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bility for the amount received by them. This being the only phase of the case considered by the court, no harm was done appellants by the ruling of the court, if erroneous, which we deem unnecessary to determine.

"4. The fourth assignment of error complains of the court for overruling special exception No. 3, which exception is as follows: 'Because it appears from plaintiffs' said amended petition that the Laughlin Nail Co., Curtis Bros. & Co., Sargeant & Co., and W. M. Rogers Manufacturing Co. are the only parties for whose benefit one of the alleged deeds of trust was executed, who are relying on their security, and they are not before the court, nor made parties to this suit.' The petition of plaintiffs shows that the parties named were creditors, and were named as beneficiaries in the instruments attacked by the bill, but were not made parties, but the trustee was. Appellees contend that, where parties seek to set aside a deed of trust and have it declared void, the beneficiaries therein are necessary parties to the suit. We think the converse of this proposition is true. The rule laid down in Pomeroy on Remedies is as follows: "There is a broad distinction between the case of an action brought in opposition to the trust, to set aside the deed or other instrument by which it was created, and to procure it to be declared a nullity, and that of an action brought in furtherance of the trust to enforce its provisions, to establish it as valid, and to procure it to be wound up and settled. In the first case, the suit may be maintained without the presence of the beneficiaries, since the trustees represent them all, and defend for them. In the second, all the beneficiaries must be joined, if not as plaintiffs, then as defendants, so that the whole matter may be adjusted in one proceeding, and a multiplicity of suits avoided. The reason of this distinction is obvious. It is that any one person interested in opposition to the trust has the right to test the validity thereof, and his voluntary action cannot be controlled by the will of others; while the trustees themselves are sufficient to represent and defend all the interest of those who claim under the trust. But when the trust is assented to, and the purpose is simply to carry out its provisions, all the beneficiaries are alike interested in that object, and in reaching that same result, and it is just to the trustees that the controversy should be ended in one proceeding.' The doctrine here enunciated is supported by Rail road Co. v. Butler, 56 Tex. 511, and by Kerrison v. Stewart, 93 U. S. 155. No case to which we have been referred contravenes the rule here laid down. Appellants, in support of their contention, cite Ebell v. Bursinger, 70 Tex. 120, 8 S. W. 77, and Hudson v. Elevator Co., 79 Tex. 401, 15 S. W. 385. In the first case the court says 'that the general rule is well established that, in suits by or against the trustee for the recovery of the trust property, the beneficiary is a necessary par

ty.' We recognize this as a correct principle, but the court further says that to this rule there are well-recognized exceptions, one of which it says is the 'case of an assignee in a deed of assignment made by an insolvent for the benefit of his creditors.' The trustee, Harrison, in this case, was vested by the terms of the instrument with full power to execute the trust imposed in him; and it was his duty, and he had the power to do so, to defend the trust against all assailants. Every defense that could be made by the beneficiaries could be made by him, and, having accepted the trust, he was interested in carrying out its provisions, and in this case he evidently endeavored to uphold the conveyance. The other case is not analogous to this. It is true that, in rendering the opinion in that case, Mr. Stayton, C. J., laid down the general rule that all beneficiaries adversely interested to the plaintiffs are necessary parties, but said, if there were exceptions to the general rule, it was not necessary to consider them in that case. In that case there was no effort to set aside the conveyance as a nullity, but it was sought to defeat the clause preferring creditors, and to have the conveyance declared a general assignment, and the property administered thereunder. In that case it was held necessary for beneficiaries to be made parties; but in the case of Preston v. Carter, 80 Tex. 388, 16 S. W. 17, a contrary rule is enunciated. Which of these two cases is correct we will not undertake to determine, as the principle upon which they were decided does not necessarily apply to the case at bar. Where an effort is made to entirely set aside a conveyance of this kind, and render it of no force whatever, in our opinion, the beneficiaries are not necessary parties. Where an action is brought to have a conveyance adjudged to be a general assignment, there seems to be some force in the proposition that beneficiaries should be made parties. In such a case the trustee is not interested, whether creditors are preferred or not; but he is interested that the conveyance be administered with him as trustee. As to the rights of creditors between themselves he has no concern. It would seem to be inconsistent with his duty to espouse the claim of one creditor as against that of an other. When, however, the instrument is attacked as a nullity, then he is concerned, and should do all in his power legally to maintain and uphold the conveyance, and can represent the beneficiaries in the litigation.

