Texas Sand Company v. Shield

• Decision Date: 08 July 1964
• Docket Number: No. A-9628,A-9628
• Parties: TEXAS SAND COMPANY et al., Petitioners, v. Donald L. SHIELD et al., Respondents.
• Court: Texas Supreme Court

Page 48

381 S.W.2d 48

TEXAS SAND COMPANY et al., Petitioners, v. Donald L. SHIELD et al., Respondents.

No. A-9628.

Supreme Court of Texas.

July 8, 1964.

Cofer, Cofer & Hearne, Austin, for petitioners.

Snodgrass, Smith, Rose & Finley, San Angelo, H. O. Woodward, Coleman, for respondents.

SMITH, Justice.

This suit was instituted on February 28, 1959, in the District Court of Coleman County by Respondents, 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, hereafter referred to as plaintiffs, against Petitioners, 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, hereafter referred to as defendants. Defendants Morton, Reynolds and H. & R. Drilling Company filed disclaimers.

Plaintiffs went to trial upon their First Amended Original Petition, wherein it was alleged that two conveyances made by defendants of a tract of land containing approximately 2,031 acres 'were merely sham transactions with no intention to pass title to the Grantees therein, and the Grantors therein had no intention that such instruments should become effective as a conveyance of the properties described therein.' In the alternative, plaintiffs alleged that the first conveyance in question was made 'with the intent to hinder, delay and defraud (plaintiffs) of and from the collection of their judgment debt.' Plaintiffs prayed that the conveyances in question 'be adjudged fraudulent and void as against plaintiffs, and that same be set aside and held for naught, that plaintiffs' judgment lien be foreclosed against the property conveyed and that such property be sold for the satisfaction of the judgment of plaintiffs.'

The defendants pleaded several affirmative defenses to the suit. However, we are concerned only with the pleaded defenses that the plaintiffs' suit, filed on February 19, 1959, to set aside the deeds, dated March 1, 1954, and March 17, 1954, was barred by the Texas four-year statute of limitations, Article 5529, ¹ Vernon's Annotated Civil Statutes. The defendants further pleaded that they had peaceable and adverse possession of the 2,031-acre ranch for three years prior to February 19, 1959, the date of the filing of this suit. In regard to this latter plea, the defendants take the position that a deed, void because it is in fraud of creditors, is sufficient to support limitation title under the Texas three-year statute of limitations, Article 5507, ² Vernon's Annotated Civil Statutes.

The case was tried to the Court with the aid of a jury, but at the close of all of the evidence, the defendants filed a motion for instructed verdict, alleging as grounds therefor that (1) under the undisputed evidence, the suit was barred, as a matter of law, by the four-year statute of limitations, Article 5529, supra; and (2) as a matter of law, plaintiffs' suit was barred by the Texas three-year statute of limitations, Article 5507, supra.

The trial court overruled defendant's motion for instructed verdict and submitted special issues to the jury.

The jury, in answer to special issues, found: (a) that the first conveyance in question was executed with the intent to hinder, delay and defraud plaintiffs in the collection of their debts; (b) that the parties to the deeds did not intend that such deeds should be effective as conveyances of the properties therein described; (c) that at the time of the execution of the first deed in question, the title of record in the name of the defendant, Elgean Shield, to the land in controversy was not held for the use and benefit of his wife, Flora Shield; (d) that the defendant, Texas Sand Company, together with its successors in title, had not held peaceable and adverse possession of the 2,031-acre tract of land for three years prior to the date this suit was instituted; (e) that both deeds in question were not based upon a substantial and valuable consideration.

Based upon the jury verdict, the trial court rendered judgment for plaintiffs, set aside the two conveyances, held that plaintiffs had a valid judgment lien against the land in question (subject to the rights of certain parties), and foreclosed the plaintiffs' judgment lien. The Court of Civil Appeals for the Eleventh Supreme Judicial District at Eastland, Texas, has affirmed. 367 S.W.2d 88. We affirm the judgments of both courts.

