Sanders v. Farrier

The important assignment of error is the one questioning the rendition of judgment against the appellant, the attaching creditor. In passing upon the assignment of error, regard must be had to the pleading and to the special facts in evidence, for the several propositions are based thereon. The defendant in the attachment writ, H. L. Shaw, was indebted to appellee and had executed a chattel mortgage on 150 head of cattle, besides other personal property, to secure the payment of the debt. At the time of and long before the levy of the writ of attachment, the chattel mortgage was duly registered in the county clerk's office. The debt was due and unpaid at the time of the levy of the attachment writ upon 75 head of the mortgaged cattle. The chattel mortgage expressly provided that, in the event the mortgagor failed to pay the note at maturity, the appellee could take possession of the mortgaged property and sell the same, and with the proceeds of the sale pay the debt and interest thereon. Clearly, in the facts. the appellee was authorized to bring the statutory action for the trial of the right of property, for he was legally entitled to the possession of the cattle at the time of the levy of the writ of attachment, as well against the attaching creditor of Mr. Shaw as against Mr. Shaw himself. State Exchange Bank v. Smith (Tex.Civ.App.) 166 S.W. 666; State Exchange Bank v. Keys Mill Grain Co. (Tex.Civ.App.) 170 S.W. 1051.

The proceeding in a trial of the right of personal property is merely a possessory action, and the issue joined and the fact to be tried is whether the attaching creditor or the claimant is entitled to the possession of the property at the time the "officer shall levy a writ of execution or attachment upon any personal property." Article 7769, R.S. The lien of the attaching creditor is fixed at the time of the levy of the attachment, and he is entitled or not entitled to immediate possession through the officer at that time. If the claimant is entitled to possession at the date of the levy of attachment, and that be the only issue involved, then he, and not the attaching creditor, is entitled to a judgment in his favor at the date of the trial of the issues. Where the right to the possession of the property at the time the action is commenced is the only matter in controversy, that becomes the only question to be determined therein. 23 R.C.L. p. 934. Therefore the appellee was entitled to a judgment in the case, unless, in view of the further facts, the appellant's plea in abatement of the further maintenance of the action should have been sustained by the court, and an order of dismissal entered.

The appellant affirmatively pleaded, in abatement of the action, that the appellee had been fully paid the debt and that he had released his lien on the attached cattle. In order that payment of the mortgage debt shall constitute a defense to a possessory action, as here, it must appear that payment was made before or after the action began or the attachment was levied. But that fact does not so appear here. The effect of the evidence is that during the pendency of the suit the appellee merely transferred to the bank both the note and lien for the balance due him, which was paid by the bank. And the trial court finds, and the evidence seems to support the finding, that the new note and mortgage taken by the bank from Mr. Shaw was intended merely as a renewal of the original mortgage of Mr. Farrier. The very purpose of the right of possession of the property under the chattel mortgage upon default of payment at maturity is that the property may he disposed of in satisfaction of the debt. The writ of attachment would not impair the mortgagee's right in this respect. Therefore a sale by the mortgagee of the mortgaged property in order to apply the proceeds of sale in payment of the debt would not legally affect or defeat his right to a judgment in his favor at the time of "the trial" of the issues between the parties, for the mortgagee would have legally established his right of possession thereto as a claimant of the property within the meaning of the statute. Articles 7787, 7790. R.S. And it is the general rule that a voluntary conveyance or transfer made during the pendency of a suit does not affect the suit nor impair the right to recover, if at the time the suit is commenced such party could have sustained the suit. Lee v. Salinas, Tex. 495. It is not a legal cause for dismissal of the suit, since, in legal effect, the plaintiff would still be entitled to continue the suit, and to a recovery, inuring to the benefit of his vendee or transferee. Hearne v. Erhard, 33 Tex. 66; Bailey v. Laws,3 Tex. Civ. App. 529, 23 S.W. 23: Evans v. Reeves, 6 Tex. Civ. App. 254,26 S.W. 220.

