Finnigan v. Floeck , 8 Tex. Civ. App. 518 ( 1894 )

Upon appellant's motion for a rehearing, we have reviewed the evidence in this case, and conclude that it was not sufficient to authorize a finding that Alexander was not indebted to Finnigan Co., as evidenced by the notes for the payment of which the proceeds of the Gibbons debt to Alexander were assigned; nor that Finnigan Co. knew that Alexander was insolvent. We think that the insolvency of Alexander was fairly shown by the evidence. He was indebted to the appellee, who had a judgment of long standing against him, which was admitted to have been kept alive by the issuance of executions, and to have due thereon $3000. The debt in favor of appellants was also of long standing. Finnigan Co., in taking the assignment of the proceeds of the Gibbons debt, entered into an arrangement the effect of which would be to shield Alexander from creditors. They did not obligate themselves to make any advances to Alexander, but the transfer was for the payment of the notes and of such advances as they might make. It is our opinion that, without any intentional fraud on the part of Finnigan Co., the transaction should be held to be fraudulent in law, if they knew that Alexander was insolvent. This knowledge was not shown, and in the face of the testimony of Paine, denying the same, we have concluded that it ought not to be inferred from the evidence. Of course, if the debt was fictitious, the questions of Alexander's insolvency or knowledge thereof on the part of Finnigan Co. would be immaterial issues in the case. But as above stated, we do not think the judgment of the court below ought to be sustained on this ground.

Since Finnigan Co. were under no obligation to make advances to Alexander, in no event should any money paid to him after notice of the garnishment be reimbursed to them out of the proceeds of the Gibbons notes coming into the hands of the assignee, and the garnishees will not be protected in paying over to Finnigan Co., after garnishment, any sums which they are not entitled to receive. If the transaction was not fraudulent as to creditors, Finnigan Co. would be entitled to receive of the proceeds of the Gibbons indebtedness the amount of their notes against Alexander, and the advancements made to him before they had notice of the garnishment, the balance of the proceeds being subject to the writ.

We are of the opinion that the motion for rehearing should be granted, and that the judgment of the court below should be reversed and the cause remanded for another trial.

Motion granted.