McLaughlin v. Carter

• Decision Date: 09 May 1896
• Citation: 37 S.W. 666
• Parties: McLAUGHLIN et al. v. CARTER et al.<SMALL><SUP>1</SUP></SMALL>
• Court: Texas Court of Appeals

37 S.W. 666

McLAUGHLIN et al. v. CARTER et al.¹

Court of Civil Appeals of Texas.

May 9, 1896.

Appeal from district court, Lamar county; E. D. McClellan, Judge.

Action by Carter, Ritchie & Co., a partnership, and others, against George M. Settle, J. S. Williams A. McLaughlin, and others, to set aside a chattel mortgage. From a judgment in favor of plaintiffs, defendants McLaughlin, McMurry, and Hubbard appeal. Affirmed.

Dudley & Moore, for appellants. Hale & Hale and H. D. McDonald, for appellees.

FINLEY, J.

Appellants' statement of the case, as made in the brief of their counsel, is sufficiently accurate to serve the purpose of a preliminary statement in the opinion, and will be given: This suit was brought by Mrs. B. Babcock, A. A. Walker, L. J. Bankhead, Eldridge Carter, the Paris Exchange Bank, and Carter, Ritchie & Co., a firm composed of J. A. Carter, W. J. Ritchie, and A. W. Deatherage, against George M. Settle, J. S. Williams, D. S. Hammond, A. McLaughlin, W. E. McMurry, and A. G. Hubbard, to set aside and declare void a chattel mortgage executed by George M. Settle to J. S. Williams, as trustee, on December 30, 1893, upon a stock of dry goods in Paris, Tex., known as the "Blue Front." Hammond, McLaughlin, McMurry, and Hubbard were made parties, because the said Hammond, as sheriff of Lamar county, was in possession of the stock of goods by virtue of the levy of three writs of attachment on the same, sued out by said McLaughlin, McMurry, and Hubbard, respectively, against the said George M. Settle. The suit was brought by plaintiffs for themselves alone, and not for themselves and all others who might desire to join or participate in its benefits. The plaintiffs claimed that they were beneficiaries in, and entitled to, a part of a trust fund which went into the hands of George M. Settle as trustee; that said Settle had used about $6,000 of said trust fund in his said dry-goods business, known as the "Blue Front"; that said Settle had transferred all of said stock of goods by chattel mortgage to said J. S. Williams, in which the said plaintiffs and the other beneficiaries in the said trust fund were preferred for $6,000; but that creditors of the said Settle were preferred first in said mortgage to such an amount, that, unless the mortgage was set aside, the plaintiffs would get nothing. They repudiated the chattel mortgage, claimed a lien on the Blue Front stock to the extent of the trust fund; prayed that the mortgage be declared void and set aside, and that they be allowed to follow the trust fund which went into the Blue Front stock of goods; that a receiver be appointed to sell the goods; and that they be first paid out of the proceeds. A receiver was appointed at chambers, who sold the stock of goods, and paid the money into the registry of the court, amounting to about $20,000. Defendants McLaughlin, McMurry, and Hubbard demurred generally to plaintiffs' petition, because it stated no cause of action against them or either of them, and demurred specially to plaintiffs' petition, because it does not allege the respective amounts belonging to plaintiffs out of the trust fund, and does not allege that they or either of them had any notice of the trust or the mingling of the fund by Settle at the time they acquired a lien on the property of said Settle; answered by general denial, and filed a cross bill against said Settle, Williams, and all the preferred creditors in the chattel mortgage from Settle to Williams, setting up the invalidity of said chattel mortgage; that it was made by Settle for the purpose and with the intent of defrauding his creditors; that he (the said Settle) embezzled the trust fund which was in his hands as trustee, converted the same to his own use, and had the same in his possession or at his command, and then preferred the amount of said trust fund in his chattel mortgage to Williams for the fraudulent purpose of securing an advantage to himself, and withdrawing that amount from the reach of his creditors; that Williams knew of such fraudulent purpose and intent at the time of the execution of the chattel mortgage, and at the time he accepted it; that none of the creditors preferred accepted said mortgage; and that, if any did so accept the said mortgage, they had notice of such fraudulent intent and purpose of Settle at the time they accepted the mortgage; alleged that certain debts were fictitious, and were preferred for larger amounts than were owing by said Settle; set up their attachments and liens thereby secured on the goods; prayed that the said chattel mortgage he declared void, and that the debts of the defendants McLaughlin, McMurry, and Hubbard be first satisfied out of the fund in court in the order of their priority. The defendant J. S. Williams answered both the plaintiffs' petition and the cross bill of McLaughlin and others, by general demurrer and general denial, and filed a cross bill against plaintiffs and against said McLaughlin et al., alleging that G. M. Settle, being indebted to divers persons, firms, and corporations, on December 30, 1893, executed to him a chattel mortgage on his stock of goods, setting out the terms of the mortgage, referring to the mortgage for the creditors thereby secured and the amount of their respective debts, and that the same was accepted by all the creditors therein named before any attachment was levied; set up the attachments, the appointment of the receiver, and the sale of the goods by him; and prayed that the lien of the creditors named in the mortgage he established, and that the clerk be ordered to pay over the money in court to him. The creditors claiming under the chattel mortgage to Williams filed answers simply adopting the answer and cross bill of J. S. Williams. The defendants McLaughlin, McMurry, and Hubbard filed a supplemental answer and cross bill, reiterating their demurrer to plaintiffs' amended original petition, demurring to the cross bill of Williams, and denying the allegations therein, denying that all the trust fund alleged by plaintiffs went into the stock of goods upon which they had levied their writs of attachment, and setting out specifically what the said Settle did with the said trust fund; that they had no notice of the mingling of said trust fund by Settle with his stock of goods at the time of their respective levies; and that J. S. Williams and the preferred creditors had such notice at the time of the execution of the chattel mortgage; prayed that they be first paid out of the fund in court. The cause was tried before a jury, who returned the following verdict for plaintiffs: "We, the jury, find for plaintiffs in the sum of five thousand seven hundred and fifty-two dollars. George Neville, Foreman." Then followed a verdict finding the names and amounts of those having just claims against G. M. Settle, and the order in which they were entitled to priority of payment out of the fund in court, giving fifteen creditors priority over McLaughlin, McMurry, and Hubbard, and giving them priority over ten other creditors. Judgment was rendered in accordance with the verdict, from which this appeal is taken.

