Parkinson Bros. v. Figel

The action was brought by plaintiff to have the rights of the several defendants determined to certain money held by plaintiff. It is alleged that plaintiff (herein referred to as Parkinson Company) and defendant Henry Cowell Lime & Cement Company (herein referred to-as the Cement Company) are corporations; that the Cement Company has commenced an action in the superior court of Santa Clara County against defendant Fred H. Figel and in said action a writ of attachment has been issued and served by the sheriff of said county upon this plaintiff, with a notice that all goods, etc., in the hands of plaintiff belonging to said Figel are attached; that before the said attachment plaintiff purchased from said Figel certain cement and other building materials for which plaintiff agreed to pay the sum of $304.20, no part of which has been paid; that said defendant Beggs claims to be entitled to receive said money from this plaintiff by virtue of a valid assignment from said Figel to him. Defendant Beggs filed an answer denying the averments of the complaint respecting the said action of the Cement Company and further answering, by way of cross-complaint, alleged: That the said money held by plaintiff belongs to cross-plaintiff ; that, prior to the commencement of this action and prior to any claim upon said money by the Cement Company and after the sale and delivery of said goods to Figel, he, the said Figel, for a valuable consideration, assigned to cross-plaintiff said demand against said Parkinson Company; that the Cement Company claims some interest therein but without right. The Cement Company filed an amended answer to the cross-answer of Beggs: Denies that plaintiff has in its possession the sgid sum of $304.20 or any other sum belonging to cross-plaintiff; admits the salfe of said goods to plaintiff; denies the assignment of said claim as alleged by cross-plaintiff ; alleges that the writ of ataehment was issued and served as alleged by plaintiff and that it has never been released and, upon information, alleges that it was served prior to any assignment by Figel to Beggs. As a further answer, alleges: That prior to the commencement of this action, Figel was indebted to the Cement Company in the sum of about thirty thousand dollars, for the recovery of which said company had commenced an action in said court; that at said time a writ of attachment was duly issued and was regularly served on

Defendant Figel answered plaintiff’s complaint admitting its averments and alleging that, prior to any levy of attachment, plaintiff was informed by defendant Figel that said account had been assigned to said Beggs.

The court made findings that the averments of the complaint were true; that the sum of $304.20, in possession of the clerk, deposited by plaintiff, belongs to defendant Beggs; that prior to the commencement of this action and after the sale and delivery of the goods, Figel, “for a valuable consideration, sold, set over and assigned to Will M. Beggs, the said

The findings support the judgment and we are only to inquire whether there is sufficient evidence to support the findings.

Appellant presents the following points: 1. That the circumstances all show that the assignment was fraudulent and a mere subterfuge to deprive the Cement Company of the money due it; 2. The assignment for future services was void against creditors; 3. A transfer to a creditor largely in excess of his demand, with an undertaking that the surplus is to be returned to the principal, is fraudulent and void; 4. That the evidence is that Figel assigned the accounts because he thought Beggs could collect them more readily than Figel could, and hence being for the benefit of the assignor, is void as against creditors.; 5. If any part of the assignment is for a consideration which the law does not permit, the whole assignment is void; 6. The assignments, if bona fide at all, are really for the benefit of creditors, and as such, are void for failure to comply with the code.

Respondent, Beggs, makes the point, as conclusive of the controversy—That appellant has no standing in court to attack the conveyance from Figel to Beggs for the reason that it had no judgment, but only an attachment on a disputed claim, against Figel. The question has been many times considered by the courts of this country and not with harmonious results. In an extended note to Ziska v. Ziska, (Okl.), 23 L. R. A., New Series, page 1, many, but by no means all of the cases, are collated. Subject to some exceptions, the rule is undoubtedly as claimed by respondent. (3 Pomeroy’s Equity Jurisprudence, sec. 1415.) The subject was quite

It appears, however, that all parties without objection submitted to an enquiry into the validity of the assignment to Beggs and the court made full findings on the issues. Neither by demurrer to the answer of the Cement Company, alleging fraud, nor by objection to the evidence touching the alleged fraudulent conveyance to Beggs, was the question raised. Under such circumstances, we do not think the respondent Beggs should be permitted to rely solely on the point just discussed, nor need it be definitely decided. Having consented to an examination into the validity of the Figel assignment, appellant is entitled to a review of the question whether the evidence is sufficient to support the findings.

