Texas Sand Co. v. Shield

• Decision Date: 05 April 1963
• Docket Number: No. 3772,3772
• Citation: 367 S.W.2d 88
• Parties: TEXAS SAND COMPANY et al., Appellants, v. Donald L. SHIELD et al., Appellees.
• Court: Texas Court of Appeals

Page 88

367 S.W.2d 88

TEXAS SAND COMPANY et al., Appellants, v. Donald L. SHIELD et al., Appellees.

No. 3772.

Court of Civil Appeals of Texas, Eastland.

April 5, 1963.

Rehearing Denied April 26, 1963.

Cofer & Cofer, Austin, for appellants.

Snodgrass, Smith, Rose & Finley, San Angelo, for appellees.

COLLINGS, Justice.

This suit was brought by Donald L. Shield, Leona Shield Montgomery, Charles L. South, James W. Dibrell, Josephine Dibrell Jobe, Elizabeth Dibrell, Joseph B. Dibrell, Jr., John F. Petty and James Robert Petty against Texas Sand Company, a corporation, Shield Oil and Gas Company, a corporation, Bridwell Oil Company, Elgean Shield and wife, Flora Shield, Richard Shield and wife, Sylvia Shield, Elgean C. Shield, F. Craig Morton, Otto Reynolds, H. & R. Drilling Company and John Hancock Mutual Life Insurance Company. Plaintiffs sought to set aside two conveyances of a tract of land containing approximately 2,031 acres on the basis of fraud, and to foreclose a judgment lien against the land. The first of the alleged fraudulent conveyances was by Elgean Shield and wife Flora Shield and Shield Oil and Gas Company to Richard Shield executed March 1st, 1954. The second alleged fraudulent conveyance was made by Richard Shield and wife Sylvia Shield to Texas Sand Company, executed March 17, 1954. Plaintiffs claimed to be creditors of Elgean Shield and Shield Oil & Gas Company as evidenced by a judgment of the District Court of Jeff Davis County rendered on July 26, 1954, and abstracted in the Coleman County Judgment Records on September 7, 1954. It was alleged that execution was issued on June 18, 1957, and returned 'nulla bona' by the Coleman County Sheriff on June 20, 1959.

Defendants Morton, Reynolds, H. & R. Drilling Company and John Hancock Mutual Life Insurance Company filed disclaimers. The remaining defendants by pleas in abatement and in bar urged their plea of limitation based upon Article 5529, Vernon's Ann.Tex.Civ.St. and Article 5507, V.A.T.C.S. The case was tried before a jury which found that the March 1, 1954 conveyance was given with the intent (1) to hinder, (3) to delay, (5) and to defraud appellees in the collection of their debt. The jury found in answer to special issues 7 and 8 that the parties to the deeds dated March 1, 1954, and March 17, 1954, did not intend that such deeds should be effective as conveyances of the properties therein described, and in answer to special issue number 13 found that such deeds were not based upon a substantial and valuable consideration. The jury found in answer to special issue number 9 that at the time of the execution of the deed dated March 1, 1954, from Flora Shield and Elgean Shield the title of record in the name of Elgean Shield to the land in controversy was not held for the use and benefit of his wife Flora Shield. Special issue number 10 inquired whether Texas Sand Company, together with its successors in title, Elgean C. Shield, Richard Shield, Alan Shield and Flora Shield held peaceable and adverse possession of the 2,031 acre tract of land for three years prior to February 28th, 1959, and such issue was answered in the negative. In answer to special issue number 12 it was found that plaintiffs, after abstracting their judgment, used diligence in obtaining and having issued execution upon the judgment debt involved.

Judgment was rendered on the verdict setting aside both conveyances holding that plaintiffs had a valid judgment lien against the land in question subject to the rights of Bridwell Oil Company and John Hancock Mutual Life Insurance Company, and foreclosing their judgment lien. The defendants filed their motion for a new trial which was overruled and they have appealed.

The evidence shows that prior to 1952, appellees held a claim for money against Elgean Shield and Shield Oil and Gas Company which was reduced to judgment in the District Court of Jeff Davis County on July 26, 1954, and upon appeal it was on October 3, 1956 determined favorably to appellees. This judgment was abstracted in the Coleman County Judgment Records on September 7, 1954, and was duly indexed. The execution entered on the judgment on June 18, 1957, was returned 'nulla bona' by the Sheriff of Coleman County.

