Opinion
No. 4283.
February 9, 1933. Rehearing Denied February 16, 1933.
Appeal from District Court, Fannin County; Geo. P. Blackburn, Judge.
Suit by H. A. Craft against Ira Barrett and others wherein E. D. Mitchell filed cross-action against named defendant. From judgment rendered, Ira Barrett and others appeal.
Reversed and rendered in part, and affirmed in part.
H. A. Craft, as plaintiff, sued in the district court of Fannin county, J. A. Craft, E. D. Mitchell, O. S. Ferguson, Ira Barrett, and the Leonard Platform Company, a copartnership, composed of J. A. Craft, E. D. Mitchell, and O. S. Ferguson, seeking recovery against J. A. Craft on a promissory note executed by him to H. A. Craft in the principal sum of $1,200 and to foreclose a chattel mortgage lien in writing upon the one-third interest of J. A. Craft in the property of the Leonard Platform Company, executed by J. A. Craft to H. A. Craft, securing the payment of said note, both instruments dated October 1, 1930. The mortgage was filed for registration October 13, 1930. Plaintiff alleged that said mortgage, in addition to fixing a lien upon said property therein described, also transferred and assigned to H. A. Craft all profits and revenues due and payable to J. A. Craft from said partnership, Leonard Platform Company, until the note was fully paid; that E. D. Mitchell had converted, and refused to pay to him, the unpaid profits and dividends of said partnership belonging to J. A. Craft, and which had been by said assignment transferred to plaintiff, for the conversion of which plaintiff asked judgment against said E. D. Mitchell. Plaintiff alleged that Ira Barrett was claiming some kind of interest in said partnership property covered by his mortgage lien. J. A. Craft answered, adopting the pleadings of the plaintiff, alleging that a garnishment judgment was void, under and by virtue of which E. D. Mitchell as garnishee had paid to Ira Barrett $345.25, being J. A. Craft's interest in the profits of the Leonard Platform Company. Ira Barrett answered by general denial, and specially pleaded that he was the owner of one-third interest in the Leonard Platform Company, and entitled to one-third the profits thereof. E. D. Mitchell and O. S. Ferguson filed joint pleadings, answering for themselves and for the Leonard Platform Company. They specially pleaded that Ira Barrett, as the owner of a judgment rendered in the district court of Fannin county, Texas, in favor of the Guaranty State Bank of Trenton against J. A. Craft, had caused to be issued and served upon E. D. Mitchell, alleged to be the same as Eb Mitchell, a writ of garnishment directed to Eb Mitchell; that E. D. Mitchell answered this writ of garnishment showing that he was not indebted to said J. A. Craft in any sum, and that he did not have in his possession any money or effects belonging to J. A. Craft, but that J. A. Craft was a member of and owned a one-third interest in the Leonard Platform Company, a copartnership composed of said J. A. Craft, O. S. Ferguson, and himself (E. D. Mitchell); that this partnership owned and operated certain cotton platforms in the town of Leonard, and that it is as such firm and partnership that said platforms are owned and operated; that he (E. D. Mitchell) is treasurer of said partnership, and as such treasurer has funds in his possession belonging to said partnership, one-third of which funds at that time amounted to $345.25; that such partnership funds were subject to the operating expenses of the partnership; that J. A. Craft was not then entitled to receive any of such funds, but that he would be entitled to receive one-third of such funds after deducting the operating expenses of the partnership, if any remained, on May 1st, next, at which time each year it was the custom and policy of the company to declare a dividend of the profits, if any, then remaining after paying operating expenses.
E. D. Mitchell further pleaded and introduced in evidence on the trial of this cause the judgment entered against him on his answer in said garnishment suit, as follows:
"On this, the 17th day of January, A.D. 1931, came on to be heard the above entitled and numbered cause and it appearing to the court, upon the answer of the defendant herein filed, a writ of garnishment served on him October 30, 1931, issued out of the district court of Fannin county, Texas, in cause No. 9510, wherein the Guaranty State Bank of Trenton, Texas, was plaintiff and J. A. Craft is defendant, and that Ira Barrett is now the owner and holder of said judgment and entitled to recover all payments due on said judgment and is entitled to receive the proceeds of said judgment; that the said defendant Ed Mitchell is indebted to J. A. Craft in the sum of $345.25 and that the Guaranty State Bank of Trenton, Texas, has recovered judgment against the said J. A. Craft in the said cause No. 9510 for the sum of $1,928.13 with a credit on said judgment in the sum of $500.00, leaving the amount due on said judgment of $1,428.13 and interest as provided in said judgment and all costs of suit.