Figel is a dealer in lime, cement, and other building material at San Jose. The Cement Company is a manufacturer of lime and cement and claimed that Figel was indebted to it in the sum of thirty thousand dollars for materials sold to him prior to March 28, 1911. The Cement Company guaranteed the lime against what is called “pitting” or “popping.” This lime was for plastering purposes. Witness, Dr. L. J. Belknap, testified to serious damage suffered by him in using the lime purchased from Figel. Explaining the meaning of the term “popping,” he testified: “There are little bits that pop out from the size of perhaps the head of a pin up to the size of a quarter. In some cases half an inch that chip out by something in the slacking.” The effect of this “popping” was such that where it occurred the walls had to be scraped and replastered. A number of persons, who had used this lime, were making claims against Figel for damages and among them some six or more contractors, amounting to more than eight thousand dollars. These claims were brought to the attention of the Cement Company by Figel. There was also a pending controversy about cement sold to the state by Figel who had brought suit against the state for $5,386.06, and Figel informed the Cement Company that he would expect it to stand back of him in this suit. Figel did not deny that the Cement Company’s claim

Figel believed, and the evidence shows that he was justified in his belief, that it was necessary for him to employ attorneys and he engaged Messrs. Beggs & McComish. They entered upon their employment and were rendering various services some time before the assignment. There was no definite understanding as to their fees except that Figel was told the fee in the suit against the state would be at least one thousand dollars and expenses. Figel had on hand between one thousand five hundred dollars and two thousand dollars and, in reply to the question why he did not use this money to pay his attorneys, he testified that he needed it to carry on his business and to meet current obligations. He testified that he needed attorneys not only to look after matters in litigation but to assist in the collection of outstanding accounts and that it was to secure his attorneys for. their services performed and to be performed that he made the assignment to Mr. Beggs. This assignment embraced a number of claims aggregating $8,516.20, among them the one here involved against plaintiff for $304.20 and one involved in another case for $1,162.71, against Charles B. Parkinson Co., which, by stipulation, is to be considered on the transcript in the present case. Figel was called as a witness by defendant, Cement Company, and it is upon his testimony and upon the cross-examination of Mr. Beggs that the objections now urged to the judgment by appellant are chiefly based. Figel was examined at great length and with much minuteness as to the extent and character of his business, his relations to his assignee, Beggs, and his financial condition at the time of the assignment.

It appears from Béggs’s testimony .that he had collected of these assigned accounts $3,667.66, and had paid out in settlement of three of the “popping” claims $2,580.00, leaving in his hands $1,087.66 and the uncollected claims amounting to $4,848.54. Several contractors and others were called as witnesses who had claims for damages, from whose testimony it appears at least problematical whether any surplus will remain to come back to Figel after claims for damages are paid and his attorneys settled with, even if Mr. Beggs should succeed in collecting the balance of the accounts assigned to him, and whatever that balance may be is secured to the Cement Company by its attachment. In fact, except as to what may be the attorney’s fees, the Cement Company is getting the benefit of all these assigned claims by the money being used to discharge liabilities for which it is answerable. Figel explained at some length why he found it necessary to employ attorneys and his explanation seems reasonable. Speaking of the assignment to Beggs, he testified: “I went through my boobs and I picked out those accounts that were bind of long-winded coming in. I did not give them any nice, good accounts because I needed that money to pay your client with you see? (addressing the Cement Company’s attorney, interrogator); I kept paying your client all my ready cash, and I depended upon Mr. Beggs and Mr. McComish to make good on those popping lime jobs. I did not expect them to work for nothing; and that is how I came to make the assignment.” lie testified that he had paid'the Cement Company $10,000.00 on its account, reducing it to about $30,000.00. We cannot undertake to give even an epitome of the succeeding hundred folios of Figel’s testimony. He was required to bring his books into court and explain in detail everything pertaining to his accounts and to explain over and over again why he found it necessary to employ attorneys and to assign to Beggs the accounts mentioned. We have failed to discover in his answers and explanations any sound reason for holding that the conclusions reached by the learned trial judge as to the bom fides of the transaction were unsupported by sufficient evidence. Figel made no concealment of what he was doing but gave notice of the assignment to the several persons

