« PreviousContinue »
the court was called to the agreement or not; the court in which the former action was that, on account of the agreement, he did tried had jurisdiction orer the parties to, not introduce Daniel McCray's chain of title and subject-matter involved in, that conto said 15+1-acre tract of land, which he troversy, cannot be questioned. What was had with him at the trial." An attorney rep- the issue involved in that cause, as shown by resenting John D. Freeman in that cause cor- the record? An issue is the question in disroborated that statement, and testified "that pute between parties to an action, and, in the before the argument began in said cause the courts of this state, that is required to be attorneys for both parties agreed in open presented by proper pleadings. The record court that the only question at issue was as of the former action shows that plaintiff, in to whether the George Allen 198-acre survey his pleadings, alleged that he was the owner was included within the boundaries of the of a tract of land therein particularly deJoseph Washington one-third league survey; scribed; that defendants, without right, had that he remembers that there was no land taken possession of that; and that he was in controversy in said suit, except said 198 entitled to have it restored to him. It is acres; and that the whole controversy was conceded that the tract of 13143 acres now in in regard to same." To verify his statement controversy is a part of the land so claimed. he referred to his brief filed in that cause, It shows that the defendants denied plainin which he said the following statement tiff's ownership, and controverted his right to was made: "It was admitted that defend- possession, and, to intensify this denial, asant in error (John D. Freeman) was the serted right in themselves, and stated the owner of the said Washington survey, and manner in which it was claimed that this acthat the plaintiffs in error were the owners crued. Thus were the issues presented, and of the title to the George Allen survey, and the leading issue was one of title; and the the question at issue was whether the said fact that the determination of that may have Allen was included in the boundaries of the depended on a question of boundary could said Washington survey.” McCray was per- not change the character of the vital issue in mitted to state that he was present at the the case, for that was but a question of fact, trial of the former action, and that “the title to be considered like any other fact in deto the 13442-acre tract was not involved in termining whether the issue of title to the said suit, and his title papers to the same land should be decided in favor of the one were not read in evidence." This cause was party or the other. What the issues made tried by a jury, and in reference to the by the pleadings were is not left uncertain former judgment the court instructed them by the record. The record of the former as follows: "Second question for you to an- action shows that the court instructed the swer is whether or not, in the case decided jury that the controversy between the parin 1883, of J. D. Freeman v. McCray & Mc- ties was one of title to the land described in Aninch (No. 1,311), the title to the 13443 plaintiff's pleadings; that he had shown title acres now claimed by McCray out of the to the Washington survey, and defendants Joseph Washington survey was involved as had shown title to the Allen survey, after an issue; or was or was not the boundaries which they were instructed to determine between the Washington and Allen surveys whether the land described in plaintiff's peti. the only issue decided in said cause?" The tion was a part of the Washington survey, jury found that the only issue in the former and in the event they so found they were inaction "was the boundary line between the structed to find for the plaintiff. The court Allen and Washington surveys." The court decided the question of title to the respective refused to instruct that “the effect of the surveys, and only submitted to the jury the petition of the plaintiff, John D. Freeman, question of boundary, on which title to the in the said original suit, and the said answer land then in controversy depended, but this of the defendants therein, was to put in is- did not eliminate the question of title to the sue in said suit the title and right of posses- land sued for. Questions of boundary are sion to all the land described in the petition never the subjects of litigation within themof plaintiffs in said original suit.”
selves, but become so only when some right Where it appears from the record of a or title is thougit to depend on their detercourt having jurisdiction over the parties and mination; and the fact that the court subsubject matter that an issue has been pre-mitted only that question to the jury does not sented and decided, then the decision so leave uncertain the issue actually tried and made, so long as it is not set aside in some determined in the former action, even if the lawful manner, must be held conclusive upon charge be considered without reference to the rights of the parties, when the same is- other parts of the record. The judgment sue is again presented; and in such cases ex- was: “It is therefore considered by the court trinsic evidence cannot be received to con- that the plaintiff, John D. Freeman, recover tradict the record, by showing that an issue of the defendants, J. F. McAninch and Daniel necessarily involved in the cause was not | McCray, the premises described and bounded presented and decided. If the record leaves as follows." It describes the land as de. that matter uncertain, then extrinsic evi- scribed in the petition, and then declares that dence may be resorted to for the purpose of for this "he may have his writ of possession, showing what was actually decided. That , and his costs in this behalf expended, for
which he may have his execution.” In pe- seq.
