275 F. 460 | N.D. Cal. | 1921
This is a proceeding in contempt of a civil and remedial nature arising in the above-entitled cause, based upon a sworn petition by the plaintiffs, wherein the respondents named therein, the First National Bank of Modesto and E. C. Peck, its president, the Union Savings Bank of Modesto and C. D. Swan, its president, and one G. W. O’Connor, are charged with having conspired and confederated with the defendants in the action to obstruct and defeat the enforcement and satisfaction of a judgment recovered therein by the plaintiffs and to render the same nugatory and fruitless by doing certain acts and things in aid of such conspiracy and to accomplish its purpose. The facts upon which the charge rests, as disclosed by the evidence, are in substance these:
The judgment in question was recovered on October 3, 1919, for $32,000 and costs, and on the same date duly entered and docketed, but on which execution was, at the request of the defendants, stayed for a period of 30 days. While the judgment ran against both defendants, the cause of action arose upon certain tortious acts of the defendant Mary J. Dillon, committed prior to her marriage to the defendant Thomas B. (the latter being joined in the action under the state statute) and the judgment was accordingly directed to be satisfied out of the property of the former. At the time of the rendition of the judgment the defendants resided in the town-of Modesto, Stanislaus county, and the defendant Mary J. Dillon was possessed in her own right of a large amount of property in that county. She had between $7,000 and $8,000 in cash in the respondent First National Bank, and in addition thereto was the owner of real and personal property of the value of upwards of $35,000, consisting of a home in the town of Modesto of a value in excess of $7,500, a ranch or farm outside the town of the value of $25,000, and a note secured by a trust deed of certain real estate in the county, on which there was due her something over $8,200, principal and interest. This constituted, so far as shown, all the property she owned.
Immediately upon the rendition of the judgment and the order staying execution, the defendants returned to their home in Modesto, and Mrs. Dillon at once set about “covering up” her property from seizure under execution by putting it in a form that it could not readily be found or taken, for that purpose. Her husband filed a claim of homestead on her residence in Modesto, and her other tangible property was precipitately and expeditiously sold and turned into ready money at a very considerable sacrifice. To thus dispose of her property she enlisted the aid of the two respondent banks, of which she was an old patron, and the advice and assistance of their respective presidents, the respondents Peck and Swan, with whom she was on familiar terms of business dealing. These latter procured her a purchaser for her ranch or farm in the person of the respondent O’Connor, a local land agent and speculator, who had had more or less frequent and intimate dealings with the two banks and their presidents, and to whom the respondent First National Bank advanced and loaned, without any collateral security, the necessary funds with which to make the purchase.
These facts coming to the knowledge of the plaintiffs, they, being unable to locale Mrs. Dillon’s whereabouts, brought the matter to the attention of the court, which at once vacated the order staying proceedings on the judgment, and an execution was on October 11th issued and placed in the hands of the marshal; but the marshal was unable to find any properly of Mrs. Dillon upon which to levy, other than the dwelling upon which a homestead had been declared and a remnant of some. $500 still on deposit in the two banks, and apparently overlooked, which was represented by their officers as all the money or property of Mrs. Dillon in their keeping or of which they had any knowledge. Thereupon this proceeding was instituted; the prayer being that the respondents be adjudged guilty of contempt, and that they be punished by being required to pay plaintiffs compensatory damages in the amount of the judgment.
As to the facts thus far stated, they stand in the main established without substantial conflict. The respondents in fact do not deny, in their sworn answers or in their evidence, that they aided Mrs. Dillon in the disposition of her property substantially in the manner stated; but their defense on the facts is in effect that what they did was without knowledge of her purpose in thus disposing of her property, that they treated the transactions as ordinary business dealings with a patron who had a perfect right to dispose of the property, and in which they had a perfect right to aid her, and that there was no intent on their part to aid her to defeat or obstruct the satisfaction of the judgment or the process of the court.
“I think on the same day it was rendered. I think it was in the Modesto Evening News the same day. I think it was about the 3d of October.”
And, further:
“Well, I knew about this judgment, it was in the papers that she had a judgment against her for $32,000. I read it in the papers. I knew that the same as all the rest of us knew it.”
