Goldner v. Spencer

This is an action to foreclose a mortgage on lands in Placer County alleged to have been given by defendant Spencer to plaintiff to secure the payment of a note for twenty-one thousand dollars dated November 15, 1907, payable one year after date, alleged to have been given by said Spencer to plaintiff. Defendant Curran, administrator, etc., was made a party defendant because he had an interest in the mortgaged premises, which interest was alleged to be subject to plaintiff’s mortgage. Defendant Spencer filed an answer admitting all the allegations of the complaint except the allegation as to the amount due, alleging that five hundred dollars had been paid on February 19; 1909, on account of the interest that had accrued on the note. This allegation was admitted by plaintiff’s attorneys on the trial to be true. Defendant Curran, administrator,

The trial court found that the note and mortgage were executed as alleged in the complaint, that at the time of their execution, Curran, as such administrator, was a creditor of Spencer on the claim subsequently reduced to judgment; that at such time Spencer was insolvent; that such note and mortgage were without consideration; that said note and mortgage were made, executed, and delivered by Spencer to plaintiff, with intent to hinder, delay, and defraud his creditors; that plaintiff accepted the same knowing these facts and knowing that Curran was one of said creditors, and with the intent to assist Spencer in his purpose to hinder, delay, and defraud his creditors. Judgment was given, declaring the amount due to plaintiff on his note,—namely, $24,388.10, and directing a sale of such portion of the mortgaged premises as had not been released to pay said amount, with interest and costs,

Plaintiff’s motion for a new trial was denied. This is an appeal by him from the judgment and from the order denying his motion for a new trial.

The validity of Curran’s claim against the mortgaged premises is not questioned, the only question in regard thereto being whether it is superior to or subject to plaintiff’s mortgage. The mortgage was recorded in Placer County on March 18, 1908, while Curran’s certified copy of the transcript of his judgment was not recorded in such county until April 6, 1908. The conclusion of the trial court was that the note and mortgage were void as against Curran because of the matters stated in the findings to the effect that the same were given by Spencer and accepted by plaintiff without consideration and for the purpose of hindering, delaying, and defrauding Curran and other creditors of Spencer. The principal claim on this appeal is that such findings were utterly without support in the evidence.

It is earnestly urged by plaintiff that it is apparent from written opinions filed by the trial judge on April 29, 1910, and May 19, 1910, which have been incorporated in the bill of exceptions, that he was satisfied by the evidence that plaintiff actually loaned Spencer twenty-one thousand dollars, and took the note and mortgage therefor, and that he did not in any way collude with Spencer to defraud any creditor, and that the only reason for holding the mortgage void as against Curran was that he accepted a note and mortgage calling for a higher rate of interest than that to which he was entitled, knowing that Spencer was heavily indebted to Curran and others. But, as has often been said, we cannot consider these written opinions in determining whether or not the findings are sufficiently supported by the evidence. Although in fact in the bill of exceptions, they constitute no proper part of the record for any such purpose. The findings of fact filed October 20, 1910, must be taken as embodying the conclusions of the trial court on all questions of fact submitted to it for decision. The only question for us is whether these findings have sufficient legal support in the evidence and such inferences as may reasonably be drawn therefrom. Learned counsel for Curran frankly ad

Addressing ourselves first to the question of want of consideration for the note. Plaintiff and Spencer are half-brothers. Plaintiff during, and ever since the year 1907, resided in Paris, France. In April, 1907, Spencer went from San Francisco, his place of residence, to Paris, and did not return to San Francisco until October. He was then heavily interested in the California City Rock Company, a rock quarrying enterprise, and was anxious to obtain money with which to further develop this enterprise, in which he apparently had great confidence. While in Paris he obtained amounts of money aggregating nearly thirty thousand dollars. His bank-book containing his account with the bank ‘‘ Socíete General” showed deposits from June 11th to October 18th, 1907, aggregating 146,500.65 francs, the last being one of ninety-four thousand francs on October 18, 1907. He testified that he received not exceeding fifty thousand francs from his stepfather’s estate, and acknowledged that forty-five thousand francs of the amount so deposited was so received by him. When he returned to San Francisco he brought at least two drafts for eight thousand dollars each issued by said bank on October 22, 1907, one of which was deposited in the Crocker National Bank on November 15, 1907, and cashed by the Wells Fargo National Bank on November 16, 1907, and the other of which was paid by the latter bank on January 9, 1908. As to the source from which the money procured in Paris was obtained, he testified positively that amounts aggregating twenty-one thousand dollars were borrowed from plaintiff in Paris, the last item so borrowed being that of ninety-four thousand francs on October 18, 1907, on his promise to send plaintiff a note and mortgage for the whole twenty-one thousand dollars on his return to San Francisco. Robinson, Spencer’s attorney, who was with him in Paris, testified that he heard Spencer say to plaintiff that he desired to borrow some money from him and that plaintiff replied- the he “would loan him

“Paris le 18 Octobre, ’07.

“Received from Edward C. Goldner Ninety-four Thousand francs, being part of the $21,000 Note and Mortgage to be executed by me on my return to San Francisco.

“Wh. Crane Spencer.”

