233 P. 70 | Cal. Ct. App. | 1924
This action was begun by the plaintiff to obtain a judgment and decree of the court setting aside a *373 certain transfer of real property made, executed, and delivered by the defendant J.A. Schafer to his wife, Clara E. Schafer, on the ground that said transfer was made for the purpose of hindering, delaying and defrauding creditors and that no consideration had been paid therefor. The second amended complaint sets forth facts upon which the plaintiff seeks both legal and equitable relief. The legal relief sought is a judgment in the sum of about forty-three thousand dollars against the defendant J.A. Schafer, for and on account of moneys belonging to the said First National Bank of Gridley, had and received by the defendant, J.A. Schafer, and unlawfully converted to his own uses and purposes, the equitable relief sought being the cancellation of the transfer of real property, as before stated. The complaint is in eleven counts, all of them being identical, hence, a summary of one will suffice for a clear statement of the whole complaint.
The organization of the First National Bank of Gridley is first set forth, its membership in the Federal Reserve Bank of this district, the ensuing insolvency of the bank and the appointment of the plaintiff herein as receiver thereof. The complaint then alleged that during the year 1920 the defendant J.A. Schafer, in violation of his trust as president and manager of said bank, entered into a secret partnership with one Mary A. Rinesmith in the cultivation of rice, and for the purpose of financing the same loaned and advanced, out of the funds of said bank, different sums of money (these sums are fully set forth in the complaint); that the said Mary A. Rinesmith at the time said moneys were advanced was insolvent; that the said defendant J.A. Schafer knew thereof; that no security was taken for the repayment of the funds to the bank so loaned and that the funds so loaned by the defendant J.A. Schafer to the said Mary A. Rinesmith was a total loss, etc.; that thereafter and on or about the twenty-seventh day of December, 1920, and after the indebtedness hereinabove referred to had been incurred, the said J.A. Schafer, for the purpose of defrauding the plaintiff, and in order to prevent it from collecting said indebtedness, etc., conveyed to his wife, the defendant Clara E. Schafer, three parcels of land; that the deeds conveying said parcels were recorded in official records of Butte County; that said parcels of land were not exempt from execution, *374 and that after the execution and recording of said deeds, there remained no property standing in the name of said defendant J.A. Schafer, etc., out of which the indebtedness due said plaintiff could be satisfied from, either in whole or in part; that immediately after making and recording said conveyance both of said defendants departed from the state of California and ever since have been and now are nonresidents of said state and that both of said defendants reside in Columbus, in the state of Ohio. Further allegations are set forth showing that the act of the defendant Schafer was in violation of the statutes governing members of the Federal Reserve Bank and establishing liability of said defendant for all sums so fraudulently appropriated by him; also, the insolvency of said defendant at the time of the transfer. To this second amended complaint the defendants demurred generally to each separate cause of action in identical language except as to the numbering thereof. We quote the first: "That the first cause of action attempted to be set forth in said second amended complaint does not state facts sufficient to constitute a cause of action." The court overruled the demurrer interposed by the defendants, the defendants failed to answer and judgment was entered in favor of the plaintiff, as prayed for by him, and from this judgment the defendants appeal.
It thus appears from the second amended complaint that at the time this action was instituted the plaintiff did not have any judgment against the defendant J.A. Schafer for any of the sums of money alleged to be due from him to the bank of which the plaintiff was the receiver, nor that any suit had been commenced to recover such judgment nor had any lien, by attachment or otherwise, been acquired by the plaintiff upon the lands and premises, the conveyance of which from the defendant J.A. Schafer to his wife Clara E. Schafer is sought to be set aside. It is purely an action to set aside a conveyance without first having acquired any judgment against either of the defendants, and without having acquired any lien upon the lands and premises alleged to have been fraudulently conveyed. The sole reason for not having proceeded to acquire either a judgment or attachment lien upon the premises is the alleged fact that at the time of the commencement of this action the defendants were both nonresidents of the state of California; and this is urged *375 as an exception to the general rule that a creditor at large without a judgment is not in a position to maintain an action to set aside a conveyance of property made by his debtor. Section 3441 of the Civil Code, defining the right of a creditor, indicates that such right must first have been judicially ascertained. The section reads: "A creditor can avoid the act or obligation of his debtor for fraud only where the fraud obstructs the enforcement, by legal process, of his right to take the property affected by the transfer or obligation." In other words, the creditor must have brought himself in that position where the legal process to which he is entitled is obstructed.
Relying upon a paragraph of the opinion written by Commissioner Cooper in the case of First Nat. Bank v. Eastman,
Appreciating the impossibility of obtaining a valid personal judgment against a nonresident in actions of this character, some courts have held that an attachment lien will suffice in that it gives the court jurisdiction to take the seized property and apply it toward the payment of the debtor's obligation. Thus, inHeyneman v. Dannenberg,
In Lyden v. Spohn-Patrick Co.,
In 12 California Jurisprudence, page 1035, section 75, the rule in this particular is thus stated: "Where the debtor is a nonresident and in consequence no judgment can be obtained against him, the creditor may bring suit without having reduced his claim to judgment, but he must have prosecuted his action against the debtor so far as to obtain a specific lien on the debtor's property," citing Roberts v. Buckingham, supra, and a number of other cases, and on page 1036 of the same volume, section 76, the authorities are collected showing that either an attachment or judgment lien against the property must first have been established, or obtained, before a creditor's bill to set aside an alleged fraudulent transfer can be maintained.
In 12 Ruling Case Law, page 629, section 136, the authorities are collected showing a conflict in the rule as to whether an action in the nature of a creditor's bill may be maintained when the property alleged to belong to the creditor is bound only by an attachment lien. The weight of authority would lead to the conclusion that in cases where the defendant is a nonresident, an attachment lien would suffice. [1] It is clear, however, from the other authorities which we have cited that the creditor must have established some specific lien upon the property alleged to belong to the debtor, and withdrawn from execution by some act which obstructs the legal process, to which the creditor has shown himself entitled before the institution of suit to set aside the conveyance.
[2] This conclusion, however, does not lead to an entire reversal of the judgment herein. The complaint, while not stating a cause of action for equitable relief against the defendant J.A. Schafer, does state a cause of action for money had and received, and appropriated by the defendant to his uses and purposes, which belonged to the First National Bank of Gridley, and the said defendant having appeared by a general demurrer, gave the court jurisdiction to enter against him a personal judgment. The demurrer, as we have seen, is general in form and simply alleges in relation to each count that it does not state a cause of action. The demurrer *380
does not point out that the complaint does not state a cause of action for equitable relief, nor is there any special demurrer calling the attention to specific defects, nor is there any ground of demurrer alleging or showing misjoinder of parties. It follows, therefore, that if the complaints state any cause of action, it is sufficient. [3] In White v. Lyons,
It follows from what has been said that the judgment against both the defendants, in so far as it purports to award equitable relief, must be reversed, and, in so far as the money judgment is entered against the defendant J.A. Schafer, it must be affirmed. This result, though necessitated by the language of section 3441 of the Civil Code, is not serious, as it leaves the plaintiff with a judgment lien against any property owned by the defendant J.A. Schafer at the time of its rendition, and if the facts are as alleged in plaintiff's complaint in relation to the fraudulent transfer of the property there described, the foundation is laid for subjecting it to the payment of plaintiff's claims. The judgment, in so far as it awards equitable relief, is hereby reversed, and in so far as it awards judgment for the recovery of the moneys had and received by the defendant J.A. Schafer, it is affirmed. The appellant Clara E. Schafer is allowed her costs on appeal.
Hart, J., and Finch, P.J., concurred. *381