Moreover, the attorney who tried the case for Mrs. Dillon was the regular attorney for the respondent banks and lived in Modesto. Under these circumstances it is idle to ask a reasonable person to believe that neither of these prominent, active, business men, living in this small community, had heard of this judgment prior to October 5th— a judgment against an old and valued patron. And what either of them knew the other undoubtedly knew. The two banks were interrelated and connected in business, occupying the same premises; Peck being president of the National Bank and vice president of the other, and ! Swan being president of the Savings Bank and vice president of the Commercial Bank, while the subordinates performed service for both interchangeably if occasion required. Of course, it would not necessarily negative the truth of the charge, had they not known of the judgment before the 5th of October as the acts charged to have been done in pursuance of the alleged conspiracy were done on the 6th; but the respondents evidently believed or had been advised otherwise, and shaped their evidence accordingly.
They both testified further, in their defense, that they regarded the
In the first place, it is idle to call it an ordinary or usual business transaction for a woman of Mrs. Dillon’s age (upwards of 70 years), situated as she was in a comfortable home and surroundings where she had lived for years, in easy financial circumstances, with thousands of dollars in bank in ready money, and her other property invested to produce a good income, to suddenly and with no apparent necessity determine to dispose of all her tangible property, at a large sacrifice, simply to enable her to turn it into cash to be invested in a manner to pioduce a much less rate of income and then to leave her old home for strange surroundings. And the evidence shows that these respondents were perfectly familiar with Mrs. Dillon’s financial circumstances, having known and dealt with her for years, and could therefore fully appreciate the utter lack, to say the least, of good business judgment in what she proposed to do; but there is not a word in their testimony that they asked a question as to her purpose or reasons for her extraordinary course, or expressed the slightest surprise or dissent, or gave her a word of admonition against her proposed folly, but proceeded with alacrity and the most apparent readiness to carry out her request—because, as they say, they regarded it as a perfectly “reasonable” proposition.
And how was the disposition of the property accomplished? On being advised by Mrs. Dillon that she wished to dispose of her property, Mr. Peck at once called up O’Cormor on the telephone, a man with whom respondents were on intimate business relations, and with whom one of them was at the time interested in a .real estate deal, and informed him that Mrs. Dillon wished fo dispose of her land, and he thought would sell cheap, and that she was in a hurry to dispose of It. O’Connor had already heard of the judgment and knew Mrs. Dillon was “in trouble.” He goes immediately to the bank and finds Mrs. Dillon there, but he does not talk with her; he talks with Peck and Swan; they do the negotiating; they tell him the national bank will
When O’Connor received her deed and gave his check for the land, he instructed Peck and Swan that they were not to cash the check for Mrs. Dillon until he had had the title examined and should notify them that it was all right; that, should the title prove bad, the deal would be off. But it appears that, instead of observing this instruction, respondents on the same day, October 6th, passed the check to Mrs. Dillon’s credit in the First National Bank, and the latter issued to her therefor three six-months’ certificates of deposit for $5,000, bearing 4 per cent, interest. On the same day the bank split up a like certificate for $7,000, previously issued to her, and in its place issued two demand certificates for $500 each and a time certificate for the sum of $6,000. Immediately after these transactions, as before stated, Mrs. Dillon disappeared from Modesto, leaving no trace, and her whereabouts were not discovered by plaintiffs until some months thereafter. Before she left the respondents delivered to her the $6,000 and the two $500 certificates of deposit last mentioned, but the three $5,000 certificates, and the one issued by the savings bank for $7,500 were left in the keeping of the two banks—for what reason does not appear.
There were, moreover, several very unusual and significant things done by these two respondents and their subordinates in the banks, wholly inconsistent with their claim that they had no knowledge of the purpose of Mrs. Dillon in concealing her property and showing the readiness and alacrity with which they lent their aid to carry out her wishes and instructions. Within a couple of days after Mrs. Dillon left Modesto—about October 10th—she called up on the telephone and asked that respondents send her a demand certificate for $3,000 out of the $7,500 certificate issued by the savings bank. Her message was taken by Mr. Stoddard, who was vice president of the National Bank. He took the $7,500 certificate, which had not been indorsed by Mrs. Dillon, indorsed it in her name, issued one for $3,000, and mailed it as requested, then issued another to Mrs. Dillon for the balance of $4,500 and placed it with her other certificates. When asked where he got authority to indorse the $7,500 certificate in Mrs. Dillon’s name, Mr. Stoddard first said he considered the request on the telephone sufficient, but later said he asked Mr. Peck, who told him it was all right.