We have carefully considered the clearly presented points of the appeal, and conclude that reversible error does not appear, and that the judgment should be affirmed, which is accordingly ordered.

On Motion for Rehearing. The appellant insists that we were in error in not rendering judgment in his favor and on the claim bond, since the undisputed evidence shows that the mortgagee received payment from the mortgagor of all the indebtedness due after default, and without sale of the property under the stipulation in the mortgage, and that he had turned the property back to the mortgagor under circumstances rendering redelivery to the officer impossible.

In the original opinion it was determined that the evidence did not show the full payment of the mortgage debt and the final discharge of the mortgage lien. As stated:

"The effect of the evidence is that during the pendency of the suit the appellee merely transferred to the bank the note and the lien for the balance due him, which was paid by the bank. And the trial court finds, and the evidence seems to support the finding, that the new note and mortgage taken by the bank from Mr. Shaw was intended merely as a renewal of the original mortgage to Mr. Farrier."

This conclusion we now think was not correct. The evidence, properly considered rather strongly shows that the execution of the note and mortgage by Mr. Shaw to the State Exchange Bank, dated February 17, 1923, was a distinct and independent transaction entirely between Mr. Shaw and the bank, intended to enable Mr. Shaw to pay off and fully satisfy the balance due to Mr. Farrier under the original mortgage. The payment was not made to Mr. Farrier until April 2, 1923, at which time he transferred the note "without recourse," as stated by Mr. Farrier:

"The consideration of the transfer was the payment to me of all liabilities of Shaw, and I transferred the note without recourse on me. Since that time (meaning April 2, 1923). I have not had any claim against Mr. Shaw."

As to Mr. Farrier the transfer of the note "without recourse" constituted an absolute, and not conditional, payment, with the effect that the debt is discharged. Hence the disposition of the appeal must now depend upon the fact that since the filing of the oath and claim bond, and before the tender of issues and trial of the claim proceedings, and while the mortgagee was still holding the possession of the property, the mortgagor, by partial payments, had wholly paid the mortgage debt to the mortgagee claimant. Clearly the full satisfaction of the debt operated to cancel and make of no further force the mortgage lien upon the cattle, with the legal consequence that the claimant's right to the property or the possessory right under the terms of the mortgage was then and there extinguished and entirely nonexistent, as against the mortgagor and as well his creditor entitled to the mortgagor's interest in the cattle in virtue of attachment. It is elementary that when the debt secured by a chattel mortgage has been wholly paid the title transferred by the mortgage is extinguished, and with it terminates the right of the mortgagee to possession. 7 Cyc. p. 66. And nothing further than payment is necessary, such as redelivery or cancellation of the mortgage, in order that title or the possessory right shall revest in the mortgagor. Harrison v. Hicks, 1 Port.Ala. 423, 27 Am.Dec. 638. Hence it is evident that at the time of the trial of the case there was complete cessation of any right on the claimant's part to the possession of the property as against the attachment, and the claim could no longer be maintained at all because the ground of action was extinguished. The claimant could no longer urge that his possessory right was disturbed by the levy of the attachment. An adjudication of the subject in controversy became therefore unavailing. Therefore, was the attaching creditor entitled to a judgment in his favor and to a recovery on the bond?

