Hollins v. Rapid Transit Lines, Inc.

430 S.W.2d 57, 1968 Tex. App. LEXIS 2974
CourtCourt of Appeals of Texas
DecidedMay 29, 1968
Docket126
StatusPublished
Cited by5 cases

This text of 430 S.W.2d 57 (Hollins v. Rapid Transit Lines, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hollins v. Rapid Transit Lines, Inc., 430 S.W.2d 57, 1968 Tex. App. LEXIS 2974 (Tex. Ct. App. 1968).

Opinion

BARRON, Justice.

This is an appeal from a partial summary judgment granted in favor of two of the defendants, Rapid Transit Lines, Inc., and Houston City Lines, Inc. Suit was filed by Dorothy Hollins and husband, John Hollins, against Rapid Transit Lines, Inc., Houston City Lines, Inc., and Pioneer Bus Company for personal injuries alleged to have been sustained by the plaintiff, Dorothy Hollins, while riding on a bus owned and operated by Pioneer Bus Company in the City of Houston. The plaintiffs allege that defendants, Rapid Transit Lines, Inc., and Houston City Lines, Inc., were joined in the suit because they had, at the time of injury of the plaintiff or have acquired since that time, such an interest in the defendant corporation, Pioneer Bus Company, that they were liable to plaintiff solely or jointly with Pioneer Bus Company. The petition specifically alleges that Rapid Transit Lines, Inc., and Houston City Lines, Inc., had notice when they purchased substantially all of the assets of Pioneer Bus Company that the plaintiffs were creditors of Pioneer Bus Company in contemplation of the law of fraudulent transfers and conveyances. It is alleged that the transfers of property from Pioneer Bus Company was fraudulent and was made with the intent to hinder and defraud the plaintiffs as creditors of defendant, Pioneer Bus Company. It is alleged that the transfer is void, and that Pioneer Bus Company does not have and will not have sufficient assets to satisfy plaintiffs’ pending claims for damages to which plaintiffs are and to which they will become entitled.

The accident occurred on August 8, 1967. The transfers of property and equipment were alleged to have occurred on September 15, 1967. Pioneer Bus Company sold a substantial portion of its assets to Rapid Transit Lines, Inc., on the latter date. Suit was filed by plaintiffs on September 26, 1967. Rapid Transit thereafter filed its motion for partial summary judgment supported by accompanying affidavit of *59 Stanley H. Gates, Vice President and General Manager of Rapid Transit Lines, Inc. Plaintiffs filed opposing affidavits by plaintiff John Hollins and by plaintiffs’ attorney. In the motion for summary judgment Rapid Transit was movant and prayed for its dismissal from the suit.

On a hearing on motion for summary judgment, the trial court rendered judgment in favor of Rapid Transit Lines, Inc., and dismissed Rapid Transit and Houston City Lines, Inc., from the suit. The trial court severed the actions and left pending the suit only against Pioneer Bus Company. Rapid Transit Lines, Inc., is an affiliate company of Houston City Lines, Inc. From the trial court’s summary judgment the plaintiffs have appealed. Mr. and Mrs. Hollins are appellants, and Rapid Transit Lines, Inc. (and Houston City Lines, Inc.), are appellees.

Appellants’ petition alleges a joint cause of action against all three transit companies by generally stating that all “defendants” were liable for damages by reason of their negligence. However, it is clear from appellants’ petition that appellees were made parties defendant by reason of the transfer of a substantial portion of Pioneer Bus Company’s assets to Rapid Transit on September 15, 1967, and by reason of appellees’ alleged notice of appellants’ claim against Pioneer. Appellants sought to set aside the transfer of the assets as a fraudulent transfer, or sought, by reason of the transfer, to hold appellees liable for damages on grounds of their own negligence.

We believe, however, that a correct decision in this case turns upon the nature of appellants’ claim against Pioneer, and whether their claim as a “creditor” of Pioneer would result in avoiding the transfer from Pioneer to appellees at this time.

The action filed by appellants is one in tort seeking damages for the alleged negligence of the three defendants. One who is entitled to damages arising from tort is just as much a creditor of one who is liable for such damages as is the person who holds against such party any other sort of claim. There is no reason for any distinction in a case of this kind. If it were otherwise, any person guilty of the commission of a tort could secure immediate protection from the consequences, however serious they may be and however culpable may have been the wrongful act committed by him, by a simple transfer or conveyance of his property to another. See Colby v. McClendon, 116 S.W.2d 505, 511 (Tex.Civ.App.), no writ.

But the claim by appellants, being a suit for damages in tort, is unliquidated. We believe the law is clear that the holders of an unliquidated claim for damages, though creditors eventually entitled to set aside a fraudulent transfer, must reduce their claim by judgment to a liquidated and definite amount before a cause of action exists. Until such claim has become liquidated by final judgment no separate cause of action exists. Cole v. Terrell, 71 Tex. 549, 9 S.W. 668, 671-672; Naumovich v. Reese, 247 S.W.2d 417, 420 (Tex.Civ.App.), no writ. In Cole v. Terrell, supra, it was said, in a case involving a trespass on land by cutting timber thereon:

“This statutory rule (fraudulent conveyances) as explained by itself, does not prevent a voluntary conveyance from attack by a subsequent creditor upon showing, not merely that the conveyance was voluntary, but was made with fraudulent intent. * * * ‘It is accordingly well settled that, if a party makes a conveyance of his property with the express intent to become indebted to another to defraud him of his debt by means of this artifice, such subsequent creditor may contest, and by proof defeat, the transfer, although he was not a creditor of the grantor at the time of the conveyance.’ And again: The simple fact of a subsequent indebtedness is not sufficient to make a transfer fraudulent. There must exist at. the *60 time on the part of the grantor a fraudulent view, and until this fraudulent purpose is established, either by positive proof or the exhibition of such facts as justify the inference of its actual existence, the conveyance cannot be set aside.” (Parenthesis added.)

We hold that if such transfer was made with a fraudulent intent to evade future liabilities, such a transfer is void as to subsequent creditors. Hartman v. Hartman, 135 Tex. 596, 138 S.W.2d 802, opinion adopted; Stevens v. Cobern, 109 Tex. 574, 213 S.W. 925 (Tex.Sup.); Cates v. Clark, 24 S.W.2d 450, 453 (Tex.Civ. App.), writ ref. But appellants have no cause of action in existence until they have procured a final judgment on their unliquidated tort claim. The action must rest upon a liquidated demand. 26 Tex. Jur.2d, Sec. 130-133, pp. 423-427; Naumovich v. Reese, supra, and cases cited; 73 A.L.R.2d 749, “Right of Tort Claimant, Prior to Judgment, To Attack Conveyance or Transfer as Fraudulent.” If, however, the unliquidated claim was in existence at the time of the transfer, a subsequent reduction of the claim to final judgment may authorize an attack on the prior transfer as fraudulent. Sikes v. First State Bank of Decatur, 197 S.W. 227 (Tex.Civ.App.), writ ref.; Cole v. Terrell, supra, 9 S.W. at p. 672; 26 Tex.Jur.2d, p. 424.

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Hollins v. Rapid Transit Lines, Inc.
440 S.W.2d 57 (Texas Supreme Court, 1969)

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430 S.W.2d 57, 1968 Tex. App. LEXIS 2974, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hollins-v-rapid-transit-lines-inc-texapp-1968.