Hunter v. Hubbard

• Decision Date: 01 January 1863
• Parties: JOHN HUNTER AND OTHERS v. THOS. P. HUBBARD AND ANOTHER.
• Court: Texas Supreme Court

26 Tex. 537

JOHN HUNTER AND OTHERS

v.THOS. P. HUBBARD AND ANOTHER.

Supreme Court of Texas.

1863.

J. H. and S. B., partners, made an assignment of their partnership assets to G. K. H., to secure him as indorser on their paper. On the same day J. H., to more effectually secure G. K. H., executed a deed of trust on his individual property. In a suit by the trustee, in which the beneficiary was made a party, to subject the trust property to the debts paid by the beneficiary as indorser, J. H. and J. B. pleaded that G. K. H. had been over-paid by J. H., out of his individual means, and that there was a balance due him as well as the firm, for which they asked judgment: Held, that it was perfectly legitimate that G. K. H. should present his side of the private accounts, and should show, if he was able to do so, that the payments made by J. H. were in satisfaction of other debts than those on account of which the suit was brought.

Where irrelevant testimony has been improperly admitted, if it can in no manner affect the result of the suit, it will be regarded as an immaterial error.

In the above stated case, where the deed of trust provided that in the event the assets so assigned were insufficient to save the assignee from his liabilities as indorser, after the expiration of eighteen months the trustee was authorized to sell the trust property and apply the proceeds to the satisfaction of the debts for which he was liable; the assignors had the right, by proper pleading, to require the assignee to render an account showing the manner in which he had disposed of the assets so assigned, and that he had made a proper appropriation of the same, as a condition precedent to his enforcing a sale of the trust property; but having failed to do so and gone to trial, it is then too late to object that the assignee had failed to render such an account.

The admissions of one partner with reference to the business of the firm, made subsequent to the date of an assignment of their assets, are admissible in evidence in a suit against all the members of the firm where they have pleaded that they are still partners as to all matters of a firm nature.

Where the plaintiffs alleged that the clerk of a firm was a secret partner, and his depositions were read by the defendants in evidence in a suit against the firm: Held, that the court did not err in leaving to the jury to determine, as a question of fact, whether the clerk was a secret partner in the firm; and if so, to disregard his testimony.

The court may well decline to consider objections which are manifestly contradictory and incompatible. Emmons v. Oldham, 12 Tex. 18, cited and approved on this point.

As to express trusts it has universally been held that the statute of limitation, as a general rule, has no application. The statute does not begin to run in favor of the trustee so long as the trust continues, and is acknowledged to be a continuing, subsisting trust, for the reason that the possession of the trustee is the possession of the cestui que trust; but if the trustee claim to hold the trust fund as his own and adversely to the cestui que trust, and the latter has knowledge of such adverse holding, then from the time of such adverse holding the statute will run in favor of the trustee.

When the trust is merely implied or constructive there has been some disagreement among the cases as to when the statute of limitations commenced running in favor of the trustee, but the better opinion seems to be, that as in general the facts out of which such trust arises, from their very nature, presuppose an adverse claim of right on the part of the trustee by implication from the beginning, the statute will commence to run against the cestui que trust from the period at which he could have vindicated his right by action or otherwise. [10 Tex. 246;11 Id. 430;17 Id. 472;27 Id. 350.]

If the statute of limitation has commenced to run against a trustee in favor of a grantor in trust, the trustee need not demand the trust property of the grantor or his assignee, as a condition precedent to his suing for the recovery of the trust property.

Two years bar the right of a trustee to recover personal property from a purchaser who purchased from the grantor in the trust while in possession with a knowledge of the trust lien, and holds adversely to the trustee.

Quœre: Whether in case of an absolute sale of personal property by a mortgagor, and a change of possession within the knowledge of the mortgagee, the statute will commence to run against the mortgagee unless knowledge is brought home to him that the purchaser is claiming adversely? or whether, until this is done, he may rely upon the presumption that he has purchased and holds subject to the mortgage? or whether he must, at his peril, take notice of the change of possession of personal property, are questions not authoritatively determined?

See the opinion in this case, in which the application of the statute of limitation to trusts is discussed and authorities cited.