The attachment lien continued and was not vacated by the filing of the claim bond. Property mortgaged is a subject-matter of attachment by express terms of law. Articles 254 and 3744, Rev.Stat. While the claimant is entitled to remain in possession, still the attaching creditor is entitled to the equity of redemption and to have the equity interest sold under his attachment lien. And a judgment in the trial of right of property is erroneous that does not merely subordinate and make the attachment lien subject to the mortgagee claimant's possessory right, if the claimant, if still holding possession, be successful in the proceeding. Lapowski v. Taylor, 35 S.W. 934. It is the well-settled rule that where the facts conclusively show that the plaintiff's suit can no longer be maintained at all because the ground of action, as payment of the debt, has become extinguished and no longer exists at the time of filing the plea in bar or cessation, as here done, the courts will proceed no further with the litigation. See Watkins v. Huff, 94 Tex. 631,64 S.W. 68; Tel. Tel. Co. v. Galveston County (Tex.Civ.App.)59 S.W. 589; Little v. Bowers, 134 U.S. 552, 10 S. Ct. 620, 33 L. Ed. 1016. Ordinarily the order entered is in the nature of a nonsuit or dismissal of the plaintiff's action; and, as held, an order of dismissal is, in effect, an adjudication of the failure on the claimant's part to establish his right to the property as against an attaching creditor, placing the duty upon the claimant to make return of the property. Dixon v. Zadek, 59 Tex. 528; Mosely v. Gainer, 10 Tex. 578. The claim bond is primarily in the nature of a forthcoming bond, and liability can be predicated thereon when the court adjudges a failure of the claimant, no matter for what reason, to establish his right to the property, As both parties are equally actors in the action, it would seem to follow that the attaching creditor was entitled to a judgment in the nature of restitution of the property, in accordance with the terms of the statute.

The inquiry must turn upon the point, as urged, of whether or not the liability of the claimant and the sureties on his bond is to be determined exclusively by the claimant's possessory rights at the time the oath and bond are filed and the attachment levied, and not at the time the issues are tendered and tried in the court. The statute does not by words or implication lay down that rule or undertake to enlarge or modify the settled rule of evidence applied in judicial decisions. And the claimant's possessory rights, given him in advance of judgment, are interlocutory in their character until the time of final judgment of the court. The statute is to the extent that the claimant, in order to avoid liability on his bond, must "establish his right to such property." As used, the word "establish" was intended as the equivalent of "to prove, or cause to be recognized as valid or legal." And the term "establish his right to such property," as applied to the trial for that purpose, directly points to the evidence offered upon the issue on the trial thereof. In effect it is merely the regulation of the burden of evidence that at the trial of the issues the claimant shall prove his possessory right to the property as claimed, intending to leave to the court the ultimate determination of the issue as to the right of the property, in accordance with the rules of law applicable equally to all cases upon like facts. As further expressly provided by the statute, "the court or justice shall direct an issue to be made up in writing between the parties" and when such issue is made up and filed the same shall be "tried as in other cases." Articles 7780 and 7784. The requisite of the issue are then stated to be "the authority and right by which the plaintiff seeks to subject the property levied on to his execution" and "the nature of the claim of the defendant thereto." Article 7781, Rev.Stat. And after the issue is so made up, the burden of proof is upon "the claimant," if the property was taken from the possession of the defendant in the writ, "to establish his right to the property" according to "the nature of the claim." As heretofore firmly decided:

"Either the question of title in the claimant or that of his right to hold possession, as against the defendant in the process, is what is to be tried. If either is proved to exist in the claimant, he must succeed in the suit, and what enables him to maintain his claim will certainly authorize him to assert it." White v. Jacobs, 66 Tex. 464, 1 S.W. 344; Willis v. Thompson, 85 Tex. 301, 20 S.W. 155; State v. Bender, 68 Tex. 676,5 S.W. 674.

It is "against the defendant in the process," the attaching creditor, that the claimant must "establish" his "right to hold possession." It is apparent that if, under the terms of the statute, "what is to be tried" is the claimant's "right to hold possession, as against the defendant in the process," the question of "possession" was important at the time of trial as well as at the time of levy. In that meaning of the statute, then, neither the statute nor the established rules of evidence would settle the question in the affirmative. The settled rule of evidence is to the extent that proof of the existence at a particular time of a fact of a continuous nature gives rise to an inference, within logical limits, that it exists at a subsequent time; but not that it will continue to exist for any definite period of time. 10 R.C.L. p. 872; 16 Cyc. p. 1052; 22 C.J. p. 86. Inferences of continuance are merely inferences of fact, and may therefore, under the general rule, be rebutted. 22 C.J. p. 87.

