Tittle v. Vanleer

• Decision Date: 10 February 1896
• Citation: 34 S.W. 715
• Parties: TITTLE et al. v. VANLEER et al.
• Court: Texas Supreme Court

34 S.W. 715

TITTLE et al. v. VANLEER et al.

Supreme Court of Texas.

February 10, 1896.

On rehearing. Motion overruled.

For original opinion, see 29 S. W. 1065.

Duncan G. Smith, for plaintiffs in error. J. A. Powers, A. R. Garrett, A. G. Walker, and B. P. Eubank, for defendants in error. Willie, Campbell & Ballinger and Scott, Levi & Smith filed an argument in support of motion for a rehearing.

DENMAN, J.

There seems to have been no serious difference of opinion among the members of this court, since the passage of the act of 1879 regulating an "assignment made by an insolvent debtor, or in contemplation of insolvency, for the benefit of his creditors," as to whether any particular instrument presented for construction should be held to be a mortgage, or trust deed in the nature of a mortgage, or to be an assignment, there having been, on this question, no dissent entered, and no case overruled, so far as we have been able to ascertain. There seems, however, to be much confusion in the mind of the profession as to the principles of law to be applied in determining whether a given instrument belongs to the one class or the other. This is doubtless due in a great measure (1) to the inherent difficulty of determining, by construction from the face of an instrument, read in the light of the circumstances surrounding its execution, the true intent of the maker, and (2) to the fact that the various instruments construed by this court have not always been so fully set forth in the reported cases as to enable the profession to certainly ascertain the very question considered and decided. The first difficulty is unavoidable. Aided by the accumulated wisdom of ages, it is often a very troublesome question to determine from the face of an instrument, even when read in the light of the circumstances surrounding its execution, whether it was intended as a will or a deed, a mortgage or a conditional deed, an executed or an executory contract, a mortgage or an assignment. The second difficulty may be to some extent lessened by a review of some of the cases in which this court has been called upon to determine whether the instruments in question belonged to one class or the other, i. e whether they were mortgages, or trust deeds in the nature of mortgages, or assignments.

In Jackson v. Harby, 65 Tex. 710, grantors, Edmison & Whatley, being insolvent, conveyed "unto Weisenfeld & Co. and to Levi Whatley" all of their stock of goods, "in trust, nevertheless, to J. D. Harby and J. J. Whatley, cotrustees, for the following purposes and uses, to wit:" (1) To take possession of same; (2) to sell same in regular course of business, or otherwise, in their discretion; (3) to pay cost of executing trust; (4) to pay Weidenfeld & Co. a debt of $680; (5) to pay Levi Whatley a debt of $385. The instrument concluded with the provision that, "when the said $680 and the said $385, and all costs of the trust herein created, shall have been fully and truly paid, then this instrument shall be of none effect; otherwise, to remain in full force." The trustees having taken possession, the goods were seized by Jackson, sheriff of Limestone county, under writs of attachment, and sold, and proceeds turned over to attaching creditors, whereupon the trustee sued the sheriff, his bondsmen, and the attaching creditors for their value. The defense was that the instrument was executed for the purpose of defrauding the creditors of the grantor, among whom were plaintiffs in the attachment suits. If the instrument had been an assignment, grantors being insolvent, no such defense would have been permissible, and the trustees, as assignees, would have been entitled to recover in any event; but, if the instrument was a mortgage, or trust deed in the nature of a mortgage, the defense, if true, would have prevented a recovery by the trustees. Therefore, the question as to whether the instrument was a mortgage, or trust deed in the nature of a mortgage, or an assignment, was directly involved, and must have been passed upon by the court before proceeding to consider the other questions in the case. The court held the instrument to belong to the former class, stating, through Robertson, J., that "they [the trustees] are not assignees. Deeds of trust, conveying property directly to trustees, made to secure and pay particular creditors, though expressed in terms sufficient to pass title, if made for creditors generally, are construed to be mortgages `with some of the qualities of an assignment superadded.' Baldwin v. Peet, 22 Tex. 718; Burrill, Assignm. (3d Ed.) §§ 6-8. The instrument under which the plaintiffs claimed was of this character. Edmison and Whatley continued to be the owners of the property, subject to the trust." The court also lay stress upon the fact that the conveyance was to the preferred creditors, as an indication that the instrument was a mortgage and not an assignment; but, although the opinion adverts to and sets out the defeasance clause, it does not seem to attach much importance to the same as indicative of a mortgage.