In its finding that Figel was solvent at the time said assignment was made, the court doubtless took into consideration, as it very properly could, the amount of offsets to the Cement Company’s claim which the evidence showed would, in all probability, be successfully urged. Figel testified that he owed no debts except this claim of the Cement Company and none were disclosed by his books. He had an established business which had some value though no price was put upon it. Aside from any good will, he showed visible assets in excess of the amount which would be due the Cement Company after it made good the losses claimed by Figel to be justly chargeable to the Cement Company. The burden of establishing his insolvency at the time of the assignment was on the Cement Company, as was the charge of fraud, and both should have been shown by clear and satisfactory evidence to have warranted a finding favorable to defendant’s contention. Although the offsets to the Cement Company’s claim were in some degree contingent and uncertain as to their amount, we do not think the trial court would have been justified in disregarding them in order to find Figel insolvent.

It is urged that because the assignee was Figel’s attorney and the assignment was for future services it is void against creditors. Some of the services were rendered before the assignment and the assignor had a right to secure the services rendered and to be rendered. (Morrell v. Miller, 28 Or. 354 , [ 43 Pac. 490 , 493, 45 Pac. 246 ] ; In re Luce, 83 Cal. 303 , [ 23 Pac. 350 ].) Figel’s principal object by the assignment was first, to secure his attorneys for their services, which he had a right to do, and second, to have the proceeds used to settle the “popping” claims as to which both Figel and the Cement Companyawere liable. That any surplus should come to him would be implied had it not been so understood. The fact that

Nor does it appear to us that any part of the assignment was void and thus, had it been true, making applicable the rule, if it is the rule, contended for, that the entire assignment is void. Figel could, as we have seen, secure his attorneys, and he had a right to make some provision to settle those harassing “popping” claims. Respondent cannot complain should there be a surplus for it is secured to respondent by its attachment.

No attempt was made to assign these claims for the benefit of all creditors nor was there an assignment of all of Figel’s property—not even all his outstanding accounts. It was not a general assignment such as in Sabichi v. Chase, 108 Cal. 86 , [ 41 Pac. 29 ]; cited by appellant. At most it was an assignment for the benefit of his attorneys and to pay certain creditors by way of compromising, where possible, their claims for damages. Such an assignment the law permits. (In the Matter of Muller v. Kennedy, 118 Cal. 432 , [ 50 Pac. 660 ] ; Heath v. Wilson, 139 Cal. 362 , [ 73 Pac. 182 ].) It seems to us that the evidence shows that Figel was proceeding under sections 3431 and 3432 of the Civil Code, if he had the code in mind at all, and not, as claimed by appellant, under section 3449 et seq., and that the assignment, though preferring a creditor, was, therefore, valid. (See cases last above cited; also, Lawrence v. Neff, 41 Cal. 566 ; approved in Wood v. Franks, 67 Cal. 32 , [ 7 Pac. 50 ] ; Saunderson v. Broadwell, 82 Cal. 132 , [ 23 Pac. 36 ] ; and in Heath v. Wilson, 139 Cal. 362 , [ 73 Pac. 182 ]. See, also, Roberts v. Burr, 135 Cal. 156 , [ 67 Pac. 46 ] ; Crane Co. v. Dryer, 9 Cal. App. 290 , [ 98 Pac. 1072 ].)

The judgment is affirmed.

Hart, J., and Burnett, J., concurred.