This rule of presumption of continuance of facts, once shown to exist, has invariably been applied, as, for instance, to ownership. For illustration: Where one is claiming the property as real owner at the time of the levy of the process, and he makes proof that at the time of the levy he was the real owner, and there is no affirmative proof that he was not the owner, his status at the time of the institution of the proceedings need only be considered. Why need his status at the institution of the proceedings only be considered? For the proof of ownership not only legally carries with it the exclusive and absolute right of continued possession against the attaching creditor, but becomes conclusive proof before the court that the property never was subject to the attachment. The real owner's property would not be subject to the debt of a third person, and therefore the proof of any other fact becomes immaterial. Hence there is sufficient proof before the court in the fact of real ownership in the claimant to compel the court trying the issue to deny the attaching creditor any right at all in the property, and to declare in favor of the claimant that the property was entirely exempt from the process at the time of the commencement of the action and at the trial thereof. And so, too, with a claimant as mortgagee entitled to possession, upon proof that he was entitled to possession under the mortgage in order to sell the property to pay his debt, and that he had subsequent to the claim, and before the trial, made proper sale of the property to pay his debt, the court in such proof could not do otherwise than render a judgment in his favor; for there is sufficient proof of the right to commence the action, and sufficient proof of the want of any right in the attaching creditor at the time of the trial to subject the property to the process. The right in the mortgagee claimant to take the possession and the right to make the sale existed, and the attaching creditor, as a matter of law, could not, under the process, afterwards follow the property into the hands of the purchasers. As the law afforded the attaching creditor no remedy at the time of the trial, the court could grant him none. The situation, however, is essentially different where a mortgagee claimant, having a conditional and not an absolute claim, has merely proven that at the date of the commencement of the proceedings he had a valid conditional claim on the property, and the attaching creditor has proven that the claim was fully paid off and discharged at the time the issues were tendered and tried.

Had the attaching creditor not pleaded and proven payment, the proof of the claimant of the right to commence the action would have constituted a prima facie case entitling him to judgment; for the presumption probably would have obtained, in absence of proof to the contrary, that the possessory right continued to the trial. But proof of the fact of payment certainly cast back upon the claimant the burden of proving that the right or claim to the property was continuing, and the liability of the property to his claim. Consequently, as tested by this rule, failing in this proof that the possessory right was a continuing one, the claimant would not, under the law, "establish his right to such property" to the extent of entitling him to a final judgment thereafter continuing in him the possessory right as against the attachment. The fact of subsequent payment, however, may be cause, in proper cases, for adjudging the costs accruing before the date of payment in favor of the claimant. England v. Brinson, 1 White W.Civ.Cas.Ct.App. sec. 320; Bolander v. Gentry,36 Cal. 105, 95 Amer.Dec.p. 162. No legal principle is perceived upon which to specially exempt a mortgagee claimant from the general rule so firmly established and applied in all cases.

The decision of the question must rest, we think, upon the ground that the mortgagee claimant having been paid his whole mortgage debt before the date of the trial, the attaching creditor was ipso facto entitled to a judgment in terms of the statute on the bond. The claimant procured property to be taken out of the hands of the officer and put into his possession, and both parties being actors in a claim proceeding with the right to carry the action to the trial, and it ought to be a part of the judgment to put the parties, as intended by the bond, in statu quo. The claim was merely interlocutory in its character until final judgment of the court releasing the bond from liability for restitution of the property. The fact of payment in effect entitled the attaching creditor to a judgment of restitution, as it is tantamount to a nonclaim of the continued right of possession against the attachment at the time of trial. The attachment lien continued and was not vacated by the filing of the claim bond. It is analogous to a voluntary dismissal of the action by the claimant, which carries with it, in effect, a judgment of restitution. See 2 A.L.R. A. note page 200; Mosely v. Gainer, 10 Tex. 578.

Accordingly, the judgment is reversed, and judgment is here rendered in favor of the appellant against the appellee and the sureties on his bond for the amount of the appellant's debt and interest. The costs of trial and of appeal are taxed against appellee.