"Complaint is made to the action of the court in permitting plaintiffs to show that the Hardman Company was indebted to them, and the nature of such indebtedness. As before stated in this opinion, the plaintiffs had alleged they were creditors of said hardware company, and, being such, they had a right to sue, and the introduction of the judgments to show that they were creditors was permissible under their pleadings. It was necessary to allege the nature and character

not

of their claims in order to permit proof of such indebtedness.

"The action of the court in permitting Harrison, trustee, to testify, over objections, that he paid the proceeds of the property to the two banks, is challenged by appellants, on the ground that the allegations of plaintiffs' petition did not warrant it. The second amended petition alleged the insolvency of the hardware company; that it had transferred its property to Harrison, in trust for the preferred creditors named; that Harrison had misapplied the proceeds of the property; and if any had been paid to said preferred creditors, of which plaintiffs were not advised, said creditors received same with full knowl edge of this litigation, and, if it was paid, 'it was paid to a person or persons then defendant, defendants, intervener, or interveners in this bill;' and the prayer was that said banks 'be required to bring into court all money, if any, paid to them, or either of them, by the said Harrison.' We think, considering the nature of this suit, that the allegations of the petition were sufficient, and there was no error in admitting the testimony. Besides, Harrison had made a report showing the disposition he had made of the property, and the amount he had paid to these parties.

"5. The fourteenth general assignment of error and the seventh assignment of error by Harrison, trustee, are in effect the same, and will be considered together. The fourteenth is as follows: "The court erred in rendering judgment against L. P. Harrison for $57,529.44, or for any amount at all, because the evidence shows that said Harrison was a trustee, and the pleadings of the plaintiffs claimed judgment against him for waste and devastavit, and the court allowed and approved his accounts, and found there was no devastavit, and the record shows that the money which came into his hands was paid out by him, under the orders, judgment, and decree of the court.' The following proposition is advanced by appellants thereunder: 'Where a court of equity obtains jurisdiction of the parties and of the subject-matter, and renders its decree, appointing a trustee, in the nature of a receiver, and places him under bond, and orders such trustee to sell property in the custody of the court, and to apply the proceeds to the payment of certain debts and claims, such decree is a full protection to the trustee, and a judgment against him for the money so paid under the orders of the court is erroneous.' This assignment and proposition raise the question whether the order made by the district judge in vacation in reference to the property transferred to Harrison by the hardware company was void. If that order is void, then the trustee is not protected thereby, and cannot shield himself from liability to the creditors of the hardware company. As the district court is the creature of the constitution of the state and the statutes passed thereunder, we must look

to those to determine the authority of said court. When in session, it has general equity powers, when not limited by statute; but in vacation the judge thereof has no power to do or perform any judicial act, except such as is definitely and specifically enumerated by statute. Mr. Black, in his work on Judgments (volume 1, § 179), in treating of judgments rendered in vacation, says: 'But, in general, all judicial functions are suspended during that interval. Hence, unless under statutory authority, a judgment cannot be pronounced in vacation. The rendition of judgment in a court of record is essentially a judicial act; and, if performed when the court is not in session,-that is, out of term,-it is open to a fatal jurisdictional objection. The judgment is absolutely void, creates or effects no rights, and will even be disregarded on appeal.' The same principle is enunciated by Mr. Freeman in his work on Judgments (section 121). Under our statutes, district judges have power in vacation to grant writs of injunction and appoint receivers, but no power is given them to take charge of property and administer it, except as may be incident to the power conferred in the appointment of a receiver. In this case the judge refused the application for the appointment of a receiver, and for a writ of injunction, but, at the instance of the defendants and interveners, adjudged the conveyance to be valid, appointed Harrison trustee, a relation he already sustained to the property,-required him to return an inventory and execute a bond for the faithful performance of his duties, and ordered the property sold in accordance with the notice theretofore given by Harrison, as required in the conveyances, and directed him to pay the proceeds to the creditors preferred, less expenses. Plaintiffs duly excepted to this proceeding, and had their bill properly signed by the judge and filed. Subsequently the judge ordered taxes to be paid on application of the trustee. Under these orders the said Harrison sold the property, paid the preferred creditors, taxes, and expenses. These proceedings were entered on the minutes of said court. All these proceedings were had in vacation. No other orders were made; nor is there any evidence to show that any order was made, or any recognition of said proceedings had, during term time. These proceedings, in our opinion, are absolutely void. Having refused to appoint a receiver or grant the writ of injunction, the judge was without jurisdiction of the property or the trustee. The entering of the order on the minutes of the district court did not breathe vitality into the void proceedings. If, during term time, the court had taken jurisdiction of the matter, and made orders pertaining to the disposition of the property or the actions of the trustee, a state of case might have arisen in which the trustee could shield himself from liabili ty. But, no such action having been taken,

