65 Wash. 121 | Wash. | 1911
— The plaintiff seeks to have set aside a conveyance of shares of corporation stock made by Henry Brook, deceased, to Joseph H.' Spear, which it is alleged was made in fraud of creditors. To that end two separate actions were originally commenced in the superior court for Spokane county. These actions involved three separate corporations which are closely related to each other, not only in their business interests, but in the ownership of their stock. These actions were consolidated and tried in the superior court as one action. At the close of the plaintiff’s evidence, the court sus
On May 31, 1894, and for some years prior thereto, Henry Brook and Joseph H. Spear were the owners of all of the capital stock of the Washington Brick, Lime & Manufacturing Company, a corporation, amounting to 500 shares, each owning 250 shares. On that day Brook sold and transferred 249 shares of his stock to Spear. The evidence warrants the conclusion that they agreed that one share should remain in the name of Brook upon the books of the corporation for the sole .purpose of maintaining the formal corporate organization. It clearly was then intended that Spear was to become the real owner of all the stock. Brook was then, and remained until the time of his death, in 1908, the president of the corporation, so far as the records of the corporation are concerned. Spear was its secretary and general manager during all of this time, and as such directed and managed its affairs. Brook was apparently only president in name, and did not exercise any control over the affairs of the corporation. He, however, continued to render services to it. During all of this time, Spear was the owner of all of the stock, unless it be held that the transfer of the stock by Brook to him in 1894 was void. A short time before the death of Brook, in 1908, he signed the usual blank assignment upon the back of the certificate for the one share remaining in his name. This certificate and blank assignment was placed in the safe of the company with the understanding that it was to be turned over to Spear. It remained' in the safe of the company accessible to both Spear and Brook until Brook’s death, when it was taken possession of by Spear and cancelled, when he issued in lieu thereof a certificate to himself. He thereby became the record owner of all of the stock.
The original consideration for the transfer of the stock was a promissory note for $9,000, executed by Spear to Brook on May 31, 1894, the day of the original transfer, payable
In 1894, when Brook transferred his stock to Spear, some of Brook’s creditors were threatening garnishment proceedings against him. As to what extent Brook’s financial condition was impaired at that time does not very satisfactorily appear from the record, though it may be conceded he was financially embarrassed, and it may be conceded that one of the purposes of Brook in making this transfer was to prevent these threatened garnishments. He also hoped to secure thereby for himself and family a living in the future. Spear evidently knew of these purposes when he purchased the stock. Whether or not there was ever any actual legal steps taken by any of his creditors looking to the collection or the securing of their claims is not shown by the record. The claims here involved were not among those which were threatened to be enforced by legal proceedings at that time.
We think the facts shown do not warrant the conclusion that $9,000 was an inadequate consideration for the stock; and it is plain that Brook received thereafter fully this much
On June 19, 1895, Brook executed and delivered to Mrs. Kate Robinson three promissory notes, aggregating $19,000, payable October 1, 1895, 1896, and 1897. This was for an existing indebtedness, some of which probably existed before the transfer of the stock to Spear, May 31, 1894. There were paid upon these notes, from time to time, many small sums, amounting for the most part to $10 and $20 each, and being a month or two apart. Mrs. Robinson seemed to well understand that Brook was able to make but small payments upon this indebtedness. Indeed, the payments seem to have been prompted rather more by the necessity of her having some income for support, rather than with any hope on the part of either her or Brook that the debt would be materially reduced. They were on very friendly terms.
Brook died in January, 1908, and his wife, Kezia, died soon thereafter. The plaintiff thereafter was appointed executrix under their wills. After the death of Brook and his wife, Mrs. Robinson assigned her claim to W. S. McCrea in consideration of MeCrea’s agreeing to pay her $25 per month during her natural life. She was then quite an elderly woman. Mc-Crea thereafter filed a claim against the estate based upon these notes. Both Mrs. Robinson and McCrea appear to have been well acquainted, and upon very friendly terms, with Brook during his lifetime, and knew in a general way about his straightened circumstances at all- times since 1894, and also knew that he had- some connection with the corporation, though they did not know exactly what that relation was until after his death. Their acquaintance with him, however, was such that they must have had reasons to believe that his in
On May 15, 189T, Brook executed and delivered to Sid Rosenhaupt two promissory notes, payable upon demand, aggregating $2,215.95. After the death of Brook and wife, he filed a claim against the estate based upon these notes.' He appears to have been well acquainted, and on very friendly terms, with Brook during his lifetime, and knew of his straightened circumstances, and that he had at one time been connected with the corporation, but did not actually know the-exact nature of that relation. We have carefully reviewed this voluminous record of approximately 1,000 pages of typewritten matter, and believe that the foregoing summary of the facts is as favorable to appellant’s position as can be stated therefrom.
This action is sought to be maintained in the interest of these two creditors of the estate of Brook and wife, under Rem. & Bal. Code, § 1540, which reads as follows:
“When there shall be a deficiency of assets in the hands of an executor or administrator, and when the deceased shall in his lifetime have conveyed any real estate or any right or interest therein, with intent to defraud his creditors or to avoid any right, duty, or debt of any person, or shall have so conveyed such estate, which deeds or conveyances by law are void as against creditors, the executor or administrator may, and it shall be his duty to, commence and prosecute to final judgment any proper action for the recovery of the same, and may recover for the benefit of the creditors of such real estate so fraudulently conveyed, and may also, for the benefit of the creditors, sue and recover all goods, chattels, rights and credits which may have been so fraudulently conveyed by the deceased in his lifetime, whatever may have been the manner of such fraudulent conveyance.”
So far as the right of the executrix to maintain this action is concerned, we are to view respondent Spear’s right to this stock in the same light as if Brook and wife were alive and the action were being prosecuted by these claimants directly against Brook and Spear to set aside the conveyance of the
It seems to us that the situation here presented is such that the great lapse of time during which these claimants have delayed in seeking the enforcement of their rights as against this stock defeats their present efforts through the executrix to recover the stock from Spear. It has been many times said by the courts, in substance, that the facts and circumstances of each case of this nature must largely govern its determination. '
Some contention is made that this action can be maintained by the executrix for the benefit of Mrs. Brook and her estate, independently of the executrix’s right under Rem. & Bal. Code, § 1540, above quoted. This is based upon the theory that, since Mrs. Brook died subsequent to her hus
Error is assigned upon the ruling of the court in taxing costs. In the cost bill of respondents, certain witness fees were claimed. In their motion to retax costs, counsel for appellant sought to have stricken out the fees of these witnesses because they had not personally reported their attendance to the clerk,' as required by Rem. & Bal. Code, § 482. The record warrants the conclusion that the witnesses were present on the last day of the trial and reported their attendance and mileage through the bailiff to the clerk. It may be con
The correct determination of this cause upon the merits is fraught with great difficulty, by reason of the greatly involved facts and voluminous record. The cause is by no means free from doubt; but, under all the circumstances shown, we cannot see our way clear to disturb the judgment of the trial court. We therefore affirm the judgment.
Dunbar, C. J., Mount, Fullerton, and Gose, JJ., concur.