The first assignment of error relates to the action of the court in suppressing the cross interrogatories propounded by McLaughlin, McMurry, and Hubbard to G. M. Settle, which said Settle had declined to answer. It appears from the record that the attorneys of the plaintiffs propounded interrogatories to the defendant G. M. Settle, and sought to take his depositions as a witness, giving notice to opposing counsel, as required by chapter 2, tit. 38, Rev. St. Tex. 1879. Counsel for defendants Settle and Williams crossed the interrogatories, and the defendants McLaughlin, McMurry, and Hubbard also filed cross interrogatories, and a commission was duly issued to take the deposition of said Settle in answer to the direct and cross interrogatories. The commission was placed in the hands of a notary, who summoned said Settle before him, and took his answers to the direct interrogatories of plaintiffs and cross interrogatories propounded by counsel for defendants Williams and Settle, but not in answer to the cross interrogatories propounded by defendants McLaughlin, McMurry, and Hubbard. When he was required by the notary to answer these cross interrogatories, he went to see his attorneys, and, returning, asked that he might take the interrogatories to his attorneys, and obtain their counsel before answering them. The notary refused to grant the request, and notified the witness that, unless he answered, he would certify that he had refused to do so. Witness then told the notary that he was willing to answer the questions if he was allowed to take them to his attorneys, and consult them, but not otherwise, and asked that such be stated in his ground for refusal to answer. The notary certified the refusal, and gave the reason, in substance, as requested. Upon the motion of McLaughlin, McMurry, and Hubbard at a term of court previous to the trial, the depositions of the witness given in answer to plaintiffs' interrogatories and the cross interrogatories of the defendants Williams and Settle were suppressed, upon the ground that the witness had failed to answer the cross interrogatories of McLaughlin, McMurry, and Hubbard. After this action, upon the motion of the defendants Williams and Settle, the cross interrogatories propounded by McLaughlin, McMurry, and Hubbard were also suppressed. It is of this last action, and the refusal of the court to allow the cross interrogatories to be taken as confessed and read in evidence, that appellants complain. Subsequently the depositions of the witness were taken by appellants in answer to interrogatories propounded to him as an adverse party, and he also appeared in person at the trial, and testified fully as a witness in the case. We do not think the court erred in this matter. Bounds v. Little, 75 Tex. 319, 12 S. W. 1109; Robertson v. Melasky, 84...