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the trustee is not protected by the orders of the judge made in vacation; nor are the plaintiffs bound by not raising any further objection thereto, as they could do nothing until the case was reached for trial. orders of the court were consummated by the trustee before plaintiffs had an opportunity to be heard in term time. They had filed their suit seeking relief, of which Harrison and the other defendants and interveners had knowledge. Harrison knowing this, and the orders being void, he should not have acted thereunder, but should have sought relief by appealing therefrom.

"The appellants contend, and cite many authorities to the effect, that 'a judgment can be considered void in no case except where it appears from the judgment itself that the court had no jurisdiction. It may be voidable, but not void, if rendered by a court of competent jurisdiction; and, until it is set aside and vacated, it forms a good Justification for the proceedings had to enforce it.' No principle of law is better settled than this. But the judgment relied on in this case was not rendered by a court of competent jurisdiction. Had it been rendered in term time, no question could have arisen as to its validity. But such is not the case. The judge, in vacation, rendered the judgment in which the validity of the conveyances made by the hardware company to Harrison, as trustee, was recognized, and all the rights of the parties were adjudicated. Such proceedings, so far as we are advised, have never been sanctioned by any jurisdiction. We are aware that trustees, when in doubt about their duties under the deed, have the right to decline to act without the sanction of the court. The trustee will be protected by the decree of any court having jurisdiction, and exercising the jurisdiction regularly, upon proper notice given.' Perry, Trusts, § 928. But this principle does not apply to this case, as the judge who rendered the decree had no power to act in vacation; consequently such proceedings are of no force or effect. Freem. Judgm. (4th Ed.) § 39a; 12 Am. & Eng. Enc. Law, p. 14, and notes.

"Appellants complain that the court erred in rendering judgment against Harrison and the two banks, and not permitting them to participate in the distribution of the assets of the hardware company. The court rendered judgment in favor of plaintiffs, against Harrison and the said banks, but directed the money to be paid into the hands of the clerk, and be held by him until further orders of the court. If it was intended by the court, which is not clear, that the judgment should preclude the said Harrison and the said banks from sharing in the distribution of said funds, then it is erroneous, as they were entitled to their pro rata share. The assets of said hardware company were trust funds for the benefit of all its creditors, and all such are entitled to their respective shares.

The judgment of the court below is correct in holding the conveyances made by said hardware company to said Harrison void, and in rendering judgment against said Har rison for the amount of the assets that went into his hands and against the banks, for the amounts received by them respectively, and that said amounts be paid into court for distribution, as all the creditors of said hardware company were entitled to participate in the distribution of the funds of said hardware company, whether parties to this proceeding or not, and the court below should have rendered judgment for all creditors who desired to share in the distribution. In failing to do so, there was error. The judgment will be here reformed as indicated, and the judgment affirmed.

On Rehearing.

"Appellees insist that this court erred in its judgment in permitting appellants, creditors of the Lyons-Thomas Hardware Company, to share in the distribution of the assets of said hardware company; contending that they are not entitled to participate in the distribution of said funds, because they attempted to appropriate said assets to the payment of their debts, to the exclusion of the other creditors, whom they compelled to litigate with them in order to have said assets declared trust funds for the benefit of all the creditors of said hardware company. Many authorities are cited by appellees to support their contention, but none, in our opinion, are in point. The most of them are to the effect that when property is conveyed in trust for the benefit of creditors, and one or more of the beneficiaries attack the conveyance, and attempt to have it declared a nullity, and failing therein, they will not then be permitted to share in the property conveyed; and others, to the effect that a creditor's bill gives a preference lien on the property to those instituting the action. This we recognize to be the law, and it is not our intention to controvert it. This case, as we understand it, does not fall within the purview of these decisions, but stands upon an entirely different footing. When property is conveyed in trust, the beneficiary acquires no interest in the same until he accepts and agrees to the provisions of the conveyance. The law makes the assets of an insolvent corporation trust funds in the hands of the directors, for the benefit of its creditors. The appellants, creditors of said hardware company, were entitled to their distributive share of the assets of said hardware company at its insolvency; and, having come into possession of the assets of said company, believing they had the right to apply the same on their respective debts, their resisting the efforts of appellees to participate in the distribution of the same was not such an act as to preclude them from participating in the distribution. The bring

ing of the suit by appellees did not give them a lien upon the assets of said hardware company, and gave them no greater right in the fund than other creditors. The effect of their recovery is merely to adjudicate the said assets to be a trust fund for the benefit of all creditors of said hardware company, of which all are entitled to share. The motion for rehearing is overruled.