"It is therefore considered, adjudged and decreed by the court that Ira Barrett who is the owner of the said judgment of the Guaranty State Bank of Trenton, Texas, have and recover of and from the said Ed Mitchell, garnishee, judgment in the sum of $345.25 for his debt and the further sum of $25.00 as costs to be paid to attorneys Couch and Couch as attorneys of garnishee, Ed Mitchell and all other costs in this suit be taxed against the said Ira Barrett."
That under and by reason of said judgment which Ira Barrett so caused to be entered against him and the orders of the court therein commanding, he, E. D. Mitchell, was compelled to pay over to said Ira Barrett said one-third interest of J. A. Craft in said partnership funds in the sum of $345.25, which judgment defendants pleaded in bar of the suit of H. A. Craft and of J. A. Craft, against E. D. Mitchell for the conversion of said $345.25, and in the alternative prayed that, should judgment be rendered against said E. D. Mitchell by reason thereof, he have judgment for a like sum against the said Ira Barrett. Ira Barrett, the same as I. F. Barrett, claimed that he Was the owner of J. A. Crafts one-third interest in the partnership property of Leonard Platform Company, and that he was entitled to receive the profits and revenues thereof. His pleadings also adopted paragraph 2 of the pleadings of E. D. Mitchell, O. S. Ferguson, and the Leonard Platform Company, which paragraph alleged the judgment which he held against J. A. Craft, individually, and alleged the writ of garnishment and E. D. Mitchell's answer thereto, and the judgment of the court rendered thereon, and which contained a copy by exhibit of said writ, answer, and judgment in garnishment, and Ira Barrett pleads the same as res adjudicata of E. D. Mitchell's cross-action against him for the $345.25.
The case was tried to the court without a jury. Briefly stated, the judgment was in favor of H. A. Craft on his note, and foreclosing his mortgage lien; and against Ira Barrett on his claim to the property; and in favor of E. D. Mitchell and Ira Barrett and against J. A. Craft on his claim against them for conversion of said partnership funds; and that no recovery be had against O. S. Ferguson or the Leonard Platform Company.
S. F. Leslie, of Bonham, for appellant Barrett.
Cunningham Lipscomb, of Bonham, for appellant Craft.
Couch Couch, of Bonham, for appellees Mitchell and Ferguson.
Ira Barrett, by twelve assignments of error, complains of the findings and the judgment of the court against him and in favor of J. A. Craft and H. A. Craft to the J. A. Craft one-third interest in the Leonard Platform Company partnership property. In support of his claim to this property, Ira Barrett introduced in evidence the following bill of sale:
"State of Texas, County of Fannin.
"Know All Men by These Presents:
"That, whereas, by virtue of a certain execution issued out of the district court of Fannin county at Bonham, No. _____ for the county of Fannin, state of Texas, in favor of the Guaranty State Bank, Trenton, Texas, and against J. A. Craft, on a certain judgment rendered in said court on the 12th day of September, 1923, and directed and delivered to me as constable of precinct 3, Fannin county, commanding me, I, J. D. Albright, constable as aforesaid, did on the 11th day of October, 1930, levy upon and take in my possession, the property hereinafter described and after advertising the same as required by law, I did on the 29th day of October, 1930, within the hours prescribed by law, at public sale to the highest bidder, sell said property at public vendue, when the same was struck off to Ira Barrett for the sum of $500.00, the receipt of which is hereby acknowledged, I, J. D. Albright, constable as aforesaid, have sold, and by these presents do bargain, sell and deliver unto the said Ira Barrett all the right, title and interest, which the said J. A. Craft had on the 29th day of October, 1930, in and to the following described property, to-wit: One-third interest in cotton platform owned by E. D. Mitchell, O. S. Ferguson and J. A. Craft at Leonard, Texas, this for the one-third interest in said cotton platform of J. A. Craft at Leonard, Texas, on railroad property, to have and to hold unto the said Ira Barrett, his heirs and assigns forever, as fully as I as constable aforesaid, can sell, transfer and dispose of it by virtue of said sale.
"In testimony I have hereunto set my hand this 30th day of October, 1930.
"J. D. Albright, Constable, Precinct 3, Fannin County, Texas."
