Opinion
May 20, 1911. Rehearing Denied June 10, 1911.
Appeal from District Court, Mitchell County; Jas. L. Shepherd, Judge.
Action by W. L. Edmondson against G. B. Coughran and others. From a judgment for defendants, plaintiff appeals. Reversed and remanded.
Beall Beall and W. B. Crockett, for appellant.
Royall G. Smith, for appellees.
W. L. Edmondson instituted this suit against G. B. Coughran, sheriff, and the City National Bank of Colorado, for damages growing out of the attachment and conversion of a certain stock of goods alleged to be owned by him; the same having been seized as the property of one J. A. Henderson. The defendants' answer embraced a general denial and a plea of fraudulent conspiracy between plaintiff and said Henderson, that the stock of goods was really the property of said Henderson, etc. There was a trial before a jury resulting in a verdict and judgment for the defendants, and the plaintiff has appealed.
We cannot consider the first and tenth assignments, since the record fails to show any ruling on the special exception made the basis of the first, and through inadvertence of some sort the tenth as presented in the record is unintelligible.
There was no error in admitting the testimony complained of in the second, third, fourth, fifth, sixth, and eighth assignments, since all such evidence bore upon the issue of Henderson's insolvency; but, if there had been, yet the fact of his insolvency appears to have been undisputed, and the rulings were harmless.
Neither was there error in admitting the testimony of the witness Ratliff, from whom plaintiff alleged he had purchased the stock of goods in question, to the effect that he had a written contract with Henderson for the sale of such stock. It tended to support appellees' theory that the sale was in reality to Henderson, though nominally to Edmondson.
Appellant requested the submission of the case on special issues. This request was denied, but the refusal was within the discretion of the trial judge under the present statute. G., H. S. A. Ry. Co. v. Jackson, 93 Tex. 262, 54 S.W. 1023.
Other assignments are predicated upon the supposed error committed by the court in authorizing the jury to consider, as a badge of fraud between Henderson and appellant, the gift or transfer of certain lands owned by Henderson in New Mexico; the insistence being that a disposition of lands in another state cannot in law be fraudulent as to existing creditors. We are not inclined to agree with this contention even as an abstract proposition; but concretely the transaction under investigation in this case is whether or not the stock of goods purchased from Ratliff became the property in fact of Henderson or of appellant. Whether the transfer of lands in New Mexico within itself could be fraudulent as to creditors or not is beside the question, which is, as above indicated; Did the stock of goods taken in exchange for it from Ratliff become in truth the property of Henderson or of Edmondson? Whatever the form of the transaction, if its effect was mala fides to place the stock of goods, which in truth belonged to Henderson, in the name of appellant and thus place beyond the reach of creditors property which otherwise would be subject to their demands, the transaction would in law be fraudulent, and the property subject to seizure by Henderson's creditors, for it is peculiarly true that in transactions of this kind the law considers the substance and not the form. While this is true, it is equally true — so much so that authorities to that effect need not be cited — that a debtor, though insolvent, may, nevertheless, pay one creditor to the exclusion of others, though the effect in all such cases necessarily is to hinder and delay those creditors not thus preferred, provided always the transaction be in good faith at least upon the part of the creditor, thus receiving payment.
Now it became an issue under the evidence whether Henderson was indebted to Edmondson and desired to pay him for which purpose a jury might find the stock of goods was taken in Edmondson's name. A jury might also find from the evidence that after payment it was the intention of the parties that Henderson should receive back whatever remained. In this state of the evidence the court charged as follows: "Now, therefore, if from the evidence you reach the conclusion from the facts and circumstances surrounding the transaction between the plaintiff and J. A. Henderson, the design thereof was not only to secure the plaintiff in repayment of debt, if any debt there was, but also to enable J. A. Henderson to get the remainder arising from said stock of goods after the payment of his debt to plaintiff, the legal effect of such transaction would be to hinder and delay said Henderson's creditors, and, therefore, as to such creditors, such transaction would be void, and the goods in question would be subject to attachment." The same instruction, in effect, is found in the seventh, eighth, and ninth paragraphs of the charge. This, as we have just seen, is not the law and undoubtedly worked a great injustice to appellant, since, under his own testimony that he intended returning to Henderson whatever remained after satisfying his debt, this instruction virtually directed a verdict for the defendants.
On another trial it is not proper that special charge No. 2, requested by appellees, should be given in view of paragraph 10 of the court's charge. In this connection it is well to say that while the witnesses speak of the transaction as a gift of one-half the New Mexico land by Henderson to Edmondson, and a jury might perhaps find it to be such, yet, on the whole, they might with equal propriety find that what the witnesses denominate a gift was in reality a purchase, although on a small consideration of his equity in property which both parties under the circumstances considered of trifling value, and hence the appellant would stand as a purchaser rather than a donee.
For the error indicated, the judgment is reversed, and the cause remanded.