"On Rehearing.

"(Feb. 28, 1894.)

"FINLEY, J. The motion for rehearing is based upon grounds which were carefully considered by us in the original hearing, and we see no reason to change our views, as expressed in the opinion rendered. Upon the proposition urged,-that the action of the court below in permitting the Baker Wire Company to withdraw from the suit may subject L. P. Harrison to double liability for the goods sequestered by the Baker Wire Company, and replevied by him,-it may be proper for us to add: The funds covered by the judgment are yet within the control and subject to the orders of the court, and, in the exercise of its equity jurisdiction, it has ample power to protect Harrison from such a result. Upon appropriate application, the court below should reserve a portion of the fund from distribution, or otherwise so control it as to prevent Harrison having to pay for the goods in this suit, and also in the sequestration suit of the Baker Wire Company pending against him. The motion for rehearing is overruled."

Maxey, Lightfoot & Denton and Dudley & Moore, for plaintiffs in error. Hale & Hale, T. S. Hill, H. D. McDonald, and A. P. Park, for defendants in error.

BROWN, J. The district court found conclusions of fact, which were adopted by the court of civil appeals, and are in substance as follows: The Lyons-Thomas Hardware Company, a private corporation, organized under the laws of Texas, being insolvent, on the 9th day of November, 1889, made three deeds of trust, by which it conveyed to L. P. Harrison all of its property and assets of every kind, to secure certain named creditors, L. P. Harrison, the Farmers' & Merchants' Bank of Paris, the Exchange Bank of Paris, and others, who are defendants, being embraced in the deeds, as well as some who are not parties to this suit. The corporation owed more than $100,000, and the amount realized from its assets was $60,306.57. There was a large amount of its debts that were not secured by these deeds of trust. The Baker Wire Company sued out against the trustee a writ of sequestration, seizing a part of the property transferred. Perry Stove Manufacturing

Company and other simple contract creditors filed suit in the district court of Lamar county against the Lyons-Thomas Hardware Company, L. P. Harrison, Baker Wire Company, and the officers and stockholders of the corporation the Lyons-Thomas Hardware Company, seeking to set aside the deeds of trust, and have the property distributed to pay all the debts of the corporation, to recover of the stockholders the amounts unpaid on their stock, and praying an injunetion against the trustee to prevent and enjoin the sale and disposition of the property under the deeds of trust. The petition also asked the court to appoint a receiver for the corporation. The district judge granted a temporary writ of injunction, and set the hearing of the application for a receiver for the 29th day of November, 1889, in chambers. The creditors secured by the first mortgage or deed of trust filed a plea of intervention, setting up their debts, and they and the Baker Wire Company filed answers under oath. The latter joined in the prayer for receiver. The Baker Wire Company subsequently, by leave of the court, withdrew its answer, and was dismissed from the suit. Upon hearing in vacation, the judge refused to appoint a receiver, but declared that the deeds of trust were valid, and, upon the prayer of the trustee and creditors ordered that the trustee, Harrison, proceed to administer the trust under the deeds of trust; that he give bond in the sum of $85,000, conditioned that he would faithfully execute the trust, and pay over to the secured creditors the money as in the deeds of trust directed; appointed appraisers to inventory the property; and directed the trustee to make report at the next regular term of the court. The clerk was ordered to record the decree upon the minutes of the court, which was done. The minutes were approved by the court at the next term, and signed, embracing the decree made in vacation. The trustee gave the bond, which was approved, the inventory returned, the property sold, and the proceeds applied by him to the payment of the secured debts, as directed by the court. He made his report at the following term, and asked that he be discharged. At the time the order was made, in vacation, the plaintiffs excepted,. took a bill of exceptions, signed by the judge, and filed it among the papers of the case. Nothing further was done by the plaintiffs until in October, 1890, when a first amended original petition was filed, alleging that they and a number of others had recovered judgments against the Lyons-Thomas Hardware Company. This petition repeated the allegations of the former petition, and alleged that the trustee had wasted and mismanaged the estate, praying judgment for the distribution of the funds among all the creditors. Other pleadings were filed subsequently, which will be noticed in so far as they af

fect the questions presented under the different assignments of error.