It is not the less so because the detition for writ of error, defendants alleged fendant failed to produce any evidence of that plaintiff had “recovered of and from the title on his part; otherwise, a party might said defendants the certain tract of land avoid being concluded by the judgment, in sued for." That judgment, in the light of any case, by withholding his evidence. The the entire record, was an unequivocal ju- record of the judgment conclusively estabdicial determination that the title to the land lishes that the title was in issue, and it was described in it was in the plaintiff, and that not competent for the defendant to impeach he was entitled to its possession, and the evi- and contradict it by the production of parol dence offered to prove that such was not the evidence." Fisk v. Miller, 20 Tex. 582; Robissue presented and determined ought to have erts V. Johnson, 48 Tex. 137; Graves v. been excluded. There is no decision in this White, 13 Tex. 123; Oldham v. McIver, 49 state, nor elsewhere, so far as is known, Tex. 572; Nichols y. Dibrell, 61 Tex. 541; which sanctions the admission of such testi- Flippen v. Dixon, 83 Tex. 421, 18 S. W. 803; mony, in the face of such a record.
Lee v. Kingsbury, 13 Tex. 70; Tadlock v. The case of Foster v. Wells, 4 Tex. 104, Eccles, 20 Tex 792; McGrady v. Monks, 1 was one in which the judgment of the jus- Tex. Civ. App. 613, 20 S. W. 959; Armstrong tice of the peace came in question; and, his v. City of St. Louis, 69 Mo. 310; Long v. record not showing what was adjudicated, it Webb, 24 Minn. 383; Bailey v. Williams, 6 was held that this might be shown by ex- Or. 71; Sturdevant v. Randall, 53 Me. 153; trinsic evidence. But in that case the gen- Butler v. Glass Co., 126 Mass. 516; Campbell eral proposition "vas announced: “That the v. Butts, 3 N. Y. 174; Jones v. Perkins, 54 judgment or decree of a court possessing com- Me. 396; Freem. Judgm. 275, 300; Black, petent jurisdiction shall be final as to the Judgm. 625; Van Fleet, Coll. Attack, 526; matters determined, cannot be controverted. Whart. Ev. 785; Duchess of Kingston's Case, The principle, however, extends further. It 2 Smith, Lead. Cas. (8th Am. Ed.) 915 et seq. is not only final as to the matters actually The cases of Cook v. Burnley, 45 Tex. 115; Hordetermined, but as to every other matter ton v. Hamilton, 20 Tex. 611; and Pishaway which the parties might litigate in the cause, v. Runnels, 71 Tex. 332, 9 S. W. 260,-do not and which they might have had decided. Le hold to the contrary. In Russell v. Place, Guen v. Gouverneur, 1 Johns. Cas. 436; 94 U. S. 608, the same rule is recognized; but Fischli v. Fischli, 1 Blackf. 360. But it is in that case it did not appear from the record only when the trial was on the merits, when on what issue the cause was tried, and it was all the matters between the parties were or held that “to apply the judgment and to give could have been adjudicated, that the judg. effect to the adjudication actually made, ment is a bar to another trial.” This, with when the record leaves the matter in doubt, its well-recognized limitations, has been rec- such evidence is adinissible." That suit was ognized as the law in this state from the brought for infringement of a patent in cerearliest times. After asserting the same tain respects, and in bar of that action a forrule, in another case, it was said: “Such be- mer judgment on a similar charge was pleading the effect of the former judgment, * ed; but it did not appear from the record in no evidence could have been received to im- the former case whether the infringement, peach the judgment when the record of it on account of which a recovery was had, was offered. It might have been competent was the same as that on which the pending to receive evidence to support its identity. suit was based. The case of Hickerson v. But if the record did not show, when com- City of Mexico, 58 Mo. 61, seems to have prepared with the matters put in controversy in sented a similar question; but there is no the suit in which it was offered, that it em- intimation in the opinion that parol evibraced the same subject-matter, it could have dence could be received to contradict the offered no bar on the plea of nul tiel rec- record, and the same may be said of the ord.” Weatherd v. Mays, 4 Tex. 390. In the opinion in Cunningham v. Foster, 49 Me. 68. same case it is aptly said: "Our system is To hold that an issue as to boundary alone happily well adapted to show conclusively by was tried, and that no issue of title was prethe record whether it was sought