McCord v. Nabours

• Decision Date: 22 April 1908
• Citation: 109 S.W. 913
• Parties: McCORD et al. v. NABOURS et al.
• Court: Texas Supreme Court

109 S.W. 913

McCORD et al. v. NABOURS et al.

Supreme Court of Texas.

April 22, 1908.

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

Action by W. A. Nabours and others against A. P. McCord and others to recover certain property assigned for the benefit of creditors, wrongfully appropriated by defendants. From a judgment of the Court of Civil Appeals (103 S. W. 469), reversing a judgment of the trial court, defendant McCord brings error. Modified and affirmed.

M. M. Crane, Henderson, Streetman & Freeman, and Monta J. Moore, for plaintiffs in error. Etheridge & Baker, A. J. Harris, W. K. Homan, D. W. Doom, and Hefley, McBride & Watson, for defendants in error.

BROWN, J.

For the purposes of this opinion the following statement of the case and of the facts will suffice: Crawford & Crawford and the Milam County Bank made a general assignment of their property for the benefit of their creditors, appointing T. S. Henderson and A. P. McCord assignees, who qualified according to law and took charge of the property. After a partial administration of the estate, a committee of the creditors, acting with the assignees, made a schedule of all the property remaining undisposed of and placed upon each item of property a price at which the assignees were authorized to sell it. Negotiations were begun between Lawrence and the assignees for the purchase of the remainder of the property by Lawrence, who was one of the creditors and one of the committee. Lawrence did not wish to buy the property in controversy because he did not believe he could sell it for the price put upon it by the committee and at which he was to make the purchase. McCord, through Ralston, who was the attorney of Lawrence, made the proposition to Lawrence that, if he would buy the property and desired to sell it, McCord would guarantee that he would find a purchaser for it at the price—$10,500—and Lawrence be credited with that sum. Lawrence purchased, and the property was conveyed to him by the assignees. T. S. Henderson did not know of the guaranty made by McCord to Lawrence at the time nor until after the institution of this suit. Soon after the transaction Lawrence called upon Ralston to produce the guaranteed purchaser, whereupon McCord purchased the property from Lawrence, taking a conveyance of it to himself. The sum paid by Lawrence for the property was distributed among the creditors of the assigned estate. It is alleged in the petition that the creditors did not know of the terms of the sale to Lawrence nor of McCord's guaranty to Lawrence upon which the sale was made. Lawrence would not have bought the property without the guaranty. Some years after the transaction occurred W. A. Nabours and a large number of the creditors of the assigned estate brought this action for the purpose of setting aside the transaction had with Lawrence and removing the assignees, Henderson and McCord, and appointing a receiver in order that the estate might be administered under the deed of assignment and the proceeds distributed. The suit was dismissed as to T. S. Henderson. The petition prayed for the recovery of the specific property or its value, except in one instance, in which it was alleged that the tract of land had been sold by Lawrence to an innocent purchaser, and in that instance it was prayed that they might recover the value of the land. There is a general prayer for such relief as the parties might be entitled to in law and in equity. At the trial the jury found a verdict in favor of the defendants, and judgment was entered accordingly. This is the third time the case been before this court.

The plaintiffs in error assign that the Court of Civil Appeals erred in entering judgment in this case in favor of the plaintiffs below because there was no sufficient pleading to justify a judgment based upon the guaranty given by McCord to Lawrence. The petition of the plaintiffs contained the following allegations: "Plaintiffs now represent and charge the fact to be that said defendant McCord, as assignee aforesaid, enabled so to do by the negligent co-operation, inattention, and dereliction of his co-assignee Henderson, fraudulently and corruptly converted to his own use and benefit all of the aforesaid properties described in paragraph 9 hereof, in that: On heretofore, to wit, May 5, 1897, the said assignees, by the contrivance of defendant McCord, made a pretended sale of all of the assets of said assigned estate, purporting to include, among other things not necessary now to be specifically mentioned, the property described in paragraph 9 hereof, to one C. W. Lawrence, with a previous agreement and understanding, both covert, express, tacit, and implied by and between the said McCord and the said Lawrence, that the said Lawrence was only to retain and pay for the assets not described in paragraph 9 hereof, it being understood and agreed as aforesaid that after such ostensible, pretended, colorable, and fraudulent conveyance of all the properties to the said C. W. Lawrence, he, the said Lawrence, should convey to the said McCord said properties described in paragraph 9 hereof at prices and upon the terms previously agreed upon by and between the said McCord and the said Lawrence." These allegations set up sufficiently a cause of action against McCord on account of his having fraudulently, as assignee of Crawford & Crawford and the Milam County Bank, acquired the property described in the petition. The allegations being sufficient on general demurrer, and the evidence not objected to, the judgment will be sustained. Pyron v. Butler, 27 Tex. 271. The sufficiency of the petition to admit the evidence, if objected to, is not before the court.

The plaintiffs in error urge with much zeal and ability that this court committed error in its former decision upon certified question (100 S. W. 1152, 18 Tex. Ct. Rep. 26), wherein it was held, substantially, that the fact that McCord gave a guaranty to furnish a purchaser for the property from Lawrence placed McCord in antagonism to the estate which he represented and to the creditors of the estate, which rendered the transaction voidable at the instance of the creditors. We have examined the matter again with care, and we see no cause to change our opinion. A more thorough knowledge of the facts of this case assures us of the necessity for and wisdom of the rule which the courts have established that the good faith and honest purposes of the assignee or trustee who, without the consent of the beneficiaries, becomes the purchaser of property confided to his care, constitutes no defense to an assertion by the beneficiary of the voidability of the title thus acquired. The difficulty of ascertaining the real truth as to the intention of the trustee who thus possesses himself of the property committed to his care is so manifest that we think the rule established by the courts to exclude all inquiry into that matter is plainly necessary to guard against the abuse of such authority. No doubt there are hardships as the decided cases show, but the interest of the public is of greater importance than the hardship which may fall upon the few who may in good faith unlawfully acquire property committed to them as trustees. There is absolute security to the agent or trustee in total abstinence from any acts by which his interest might become adverse to that of his principal. There is not such security to the beneficiary in any other rule for the government of trustees.

The plaintiffs in error assign that the Court of Civil Appeals erred in its judgment that the defendants in error recover the property specified in their petition because they say that the right to recover the note due from the Oil Mill Company to the Milam County Bank, which it is alleged that McCord misappropriated to his own use, was not embraced in the first petition, and that more than two years elapsed before the filing of the amended petition in which this note was first set up. The disposition made of that note was shown in the report of the assignees and if the claim for the misappropriation of it was not embraced in the original petition, the action to recover that sum was barred within one year from July 3, 1900. Article 86, ...