In Milling Co. v. Eaton, 86 Tex. 401, 25 S. W. 614, the original instrument is not copied in full into the transcript; but, in the finding of facts by the court below, its substance is stated, from which it appears that Eaton, Guinan & Co., merchants, on the day of their failure in business, "conveyed their property by deed of trust to John F. Marshall for the purpose of securing the payment of certain of their debts. Said deed of trust provided and directed that said John F. Marshall should take immediate possession of the property and effects thereby conveyed, which he did, and sell a sufficiency thereof, in the usual course of trade, for cash, to pay off all of the debts therein mentioned, after reserving to said trustee 2½ per cent. commission on the amount realized by such sales, and also a sufficiency to pay all expenses of sales and executing said trust and the rent of the storehouse, and, after having sold such sufficiency, to return to said Eaton, Guinan & Co. the remainder of said property and effects, when said conveyance or instrument was to be of no further effect." After the trustees had taken possession, and before any creditor mentioned therein had assented to or accepted the terms of the trust deed, the milling company, creditors of Eaton, Guinan & Co., sued the latter, and in such suit caused an attachment to be sued out and levied upon the property described in the trust deed, claiming that the same had not become effective by reason of the fact that no creditor had assented to or accepted same. If the instrument was an assignment, the grantors being insolvent, acceptance of creditors, by force of our statute, was not necessary, and therefore the instrument took effect upon its delivery, and plaintiffs would not have been entitled to a foreclosure of the attachment lien. This proposition was conceded, and is clearly stated in the opinion rendered by Chief Justice Stayton. If, however, the instrument was a mortgage, or trust deed in the nature of a mortgage, it did not, under the opinion, become effective before the levy of attachment, because no creditor had then accepted or assented thereto, and therefore plaintiffs were entitled to their foreclosure. Thus, the question as to whether the instrument belonged to the one class or the other was necessarily involved. The learned chief justice, in holding the instrument to be a mortgage, though mentioning, in the beginning of the opinion, that the instrument provided that, after paying the debts specified, and returning the residue of the property to the grantors, "the trust deed was to be no longer operative," does not seem to attach any importance to the defeasance clause, the expression of which he probably regarded as entirely formal, but says that the only difference between the case of Wallis v. Taylor, 67 Tex. 431, 3 S. W. 321, and the one under discussion, is "that in this the instrument confers the power on a third person to sell the mortgaged property and apply the proceeds as therein directed, while in the former case the power was to be exercised by the creditors named. Both instruments would have created mortgages, if consummated." The instrument in Wallis v. Taylor is set out in full in the report of that case, and is in the following words: "Know all men by these presents, that, for and in consideration of value received, I, W. H. Taylor, bargain, sell, and convey the merchandise in my two houses, situated in Anderson, Grimes county, Texas, to the undersigned parties to satisfy a part or all of certain claims held by them against me for the following amounts." Here follows list of creditors and amount of their respective claims. "[Signed] W. H. Taylor."

Notwithstanding the fact that neither Justice Robertson nor Chief Justice Stayton, in the opinions above referred to, seems to attach any importance to the formal defeasance clause, and certainly did not regard it as the decisive test as to whether the instrument belonged to one class or the other, and notwithstanding the fact that each of such instruments fixed preference liens on the property therein described, and provided for the immediate sale thereof to pay the specific debts therein mentioned, as is done in the case before us, nevertheless, it is urged that, by reason of the existence of such clauses, such cases are not authority in support of the latter. While we do not agree with this contention, we will proceed to consider another class of cases, held by this court to be mortgages, or deeds of trust in the nature of mortgages.

In Stiles v. Hill, 62 Tex. 429, the instrument, omitting unnecessary verbiage, was as follows: "Whereas, we, Rogers & Atkinson, are indebted to Hill, Fontaine & Co., $850, evidenced by our note this day, due one day after date; and whereas, we are desirous of securing the payment of said note: Therefore, in consideration of the premises, we by these...