to litigate sented and determined, would be to deny to a matter that had already been adjudicated. the record its only legitimate construction; The cause of action is required fully to be set to attribute to the parties the intention to out in the petition, and the defense in the have an issue of fact decided, from which no answer, that there would be no uncertainty benefit whatever could result to either party; as to the matter litigated in the adjudged and, worse still, to assume that the court case, or whether it was decided on its merits, did, and intended to, enter a judgment which and as little as to what was sought to be could have no effect,-for if the issue of title litigated in the suit pending." "The plain-| to the property was not determined, or intiff's title was put directly in issue by the tended to be, it was wholly unimportant defendant's answer in the former suit. It where the boundary between the surveys was the material and traversable matter in
The issue presented by the pleadings, issue between these parties in that suit, and and determined by the judgment, was one of the judgment upon it is conclusive of that title; and that under the agreement of the question in this suit 1 Greenl. Ev. 528 et parties, or determination by the court, of
the effect of written muniments of title of- / judgment of the court of civil appeals and fered by the respective parties, this depended the judgment of the district court will be on the fact of true locality of the boundary reversed, and the cause remanded for further between the surveys, could not change the trial. character of that issue. The effect of the agreement proved was that the right of the plaintiff to recover should depend on the question whether the land described in his peti
LYONS-THOMAS HARDWARE CO. et al. tion was a part of the Washington survey;
V. PERRY STOVE MANUFG CO. et al. but this did not change the issue made by (Supreme Court of Texas. June 7, 1894.) the pleadings, nor divest the judgment of its
INSOLVENT CORPORATION-PREFERENCE OF CREDITeffect as a determination of title, any more ORS — Suit TO SET ASIDE -- ORDER IN VACAthan would it had the parties agreed that Tion-VALIDITY-RECEIVER'S LIABILITIES. judgment should be entered for the plaintiff 1. An insolvent corporation, which has if some muniment of title offered by him ceased to do business, or which, by conveying was found to be genuine, and that it should
all its property, has incapacitated itself for con
tinuing its business, cannot prefer its creditors, be for defendants if that was found to be a 2. Though the officers of a corporation tesforgery. It is not claimed that any agree- tified that it was not insolvent, yet, when it ment was made that judgment should not
appeared that it was largely indebted, and had
conveyed all of its assets to a trustee for the be entered for plaintiff for the 13413 acres
benefit of preferred creditors, a conclusion that now claimed by McCray if the land described it was insolvent is justified. in the petition was found to be a part of the 3. Where an amended complaint, in a snit Washington survey, but that in that event he
by simple contract creditors of an insolvent cor
poration to set aside its deed of trust for the should have judgment for all the land but benefit of preferred creditors, states that plainthat now claimed by McCray. Under such tiffs have recovered judgments against the coran agreement, another and very different poration during the pendency of the suit, they
may maintain the suit, if they could not have question might arise. Pending the former
done so originally. action, McCray may have acquired title to so 4. In such an action it is proper to join much of the Washington survey as he now actions against the preferred creditors to comclaims; but, if so, it was his right to assert
pel them to pay into court money which has
been paid to them by the trustee. that when the cause was tried, and his failure
5. In an action by the creditors of an insolto do so does not now entitle him to the relief vent corporation against a trustee under a trust he might then, by diligence and care, have se deed for the benefit of preferred creditors, who cured. “A party cannot relitigate matters
has power to sue in respect to the assets, to set
aside the trust deed, the beneficiaries thereunwhich he might have interposed, but failed der are not necessary parties. to do, in a prior action between the same 6. In an action against a preferred creditparties, or their privies, in reference to the
or to compel him to pay into court money wrong.