The evidence further shows that on March 1, 1954, the date upon which notice was given by letter that the case in Fort Davis had been set for trial, Elgean Shield and his wife and Shield Oil and Gas Company conveyed the land in question together with all their other properties, except the homestead, to their son, Richard Shield. The consideration recited in this deed was the 'love and affection which we bear toward our son' and the further consideration of the assumption of specified indebtedness. The Texas Sand Company was organized by the Shield family and chartered on February 1, 1954. No stock was issued and the Charter was forfeited by the Secretary of State on September 1, 1956, for non-payment of franchise taxes. On March 17, 1954, Richard Shield and his wife conveyed all the properties covered by the deed dated March 1, 1954, to Texas Sand Company in consideration of the assumption of the same indebtedness. This suit was brought on February 28, 1959, in Coleman County to foreclose appellees' judgment lien on the 2,031 acre tract and the parties to the deeds dated March 1, 1954, and March 17, 1954, were joined as defendants.

In appellants' 1st and 2nd points it is contended that the court erred in overruling their plea of limitation and in holding that the 4 year statute, Article 5529, V.A.T.C.S. was not applicable to this suit to set aside a fraudulent conveyance. Article 5529, V.A.T.C.S., provides as follows: 'Every action other than for the recovery of real estate, for which no limitation is otherwise prescribed, shall be brought within four years next after the right to bring the same shall have accrued and not afterward.'

We cannot agree with appellants' contention that the court erred in holding that Article 5529, was not applicable and in overruling appellants' plea of limitation. It is held that a suit to enforce a subsisting judgment lien on land against a grantee in a void fraudulent conveyance is not barred until the grantee thereunder or his assigns acquire full title to the land under some statute of limitations which would bar an action to recover realty. 53 C.J.S. Limitations of Actions Sec. 36, page 988; Eckert v. Wendel, 120 Tex. 618, 40 S.W.2d 796, 76 A.L.R. 855.

The jury found and the evidence shows that the conveyance of March 1, 1954, was fraudulent. It is held that such a conveyance although valid as between the parties is void as to creditors. It was void under the provisions of Articles 3996 and 3997, V.A.T.C.S. Appellees held a claim against Elgean Shield and Shield Oil and Gas Company at the time of such conveyance, which was thereafter reduced to judgment in the District Court of Jeff Davis County. As to such creditors the legal title and equitable title to the property remained in the grantor unaffected by the fraudulent deed. Art. 5529 is therefore not applicable. It is held that a judgment creditor cannot be deprived of his legal right to enforce collection of his judgment against lands of his debtor by a fraudulent conveyance made to hinder, delay and defraud creditors, even though prior to the entry of the judgment and the filing of the abstract of judgment. See Eckert v. Wendel, supra, 40 S.W.2d at page 799. The land, as to such a judgment creditor, is held to be still the property of his debtor, and when the creditor obtains a judgment lien he is entitled to have the land sold to satisfy such judgment lien unless the vendee of the debtor has acquired title by the 3, 5 or 10 year statutes of limitation applicable to real estate.

Appellants claimed the land by adverse possession under Articles 5507 and 5508, V.A.T.C.S. The evidence shows without dispute that appellees instituted this suit on February 28, 1959, to set aside the two conveyances in question, which were executed on March 1, 1954 and on March 17, 1954, both of which were filed and recorded in the Coleman County Deed Records on April 5, 1954. We cannot, however, agree with appellants' contention that there was no evidence, or insufficient evidence, to support the finding of the jury that appellants had not shown peaceable and adverse possession of the land for three years prior to February 28, 1959, or that such finding was against the great weight and preponderance of the evidence, and that the court therefore erred in entering judgment for appellees upon the verdict.

Appellants contend that at the time this suit was instituted by appellees, Texas Sand Company held record title from the sovereignty of the soil to the tract of land. The evidence shows that at about the time the law suit in Fort Davis County was ripe for trial Elgean Shield and wife Flora Shield and Shield Oil and Gas Company executed a deed to Richard Shield covering the land. Soon thereafter Richard Shield and wife executed a deed covering the same properties to Texas Sand Company. No further conveyances of the land in question were made. Texas Sand Company was a Texas corporation incorporated by the Shield family on February 2, 1954. The right of Texas Sand Company to do business in Texas was forfeited on July 5, 1955 because of failure to pay the franchise taxes. The Charter of Texas Sand Company was forfeited on September 1, 1956, because of the failure to pay franchise taxes. Mrs. Flora Shield claimed to own Texas Sand Company. Proof of final payment of the capital stock of Texas Sand Company was filed with the Texas Secretary of State's office on July 16, 1956. The proof of final payment showed Richard Shield to own six shares, Elgean C. Shield to own six shares and Floria Shield to own thirteen shares. No stock was paid for in cash and no stock was ever issued. Mrs. Flora Shield further claimed to have owned and held the land in question as her separate...