Haas v. Whittier

The Court.

This is an action brought to recover a sum of money, which the plaintiff, as assignee of an insolvent debtor., Edgar Sessions, claims should be paid him in his representative capacity by the defendants, W. F. Whittier et al., by reason of their having received from the insolvent, and-converted to their own use, certain goods delivered to them in satisfaction of a debt due the defendants by the insolvent.

The proposition upon which the plaintiff based his claim for a recovery is, that the defendants had received the property by a transfer made by the insolvent, with the intention of giving them a preference over his other creditors. The cause was tried before a jury, and they gave a general verdict for the plaintiff, but found “Ho” upon the special issues submitted to them. The special issues were: 1. At the time that Edgar Sessions transferred to Whittier, Fuller & Co. the goods described in the complaint, was he able to pay his debts from his own means as they became due ? 2. Was the transfer of said goods by Sessions to Whittier, Fuller & Co. made in the usual and ordinary course of business of said Sessions ? 3. Did Sessions make said transfer with a. view to give a preference to said Whittier, Fuller & Co.? 4. Did Whittier, Fuller & Co., at the time they received said transfer, have reasonable cause to believe that it was made with a view to prevent Sessions’s property from coming to his assignee in insolvency? 5. Did Whittier, Fuller & Co., at the time of said transfer, have reasonable cause to believe that the transfer was made to prevent said property from being distributed ratably among his creditors ?

The defendants moved the court for a judgment in their favor, because the general verdict was not supported by the special findings under section 625 of the Code of Civil Procedure. The plaintiff made a motion for a new trial, and the court below considered the two motions together, refused that of the defendants, and granted that of the plaintiff, from which rulings this appeal is taken.

The real questions involved in the case are, whether the trial court was justified in believing, upon the evidence and contrary to the view of the jury, that the preference denounced by section 55 of the Insolvent Act had been given, and whether such errors of law had been committed on the trial as warranted a new trial. It would have been useless to have entered judgment for the defendants on the special issues found by the jury, •if the trial court had not considered the evidence sufficient to support the special findings of the jury, or had believed itself to have committed errors of law on the •trial; for immediately following the order for judgment •for defendants, the court would, by granting a new trial, have rendered the judgment inoperative.

The jury found, as it was proper they should under the evidence, that the transfer was not made in the usual and ordinary course of business. This, of course, made the transaction, prima facie, a preference, not allowed by section 55 of the Insolvent Act. But they also found, as we think justifiably, from the evidence, that neither of the parties .had, in fact, any intention to violate the law denouncing á preference' in favor of one creditor over others. If the court was not right in coming to a different conclusion from the evidence, then it could not, in the exercise of its discretion, grant a new trial on that ground. As we look at the evidence, it is all one way, that both parties were desirous that all creditors should share alike. This is shown, in part, by the fact that both of them were willing and desired that a general assignment should be made for all creditors, and were prevented from taking this course by the advice of an attorney, who thought it could not be done. The creditor’s agent wished to secure his debt, the debtor wished to settle it in some way, and preferred to make a general assignment, and this, also, the creditors were willing if they were advised it could be done, but they did not proceed in that way, as they were advised to the contrary by an attorney at law. It is clear that there was no intent to make or to secure a preference over other creditors. The main idea of the insolvent was to secure all his creditors alike; he had his choice to make an assignment, which, under the advice he had, he was justified in not doing, to be attached, which would render his chance to pay all his creditors worse, or to pay his creditor in goods, as he had not the money. This shows the contrary of any intention on his part to make a preference of one creditor over another.

The trutli is, he seems to have been very anxious to do the best he could for all his creditors. ■ The creditor had no ground to believe that the debtor intended to make any preference such as the law denounced.

The declaration of the insolvent and the agent of Whittier, Fuller & Co. are directly to the point that they did not have the least intention of preferring any creditor. i

The insolvent was a witness for the plaintiff in this action; he is contradicted in his material statements by no witness. And the evidence of both these witnesses was not, on this trial, given orally in the presence of the court, but was, by agreement, read from the transcript of the case made up when it was in this court on a former appeal.

There was nothing, then, in their manner or appearance, as the court did not have them before it, which could have influenced that tribunal to disbelieve their positive statements, and we perceive nothing in the circumstances to raise any such disbelief. The presumption, prima facie, which the law makes from the unusual nature of the transfer is entirely done away with by the testimony of these two uncontradicted witnesses, and the jury w'as right in its special findings.

The court below had therefore no legal ground to doubt the correctness of their conclusion, and should not have done so.

The question, then, recurs, What, if any, were the errors in law committed by the trial court?

That tribunal should not have directed a verdict for the plaintiff, as the respondent contends it should, for the question of intent to make a fraudulent preference, denounced by the statute, was one of fact. (Bull v. Bray, 89 Cal. 298.) And, as we have seen, there was no evidence except the prima facie presumption, which was entirely done away with, to support any such theory of the case as the plaintiff contends for.

The next contention of respondent in support of the court’s action is, that the court erred in striking out a portion of the fourth instruction. The' matter which it was proper should be contained therein as an instruction, in the part stricken out, was fully covered by the fifth instruction for the plaintiff, and the part of the fourth given. The matter concerning the responsibility of Whittier, Fuller & Co. for the acts of their agent, in the plaintiff’s sixth instruction, was sufficiently explained in the plaintiff’s fourth instruction granted, and the balance of what was refused was given by the court in the first instruction for plaintiff.

We perceive no objection to the first instruction given for defendants. It is sustained by Bull v. Bray, 89 Cal. 298. Neither do we perceive any valid objection to the third and fourth instructions asked and given for defendants.

The fifth instruction is in accordance with the law of this case, as settled by the appellate court in Hass v. Whittier, Fuller & Co., 87 Cal. 613.

It is further claimed that the jury found contrary to the fourth instruction given by the court for the plaintiff, and therefore the new trial should have been granted.

Taking all the instructions together, such was not the effect of the findings by the jury; they were not told by the instruction last mentioned to find for the plaintiff at all events, but that if they believed certain facts existed, or things had been done by defendants, they xvould find for plaintiff, and the basis on which this instruction is placed as one element necessary to show a wrongful intent is, Did defendants knoxv or have reasonable cause to believe the debtor was insolvent xvben they took the transfer? But the insolvency of the debtor, known to the creditor when he took the transfer, xvas not the only condition on which the jury were told that thejr could find for plaintiff. Taking all the instructions together, and interpreting them fairly, the jury had the right, if the evidence warranted, to find that the defendants and the debtor had no intent to make a preference in violation of section 55 of the Insolvent Act.

This they did find in effect, and in so doing they did not xiolate the instructions of.the court.

We think that the court below should not have granted a new trial, but should have rendered judgment for the defendants on the special findings, and therefore the order granting a nexv trial is reversed, and the court below directed to enter iudgment for defendants as herein indicated.

Hearing in Bank denied.