No judgment or execution was offered in evidence in support of this bill of sale.
"A sheriff's deed [or bill of sale, though] reciting that it was made by virtue of an execution issued on a judgment is insufficient to support title without evidence of the judgment or execution." Atkinson v. Citizens' State Bank of Giddings (Tex.Civ.App.) 221 S.W. 998; Richards v. Rule (Tex.Com.App.) 207 S.W. 912; Flenniken v. Foote (Tex.Civ.App.) 270 S.W. 903.
It further appears in evidence that no levy was made by giving notice to one or more of the partners or clerk of the partnership of the Leonard Platform Company, required by article 3796, R.S., for levying an execution upon the interest of a partner in partnership property. Middlebrook v. Zapp, 79 Tex. 321, 15 S.W. 258; Sumner v. Crawford, 91 Tex. 129, 41 S.W. 994. The trial court correctly held that Ira Barrett showed no interest in the property, and his assignments are overruled.
As to the $345.25 paid by E. D. Mitchell to Ira Barrett out of the Leonard Platform Company partnership funds under and by virtue of the garnishment judgment, it appears that the judgment, referred to in the writ and a judgment in garnishment, was the individual debt of J. A. Graft, and E. D. Mitchell's possession of the funds was as member and treasurer of the Leonard Platform Company partnership. J. A. Craft was not entitled to possession, or payment, of any of such funds at the time. They were partnership funds in possession of the partnership, subject to the operating expenses and other obligations of the partnership, and not the subject of garnishment proceedings for the individual debt of J. A. Craft.
"The funds and effects of a partnership are not liable to garnishment for the debt of an individual member. This principle is based upon the theory that the assets of the partnership constitute a trust fund for the satisfaction of partnership creditors, and until the settlement of the partnership business a member of the firm has no specific interest that may be appropriated to the satisfaction of his debt." 20 Tex.Jur. § 19, p. 720; Brown v. Cassidy-Southwestern Commission Co. (Tex.Civ.App.) 225 S.W. 833; Belva Oil Co. v. Lowe (Tex.Civ.App.) 27 S.W.2d 599.
Payment out of the partnership funds by E. D. Mitchell to Ira Barrett by reason of the illegal garnishment judgment against E. D. Mitchell as garnishee would not be a defense to the claim of J. A. Craft, the judgment debtor. Shoemaker v. Pace (Tex.Civ.App.) 41 S.W. 498; Johnson v. Hall (Tex.Civ.App.) 163 S.W. 399. Should E. D. Mitchell's answer to the garnishment writ be treated as answering for the partnership as well as for himself, it would be a voluntary answer as respects the partnership, and the court would not thereby acquire any jurisdiction over the partnership funds. Insurance Co. of North America v. Friedman, 74 Tex. 56, 11 S.W. 1046. The assignment by J. A. Craft to H. A. Craft of his interest in the partnership funds, though placed in the mortgage and thereby placed of record, was by the court correctly held not to be such an instrument as is by statute authorized or required to be placed of record, and its registration in this manner was not constructive notice to any one. However, the assignment not being such as is required to be recorded, constructive or actual notice of the assignment was not necessary.
"The service of a writ of garnishment impounds only such debt or debts as the garnishee in fact owes to the defendant in garnishment at the time. It does not impound debts owed by the garnishee, which, prior to the service of the writ, have passed by valid assignment from the defendant to another. This is true whether the garnishing creditor has any notice * * * or not." Adams v. Williams, 112 Tex. 469, 248 S.W. 673, 676; South Texas Lbr. Co. v. Nicoletti (Tex.Civ.App.) 54 S.W.2d 893.
Judgment of the trial court denying H. A. Craft and J. A. Craft judgment against E. D. Mitchell, and in denying J. A. Craft judgment against E. D. Mitchell and Ira Barrett, and in denying E. D. Mitchell judgment against Ira Barrett, for the $345.25, is reversed and here rendered in favor of H. A. Craft and J. A. Craft against E. D. Mitchell and in favor of J. A. Craft against E. D. Mitchell and Ira Barrett for $345.25 and for a like amount in favor of E. D. Mitchell, on his cross-action against Ira Barrett. The judgment of the trial court in all other respects is affirmed. The costs of this appeal and of the trial court are taxed against E. D. Mitchell and Ira Barrett, except the cost of the foreclosure proceedings incurred by H. A. Craft, which is taxed against J. A. Craft.