Hudson v. Childree , 156 S.W. 1154 ( 1913 )

The assignment presents the point that appellant was entitled to have judgment against appellee Patterson for the value of the cotton converted by him. The facts are admitted that appellee Patterson had seized and sold under execution two bales of cotton covered by a registered chattel mortgage to appellant, and appropriated the proceeds, less the rent, to his own benefit. And these facts authorized, it is not doubted, a recovery by appellant, unless, as argued by appellee, the note and mortgage to appellant were executed to hinder, delay, and defraud creditors. As the record is here, it cannot be said, from the findings of the court and the evidence, that the indebtedness and security therefor given to appellant are fraudulent and unenforceable against appellee Patterson.

The court entered a judgment for the amount of the note in favor of appellant against Childree, and this involves the specific finding by the court that the note secured was for a valid indebtedness and that no fraud was proved as to the indebtedness. And the evidence supports this conclusion of the court.

If the debt which is the subject of the security is a valid and subsisting debt and a bona fide transaction evidenced by a note, as found by the court, then the simple fact of executing a mortgage intended by the parties as security is not sufficient to make the mortgage void as to creditors.

There is no presumption of law that a mortgage of property is made with fraudulent intent if the mortgagor at the time is actually indebted to another. There being a valid and subsisting debt and a mortgage intended by the parties as security, then the legal effect of such obligation is a valid security for a lawful purpose and enforceable against all claiming subsequently to the registered mortgage. The mortgage on its face shows and has the legal effect that it was given only as simple security for the debt, for it expressly provides that the excess, after paying the specified amount of the note, was to be paid over to the mortgagor.

The giving of the agreed security for the valid debt may have the effect of a preference between appellee and appellant as creditors, and to hinder and delay other creditors; but as said in Hardware Co. v. Kaufman Runge, 77 Tex. 137, 8 S.W. 287: "It is settled in this court that, so far as the statute of frauds is concerned, this is legitimate and not fraudulent."

The equity of redemption in the mortgage property being subject to levy and sale at the suit of other creditors, the excess after paying the secured debts was not placed beyond their reach. Besides, the fact is significant here that Childree agreed with appellant to give the mortgage at the inception of the indebtedness, and there is no suggestion in the evidence that such was not the agreement.

In view of the finding by the court, the appellant was entitled to have judgment against appellee Patterson for the value of the cotton, less the rent paid, and the judgment is reversed and here rendered for appellant against the appellee J. W. Patterson for the sum of $91.56 and costs of appeal. The judgment against the appellee Childree will be affirmed, and the costs of the courts below will be taxed generally against both appellees.