Spencer testified that he gave this receipt to plaintiff on October 18, 1907, when the ninety-four thousand francs were loaned to him, and that plaintiff returned it to him with the

No witness testified directly to anything in conflict with the foregoing. Opposed to it are only certain circumstances which respondent claims warranted an inference on the part of the trial court to the effect that there was no consideration for the note and mortgage. In considering these it must be borne in mind that, by reason of certain facts that cannot be disputed, if in fact there was no consideration, plaintiff must have deliberately assisted in the fabrication of evidence for the purpose of consummating a fraud on Spencer’s creditors. That plaintiff accepted the note and mortgage from Spencer, that he indorsed Spencer’s receipt of October 18, 1907, to him for ninety-four thousand francs, “Paid by note, Nov. 15-07. Ed. C. Goldner,” that he furnished to his attorney a written statement to the effect that he had loaned to Spencer the various sums stated therein, on the dates named, aggregating one hundred and five thousand francs, and that he directed the institution by his attorney of the foreclosure action, is absolutely established. These things cannot be reconciled with the idea of want of consideration except upon the theory that he was actively engaged in a deliberate attempt to defraud. They fully corroborated Spencer in his testimony as to the borrowing of twenty-one thousand dollars from plaintiff, the agreement as to the giving of the note and mortgage therefor, and the claim that such note and mortgage were given in pursuance of such agreement.

The matters relied upon by respondent as warranting a conclusion on this point opposed to plaintiff’s claim and to Spencer’s direct testimony are all as consistent with honesty

Of course, some of these facts are not reconcilable with the idea that plaintiff in his dealings with Spencer was a cold and keen business man, careful to guard himself against loss. But it is to be borne in mind that he was a half-brother of Spencer, that the relations between plaintiff and Spencer had always been most friendly, and that Spencer had the greatest confidence in his rock quarry enterprise, and fully believed that he would make a great deal of money out of it, and had probably imbued plaintiff with the same confidence. Plaintiff was not dealing with a stranger, but with his half-brother, whom he desired to aid financially and in whom he had every confidence. It would not be at all surprising under the circumstances, assuming that he was financially well situated, which does not appear to be questioned, had he been willing to advance the money without any security whatever, and it certainly is not a very material circumstance, in view of the relations between the parties, that he was willing to trust Spencer to subsequently furnish him with such security as he had promised to give, and to see that the instrument furnishing such security was properly recorded. The same is true as to the fact that he was willing to take inadequate security for his loan and also as to the fact that he was

We have given these matters very careful consideration, and are unable to find anything therein that warrants the rejection of the clear and uncontradicted evidence as to the actual making of the loan of twenty-one thousand dollars by plaintiff to Spencer upon the promise by Spencer that he would give therefor the note and mortgage in suit here. Even if, as claimed by learned counsel for Curran, the situation was such as to throw the burden on plaintiff to show a valuable consideration for the note and mortgage, the evidence was-such, in our opinion, as to compel a conclusion that these were the facts. The circumstances claimed to be opposed to this conclusion cannot be held to constitute such “satisfactory” evidence as justifies a verdict. They are at best “slight evidence.” (Code Civ. Proc., sec. 1835.)

What we have said applies with equal force to the matter of good faith on the part of plaintiff in’ the acceptance of the note and mortgage. There was nothing in the nature of evidence sufficient to support a conclusion that plaintiff had knowledge of any intent on the part of Spencer in giving the mortgage to thereby destroy, hinder, or defraud any other creditor, if indeed such intent did exist on the part of Spencer. If a valuable consideration for the note and mortgage was shown, the burden of showing plaintiff’s knowledge of a fraudulent intent on the part of Spencer was on Curran (see Hart v. Church, 126 Cal. 481 , [ 77 Am. St. Rep. 195 , 58 Pac. 910 , 59 Pac. 296 ]; Roberts v. Burr, 135 Cal. 159 , 67 Pac. 46 ]). It may be freely conceded that if there was satisfactory evidence to show that it was understood between the parties that the loan was in fact to be one without security, and that the mortgage was a mere device to protect the property from other claims for the sole benefit of Spencer, and was not to be enforced against him in any event, a different conclusion could be sustained. But certainly there is not satisfactory

Something has been said about the matter of interest. The note called for interest at the rate of eight per cent per annum, “Compounding quarterly.” In the mortgage it was declared that the same was given as security for the payment of twenty-one thousand dollars on November 15, 1908, “with interest thereon at the rate of eight per cent per annum according to the terms and conditions of a certain promissory note of even date with the mortgage, in words and figures following, to wit”; but the note was not set forth in the mortgage. So far as the record shows, nothing was said at the time of the loan as to the rate of interest, but it does not appear from the record that any point was made in regard to interest either in the pleadings or at the trial, except in so far as a waiver of interest in excess of seven per cent, and the written opinions filed by the trial judge, indicate that something was said about the matter in argument. At the time of the first submission of the case, April 7, 1910, plaintiff’s attorneys filed a disclaimer and waiver of all interest “in excess of seven per cent (7%) per annum upon said note from the date of the execution thereof.” The learned trial judge apparently was of the opinion that there was no agreement as to the amount of interest and that consequently plaintiff was entitled to only seven per cent per annum, and furthermore that by reason of certain early decisions of this court (Taaffe v. Josephson, 7 Cal. 352 ; McKenty v. Gladwin, Hugg & Co., 10 Cal. 227 ) if plaintiff with full knowledge that Spencer was largely indebted, knowingly and intentionally took a note calling for a larger rate of interest than he had agreed to accept or to which he was entitled the note and mortgage must be held void in toto. It is conceded by learned counsel for Curran that in so far as the cases cited may be considered as holding that the acceptance by a creditor from a debtor known to be financially involved of an evidence of indebtedness calling for more

From what we have said it is apparent that our conclusion is that certain findings essential to support the judgment subordinating plaintiff’s lien to the lien of Curran’s judgment are without sufficient support in the evidence, and it is unnecessary to discuss other points made in the briefs.

The judgment and order denying a new trial are reversed.

Shaw, J., and Sloss, J., concurred.

Hearing in Bank denied.