Overstreet v. Manning

• Decision Date: 19 April 1887
• Citation: 4 S.W. 248
• Parties: OVERSTREET v. MANNING and others.
• Court: Texas Supreme Court

4 S.W. 248

OVERSTREET v. MANNING and others.

Supreme Court of Texas.

April 19, 1887.

Appeal from Shackelford county.

L. W. Campbell and Fleming, Moore & Maloney, for appellant. A. A. Clarke and J. A. McCall, for appellees.

WILLIE, C. J.

The appellant, Mrs. Overstreet, brought this suit against R. E. Watts, E. R. Manning, A. P. Root, and G. L. Price, to recover from Watts the amount due her from him on three promissory notes, and to foreclose a lien given by Watts to secure these notes, upon a flock of sheep, which it was alleged belonged to Watts, but to which the other defendants set up some kind of a claim. Watts made no defense, and judgment was taken against him. Root and Price pleaded, claiming a half interest in the sheep by purchase from Watts; and Manning set up a conveyance to him by Watts of the other half of said sheep, together with other property, in payment of a debt due Manning from Watts, and for the further consideration that Manning would assume and pay off two debts from Watts to other persons, which were liens upon said property. Manning averred the payment of one of these debts by himself, and the assumption of the other in a manner to make it a a binding obligation upon him. The conveyance to Root and Price was alleged to have been made before the execution of the note sued on, and the conveyance to Manning subsequent to the date of said note, but without notice to Manning; and it was further averred that the lien of said notes had never been recorded. The plaintiff abandoned all right to recover against Root and Price, and the issues between herself and Manning were submitted to a jury, who found in favor of the latter, and she has appealed to this court from the judgment rendered upon that verdict.

The evidence made it apparent that the lien of appellant was prior in date to the conveyance to Manning, but that it had never been recorded, and Manning had no notice whatever of its existence when he purchased the property. It was also shown that the consideration for the purchase was paid by the extinguishment of a debt claimed by Manning against Watts, and the assumption by Manning of debts due from Watts to other parties. One of these debts, a mortgage to one Hogan, was paid after this suit was commenced. The other seems to have been an obligation by which Manning and J. C. Lynch guarantied a note executed by Watts to Mrs. Pressler previous to the purchase of the sheep by Manning from Watts. Watts had been a book-keeper for Manning; and the latter, upon examination of his balance sheet, found that there was a deficit in the account of cash, merchandise, etc., on hand, and charged Watts with embezzlement of his property to the extent of eleven or twelve thousand dollars. Watts admitted that the books were against him, and showed him to be behind to about that extent, and offered to convey to Manning his entire property in satisfaction of the amount. The deed from Watts to Manning was accordingly made, and the former released from all indebtedness growing out of the supposed embezzlement. The plaintiff objected to the proof of this indebtedness by the admissions of Watts, but the objection was overruled, and the evidence received. A number of errors are assigned, but the three principal questions are: (1) Is Manning protected against the plaintiff's unrecorded lien as a bona fide purchaser for value? (2) Is he protected as a purchaser within the meaning of the chattel mortgage act? (3) Was it competent to prove an indebtedness from Watts to Manning by the admissions of the latter?

1. It is settled in this state that one who buys at a voluntary sale from his debtor, and pays no money, but credits the amount of the consideration upon a pre-existing debt, is not a bona fide purchaser for value. McKamey v. Thorp, 61 Tex. 648. Some distinction is sought to be drawn between the case cited and the one in hand, on the ground that here a release in full of the indebtedness was given, and a new consideration was paid in the assumption of debts due from Watts to other parties, and the subsequent payment of one of these debts. The principle upon which the purchaser who pays the purchase money in a pre-existing debt is not protected against secret claims and equities is, he does not advance anything on the faith of his purchase, and loses nothing if the apparent title of his vendor should prove worthless. This principle, of course, cannot be affected by the amount of the indebtedness canceled by the purchase, if it is sufficient to repel any presumption of fraud. Whether a part or the whole of the debt is extinguished, the position of the creditor is not changed unless he parts with some valid security, such as a mortgage or judgment lien, or advances a new consideration, or incurs new liabilities. Manning had no securities for the payment of Watts' debt, and, in our opinion, he incurred no new liabilities. As to the Pressler debt, he was already liable for that as a guarantor of the note. His assumption of the debt, if binding, would doubtless have caused a change of position in the parties bound by the note. As to each other, Manning would have been liable to Watts had the latter been compelled to pay the debt; whereas, but for the assumption Watts would have been liable to Manning in case he had paid the note to Mrs. Pressler. To change the liabilities of the parties in this respect, a valid contract binding upon both parties...