On the afternoon of October 10th the attorney for plaintiffs, accompanied by the attorney for Mrs. Dillon, came to the court’s chambers, and the former advised the judge that he was informed Mrs. Dillon was disposing of her property, and, he feared, to avoid execution, and
‘•I)id you consult Mr. Hawkins concerning any of these transactions? A. No, sir. Q. Not at all? A. No, sir.”
The court then asked him:
“Did you never discuss this transaction during any of its history or in any of its phases with the attorney for the bank? A. Which transaction? Q. What we are investigating here. A. I never discussed it with Mr. Hawkins, only in a casual way, visiting. I never discussed it professionally at all. Q. rfhat is putting your characterization on it when you say only in a casual way. What do you mean by that? What was said between you? A. Mr. Hawkins was present at the time we met down in Mr. Ehrman’s office, and we just discussed the matter in a general way. Q. Would you tell us what was said, and leave out the characterization as to whether it was in a general*468 way or a casual way? I want to get at the facts, not somebody’s construction of them, because I have to construe these facts.”
But the witness never did state anything of a specific character said between him and the attorney, other than that the latter advised them not to include the certificates of deposit in their return. The same witness, being examined about issuing certificates to Mrs. Dillon on the O’Connor note on October 6th, after being instructed by O’Connor to withhold cashing it until the title had been passed on—which was not until October 9th—was asked by the court:
*‘Q. How did that come about? A. You mean, how were they dated before the 9th? Q. How did they come to be issued at a time when she did not have the funds there? A. The check of Mr. O’Connor was dated the 6th. If we had waited until the 9£h to date them, we would be simply beating her out of three days’ interest on the transaction. Q. You are not in the habit of drawing certificates of deposit in favor of one who has not the funds in your bank, are you? A. No; not in an ordinary transaction perhaps, but this was a transaction where she was putting the money all on interest. Q. How did you know that? A. Because she had us issue certificates of deposit. She said, ‘put that on interest right now.’ ”
That testimony was given on December 1st. On December 4th the witness, being again asked about the same transaction, gave the reason for issuing the certificate on October 6th that escrow transactions were “always handled that way.” It' is quite obvious, I think, that tíie real reason for issuing these certificates so precipitately, and at a time when they did not know if the sale would go through, was to have the security in such a form that, in case of emergency, would enable them to be assigned or passed to others, so they could not be readily reached—as was subsequently done.
I have stated the facts and circumstances thus at length, in view of the strenuous denial by the respondents of any knowledge of a wrongful purpose on the part of Mrs. Dillon, or any intent on their part to aid her in defeating the satisfaction of the judgment in question ; but I have not the slightest hesitation upon these facts in finding, and that beyond any reasonable doubt, that these respondents knew perfectly, not only about the judgment and its stay, but of Mrs. Dillon’s purpose in the transaction, and with that knowledge deliberately aided her, so far as lay in their power, to accomplish it.
The, question still remains as to whether the acts done by the other respondents, as above stated, constitute in law a contempt of this court. Respondents contend, with apparent confidence, that the facts stated afford no competent basis in law for a judgment In contempt against them; that the judgment against Mrs. Dillon was, at the time in question, a naked common-law judgment, upon which execution had not issued, and which cast no lien or hold of any character upon her property, real or personal; that such a judgment in no way restrained or affected her right to transfer or dispose of her property in such manner as she might see fit; and that what she was at liberty to do the respondents bad a perfect right to aid or assist her in doing, with - out rendering themselves liable in any way to the plaintiffs. This contention involves several propositions more or less distinct which should properly be discussed separately. Whether the judgment constituted a Hen on the property dealt with is a question much mooted, and of conceded importance in its effect upon the acts of the respondents, and it should not be confused with a discussion of the rights of the parties under the judgment considered apart from such effect. The question may therefore be laid on one side for later consideration.
