United Bank Metro v. Plains Overseas Group, Inc., 01-82-0696-CV

• Decision Date: 02 June 1983
• Docket Number: No. 01-82-0696-CV,01-82-0696-CV
• Parties: UNITED BANK METRO, Appellant, v. PLAINS OVERSEAS GROUP, INC., et al., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 281

670 S.W.2d 281

UNITED BANK METRO, Appellant, v. PLAINS OVERSEAS GROUP, INC., et al., Appellees.

No. 01-82-0696-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

June 2, 1983.

Don M. Kennedy, R. Kenneth Keim, Houston, for appellant.

John Jones, Dallas, for appellees.

Before JACK SMITH, BASS and COHEN, JJ.

OPINION

COHEN, Justice.

This case requires us to decide whether a cause of action under Tex.Rev.Civ.Stat.Ann. art. 3827a (Vernon 1980), commonly called the "turnover" statute, can be brought against one who is not a judgment debtor. Appellant brought suit against C. Benton Musslewhite and James W. Grafton, against whom they had obtained judgments for money damages, seeking various relief including injunction, receivership and turnover of assets. Appellants also sued Plains Overseas Group, Inc., (POGI) and Plains Overseas Export, Inc., (POEI) seeking the same relief under the turnover statute asserting that both corporations were alter egos of Musslewhite and Grafton and were being used to conceal and transfer fraudulently the assets of the individual judgment debtors, Musslewhite and Grafton. Neither POGI or POEI were judgment debtors of the appellant, nor had they been parties to the prior litigation with appellant.

The district court sustained the plea in abatement against appellant's claim for relief against POGI and POEI under art. 3827a, and severed such causes of action from other causes of action alleged against POGI, POEI, Musslewhite and Grafton upon other legal theories.

Article 3827a provides:

(a) A judgment creditor whose judgment debtor is the owner of property, including present or future rights to property, which cannot readily be attached or levied on by ordinary legal process and is not exempt from attachment, execution, and every type of seizure for the satisfaction of liabilities, is entitled to aid from a court of appropriate jurisdiction by injunction or otherwise in reaching the property to satisfy the judgment.

(b) The Court may order the property of the judgment debtor referred to in Subsection (a) of this section, together with all documents or records related to the property, that is in or subject to the possession or control of the judgment debtor to be turned over to any designated sheriff or constable for execution or otherwise applied toward the satisfaction of the judgment. The Court may enforce the order by proceedings for contempt or otherwise in case of refusal or disobedience.

(c) The Court may appoint a receiver of the property of the judgment debtor referred to in Subsection (a) of this section, with the power and authority to take possession of and sell the non-exempt property and to pay the proceeds to the judgment creditor to the extent required to satisfy the judgment.

(d) These proceedings may be brought by the judgment creditor in the same suit in which the judgment is rendered or in a new and independent suit.

(e) In a proceeding under this section, a judgment creditor is entitled to recover reasonable costs, including attorney's fees.

One respected commentator has written that, "These statutes should be liberally construed and harmonized with existing statutes and rules of procedure." Hittner, "Texas Post-Judgment Turnover and Receivership Statutes", 45 Tex.Bar J. 417 (1982).

The purpose of the turnover statute is stated in the Texas House and Senate Committee Reports:

The traditional methods of reaching property of a judgment debtor to satisfy a judgment have been found inadequate in cases where the judgment debtor has property outside the State of Texas, where the judgment debtor owns property interests in such items as contract rights receivable, accounts receivable, commissions receivable and similar acts to property or rights to receive money at a future date.

Quoted in Hittner, supra.

Appellant has sought to go far beyond collection of an account receivable, commission receivable, contract right receivable, note receivable, or any similar right to future payment. Although neither POGI or POEI are judgment debtors, the appellant argues that they should be treated as judgment debtors, since they are merely alter egos of judgment debtors Grafton and Musslewhite. This argument would permit the appellant to skip the trial on the merits in this case with respect to the alter ego issue and declare itself the winner. In Pace Corporation v. Jackson, 155 Tex. 179, 284 S.W.2d 340, 351 (1955) the court stated:

Courts will not disregard the corporate fiction and hold individual officers, directors or stockholders liable on the obligations of a corporation except where it appears that the individuals are using the corporate entity as a sham to perpetrate a fraud, to avoid personal liability, to avoid the effect of a statute, or in a few other exceptional situations.

See also Tigrett v. Pointer, 580 S.W.2d 375 (Tex.Civ.App.--Dallas 1979, writ ref'd n.r.e.); Karl & Kelly Company, et al. v. Clifford McLerran, et ux., 646 S.W.2d 174 (Tex.1983).

These cases show that our courts have been slow to disregard corporate entities, and have done so only after compelling evidence was produced at a trial, by jury if desired, on the merits. Texas Constitution, art. 1, § 15 and art. V, § 10 (Vernon 1955).

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