that time he could have obtained judgment against the corporation, and have sold its properties for his debt and bought it in at forced sale. It was at that time...