When, therefore, the respondents undertook to render this judgment nugatory and valueless by lending their aid to remove the only tangible property of the judgment debtor beyond the reach of process, they were as guilty of violating the court’s order as though it had forbidden their acts in positive terms, and under well-established principles their acts constituted a contempt of the court. Courts do not sit for the idle ceremony of making orders and pronouncing judgments, the enforcement of which may be flouted, obstructed, and violated with impunity, with no power in the tribunal to punish the offender. These courts, equally with those of the state, are possessed of ample power to protect the administration of justice from being thus hampered or interfered with. Nor is this power in any wise limited by section 268, Judicial Code (Comp. St. § 1245). That section “conferred no power not already granted, and imposed no limitations not already existing.” Toledo Newspaper Co. v. United States, 247 U. S. 402, 38 Sup. Ct. 560, 62 L. Ed. 1186. The above principles will be found amply sustained in the leading cases on the subject. Ex parte Kellogg, 64 Cal. 343, 30 Pac. 1030; Wartman v. Wartman, Taney, 362, 29 Fed. Cas. 303; Merrimack Bank v. Clay Center, 219 U. S. 527, 31 Sup. Ct. 295, 55 L. Ed. 320; Clay v. Waters (C. C. A. 8th Circuit), 178 Fed. 385, 391, 101 C. C. A. 645, 21 Ann. Cas. 897; In re Mardenfeld, 256 Fed. 920; State ex rel. Morse v. District Court, 29 Mont. 230, 74 Pac. 412.
Ex parte Kellogg is aptly analogous. There the party, on examination as to his property on supplemental proceedings and in anticipation of an order being made requiring him to turn certain personal property over to the sheriff, asked for a continuance, which the lower court found was to enable him to dispose of the property to a third party, thus rendering himself unable to comply with the anticipated
In Merrimack Bank v. Clay Center, a bill to prevent removal of certain poles and wires from the streets was dismissed by the court below on demurrer, and an appeal to the Supreme Court was dismissed by the latter tribunal without opinion; an application for rehearing was filed, and during its pendency respondents proceeded to remove the poles. The .Supreme Court pronounced them guilty of contempt in thus undertaking to interfere with their appellate jurisdiction before the controversy was finally determined, saying:
“That such conduct may bo a violation of the injunction below affords no reason why it is not also a contempt of this court. Unless this be so, a reversal of Hie decree would be but a barren victory, since the very result would have been brought about by the lawless act of the defendants which it was the object oí the suit to prevent.”
So here the purpose of the stay order to maintain the status quo was negatived and its effect wholly defeated by the acts of the respondents.
In Wartman v. Wartman, heard by Chief Justice Taney on circuit, the question was whether a defendant who had parted with an alleged trust fund in his custody pending an application for an order requiring him to pay the money into court was thereby in contempt. His act. was held to be in contempt of the authority of the court, “as a final decree would be idle and nugatory, if pending the litigation he should be held at liberty to put the fund beyond the reach of the process of the court.”
In State ex rel. Morse v. District Court, a chief of police and his subordinates, having knowledge that a writ of habeas corpus had been issued for a prisoner in their custody, eluded the service of the writ until they had delivered the prisoner to the messenger of the Governor of another state under extradition process. They were held guilty of contempt of the court issuing the writ, and it was said:
“Although there was no technical, actual, personal service of the writ upon Morse prior to the removal of the prisoner from the county by the messenger to whom he was delivered by the police, it must have been apparent to the District Court, upon the hearing on contempt, as it is apparent to us, that all of the relators herein, having knowledge that the writ had been issued, used their utmost endeavors to avoid it. - * * It is impossible to conceive of a more flagrant act of contempt oí court than the unlawiul interference with such a writ.”
See, also, United States v. Shipp, 203 U. S. 563, 27 Sup. Ct. 165, 51 L. Ed. 319, Id., 214 U. S. 386, 29 Sup. Ct. 637, 53 L. Ed. 1041, as to the duty of the court, pending a stay of the execution of the judgment, to protect the rights of the parties against a violation of such stay.