fully paid him by the trustee for the benefit of same subject matter.” And if one of the
creditors, a complaint alleging that plaintiffs parties failed to introduce matters for the are not informed of the facts of the payment, consideration of the court that he might nor of the amount, is sufficient to admit evihave done, he will be presumed to have
dence of such payment, as the facts and waived his right to do so. Hackworth v.
amount are particularly within the knowledge of
the creditor. Zollars, 30 Iowa, 433; Hites v. Irvine, 13 7. Where, in an action by creditors of an Ohio St. 283; Le Guen v. Gouverneur, 1 Johns. insolvent corporation to set aside a trust deed
for the benefit of creditors, money has been Cas. 436; Gray v. Dougherty, 25 Cal. 206.
paid by the trustee to a creditor, who has interIf a party fails to plea.l a fact he might have vened, under a void order of the court, the pleaded, or makes a mistake in the progress court may order the creditor to return into court of an action, or fails to prove a fact he
such money, the case not having been fully ad
judicated. might have proved, the law can afford him
8. In an action by creditors of an insolvent no relief. When a party passes by bis op- corporation for the appointment of a receiver, portunity, the law will not aid him. In and also to set aside a trust deed for the beneEwing v. McNarry, 20 Ohio St. 322, the
fit of preferred creditors, the court cannot, dur
ing vacation, adjudge the deed valid, and, after judge says: “By refusing to relieve parties appointing a receiver, order him to sell the against the consequence of their own neg- goods and pay the proceeds to the preferred lect, it seeks to make them vigilant and care
creditors; and the receiver is liable for the
amounts so paid out. ful. On any other principle, there would be
9. Where, in an action by creditors of an no end to an action, and there would be an insolvent corporation to have a receiver apend to all vigilance and care in its prepara- pointed, and also to set aside a trust deed for tion and trial.” The same principle is well
the benefit of preferred creditors, the judge, in
vacation, though refusing to appoint a receiver, settled in numerous authorities. See Em
orders the trustee to hold the assets, and rebury v. Conner, 3 N. Y. 511; Pierce v. Knee- quires him to file a bond and inventory and reland, 9 Wis. 23; Birckhead v. Brown, 5 Sanf.
port to the court, the trustee will be considered
à receiver, as the judge having only the power 135; Bridge Co. v. Sargent, 27 Ohio St. 237.
to appoint a receiver in vacation, the substance This is necessarily the law in all cases in of the appointment will be considered. which failure to use proper diligence is not 10. Where a creditor who had begun a suit caused by accident, excusable mistake, or
against the trustee named in a corporate deed fraud of the adverse party. Bassett v. Rail
for the benefit of creditors, to recover part of the
assets of the insolvent corporation, joins in an road Co., 150 Mass. 180, 22 N. E. 890. The action to set aside the deed and for the appointment of a receiver, the court may permit | ing the clerk to enroll the decree upon the him to withdraw and prosecute his original suit, minutes of the court, which order was duly as it can in the distribution of the assets pro tect the trustee from such suit.
excepted to at the time. This decree was
duly signed by the judge, and enrolled by Error from court of civil appeals of fifth the clerk, and at the following term the minsupreme judicial district.
utes of the court were signed by the judge. Action by the Perry Stove Manufacturing The trustee gave bond for $85,000, as reCompany and others against the Lyons- quired. The inventory was duly filed and Thomas Hardware Company and others. approved, and the trustee administered the From a judgment of the court of civil ap
trusts, under the directions and orders of peals reforming and affirming the judgment the court, made in vacation, sold the propof the district court, defendants bring error. erty, and paid the proceeds upon the mortAffirmed.
