Wiggins v. Blackshear

• Decision Date: 10 May 1894
• Citation: 26 S.W. 939
• Parties: WIGGINS v. BLACKSHEAR et al.
• Court: Texas Supreme Court

26 S.W. 939

WIGGINS v. BLACKSHEAR et al.

Supreme Court of Texas.

May 10, 1894.

Error from court of civil appeals of fourth supreme judicial district.

Action by W. N. Wiggins against W. S. Blackshear and others for conversion. Judgment for defendants, and plaintiff appealed to court of appeals, which affirmed the judgment (24 S. W. 918), and plaintiff brings error. Reversed.

D. W. Doom, for plaintiff in error. Frank Grady and J. H. Barton, for defendants in error.

STAYTON, C. J.

This is an action by W. N. Wiggins against the persons composing the firm of Blackshear & Co., and P. C. Baird, sheriff, to recover the value of property seized by the latter under attachment sued out by Blackshear & Co. in an action brought by them against J. T. Wiggins & Co., a firm composed of J. T. Wiggins and S. J. Redman. J. T. Wiggins & Co. owned a stock of drugs, paints, oils, etc., of the value of $1,310, besides accounts and claims amounting to $800. J. T. Wiggins was indebted to W. N. Wiggins in the sum of $445, exclusive of some interest, and S. J. Redman was indebted to F. W. Henderson in the sum of $594. These were not partnership debts, but the money for which they were contracted seems to have been used in the partnership business. The firm was indebted in the sum of $871.63, of which $292.71 was due to Blackshear & Co. On December 24, 1889, Wiggins & Co. were unable to raise money to meet their maturing indebtedness, and in that sense the firm was insolvent, but it does not appear what property the members of the firm owned at that time. On that day they conveyed to W. N. Wiggins, in trust, all of the partnership property, with power to sell it, collect the debts, and, after paying the expenses, to pay (1) the sums due from J. T. Wiggins to W. N. Wiggins, and the sum due from Redman to Henderson; (2) the sums due to partnership creditors in full or pro rata, without preferences between them, — any property remaining after these things were done to be returned to J. T. Wiggins & Co. Before the trust deed was executed, and with view to make them partnership creditors, the notes due from J. T. Wiggins to W. N. Wiggins, and from S. J. Redman to Henderson were indorsed by the firm of J. T. Wiggins & Co., with knowledge of their creditors. W. N. Wiggins took possession of the property at once, in accordance with the trust deed, whereupon Blackshear & Co. brought suit for the sums due them, and seized the property under attachment, and it was afterwards sold as perishable property. That seizure was the basis of this action, and the question arises whether Wiggins & Co. could thus, by way of mortgage, appropriate their partnership property to payment of individual debts of members of the firm. In the decision of this question, the fact that the money borrowed by the persons composing the firm, for which they were only severally liable, may have been used in the purchase of property that became the property of the firm, may and will be considered only in so far as it shows that the mortgage given to secure sums so borrowed and used was made without fraudulent intent. That the individual debts so secured were real, and the money obtained through their creation used in the purchase of property which became partnership property, takes from the case all question of fraud, and leaves the simple question whether the members of a partnership, circumstanced as was the firm of Wiggins & Co., may lawfully mortgage partnership property to secure debts of the several members of the firm, for which the partnership is not liable.

There are two theories on which it is sometimes claimed that creditors of a partnership have right to have its assets applied to the payment of their claims in preference to creditors of the persons composing the firm. The first of these is that the partnership property is presumed to have been obtained through credits given to the firm, and that, for this reason, partnership creditors ought to be preferred in the distrubution of its assets. But, if courts could enter into such inquiries, the facts of this case would defeat the right to preference on such a ground, for the partnership property in question was doubtless largely acquired with money borrowed by the several persons composing the firm from W. N. Wiggins and F. W. Henderson, to whom preference was given in the...