APPEAL from Fayette. Tried below before the Hon. James H. Bell.

John Hunter and Samuel Benton, merchants in Marshall county, Mississippi, using the firm name of Hunter & Benton, on the 5th day of November, 1851, made to Green K. Hubbard an assignment of all debts due the firm, by notes, open accounts or otherwise, for the purpose of securing him against his liabilities for them as indorser or surety on certain bills of exchange, amounting to some twelve thousand dollars, payable to several parties. Hubbard, after paying off and discharging said liabilities, was authorized to discharge, with any surplus that might come into his hands, any other debts of said firm, and to facilitate the objects of the assignment, was further authorized to take charge of the books, notes and accounts of the firm.

To more effectually secure Green K. Hubbard harmless from said liabilities, John Hunter on the same day executed a deed of trust to Thomas P. Hubbard on nineteen negroes and their increase; also on certain other personal property, as wagons, mules and horses, conditioned that if the said assignment proved insufficient to secure and save the said Green K. Hubbard harmless, at the expiration of eighteen months, then Thomas P. Hubbard was to expose for sale, after giving sixty days' notice, the property or a sufficiency to secure the said Green K. Hubbard. It was further provided, that John Hunter should be permitted to remove the said property without the limits of Mississippi, and have the use and service of the same without hindrance or molestation from Thomas P. Hubbard.

John Hunter removed the negroes to Texas, sold them to Henry H. Hunter, and executed a bill of sale for the same, dated September 2, 1852. H. H. Hunter sold three of the negroes to John Whittenburg, and made a bill of sale therefor, dated February 14, 1855. He also sold John G. Sergeant five of the negroes and made a bill of sale therefor, dated February 12, 1855. Sergeant sold one of the negroes thus purchased to Isaac Morrow, and made a bill of sale for the same, dated January 11, 1856. On the 28th day of August, 1856, Thomas P. Hubbard, as trustee, brought suit in the district court of Fayette county, Texas, to subject the negroes in possession of Whittenburg, Sergeant and Morrow, to the trust deed, making them and John Hunter parties defendant.

On the 21st November, 1856, defendants answered and pleaded that Green K. Hubbard had received ample assets of the firm of Hunter & Benton to discharge the liabilities; that he had in fact, out of the assets of said firm, paid off and discharged all of the claims upon which he was liable as indorser or surety; indeed, he had received assets more than sufficient for that purpose, and was indebted to the said firm and to John Hunter for money remaining in his hands. They further pleaded the two and four years' limitations.

On the 19th day of May, 1857, John Hunter and Samuel Benton intervened and averred that Green K. Hubbard had, out of the assets of the firm assigned, paid a portion of the claims; that the balance had been paid; that he had paid no part out of his own means; that he had diverted a large portion of the assets assigned to his own use, in payment of claims against himself and his relatives; that they had by mistake paid him eight thousand dollars; that Green K. Hubbard was individually indebted to said firm in a large sum for articles sold to him; that he had failed to use due diligence in collecting the debts and assets assigned, whereby a large amount had been lost to defendants; and they reconvened and asked judgment against Thomas P. and Green K. Hubbard for fourteen thousand one hundred and thirty-two dollars and ninety-two cents. The account of Green K. Hubbard with Hunter and Benton for that amount was filed as an exhibit. On the same day John Hunter for himself filed an answer, adopting the plea of intervention filed by Hunter and Benton, and averring that being deceived by the false representations of Green K. Hubbard, he had consented to the payment of the eight thousand dollars, and that he himself had paid Green K. Hubbard large amounts, filed an account against him as an exhibit, showing a balance against G. K. Hubbard of two thousand six hundred and ninety-two dollars and eighty-two cents. By further amendment, intervenors alleged that the books, notes and accounts of Hunter and Benton were placed in the hands of Green K. Hubbard, under the assignment; that he failed to use due diligence in the collection of debts due the firm; diverted the assets to his own private purposes; by his negligence in collection of debts large sums of money were lost to intervenors, and prayed that he be compelled to account.

Green K. Hubbard, being made a party to the proceedings, answered, denying all the allegations of the answers of defendants and of the pleas of intervention, and specially denying that the books and accounts of Hunter &...