gage debts as ordered, and at the following The opinion of the court of civil appeals term filed his accounts showing how he had (RAINEY, J.) was as follows:
executed the same, and asked to be dis"This suit was originally brought Novem- charged. The plaintiffs took no further acber 20, 1889, by appellees, Perry Stove Manu- tion in the case, and made no effort to have facturing Company and six other simple con- the decree of the court set aside, but acquitract creditors of the Lyons-Thomas Hard- esced therein, until all of the property had ware Company, in what they termed been sold, and the proceeds applied to the 'creditors' bill,' setting up that the said hard- payment of the secured debts, under the ware company was an insolvent private cor- order of the court, when on August 7, 1890, poration, and had on November 9, 1889, ex- the plaintiffs and a number of other credecuted to L. P. Harrison, trustee, three mort | itors filed a first amended original petition, gages to secure certain debts, covering all setting up that Shoveling, Daily & Gales of its property and giving preferences; that and eighteen other creditors of the Lyonsthe Baker Wire Company had sequestered Thomas Hardware Company had obtained a part of the assets, making the hardware judgment against it; that the mortgages company, the trustee, and the Baker Wire were invalid, and the trustee had refused Company parties; and praying for an injunc- to pay any except the secured debts; that tion; that a receiver be appointed; that the the members of the hardware company owed mortgages be set aside, and the fund dis- large amounts of unpaid stock; that the tributed as a trust fund among the cred- court had rendered its decree, and directed itors without preferences. A temporary in- that the trust be executed by the trustee, junction was granted by the district judge L. P. Harrison, under the direction of the at chambers November 20, 1889, and notices court, and that he give bond for $85,000, ordered to be issued for all of said parties which he did give; that he had wasted the to appear before him on November 29, 1889, funds; and praying judgment against him to answer said petition, and show cause, if on the bond; that the funds be divided, etc. any they have, why a receiver should not On March 30, 1891, the plaintiffs filed a secbe appointed as prayed for. Upon the hear- ond amended original petition, in which they ing. November 29, 1889, all the defendants seek judgment setting aside the mortgages, answered under oath, and the creditors se- and against the trustee for conversion, waste, cured under the first mortgage made them- and devastavit, and also against the stockselves parties, and, with the trustee, set up holders of the corporation for unpaid stock, the mortgages, and prayed that he be al- and ask judgment against the two banks lowed to administer the trusts and to execute and L. P. Harrison. The answers and pleas the same under the direction of the court, of intervention set up the mortgages and and the case was fully heard before the court their validity, and the execution thereof by upon questions growing out of the applica- the trustee under the orders of the court. tion for injunction and receiver, and the The case was tried before the court, and on court rendered its judgment, dissolving the April 9, 1891, the court overruled the demurinjunction, declaring the mortgages to be rers and exceptions of the defendants and valid and the security good, refusing the interveners to plaintiffs' petition, and susplaintiffs' application for a receiver, and tained the plaintiffs' demurrer and excepgranting the application of the defendants tions to the answers of defendants and pleas and interveners that the trustee, L. P. Har- of intervention by interveners, to which they rison, be allowed to administer the trusts excepted, and rendered judgment in favor of under the order and direction of the court the plaintiffs against the proceeds of the sale in the nature of receiver, ordering that he of the property, less his costs, expenses, and execute bond in the sum of $85,000, con- commission for selling; also, a judgment in ditioned that he would faithfully execute favor of plaintiffs against the Farmers' & the trusts, and pay over to the secured cred- Merchants’ Bank for $48,193.70, the amount itors the money as in the mortgages directed, of said money paid to it by said trustee on appointing appraisers to inventory and ap- | its debt; also, a judgment against the Paris praise all of the said property, and directing Exchange Bank for $7,508.10, the amount of that the trustee make his report at the next said money paid to it by said trustee on its regular term of the district court, and direct. I debt,--decreeing that the mortgages were
void; that the fund be paid into court, dis- not entitled to maintain this action, because missing the Baker Wire Company from the it was not alleged that they had valid liens; case, etc. Defendants and interveners, in nor had their claims been reduced to judgopen court, excepted, and gave notice of ap-ment, and they had failed to collect the same peal, filed their statement of facts, appeal under execution. We will not here discuss bonds, and assignments of error, and bring what the status of claims of creditors must the case up by appeal.
