Wasson v. Anglo-Texas Oil Co.

• Decision Date: 03 January 1928
• Docket Number: Case Number: 17189
• Parties: WASSON, Rec., et al. v. ANGLO-TEXAS OIL CO. et al.
• Court: Oklahoma Supreme Court

1928 OK 12

264 P. 164

129 Okla. 222

WASSON, Rec., et al. v. ANGLO-TEXAS OIL CO. et al.

Case Number: 17189

Supreme Court of Oklahoma

Decided: January 3, 1928

Syllabus

¶0 Fraudulent Conveyances--Foreclosure of Mortgage Given by Corporation on Property Purchased from Insolvent Corporation--Creditors of Vendor Held Without Right to Intervene. Where, in an action to foreclose a mortgage by A. against O., a corporation, the common creditors of G., another corporation, file intervening petition alleging: (1) That they are common creditors of G, which was insolvent and was the former owner of the property in foreclosure; (2) that same was transferred by conveyances regular in form to O., but without authority of G.; (3) that such conveyances were upon terms to be paid partly in cash, part by satisfying creditors, balance by issuing stock in vendee to stockholders of vendor; (4) that said cash payment was made and negotiable instruments in a large sum delivered to and received by creditors in payment of their claims against G., and no allegation as to default in delivering stock as per agreement, and where none of such payments, either in money or securities, is tendered back, and where no fraud or lack of consideration is alleged, either in the original sale or in the making and delivering of the subsequent mortgages, and where it is not alleged that any of said transfers were made to hinder, delay, or defeat creditors, and where said interveners have no lien upon, judgment against, or interest in the property under foreclosure, and where the sole ground for relief is based upon the allegation that the original sale of the property was made without authority of its former owner, G., the sustaining of a demurrer to such intervening petition is not error.

Commissioners' Opinion

Appeal from District Court, Tulsa County; Z. I. J. Holt, Judge

Action by the Anglo-Texas Oil Company against the Oklahoma Gasoline & Oil Compay to foreclose a mortgage, in which Clark Wasson, receiver of the First National Bank of Sapulpa, and others, creditiors of the Oklahoma Natural Gasoline Company, intervened. From a judgment sustaining a demurrer to the interveners' petition, they appeal. Affirmed.

Robt B. Keenan, H. B. Martin, and C. A. Steele, for plaintiffs in error.

Biddison & Campbell, R. W. Kellough, and R. Y. Stevenson, for defendants in error.

BENNETT, C.

¶1 The Anglo-Texas Oil Company brought suit in the district court of Tulsa county against Oklahoma Gasoline & Oil Company and others to foreclose a second mortgage for $ 112,802.73 covering certain oil and gas mining leases, two gasoline refineries and equipment, consisting of engines, boilers, compressors, buildings, etc., and a certain contract for the purchase of gas, all belonging to Oklahoma Gasoline & Oil Company. Samuel L. Lubell, trustee, one of the defendants, filed answer and also a cross-petition by which latter he sought to foreclose upon the same property a first mortgage for $ 450,091.51 and also a subsequent lien for $ 53,176.08.

¶2 All of the property described above belonged to Oklahoma Natural Gasoline Company, a corporation, until on or about the 5th day of March, 1923, when, by conveyances, assignments and transfers in proper form executed by its president and attested by its secretary with the corporate seal attached and properly acknowledged, it conveyed said property, upon a consideration of $ 200,000, to Oklahoma Gasoline & Oil Company. Thereafter, the latter company executed and delivered the mortgages herein sought to be foreclosed covering this and other property to Anglo-Texas Oil Company and to Samuel L Lubell, trustee. Upon application a receiver for this property was appointed by the court.

¶3 This appeal involves the rights of certain common creditors of the Oklahoma Natural Gasoline Company to intervene in this foreclosure proceeding for the purpose of having their claims against said company paid out of the property conveyed and mortgaged as hereinbefore set out.

¶4 Their first intervening petition was predicated upon the theory that the Oklahoma Natural Gasoline Company had and should be permitted to assert a vendor's lien upon the property transferred by them to the Oklahoma Gasoline & Oil Company by reason of the fact that parts of the consideration for such transfer had not been paid or performed. The later petitions in intervention show a change in their theory, and disclose that they rely upon the allegation that the transfers and assignments were made "without the authority of said Oklahoma Natural Gasoline Company, a corporation, its officers, agents and stockholders, * * * and were, therefore, of no effect."

