Texas Bank & Trust Co. v. Teich

• Decision Date: 03 March 1926
• Docket Number: (No. 6953.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 283 S.W. 552
• Parties: TEXAS BANK & TRUST CO. v. TEICH et al.
• Court: Texas Court of Appeals

283 S.W. 552

TEXAS BANK & TRUST CO. v. TEICH et al.

(No. 6953.)^*

Court of Civil Appeals of Texas. Austin.

March 3, 1926.

Rehearing Denied March 31, 1926.

Motion to File Second Motion For Rehearing Overruled April 28, 1926.

Appeal from District Court, Travis County; Geo. Calhoun, Judge.

Action by E. A. Teich and others against the Texas Bank & Trust Company. Judgment for plaintiffs, and defendant appeals. Reversed and remanded, with directions.

Robert B. Thrasher and Victor Gleckler, both of Austin, for appellant.

Cofer & Cofer, of Austin, for appellees.

BLAIR, J.

This suit arose as the result of the following facts and transactions:

Prior to June 16, 1923, the Central Texas Motor Company was engaged in the business of selling automobiles at retail in the city of Austin, and prior to this date it became indebted to appellee in the sum of $450, representing the price of a Ford automobile which it purchased from her. On June 16, 1923, the following agreement was executed by the Central Texas Motor Company with appellant, Texas Bank & Trust Company:

                              "Austin, Texas, June 16th, 1923
                

"This is to certify that we hold in trust for the Texas Bank & Trust Company of Austin, Tex., the following described property and merchandise: One Durant sport model touring car. At the time of the issue of this trust receipt it is represented by the undersigned that the above car was solely the property of the Texas Bank & Trust Company, and that no other person has any interest therein. We hereby agree to keep the above car stored for the benefit of the Texas Bank & Trust Company, fully insured against loss by fire, and that the proceeds of the sale will be turned into said bank in payment of our note for $983.12 of even date herewith, which money is furnished us for the purpose of unloading said cars, and on the express condition that the title to said cars shall remain in the Texas Bank & Trust Company until our note above referred to has been fully paid. In default of the payment of the above note to said bank, its agent or attorney is hereby authorized to take charge of said cars, and to sell same at private or public sale, and to apply the proceeds to the payment of the above obligation. It is represented by the undersigned that the above cars have a value of $983.12."

This instrument was not filed for registration. An issue was submitted to the jury in connection with this transaction, and they found that the Durant automobile described was delivered to the possession of the Central Texas Motor Company subsequent to June 16, 1923. Thereafter, and in accordance with the terms of the trust receipt, the Durant automobile was delivered to the Texas Bank & Trust Company upon the following agreement and contract:

"July 18, 1923, in cancellation of certain amount of our indebtedness to the amount of $5,000 due the Texas Bank & Trust Company of Austin, we, the Central Texas Motor Company, a corporation, acting by and through its president, W. C. Arnett, do hereby deliver to said bank in accordance with certain trust receipts heretofore executed by said company to said bank the following described car, to wit: one Durant sport touring car, motor No. 122911; one Durant sport roadster, motor No. 27036; one Durant Six touring car, motor No. 13539; one Durant coupé, motor No. 33876; one Durant touring car Four, motor No. 35062. "[Signed] Central Texas Motor Company,

                                       "By W. C. Arnett, President."
                

The testimony is undisputed that on this date, July 18, 1923, the Central Texas Motor Company closed its doors and ceased to do business thereafter. The testimony is also undisputed that as to this transfer no effort was made to comply with the provisions of the Bulk Sales Law.

The appellant bank on the same date of this instrument took charge of the automobile in question and stored it at Miller's Garage, in the city of Austin, in its name, and paid thereafter the storage charges on it. On November 10, 1923, the appellee recovered a final judgment against the Central Texas Motor Company for the sum of $463.50, with interest and costs, on which an execution was issued December 18, 1923, and the sheriff levied upon the Durant automobile in controversy. On the 20th of March, 1924, appellant bank filed its claimant's oath and bond with the sheriff, who surrendered the automobile to it.

Appellee brought this suit, setting up the judgment as a basis of her claim against the Central Texas Motor Company, and alleging that by virtue thereof she was a bona fide creditor of said company prior to the 16th day of June, A. D. 1923, and prior to July 18, 1923, and, further, that the alleged transfer pleaded by the appellant bank was violative of article 4000, R. S. 1925, relating to fraudulent mortgages, and article 4001, R. S. 1925, relating to the Bulk Sales Law, and that the trust receipt described was not filed for registration. She also alleged:

"That the said Texas Bank & Trust Company, not having thus conformed to the provisions of the law, upon application of this plaintiff became in law a receiver and became accountable to plaintiff for such merchandise, to wit, the automobile in controversy, so coming into its possession by virtue of such alleged sale and transfer, and that plaintiff is now seeking to enforce such accountability under the law by the judgment, execution, and levy hereinbefore alleged."

Appellant's brief correctly states its defensive pleadings as follows:

"Appellant answered by general demurrer, special exceptions, and general denial, and setting up a trust agreement bearing date the 16th day of June, 1923, whereby it was stated that Central Texas Motor Company held the automobile levied upon by appellee in trust for appellant, and that the same was solely the property of appellant; that the said automobile would be stored for appellant, and when the car was sold the proceeds were to be turned over to appellant in payment of a note for $983.12, which money was furnished the motor company for the purpose of unloading said car; that on the 18th day of July, 1923, said automobile was delivered to appellant in accordance with said trust receipt; that at the time said automobile was levied upon by appellee it did not belong to Central Texas Motor Company, but was the property of appellant, and appellant was entitled to the possession thereof, and that appellant's claim to the property was made in good faith."

The trial judge concluded upon the undisputed facts and the jury's findings of fact that the transactions of appellant, Texas Bank & Trust Company, with the Central Texas Motor Company as above detailed were void because violative of the fraudulent mortgage statute, the bulk sales law statute, supra, and of the registration laws, and in effect declared appellee to have a preference lien on the sport model Durant touring car by virtue of the levy of her execution, and rendered judgment for her against appellant for the full amount of her claim, conditioned however, upon appellant bank producing the automobile for which it executed its claimant's bond.

The trial court correctly held under the undisputed facts and findings of fact by the jury that the mortgage or trust receipt, under which appellant bank asserts its claim of right to the automobile, and under the terms of which it took possession, is void as to appellee, because such transactions were violative of articles 4000 and 4001, R. S. 1925, supra, and because the trust receipt or mortgage had not been registered. The following authorities support this conclusion: Article 3970, R. S. 1911 (article 4000, R. S. 1925); article 3971, R. S. 1911 (article 4001, R. S. 1925); articles 5654 and 5655, R. S. 1911 (articles 5489 and 5490, R. S. 1925); Beene v. Nat. Liquor Co. et al. (Tex. Civ. App.) 198 S. W. 596; Gen. Motors Acceptance Corp. v. Boddeker (Tex. Civ. App.) 274 S. W. 1016; First Nat. Bank of Stephenville v. Thompson (Tex. Com. App.) 265 S. W. 884; Bowen v. Lansing Wagon Works, 43 S. W. 872, 91 Tex. 385.

The trial court erred in holding the sale or transfer to be wholly void so as to pass no title to appellant in the automobile, that it remained the property of Central Texas Motor Company on the date of the levy of appellee's execution, and that she obtained a preference lien over other creditors thereby, for, under ...