Sutherland v. Friedenbloom

• Decision Date: 31 January 1918
• Docket Number: (No. 788.)
• Citation: 200 S.W. 1099
• Parties: SUTHERLAND v. FRIEDENBLOOM.
• Court: Texas Court of Appeals

200 S.W. 1099

SUTHERLAND v. FRIEDENBLOOM.

(No. 788.)

Court of Civil Appeals of Texas. El Paso.

January 31, 1918.

On Rehearing, February 22, 1918.

Appeal from District Court, El Paso County; P. R. Price, Judge.

Action by J. A. Friedenbloom against J. L. McAfee, in which S. H. Sutherland, executor, was substituted as defendant, the original defendant having died. From a judgment for plaintiff, defendant appeals. Affirmed.

S. P. Weisiger, T. A. Falvey, and Bates McFarland, all of El Paso, for appellant. F. G. Morris and Geo. E. Wallace, both of El Paso, for appellee.

HIGGINS, J.

Appellee, Friedenbloom, and J. L. McAfee entered into an oral agreement of partnership for the purpose of buying and selling real estate, building houses, and renting same. The partnership was formed about June, 1899, and, unless sooner dissolved by mutual consent, was to continue for a period of not exceeding 10 to 12 years. Each of the partners contributed originally $1,500 in cash to the enterprise. Subsequently Friedenbloom contributed to the partnership funds the additional sum of $15,000 out of his individual funds and estate. The business was conducted in the name of McAfee, and the title to all property acquired was taken and held in his name. The contributed capital and profits from time to time were reinvested, and in course of time a large amount of real and personal property was acquired belonging to the partnership. At the time the partnership was formed Friedenbloom was insolvent, and there is evidence to show that his interest in placing the $1,500 cash originally contributed in the name of McAfee, and in having the partnership conducted in McAfee's name, and the title to the partnership property taken in his name, was to delay, hinder, and defraud his creditors. Subsequent to the expiration of the partnership agreement McAfee repudiated the partnership, and Friedenbloom sued to compel an accounting of the partnership affairs and partition of its assets. The original suit was dismissed upon a plea in abatement. The present suit was then filed, and in bar thereof defendant pleaded the judgment rendered upon the plea in abatement as res judicata; a general denial; a special plea denying under oath that he had ever entered into a partnership with plaintiff or that plaintiff had ever contributed any sum to any such enterprise; a further plea that if such partnership was entered into, and any sum contributed thereto by plaintiff, which was denied, that at the time plaintiff was insolvent, and the same was done by plaintiff with the intent and for the purpose of placing his property beyond the reach of his creditors, and to hinder, delay, and defraud them. Upon trial the plea of res judicata was sustained, and upon appeal the judgment rendered was reversed and the cause remanded, this court holding that such plea was not well taken. Friedenbloom v. McAfee, 167 S. W. 28. Prior to retrial McAfee died, and appellant Sutherland was appointed executor of his estate and guardian of the estate of Lucretia McAfee, the heir at law and sole devisee under the will of McAfee. Sutherland, in his representative capacity, became party to the suit. The case was then tried and submitted to a jury upon special issues. All issues submitted were answered in Friedenbloom's favor. The court thereupon rendered judgment in his favor, and Sutherland prosecutes this appeal therefrom.

Error is assigned to the refusal of a peremptory instruction in defendant's favor, requested upon the theory that if a partnership was entered into by the parties, and money contributed thereto as claimed by Friedenbloom, that Friedenbloom was then insolvent, and the same was done for the purpose and with the intention of hindering, delaying, and defrauding his creditors, and the contributing of said money and formation of the partnership did in fact hinder, delay, and defraud his creditors, for which reason the contract of partnership was contrary to public policy, illegal, and unenforceable.

This assignment presents the question underlying all of the assignments, and the one upon which the rights of the parties depend. The question may be succinctly stated as follows: Conceding that Friedenbloom was insolvent at the date the partnership was formed, and that his purpose and intent in forming the same, contributing $1,500 in cash to its assets, and having the partnership conducted in the name of McAfee, was to hinder, delay, and defraud his creditors, and that it had that effect, do such facts preclude him from demanding an accounting of the partnership affairs and recovery of his share of its assets? Upon the former appeal this question was answered in Friedenbloom's favor, in an opinion rendered by Justice McKenzie. But appellant insists that the only question then before this court was the correctness of the trial court's action in sustaining the plea of res judicata, and therefore the expression of its opinion upon a question not presented was dictum. It is true that the question of res judicata was the only one upon the former appeal this court must necessarily have passed upon, but, when this was answered in Friedenbloom's favor, it became apparent upon the face of the record that the rights of the parties depended upon the question which is now presented. And McAfee upon that appeal, in support of an affirmance, was urging the illegality of the transaction upon the same grounds here presented, and contending that by reason of such illegality Friedenbloom could not recover. In this state of the record it was deemed proper to consider the question, and indicate to the...