Nelson v. Lyon-Gray Lumber Co. , 277 S.W. 740 ( 1925 )

If the value of the stock of the printing company, pledged by Nelson and Morris to secure the payment of their indebtedness to appellant and the bank, was no greater than was reasonably necessary for the purpose, the facts (as found by the jury) that said Nelson and Morris were insolvent at the time they made the pledge, and that they intended thereby to hinder and delay appellee in the collection of its judgment, did not invalidate the pledge, nor the sale of the stock thereunder, notwithstanding (as further found by the jury) appellant knew of such insolvency and intent. Ellis v. Valentine, 65 Tex. 532; Haas v. Kraus,86 Tex. 687, 27 S.W. 256; Bruce v. Koch, 94 Tex. 192, 59 S.W. 540; Drug Co. v. Shields, 20 Tex. Civ. App. 274, 48 S.W. 882; Moore v. Robinson (Tex.Civ.App.) 75 S.W. 890.

The face value of the 1,999 shares of stock was $19,990, but the jury found the market value thereof at the time it was sold to appellant under the pledge to be $6,750 — about $2,950 in excess of the amount of the indebtedness it was pledged to secure. Such an excess, if the testimony warranted a finding that it existed, we think would have authorized the conclusion of the trial court that the sale to appellant was fraudulent. But appellant insists, and we agree, the testimony did not warrant such a finding. If there was any testimony at all showing the market value of the stock, it was that of the defendant Morris as a witness that it was "worth less than 10 per cent. on the dollar." Ten per cent. of the face value of the 1,999 shares of stock would have been $1,999, an amount considerably less than the indebtedness of Nelson and Morris to appellant alone. Viewing that as the value of the stock, it is obvious that the conclusion of the trial court that the pledge and sale of the stock thereunder was fraudulent was not warranted.

The only other testimony as to the value of the stock was that of witnesses to the effect that the property belonging to the printing company was worth from $5,000 to $7,000, and that its indebtedness was $4,125. If that testimony should be treated as testimony the jury had a right to consider in determining the market value of the stock, it still must be said that it did not warrant their finding that such value was $6,750. There was no testimony showing the net earnings of the printing company, or any other facts which would justify a finding that its capital stock was worth a sum in excess of the difference between the value of its property and the amount of its indebtedness. Such difference, it seems from the testimony referred to, would be less than $3,000, whereas the indebtedness the stock was pledged to secure amounted to more than $3,800.

It follows from what has been said that we think appellant's first, second, and third assignments of error should be sustained.

The contention presented by the fourth assignment is that the trial court erred when he determined that appellee was entitled to have its judgment paid out of the proceeds of the sale he ordered of the 1,749 shares of stock, before anything should be paid to appellant out of such proceeds. We think the contention is a meritorious one, and should be sustained. It was not shown that appellee had in any way acquired a lien on the stock, and therefore it did not appear that appellee was entitled to priority over appellant in the distribution of the proceeds of the sale of the stock ordered by the court. Coffee Co. v. Werner, 77 Tex. 43,13 S.W. 963; Ziska v. Ziska, 20 Okla. 634, 95 P. 254, 23 L.R.A. (N. S.) 1, note pages 26 to 31.

The judgment will be reversed, and the cause will be remanded to the court below for a new trial.