be before they can ordinarily bring a suit “The first and fourteenth assignments of in the nature of a creditors' bill, as it is not error are treated together by appellants. necessary under the attitude of this case. Under these assignments two propositions This action was brought to have the trust are made, as follows: (1) A private business deed declared void, and to subject the propcorporation, when not restrained by statute, erty of an insolvent corporation to the pay. has the same power to execute a mortgage ment of the claims of all the creditors of the as an individual, and, if insolvent, may in concern. The corporation being insolvent, good faith execute a valid mortgage with the property it owned was held in trust by preferences. (2) A private corporation in the directors for the benefit of all creditors this state is authorized by statute to execute who under the law had an equitable lien a mortgage, and, there being no exception upon the property of the corporation; and in the statute, the courts cannot legally in. when the directors attempted to appropriate graft one; but corporations have the same that property to the payment of some credrights as individuals to execute mortgages | itors, to the exclusion of others, those others preferring creditors. When this case had the right to bring an action for their pending in the court of civil appeals of the relief in the manner here done. The allegasecond supreme judicial district, that court tions of the petition show all the plaintiffs certified to the supreme court for answer the to be creditors of appellant company, and it following question: 'Whether or not a pref- was unnecessary to allege that their claims erential deed of trust executed a private had been reduced to judgment, or that they trading corporation (chartered in July, 1884, were secured by specific liens, as their rights under General Laws), after it has become in- were not affected by the status of their solvent, and consequently ceased to carry on claims. its business, without any intention of re- "3. Appellants complain of the court for suming the enterprise, is void as against the overruling their special demurrer, which emunsecured creditors of such corporation.' bodied the following proposition: 'Where This question was based upon the findings numerous creditors join in a bill seeking to of the court below, which are fully sustained litigate in one suit equitable rights to assets, by the evidence adduced on the trial. The to recover against alleged members of a corsupreme court, in an elaborate and exhaust- poration the value of unpaid stock, for capive opinion, rendered by Mr. Stayton, C. J. ital stock wrongfully transferred or misap(24 S. W. 16), in answer to said question, plied, damages against the trustee for alleged after discussing the powers of a corporation waste, devastation, and misapplication of under the different provisions of our stat- property or money which came into his hands utes, and after reviewing at length the nu- as trustee, such suit is a misjoinder of causes merous decisions on the subject, both of of action, and cannot be maintained.' This England and America, closes its opinion as was an equitable action brought by the cred. follows: "The condition of the corporation itors of appellant hardware company, seekset forth in the question propounded, under ing to reach the property of said company the long-recognized rules of equity, conferred in the hands of one to whom it had been trans. upon every unsecured creditor of the corpo- ferred by its officers, and to have such transration a right to a ratable share of the pro- fer declared void and of no force as against ceeds of all the assets of the corporation not
all the creditors of said company. In the bill subject to priorities lawfully existing when there was an allegation that the members this condition arose, and we therefore an- of said company were due something on swer that neither the stockholders nor di- unpaid stock, and especially alleged that derectors of the insolvent corporation had law- fendant Harrison was so indebted, and judg. ful power, under the facts stated, to make ment was asked against him for same. The a preferential deed of trust, whereby any amount due by any of them was not alleged. creditor, whether a stockholder, director, or The case was tried by the court, without a other officer of the corporation or not, could jury, and the issue raised by such allegaacquire a preference, and that the attempted tions seems to have been ignored by the preference would be invalid as to other cred- counsel and the court. The record does not itors of the corporation.' This settles the pro- show that any evidence was introduced on positions raised by said assignments against this issue, nor is there any finding of the the appellants, and we must hold that said court thereon. As we gather it from the assignments are not well taken. This ruling record, the only issues that were tried by applies to the fifth assignment of error, the court were the validity of the deeds of which raises practically the same issue. trust made by the officers of said company,
"2. The second assignment of error raises and the liability of Harrison for the funds the proposition that plaintiffs below were | paid the preferred creditors, and their lia