83 Cal. 234 | Cal. | 1890
C. — Plaintiff appeals from a judgment for defendants, rendered upon their general demurrer to his- amended complaint.
It appears from the complaint, which contains much evidential matter that should have been omitted, that on November 8, 1888, Smiley, being then insolvent, made an assignment for the benefit of his creditors to the plaintiff, who accepted the trust and qualified as such assignee.
About October 20, 1888, a firm of wholesale dealers in Sacramento, who were creditors'of Smiley, first learned of the transfer to Smith, Smiley having never prior to that time disclosed to his creditors that Smith was one of them. On the 22d of the same month, after an interview with a member of the said firm, Smiley procured
The plaintiif, after qualifying as assignee, took possession of the stock of merchandise and other personal property, all of which personalty, with the exception of the stock of merchandise, was estimated by Smiley at a much greater value than it was reasonably worth; some of the notes and accounts being, at the time, barred by the statute of limitations. The two notes delivered by Siniley to Smith with the $1,000 note have not been offered to plaintiff. The actual value of Smiley’s assets will not exceed $5,000. His total indebtedness, as scheduled, including the $1,000 on the note to Smith, is $6,121.75, and is all justly due, except the amount of said note. Creditors’ claims to the amount of $419.83 have been exhibited to the assignee, and the expenses of executing the trust imposed by the assignment will
The assignment in this case ivas made pursuant to division 4, part 2, title 3, of the Civil Code, the first provision of which is as follows: —
“See. 3449. An insolvent debtor may, in good faith, execute an assignment of property to one or more assignees, in trust for the satisfaction of his creditors, in conformity to the provisions of this chapter; subject, however, to the provisions of this code relative to trusts and to fraudulent transfers, and to the restrictions imposed by law upon assignments by special partnerships, by corporations, or by other specific classes or persons.”
By section 3439, under the title relating to transfers with intent to defraud creditors, referred to in the section quoted, it is provided that “every transfer of property or charge thereon made, every obligation incurred, and every judicial proceeding taken, with intent to delay or defraud any creditor or other person of his demands, is void against all creditors of the debtor, and their successors in interest, and against any person upon whom the estate of the debtor devolves in trust for the benefit of others than the debtor.”
The promissory note to Smith, which, upon its face, purports to have been made for a valuable consideration, having been given by Smiley to and received by Smith for the purpose of defrauding the creditors of the former, clearly constitutes such an obligation as is contemplated
“A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.” (Civ. Code, sec. 3412; 3 Pomeroy's Eq. Jur., sec. 1377.)
From the fact that the note is scheduled as one of the insolvent’s items of indebtedness, it is prima facie a charge against his estate in the hands of the plaintiff. As the estate is insufficient to pay the bona fide creditors in full, it is manifest that although the plaintiff, as assignee, knowing the note to be fraudulent and without consideration, might successfully resist the payment of it, yet Smith, before it matures, may, unless restrained, transfer it for value to an innocent purchaser, who could enforce it, and thereby cause serious injury to such creditors by reducing the alreadjr insufficient assets of the estate. The date and time of maturity of the note are both unknown to plaintiff; but in view of the other facts stated, his apprehension that it may not have matured, and may be so used as to result in injury to the beneficiaries of the trust imposed upon him, is well founded.
For these reasons, we think the court erred in sustaining the demurrer, and we therefore advise that the judgment be reversed, and the trial court directed to overrule the demurrer, and grant the defendants leave to answer.
Vanclief, C., and Foote, C., concurred.
For the reasons given in the foregoing opinion, the judgment is reversed, and the trial court is directed to overrule the demurrer, and grant the defendants leave to answer.