Prhe transcript of the original docket of any judgment, * * * certified by the derk, may be filed with the recorder of any other county, and from such filing the judgment becomes a lien upon all the real property of the judgment debtor not exempt from execution in such county,” etc.
Pet us see if plaintiffs were called upon to comply with this provision, or if it would have availed them anything had they done so. Prior to any action by Congress making express provision upon the subject, it had become the settled doctrine of the federal courts that judgments of those courts had the same effect precisely in their operation as a Hen upon the property of the judgment debtor as the law of the state in which they were rendered, prescribed for judgments in the state courts, and that such Hen extended to all counties within the limits of the territorial jurisdiction of the court; that is, to the limits of the state or district for which the court sat. This construction was deemed necessary to put the judgments of federal courts on a parity or plane of equality with those of the state courts in protecting the rights of suitors. The rule is thus stated in Metcalf v. Watertown, 153 U. S. 671-678, 14 Sup. Ct. 947, 950, 38 L. Ed. 861:
“In those states where the judgment or the execution of a state court creates a lien only within the county in which the judgment is entered, it has not been doubted that a similar proceeding in the Circuit Court of the United States would create a lien to the extent of its jurisdiction. This has been the practical construction of the power of the courts of the United States whether the lien was held to be created by the issuing of process or by express statute. Any other construction would materially affect, and in some degree subvert, the judicial power of the Union. It would place suitors in the state courts in a much better condition than in the federal courts.”
And see Dartmouth Savings Bank v. Bates (C. C.) 44 Fed. 546; Rock Island National Bank v. Thompson, 173 Ill. 593, 50 N. E. 1089, 64 Am. St. Rep. 137; Seventeenth Street Land Co. v. Hustead, 263 Pa. 342, 106 Atl. 540; Cooke v. Avery, 147 U. S. 375, 13 Sup. Ct. 340; 37 L. Ed. 209; Massingill v. Downs, 7 How. 760, 12 L. Ed. 903; U. S. v. Humphreys, 3 Hughes, 201, 26 Fed. Cas. 430, No. 15,422; Cropsey v. Crandall, 2 Blatchf. 341, 6 Fed. Cas. 873, No. 3,418, where the history and reason of the doctrine is fully gone into.
“That judgments and decrees rendered in a Circuit or District Court of the United States within any state, shall be liens on property throughout such state in the same manner and to the same extent and under the same conditions only as if such judgments and decrees had been rendered by a court of general jurisdiction of such state: Provided, that whenever the laws of any state require a judgment or decree of a state court to be registered, recorded, docketed, indexed, or any other thing to be done, in a particular manner, or in a certain office or county or parish in the state of Louisiana, before a lien shall attach, this act shall he applicable therein whenever and only whenever the laws of such state shall authorize the judgments and decrees of the_ United Slates courts to be registered, recorded, docketed, indexed, or otherwise conformed to the rulos and requirements relating to the judgments and decrees of the courts of the state.”
It will be observed that under the terms of the proviso the act is to have effect only in those states wherein the state law has made provision by which the mode of casting liens by judgments and decrees of the federal courts shall be “conformed to the rules and requirements relating to the judgments and decrees of the courts of the state”; in other words, until the state shall have provided— which obviously Congress did not possess the power to do—for docketing, or filing, abstracts of the judgments of federal courts in the local state or county offices in the same manner as provided for judgments o£ state courts, and giving them like effect, thus putting them upon an equality with the latter as a protection to suitors, the limitations of the act should not apply, but a judgment or decree of a federal court should continue to cast a lien coextensive with the territorial limits of the jurisdiction of the court rendering it. And such has been the construction of the act. See Dartmouth Savings Bank v. Bates, and other cases last above cited.
Has this state met the requirements of this act in a manner to put judgments of these courts on an equality in this respect with judgments of state courts? Until 1917 there was no legislation on the subject, but in that year the Legislature passed an act adding a new section to the Code of Civil Procedure, numbered 671a (St. 1917, p. 142),. reading as follows:
“Transcripts of judgments and copies of judgments, rendered in the district or other courts, of the United States within the state of California, when certified by the clerk of said courts under the seal thereof, may be filed and recorded in the office of the county clerk of any county in this state, and when so filed the clerk shall immediately enter the same in the judgment docket in the same manner as judgments rendered in the superior court are entered and such transcripts of judgments and copies of judgments, when so certified, may be filed for record in the office of any county recorder of this state and when so filed for record the county recorder shall record and index the same in the same manner as transcripts of judgments and copies of judgments of the courts of this state are recorded and indexed; and from sneh recording the*474 judgment becomes a lien upon all tbe real property of the judgment debtor not exempt from execution in such county,” etc.
