Arbuckle Bros. Coffee Co. v. Werner & Cohen

COLLARD, Judge.

—Plaintiff alleged that Werner, against whom he had a judgment, purchased the land described in the petition from one Lindsay, and to defraud plaintiff, his creditor, caused the deed to be made to Cohen. The prayer was to divest the title out of Cohen and invest it in Werner, and that the same be sold to satisfy plaintiff’s judgment.

The court erred in sustaining exceptions to the petition.

notwithstanding the judgment did not bind the land as security for the debt, nor was there any registration of the judgment under the statute creating a lien (Rev. Stats., title 61, chap. 1), plaintiff being a creditor of Werner had the right to a decree properly vesting the title, and to have the land subjected to his debt with the debts of other creditors, if any, who might come in and claim their pro rata of the proceeds of the sale, plaintiff’s rights being, however, subject to those of any other creditor who had a lien by judgment or levy of execution, or to those of a. pur■chaser under execution before or pending plaintiff’s suit.

In the case of Cassaday v. Anderson Justice Bonner says: “As between two creditors, if one has already obtained his judgment and instituted proceedings to set the fraudulent conveyance aside, this will give him priority of right to first have his debt satisfied out of the property, but it seems this priority does not extend to a simple contract creditor who may institute such a suit.” 53 Texas, 537.

The judgment here intended must be one with a lien on the property in order to give the creditor the preference over other creditors or over a purchaser who buys at execution sale before or pending suit. In the Cassaday case Veal was but a simple contract creditor, suing as such to set aside a fraudulent conveyance and to subject the land to the judgment to be obtained. He had no lien at the institution of the suit, and it was held that a purchaser at execution sale of another creditor pending Veal’s suit “ vested the title prior to any lien in favor of Veal.” The entire discussion and the authorities cited and quoted show that “ the equitable proceeding to bind the property must be based upon a lien or legal seizure of the property.”

One of the cases cited is Robertson v. Stewart, 10 New York, 190, in which the court say: “The complainant had not acquired any lien at law, not having obtained any judgment against William Stewart (the debtor), and was not therefore entitled to any priority over the other creditors; equity requires that the fund be distributed among the creditors pro rata;” and it was further held that the fraudulent vendee being himself a creditor was entitled to his pro rata of the fund.

The other case cited to support that portion of the opinion above quoted is Day v. Washburn, 24 Howard, 355, 356, where it is held that a creditor at large who sues to set aside a fraudulent sale, not having a lien, is not entitled to priority over other creditors in the proceeds of the sale, adding: “It is only when he has obtained a judgment and execution * * * that a legal preference is acquired.” This view that the judgment must be a lien upon the property at the institution of the suit in order to give it priority over other creditors or to have the effect of lis pendens is also supported by the case of Gaines v. National Bank, 64 Texas, 18.

Plaintiff had a judgment but no lien thereby on the property sought to be subjected to his debt; hence lis pendens would not apply in his favor as against a bona fide purchaser pending the suit under a legal and valid judgment and execution. But there is no doubt under the authorities cited, and as was reiterated in a recent decision of the Commission of Appeals in the case of Shirley v. Waco Tap Railway, that plaintiff may maintain the suit. 10 S. W. Rep., 552. We regard the law as settled.

The court below sustained exceptions to the suit upon the ground that plaintiff had no lien. This was error. The plea of defendants that the property had been sold under execution since plaintiff’s suit was brought was not heard by the court on its merits nor tested by the demurrer. Besides, it was not a good plea, if true, for defendants Cohen & Werner. It would be available for the purchaser or his privies.

The judgment should be reversed and the cause remanded.

Reversed and remanded.

Adopted April 22, 1890.