December 14, 1891, F.B. Duke and W.T. Dodson, composing the firm of Duke, Dodson Co., executed and delivered to M.L. Vanleer an instrument in writing which divested of unnecessary verbiage is as follows: "Know all men by these presents, that we, F.B. Duke and W.T. Dodson, composing the firm of Duke, Dodson Co., in consideration of one dollar, to us paid by Vanleer, for the uses and upon the trust herein mentioned, and by these presents doth sell, convey and deliver to said M.L. Vanleer forever, (here follows description of real and personal property.)
To have and to hold unto him the said M.L. Vanleer, trustee as aforesaid, the above described premises and personal property aforesaid, unto the said M.L. Vanleer, trustee, and his assigns forever in trust nevertheless and for the uses following and no other; that is to say the said M.L. *Page 177 Vanleer, trustee as aforesaid, shall and does take actual and exclusive possession and control of all the above described property; and the said M.L. Vanleer, trustee as aforesaid, is to sell all of the aforesaid real and personal property, and make a deed in our name to same, at private or public sale, for cash in such manner and quantity as he may deem best for the purpose of obtaining the greatest amount of net proceeds in cash from the sale of said property or any part thereof. The said M.L. Vanleer, trustee, is to apply the proceeds of the sale of the said property in the following order, to-wit:
First. The expenses of executing this trust as they occur including the sum of fifty dollars per month for the services of the said M.L. Vanleer in executing this trust and all other necessary expenses connected therewith.
Second. The said M.L. Vanleer, trustee as aforesaid, shall apply the remainder of the proceeds of the sale of the said property to the parties hereinafter named and in the order named as the preferred creditors of the firm of Duke Dodson Co. (Here follows list of creditors.)
That is to say the said M.L. Vanleer, trustee as aforesaid, shall, as fast as he realizes money from the sale of any said property, apply it to the extinguishment of our indebtedness to said parties, commencing with No. 1 and continuing to pay them off according to their number as appears in the above list of creditors until they are all paid or until the property is exhausted.
But it is to be paid out in full of each claim in its order and number, and after faithfully executing the trust herein, should there be any surplus, the said M.L. Vanleer is to pay the same to F.B. Duke one-half and W.T. Dodson the other half of said surplus.
In testimony whereof we have on this the 14th day of December, A.D. 1891, signed our names at Mangum, Texas.
Duke Dodson Co., per F.B. Duke.
F.B. Duke, W.T. Dodson.
At the time the instrument was executed the grantors were insolvent and the property and creditors therein set out constituted all their property and creditors, and said property was not sufficient to pay said debts.
Vanleer, immediately upon the execution of the instrument, took actual possession of the property described herein, and the next day one of the creditors, standing near the last in the order of preference, with actual notice of the instrument, caused a portion of the personal property mentioned therein to be seized and sold under a writ of attachment issued against said grantors.
Vanleer, thereupon, brought this suit against the sheriff executing said writ and the plaintiff therein and their respective sureties for the value of the property so seized, and recovered judgment therefor, which was affirmed by the Court of Civil Appeals. Vanleer's petition did not allege that any of the creditors, mentioned in the instrument above set out, had, at the time the attachment was levied, accepted its provisions. *Page 178 Defendants specially excepted to the sufficiency of the petition for want of such an allegation, which exception the trial court and Court of Civil-Appeals held not well taken, and this ruling is here assigned as error.
Both of said courts treated said instrument as a statutory assignment. If such construction be correct there was no error in overruling the exception; for, though it be considered that an acceptance by the creditor is essential to the taking effect of a common law assignment or mortgage (86 Tex. 401), still it is clear that the statute regulating assignments by persons insolvent or contemplating insolvency gives effect to such assignments independent of the acceptance by creditors.
But is the instrument an assignment?
An assignment, whether statutory or common law, conveys to the assignee the entire estate of the assignor. It vests the title in the assignee, which cannot be divested by mere payment of the debts.
If the debts be satisfied the assignee would hold the balance of the assigned estate in trust for the assignor, but a conveyance or decree would be necessary to revest title in the assignor. If the instrument on its face, when construed according to the settled rules of construction in this State, does not pass the title of the assignor to the assignee it cannot be held to be an assignment, but must be held to be a mortgage. Johnson v. Robinson, 68 Tex. 399; Watterman v. Silberberg, 67 Tex. 101.
The instrument in question transfers the property to Vanleer as a trustee, authorizes him to sell and make deed in name of the grantors, and provides for return of the surplus to the grantors, and appears to have all the elements of an ordinary trust deed which, under the settled rules in this State, does not vest title in the trustee. Stiles v. Hill, Fontaine Co.,62 Tex. 429; Watterman v. Silberberg, 67 Tex. 101 [67 Tex. 101].
We are of opinion that the instrument in question is a trust deed and not an assignment; that it was necessary to allege and prove that some of the creditors had accepted before the attachment was levied in order to show that the instrument had become effective before such levy, and that the court erred in overruling said exception. Milling Co. v. Eaton, Guinan Co.,86 Tex. 401.
We are of opinion that the possession of Vanleer, if there was an acceptance by any creditor prior to the levy, was sufficient to authorize him to maintain a suit against the attaching creditor without joining all the beneficiaries.
It is his duty to protect the subject matter of the trust. If there be any danger of his misapplying the fund a court of equity has ample power to protect the beneficiaries upon a proper showing made by them.
Since the instrument is not an assignment it will not be necessary to discuss the other assignments of error, as the questions would not probably arise on another trial.
For the error above indicated the judgments of the Court of Civil Appeals and of the District Court are reversed and the cause is remanded.
Reversed and remanded.
Opinion delivered February 25, 1895. *Page 179 A.P. Eubank, for defendants in error, filed a motion for rehearing.
Arguments supporting the motion were filed by B.P. Eubank,Willie, Campbell Ballinger, and by Scott, Levi Smith. D.G. Smith, for plaintiff in error, filed an argument resisting the motion.
OPINION ON MOTION FOR REHEARING. Delivered February 10, 1896.