Vaughan Lumber Co. v. Martin , 98 Tex. 80 ( 1904 )

The Texas Briquette and Coal Company, a corporation created under the laws of the State of Texas, owned a tract of land in Milam County upon which was erected its plant for mining lignite and manufacturing briquettes and other product from the lignite. On April 24, 1896, the corporation issued its bonds for a large sum of money, and to secure the payment of the bonds executed to the Farmers Loan and Trust Company, as trustee, a deed of trust upon the said land, on all property on hand and all property thereafter acquired, which deed of trust contained this clause: "And whereas, for the purpose of completing its plant for the manufacture of briquette and other products of lignite coal, and for the purpose of developing its coal mines and increasing its output and capacity and supplying necessary machinery therefor, it has become desirable to borrow money, and for the party of the first part to mortgage its lands, machinery, plants, improvements and franchise."

The bonds were sold at the time and are now owned by D. Sullivan Co. and Hattie A. Martin. The work was completed and in the course of the construction the briquette and coal company contracted debts with plaintiffs in error for lumber, coal cars, plumbing material and other material used in the completion of the plant. All of these debts were contracted and material furnished after the bonds were sold and the deed of trust was recorded. Before the deed of trust was executed the briquette and coal company applied to the Vaughan Lumber Company to make prices on lumber to be furnished during the next twelve months; that is, the Vaughan Lumber Company agreed that for twelve months it would sell lumber to the briquette and coal company, at certain rates, to an amount of 200,000 feet. At the time that this occurred and when the bonds were issued the briquette and coal company had in contemplation improvements of its plant and it was intended to use the lumber in connection therewith. The Vaughan Lumber Company furnished to the briquette and coal company a list of prices as requested, but there was no contract made for any definite amount at the time. At the time that this occurred no contract had been made for any improvements upon the property of the briquette and coal company.

Halff Brother, one of the creditors, instituted suit in the District Court of Bexar County against the briquette and coal company upon an account and caused a receiver to be appointed for the company, whereupon D. Sullivan Co. and Hattie A. Martin, owners of the bonds, intervened in that suit and sought to foreclose the deed of trust upon the land and all of the property connected with the mines of the company. The Vaughan Lumber Company and the other plaintiffs in error also intervened, setting up their claim for material furnished, and claimed a lien under the statute upon the entire property, including the land, superior to the deed of trust. During the pendency of the receivership, the court ordered all the property sold without making any distinction between the lands and improvement on it. The proceeds of the sale constitute the subject of this litigation.

The trial court gave judgment for the plaintiffs in error, that they should have a lien upon the proceeds of all of the property of the briquette and coal company superior to the lien of the bondholders. That judgment was reversed by the Court of Civil Appeals and judgment rendered decreeing that D. Sullivan Co. and Mrs. Martin, the holders of the bonds, should have a prior lien upon the assets of the briquette and coal company, and adjusted the rights of all other parties.

This case was before this court on writ of error at a former term and the right of the holders of the bonds to priority of lien upon the property of the briquette and coal company was decided adversely to the contention of the plaintiffs in error. Sullivan Co. v. Texas Briquette and Coal Co., 94 Tex. 541. The facts presented in the record now before us do not differ materially from those on which the former decision was made, and we find no reason to change our views of the question as then expressed. Further discussion of the matter is unnecessary.

Plaintiffs in error complain that the Court of Civil Appeals erred in decreeing to the bondholders a preference of payment out of the proceeds of all of the property including the improvements, machinery and apparatus furnished by the plaintiffs in error. They claim that they are entitled to a preference lien upon the improvements made with material furnished by them and upon the cars and other machinery sold and delivered to that company. The plaintiffs in error have not pointed out any evidence which shows that they are entitled to a preference in any portion of the fund now in the hands of the receiver. There is no evidence as to the value of the land, the improvements or other personal property. Besides, they prosecuted their intervention in the trial court upon the hypothesis that they were entitled to a preference over the bondholders in the entire fund. If they desired to have the funds derived from the sale so distributed as to give to them the proceeds of property on which they claimed a prior lien, then they should have so presented the case that the court might have preserved the funds in such shape that it could make a distribution according to their several equities; but failing so to do, or to present to this court a record by which their equities, if they have any, can be ascertained, the judgment of the Court of Civil Appeals will not be reversed in order to give them an opportunity to make a case they combatted on the former trial by unqualifiedly claiming priority to the entire fund.

There is no error in the judgment of the Court of Civil Appeals, and it is therefore affirmed.

Affirmed.