¶5 The petition in intervention alleges, inter alia, that the interveners are creditors of the Oklahoma Natural Gasoline Company, a corporation, and were such at the time of the transfer of the properties of said corporation to the Oklahoma Gasoline & Oil Company, and that the debtor is, and has been since such transfer, insolvent, and that all of said properties are now in the hands of a receiver, and they have no adequate remedy at law; that the transfers and conveyances from the Oklahoma Natural Gasoline Company to the Oklahoma Gasoline & Oil Company were executed and delivered without the authority of said Oklahoma Natural Gasoline Company, its officers and stockholders, and that, on that account, such transfers were void and of no effect; that the Oklahoma Gasoline & Oil Company took possession of said property under these said transfers, and thereafter executed the mortgages to Anglo-Texas Oil Company and Samuel L. Lubell, trustee, herein sought to be foreclosed, and that said mortgagees had knowledge of all the facts so alleged.

¶6 The petition further alleges that the Oklahoma Gasoline & Oil Company, after taking over all of said property, issued negotiable promissory notes payable to "ourselves," and delivered them, before maturity, to the various intervening creditors who are seeking relief in this action, and covering the amounts of their several claims against the Oklahoma Natural Gasoline Company, and it is further alleged that these notes were issued and accepted upon no consideration other than as and for renewals of the obligations theretofore existing between said creditors and the debtor, Oklahoma Natural Gasoline Company.

¶7 A demurrer was filed by Samuel L. Lubell, trustee, to the petition of intervention of the Oklahoma Natural Gasoline Company upon the grounds: First, that same fails to state facts sufficient to constitute a cause of action; second, that there is a defect of intervening parties defendant; third, that there is a misjoinder of causes of action; fourth, specifically demurring for that every claim of each creditor did not state facts sufficient to constitute a cause of action. A similar demurrer was filed on behalf of the plaintiff, Anglo-Texas Oil Company, a corporation. The court, upon consideration of these demurrers, held that the same should be sustained, and from this action the case is appealed here by the interveners for review. On page 2 of the brief of plaintiffs in error it is stated:

"The only assignment of error is that the court erred in sustaining said demurrers of the Anglo-Texas Oil Company and Samuel L. Lubell, trustee."

¶8 It might be said in passing that, in the oral argument of this case, the sole ground of error alleged or contended for was the one set out above. Did this petition state a cause of action? The first inquiry is: What sort of proceeding is this? In the pleadings, in the briefs, and in the oral argument, this action has been treated by each of the parties, through their respective counsel, as an action in the nature of a creditor's bill, and, necessarily, the one crucial, essential and determinative inquiry is: Was this transfer by the Oklahoma Natural Gasoline Company to the Oklahoma Gasoline & Oil Company a fraudulent transfer? Was it a fraudulent conveyance? That is, a conveyance made in fraud of its creditors by the transferring company and with a knowledge of that intent on the part of the transferree? Was it a conveyance made with the fraudulent intent of hindering, delaying or defrauding creditors? And having these inquiries in mind, we will examine the petition from its four corners to determine whether or not it alleges a transfer for that purpose.

¶9 (1) It is not alleged in the petition that there was any fraud in the sale of the properties of the Oklahoma Natural Gasoline Company to the Oklahoma Gasoline & Oil Company, or that same was without, or for, an inadequate consideration.

¶10 (2) It is not alleged that there was any fraud in the execution or delivery of the conveyances which transferred the properties of the Oklahoma Natural Gasoline Company to Oklahoma Gasoline & Oil Company.

¶11 (3) It is not alleged that there was any fraud or failure of consideration in the making or taking of the mortgage made by Oklahoma Gasoline & Oil Company to Anglo-Texas Oil Company.

¶12 (4) There is no fraud or failure of consideration alleged in the making or taking of the mortgages from the Oklahoma Gasoline & Oil Company to Samuel L. Lubell, trustee, the foreclosure of both of which mortgages is sought in this action.

¶13 (5) It is not alleged that plaintiffs in error or any of them, prior to the filing of the petition in intervention, obtained a judgment upon their claims, nor is it alleged that they or either of them have any lien upon the property involved.

¶14 (6) It is not alleged in the petition that the claims of the interveners are admitted; and

¶15 (7) It is not alleged that the interveners are all the creditors of the Oklahoma Natural Gasoline Company, or that they sue in behalf of all such creditors.

¶16 Under the first head as to fraud, the only allegations which are even directed towards this point are that these transfers "were so executed and delivered and recorded without the authority of said Oklahoma Natural Gasoline Company, a corporation,...