It may be assumed that this provision was intended in good faith to meet the requirements of the above act of Congress by an endeavor to create similar provisions as to the mode of acquiring judgment liens under judgments of the federal courts as those existing as to judgments of the state courts; but it will be seen at a glance that, if such was the purpose, it has signally failed in some very material respects to ■ accomplish it. Quite evidently the section has been hastily, if not carelessly, drawn, and apparently without the draftsman having before him the Code provisions applying to judgments of the state courts, since it departs from the latter in several matters of substance. In the first place, one important feature of the Code provisions is wholly omitted. Under the state law judgments of its courts operate as a lien on the real estate of the judgment debtor in the county where rendered instanter upon its being docketed (Code Civ. Proc. § 671), nothing more being required of the judgment creditor; it being only to create a lien upon property in another county that a transcript of the docket must be there filed.
It will be observed that no such provision is embraced in section 671a, but, to the contrary, that section is so drawn as evidently to contemplate that the judgment of a federal court is not intended or to be permitted to operate as a lien, even in the county of its rendition, until a transcript or copy of the judgment has been first filed and recorded in the office of the county clerk and then filed with the recorder and by the latter duly “recorded and indexed.” This omission alone would work a great disadvantage and embarrassment to a judgment creditor in a federal court.
In the next place, the provision for making a judgment of a federal court a lien in a county other than that where rendered is markedly different and more onerous than that provided for state judgments. As to the latter, the requirement is simply that “the transcript of the original docket * * * may be filed with the recorder of any other county, and from such filing the judgment becomes a lien” in such county; nothing being said about recording (Code Civ. Proc. § 674), while as to judgments of federal courts the requirement is that “transcripts of judgments and copies of judgments * * * may be hied and recorded in the office of the county clerk of any county,” whereupon the clerk shall first enter it in his docket in like manner as judgments of the superior courts “and such transcripts of judgments and copies of judgments, when so certified may be filed for record in the office of any county recorder of this state and when so filed for record the county recorder shall record and index the same * * * and from such recording the judgment becomes a lien,” and only then. It will be readily seen that, not only is the judgment creditor under a federal judgment put to great circumlocution and necessarily greater expense than one holding a judgment of a state court, but that in the frequently important matter of time in getting his judgment to a point where it would operate as a lien the former would be hopelessly outdistanced by the latter.
While plaintiffs might possibly be able to upset the homestead or the sale of the other property, I do not think they should be put to further expense, or subjected to the annoyance and hazards of any such effort, in order to realize the balance of their judgment. The respondents, by their aid and connivance, made it possible for Mrs. Dillon to carry away funds much in excess of the sum sufficient to satisfy the judgment in full, and it would seem but bare justice that they should be called upon to make plaintiffs good in the amount they have lost through their interference. The respondents and Mrs. Dillon are in their unlawful acts joint tort-feasors, and it is not a case where plaintiffs should first be required to exhaust their remedy against the latter. Accordingly the plaintiffs may prepare findings to accord with the facts as above outlined, and upon such findings, when signed and filed, the clerk will enter judgment adjudging the two banks and the respondents Peck and Swan jointly guilty of a contempt of the court; that they be fined and adjudged to pay to the plaintiffs, as compensatory damages, such sum as will be found to cover the balance remaining due and unpaid on the judgment, with interest thereon from September 24, 1920, together with plaintiffs’ costs, both of this proceeding • and the proceedings supplemental to execution, and, in addition, an attorney’s fee in the sum of $750; that the judgment direct that, if the amount thereof be not paid within 15 days from notice of its entry, plaintiffs may have execution thereon against the property of the respondents named, and each of them.
As to the respondent O’Connor, an order may be entered, for the reasons stated, that the rule be discharged, and he dismissed.