Thompson v. Baker

A conveyance by a debtor in Texas of his real estate there, m.ade with intent to delay, hinder or defraud his creditors, being void as to the latter under the statutes of that State, a judgment sale and transfer of such property, in an action commenced by the levy of an attachment upon it. as the property of the debtor, made after the fraudulent sale, is hpheld in this case as against a bona fide purchaser from the fraudulent grantee, taking title after the levy of the attachment.

. ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF TEXAS. . This was an action of trespass to try the title to a tract of land in Clay County, Texas, containing seventeen hundred and -twenty-nine acres, more or less. The dispute was between Thompson, who was the plaintiff below, and Schuler. Each party claimed under Baker. Schuler pleaded not guilty, alleging, by way of reconversion, that, he was the owner in fee and entitled to a judgment for the land, with damages; and writ of restitution. The court tried the case, making a special finding of facts, in accordance with the agreement, of the parties, upon which judgment was entered in favor of Schuler. The history of the title, as shown by" that, finding, was as follows: Baker, August 30, 1884, conveyed the land,' with general warranty, to one Ledbetter, the deed' reciting a/ consideration of $8225 evidenced by three promissory notes, each for one-third of that sum, and due, respectively, on the first days of September, 1885,1886 and 1887. The grantee was a nephew of Baker, and a single man, living on the land with his • uncle, and having there 40 heac] of' cattle.. After the deed,’ he continued to live with Baker, who had 300 head of cattle on the land. But their valúe is not stated; nor does it appear to what extent . Baker was indebted, or what other property, if any, he had in the/State subject to execution. ■The deed of' Augus;t..30, 1884, was made to defraud the creditors of the grantor, particularly Schuler, who, at its date, held, the note of Baker and others for $10,000. It was never delivered to Ledbetter, but was put on record by Baker, September 29, 1884. A fe.w days before that deed was recorded, namely,'on the ‘24th day of September, 1884, Schuler instituted suit on his demand of $10,000 against Baker and others in the District Court of Clay County, Texas, and, on the same day, sued out an attachment, which Was levied upon the land in controversy as the property of Baker. That suit, on Schuler’s application, was removed into the Circuit Court of the United States for the Northern District of Texas, in which court the transcript was filed December 4, 1884. On the next day, December 5, 1884, Schuler sued out in that court another writ of attachment, which was levied the same day on the land in dispute as the property of Baker. On May 9, 1885, Ledbetter made and delivered to L N. Israel a general warranty deed, conveying the land to the latter, and reciting a consideration of $10,000 cash. On the same day, Baker executed a release of his vendor’s lien. The deed and release were both' acknowledged on the day last named. Two days later, May 11, 1885, Baker executed to Israel a quit-claim deed for the land. No consideration was paid by Israel to Baker or to Ledbetter for their respective ■conveyances, which were recorded' May 14, 1885. On the 1st day of August, 1885, Thompson loaned to Israel the sum of $5000, for which the latter executed his note •secured by mortgage on this land. Default in performing the ■stipulations of the mortgage having occurred, Thompson brought suit against Israel in the court below to foreclose it. The finding does not show when that suit was instituted, but it was commenced after Schuler’s action was brought. In Schuler’s suit, the court below rendered judgment, January 12, 1886, against Baker and others for the debt sued on, “ with foreclosure of the attachment lien.” The judgment recites that “ the attachment lien, as it. existed December 5, 1884, is foreclosed; ” the writ issued in the state court not being mentioned in it. Upon the above judgment an order jof sale was issued. The sale took place June 1, 1886, Schuler becoming the purchaser,, and. receiving a deed from the marshal, which was recorded June 4, 1886. Subsequently, June 16, 1886, Thompson obtained a decree in his suit,, under which the land was sold on the 3d of August,. 188fy 'He became the purchaser at the sale, receiving from the marshal a' deed, which was recorded in September, 1886. When'-Thompson made the loan to, and took the mortgage from, Israel, he had. no knowledge of the fact that the latter paid nothing for the conveyances from Baker and Ledbetter, nor of the fraudulent intent-with which Baker conveyed to Ledbetter, nor actual notice of any defect or infirmityin the title. . The writs of attachment in the action of Schuler v. Baker,, etc., the court found, “were properly sued out, issued and levied, and by proper' officers, and the lien on the land in controversy, under the writ of December 5, 1884, was duly and regularly foreclosed.” It was also found that “ the foreclosure proceedings under the mortgage from Israel to Thompson were regular.” Neither Thompson, Ledbetter nor Israel were parties toSchuler’s suit, nor was Schuler a party to Thompson’s suit. Such is the case made by the finding of facts. The statute of Texas, relating to frauds'and fraudulent conveyances, declares that “every gift, conveyance, assignment or transfer of, or charge upon any estate, real or personal, every suit commenced, or decree, judgment or "execution suffered or obtained, and every bond or other writing given with intent to delay, hinder or defraud creditors, purchasers or other persons of or from what they are or may be lawfully entitled to, shall, as to such creditors, purchasers or other persons, their representatives or assigns, be void. This article shall not affect the-title of a purchaser for valuable consideration, unless it appear that he had notice of the fraudulent, intent of his immediate grantor, or of the fraud rendering void the title ofssuch grantor;” also, that “every gift, conveyance,, assignment, transfer or charge made by a debtor, which is not. upon a consideration deemed valuable in law, shall be void as. to prior creditors unless it appears that such debtor was then possessed of property within this state sufficient to pay his existing debts; but such gift, conveyance, assignment, transfer or charge shall not on that account merely be void as to subsequent creditors, and though it be decreed to be void as to a prior creditor, because voluntary, it shall not for that cause he decreed to-be void as to subsequent creditors or purchasers.” Sayles’s Texas Civil Statutes, vol. 1, Art. 2465, p. 807, Art. 2466, p. 809; Bev. Stats. Texas, 1879, p. 363.