Upon final trial before the court, the deeds of trust were held to be void, and judgment was entered against the trustee, Harrison, for funds that came into his hands, less his commissions and costs of administering the trust, and against the Farmers' & Merchants' Bank and the Paris Exchange Bank, each for the sum paid to it. The judgment of the district court was reformed, and affirmed by the court of civil appeals, and the plaintiffs in error present the case to this court, upon objections to the judgments of the district court and court of civil appeals, embracing in substance, these propositions: First. That the court erred in holding that an insolvent corporation could not make a valid mortgage with preference to a portion of its creditors. Second. That the undisputed evidence shows that the Lyons-Thomas Hardware Company was not insolvent, and the court erred in so finding. Third. That simple contract creditors could not maintain this character of suit. Fourth. That there was a misjoinder of causes of action. Fifth. That all of the beneficiaries in the deeds of trust were necessary parties to this suit. Sixth. That the court erred in admitting evidence as to the money paid by Harrison to the Farmers' & Merchants' Bank and to the Paris Exchange Bank, because there were no allegations to permit it, and that the court erred in entering judgment against said banks. Seventh. The court erred in entering judgment against Harrison, and holding that the order appointng him was void. Eighth. The court erred in permitting the Baker Wire Company to withdraw from the case.

In this case, upon a question certified by the court of civil appeals, this court held that an insolvent corporation which had ceased to do business, or which, by the making of an instrument conveying all its property, incapacitates itself for continuing its business, cannot make a mortgage or deed of trust by which it gives a preference to some of its creditors over others. Lyons-Thomas Hardware Co. v. Perry Stove Manuf'g Co., 24 S. W. 16. We see no reason to change our opinion on that question.

It is asserted by plaintiffs in error that there was no evidence to sustain the conclusion of the court that the Lyons-Thomas Hardware Company was insolvent at the time the deeds of trust were executed. It is true that some of the officers of the company stated that it was not insolvent at that time. But the evidence shows without doubt that the company was largely indebted; that, to secure a part of its creuitors only, it conveyed and delivered to Harrison, trustee, all of its assets, with power to convert them into money, and to apply the money to the payment of the debts named. If there was more than sufficient to pay all, why convey its entire property to secure the payment of a portion of its debts, leaving a large amount

unprovided for?

By these acts, which oc curred within a few hours of each other, it declared in most unmistakable terins its inability to pay its debts, terminated its business; and, having not a dollar with which to buy another stock of goods, no hope of resuming could exist, except upon the bare contingency of making a compromise with its creditors. There was not only evidence to sustain the conclusion that it was insolvent, and had ceased business, without expectation of resuming, but the court could not, in our judgment, have found otherwise, consistently with the facts.

This was a suit to restore funds to the trust estate, in which the plaintiffs were beneficiaries, and the making of the deeds of trust by the insolvent corporation was a violation of the trust which the law raised upon its solvency, and to place the property in the control of the court. Plaintiffs had a right to maintain the action, whether they had judgments or not. Dimmock v. Bixby, 20 Pick. 377. We do not deem it necessary to discuss this question at length, for the reason that the second amended original petition, upon which the case was tried, alleged that all of the plaintiffs had recovered judgments during the pendency of the suit. If there was a defect in this particular in the original petition, which we do not be lieve to be true, the amendment cured it.

Plaintiffs, in the second amended original petition, set up that the stockholders owed large amounts for their stock, but did not pray judgment against them, and no judg ment was entered against them. The petition sought to recover for the benefit of all the creditors of the corporation the value of the property that went into Harrison's hands, and the amounts paid to himself and to the two banks. These rights all grew out of the making of the deeds of trust and the proceedings thereunder in court. They were properly joined.

When the Lyons-Thomas Hardware Company, being insolvent, ceased to carry on its business, the law made its assets a trust fund, to be held and administered by its officers and the courts, for the benefit of all of its creditors. Each creditor became a beneficiary in that fund. The distribution was to be made under the law, and not under the deeds of trust that the company executed. The deeds of trust in this case committed the fund to the possession and control of Harrison, with full power to sell the property and distribute the proceeds among the creditors. The Lyons-Thomas Hardware Company parted with the control of the property, and the trustee could maintain suits to recover it, and defend actions brought against him for its possession, or which brought in question his right of control. We believe that reason and authority sustain the proposition that, in a suit to set aside such an instrument, the beneficiaries in the deeds of trust were not necessary parties,

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