The facts are these: On March 1, 1954, the defendants, Elgean Shield, his wife, Flora Shield, and Shield Oil & Gas Company, conveyed the land in question, among other properties, to the defendant Richard Shield. By instrument dated March 17, 1954, the defendants, Richard Shield and wife, conveyed the land in question and all other properties conveyed to them on March 1, 1954, to the defendant, Texas Sand Company, a corporation organized by Elgean Shield. Both of these conveyances were recorded in Coleman County on April 5, 1954. It is these two conveyances which the plaintiffs are attacking in the present suit as being 'sham transactions' which were allegedly given with the intent to defraud plaintiffs from the collection of their debt. In order to understand the basis of the plaintiffs' allegations, it is necessary to set out the details of an earlier suit between these parties.

Prior to 1952, the defendants, Elgean Shield and Shield Oil & Gas Company, were indebted to plaintiffs. This indebtedness was the subject matter of a lawsuit which was heard in the 83rd District Court of Jeff Davis County, Texas, and on July 26, 1954, plaintiffs recovered judgment against these two defendants in the amount of $45,468.51. An abstract of this judgment was filed for record in Coleman County, Texas, on September 7, 1954, and thereafter duly recorded. On appeal to the Court of Civil Appeals, the judgment for the Eighth Supreme Judicial District at El Paso, Texas, affirmed this judgment in favor of plaintiffs. All rights of appeal to this court were fully exercised and the judgment became in all things final.

On June 18, 1956, execution was ordered on the judgment. On June 20, 1957, the execution was returned nulla bona by the sheriff of Coleman County, Texas. (In its opinion in the present case, the Court of Civil Appeals erroneously stated June 20, 1959.)

In the present case plaintiffs contend that the two conveyances in question were executed on the part of defendants with the intent to hinder, delay and defraud plaintiffs from the collection of this judgment.

We shall first consider the defendants' contention that there is no evidence to support the jury's findings that the conveyance of March 1, 1954, from Elgean Shield and wife to Richard Shield, was made with the intent to hinder, delay and defraud the plaintiffs in the collection of their debt. We overrule the defendants' contention.

First, this conveyance was made just prior to the trial of the case in Ft. Davis in which the plaintiffs were seeking a money judgment against the defendant Elgean Shield. This court has held that the existence of pending suits against an indebted vendor at the time of a transfer alleged to be fraudulent is a sign of fraud. See Briscoe v. Bronaugh, 1 Tex. 326 (1846). The record further discloses that the transfer of March 1, 1954, purported to cover not only the 2,031 acres in dispute, but also all of the grantor's property, both real and personal, except his homestead. It is a badge of fraud when a debtor transfers all of his property subject to execution. As stated by this court in Hughes v. Roper, 42 Tex. 116:

'* * * The conveyance was evidently designed to embrace all of the property of Reece Hughes, sen., subject to execution. The exception of his homestead of two hundred acres, and of his saddle pony, if it has no other significance, at least shows that the idea of property by law exempt from execution was present to the mind of the grantor. With these exceptions, the conveyance embranced not only all his lands and stock, but a large number of accounts and notes, many of them in process of collection, and was unusual in its character. * * * All these are badges of fraud; that is, evidence of fraud-means of establishing a fraudulent intent. (Bump on Fraud. Convey., 78, et seq.) * * *'

The grantee of the conveyance in question was the son of the grantor. While evidence of a blood relationship between the parties in itself does not conclusively show fraud, such relationship may be of importance when coupled with other circumstances that tend to show fraudulent intent. See Shearon v. Henderson, 38 Tex. 245, 246 (1873); Hughes v. Roper, supra; Blum v. McBride, 69 Tex. 60, 5 S.W. 641 (1887). The recited consideration for this conveyance to Richard Shield, who was a college student at the time, was 'the sum of Ten Dollars ($10.00) and other good and valuable considerations to us-paid by Richard Shield-and the love and affection which we bear toward our son.' The deed also recited as consideration the assumption by Richard Shield of a stated indebtedness in the amount of approximately $92,000.00. The jury found in answer to special issues that both the deeds of March 1, 1954, and March 17, 1954, were not based upon a substantial and valuable consideration, and that the property described in such deeds had more value than was reasonably sufficient to pay all just debts, the payment of which was assumed in said deeds. The defendants have not brought forward to this court any point attacking these jury findings. From a review of the entire record, this court cannot say, as a matter of law, that there is no evidence to support the jury's findings that the conveyance of March 1, 1954, was given with the intent to hinder, delay and defraud the plaintiffs in...