Baar v. Smith

This is an action to quiet title. The plaintiff named as defendants F. M. Smith, his wife, West End Consolidated Mining Company, Mercantile Trust Company and several other persons. The defendants appeared and answered and a trial was had before the trial court sitting without a jury. The trial court made findings in favor of the plaintiff and from a judgment entered thereon the defendants appealed under section 953a of the Code of Civil Procedure.

The judgment appealed from contained many provisions. After it was rendered, on an application for a writ of supersedeas, the supreme court decided that the judgment was void except in so far as it provides for the quieting of plaintiff’s title to the stock. (Baar v. Smith, 201 Cal. 87 [ 255 Pac. 827 ].) The appellants present six points. In the first place they present the point that the judgment is void except in so far as it provides for the quieting of plaintiff’s title to the stock. In support of that point they cite Baar v. Smith, supra. The respondent disagrees with the appellants ‘ in this contention and presents many arguments and cites many authorities which she claims to be to the contrary. It is a sufficient reply to state that the decision of the supreme court in Baar v. Smith, supra, is controlling in this court and that we are not at liberty to depart from the ruling therein contained; furthermore, we have no disposition to do so. It remains for us to consider the additional points on the appeal of the defendant Evelyn Ellis Smith.

In the next place that defendant contends that no title passed to plaintiff’s assignor at the execution sale upon which plaintiff’s claim of title is founded, and that the finding in favor of plaintiff’s title is therefore unsupported by the evidence. In support of that point she quotes from the execution as levied and she quotes also from the notice of sale. The attempted description in each is the same and is couched in the following language: “all stocks and shares of stock, and interest in stocks and shares, of the West End Consolidated Mining Company, a corporation, standing on

In the case of Odell v. Cox, 151 Cal. 70 [ 90 Pac. 194 ], the court was considering facts in which it appeared that property of the value of $2,000 was sold for $26.50 together with $14.55 as costs. After discussing some of its own decisions and some of the text-books, speaking through Mr. Justice Angellotti, on page 74, the court said: “By the term ‘mere inadequacy of price’ is meant simply an inequality in value between the subject-matter and the price. The effect of this rule is that where such inadequacy stands alone, unaccompanied by any unfairness or other inequitable incident, it will not authorize the vacating of the sale. But it is universally recognized that inadequacy of price is a circumstance of greater or less weight, to be considered in connection with other circumstances impeaching the fairness of the transaction as a cause of vacating it, and that where the inadequacy is palpable and great very slight additional

To the foregoing contention made by the defendant the plaintiff says that “The obvious answer to this contention is, that the sale was made exactly in conformity with the code provisions regarding such sales.” With this reply we do not agree. In Cummins v. Little, 16 N. J. Eq. 48 , at page 56, the court said: “I accept it as a sound and clear principle, that if a sheriff abuses, to the detriment of subsequent encumbrancers or of the defendant in execution, the discretion vested in him by law to make sale under execution, a court of equity will grant relief, although there has teen a formal compliance in the conduct of the sale with all the requirements of the étatute. It is not necessary that there should be actual fraud committed or meditated. The abuse of discretion in the execution of the trust is a constructive fraud, against which equity will relieve. In arriving at this conclusion, no fraud or improper motive is designed to be imputed to the sheriff. The evidence does not warrant it. The fair presumption, I think, from the evidence is, that the sheriff had no idea of the real value of the interest that he was selling, of the circumstances which surrounded the transaction, or of the effect of the sale upon the rights of the parties interested. Otherwise, it is scarcely credible that, as a right minded man and upright public officer, he would have struck off the property as he did.” (Italics ours.) The sheriff was in the act of discharging an important trust which vested in him many highly discretionary powers which do not appear on the face of the statute.

We do not understand that the defendant attacks the levy as distinguished from the sale. Therefore we will not go into the subject. The plaintiff cites and relies on O’Brien v. Mechanics’ Ins. Co., 56 N. Y. 52 . If the validity of a levy were involved, that case would be in point, but there is a broad distinction between an attack on levy and an attack on a sale. (Fortin v. Sedgwick, 133 Iowa, 233 [12 Ann. Cas. 337, and note, 110 N. W. 460 ].)

In this same connection the defendant contends that shares of stock in a foreign corporation are not subject to execution sale in a jurisdiction other than in the state under the laws of which the corporation was organized. The plaintiff replies, among other things, that the certificates of the shares of stock in question were in this state and that the rule is not applicable. (23 C. J. 328.) In support of the judgment we think the trial court had before it sufficient facts from which it was entitled to draw the inference that, at the time of the levy, the certificates of the shares in litigation were within this state. There was no direct evidence to the contrary.

The trial court made several findings to the effect that the transfer of 819,632 shares from F. M. Smith to Evelyn Ellis Smith was a fraud on the creditors of F. M. Smith. In the view that we take it will not be necessary to consider those attacks.

The defendant calls attention to the fact that in finding number III the trial court found that ever since February 23, 1921, plaintiff was the owner and entitled to the possession of the 819,632 shares; and that in finding XXVIII the trial court found that at the time of the levy of the execution Evelyn Ellis Smith was the owner of and in the possession of said shares of stock and that ever since the commencement of this action she was such owner. Thereupon the defendant contends that the findings are hopelessly conflicting. The plaintiff replies that the statement of ownership in E'velyn Ellis Smith is a clerical error. It may be. However, this court, on this record may not so declare the fact.

E. L. Ransome, in 1915, was an agent of some kind for F. M Smith. The nature of the agency was not proved.

Mr W. S. Tevis was called as a witness by the defendant and testified to conversations held between him and Mr. Smith at various times covering the years 1910, 1911, and 1912. The declarations by Mr. Smith were on the subject of his financial ability. Some were made before the transfer to Mrs. Smith, some were made later. At least one of the declarations was made as early as September, 1911, that is, before the transfer. In the conversation held at that time Mr. Smith made the declaration that he was unable to pay a large sum which he was legally bound to pay and which was due and payable. Conceding that the admission of declarations by Mr. Smith after the transfer to his wife were inadmissible as against her, and conceding that the trial court applied the evidence as against her (which the record does not disclose), no prejudicial error appears, because the evidence was but cumulative on the same subject on which unobjectionable evidence had been received from the witness W. S. Tevis.

The defendant asserts that the plaintiff should be denied all relief because he comes into a court of equity with jUnclean hands. To that assertion the plaintiff replies that jthe defendant is making a collateral attack. No authority is cited by either party to support either of these assertions. Mrs. Smith was not a party to the action out of which the 'execution issued and is not precluded from attacking that ¡judgment in this action. (34 C. J. 526.) She is a claimant to the chattels and is here in a position to make the claim. ( Boylan v. Kelly, 36 N. J. Eq. 331 , 336.) The case ¡last cited is authority to the effect that this plaintiff has not come into court with unclean hands.

Nourse, J., and Koford, P. J., concurred.

A petition for a rehearing of this cause was denied by the District Court of Appeal on April 5, 1929, and a petition by respondent to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on April 29, 1929.

All the Justices present concurred.