Bailey v. Leeper

This is an appeal from a judgment setting aside as fraudulent the transfer of shares of stock in Pacific Coast Aggregates, Inc., a corporation, made by appellant Thomas B. Leeper to his wife, Abbie.

During 1950 and 1951 respondents, who are attorneys at law, performed professional services for appellant Thomas B. Leeper. On September 17, 1952, they brought suit to recover the reasonable value of those services, less the sum of $200 theretofore paid. On September 17, 1954, they obtained a judgment in the sum of $8,015, plus costs. Intermediate the commencement of said action and the entry of said judgment respondents brought the present action to set aside the transfer of the shares on the ground that the transfer had been made without consideration and with intent on the part of both appellants to defraud respondents. Judgment was entered in respondents’ favor and supportive thereof the court made the following findings of fact: That prior to the month of May, 1953, Thomas B. Leeper owned “approximately 1,700 shares” of stock of the Pacific Coast Aggregates, Inc., a corporation; the shares had a value as of the time of rendition of judgment of $11,800; that between

Appellants challenge the judgment against them on two fronts. First, they say that proeedurally the trial court committed error in failing to make specific findings as to all properties, including the shares transferred, as to their value when transferred, and as to the obligations entered into by Abbie in consideration of the transfer to her. They say the court’s findings on the fairness of the consideration is nothing more than a conclusion of law. Second, they aver that, treating the court’s findings as to consideration to be a finding of ultimate fact, it is not supported by the evidence.

We will first consider the evidence as to its sufficiency to support a holding that fair consideration had not been given by Abbie for the transfer to her by Thomas of all his assets. Although the trial court confined its findings and its judgment, as noted above, to the shares of stock in Pacific Coast Aggregates, these shares did not constitute the whole of the property transferred. Bather, the shares constitute the residuum of the property transferred still in the hands of Abbie. Both Thomas and Abbie testified that when the transfers were made, the two of them had already by an oral agreement made in June of 1952 agreed upon the conditions for the transfer. This agreement was made while Thomas was in the Yolo County jail under stay of execution from a felony conviction. The agreement was that Thomas would transfer all of his assets to Abbie, and that in consideration of the conveyance, she would bind herself to do the following things: (1) Discharge all of Thomas’ debts, both secured and unsecured, a list of which Thomas had made up (this list did not contain any reference to the debt to respondents, and Thomas testified that he left that debt out of the list because he had received no demand for money from them although their services had been completed and he did not consider he owed respondents anything) ; (2) Devote the properties or moneys that might be left in her hands to her support and to the support of Thomas. Thereafter, and in August of 1952, following the oral agreement for transfer, Thomas transferred to Abbie all of his assets. He conveyed to her two ranches, one in Sutter County

The testimony as to values is unsatisfactory. However, as to the ranches, it appears that there was evidence from which the court could infer they were valued at $40,000. Under cross-examination, Thomas was asked this question; “Q. Isn’t it true that the approximate value of these ranches in 1952 was $40,000; is that right? A. That is an estimate, could vary some.” The only other evidence as to the value of the ranches is that furnished by the actual sale of the ranches which Abbie made shortly after she received them. She sold the two ranches for a total of $28,760. It satisfactorily appears that the value of the Merchants’ National Bank shares was $4,650 in 1953. There is no suggestion that this value varied materially between the date of transfer and the date as to which the values were fixed. It was stipulated that the Pacific Coast Aggregates shares were worth $6.00 per share in 1953, but Thomas testified that when he assigned the stock to Abbie it was worth not over $5.00 a share. The bank account was found to have had a balance of $200 at the time of transfer, which sum Abbie received. To pass good title to the ranches Abbie had to pay out a total sum of $14,028.85, and from the proceeds she also paid various other sums totaling $7,962.50. She repaid to herself a loan she had made to Thomas in the sum of $1,000. She paid his debt to the Merchants’ National Bank in the sum of $1,847.50. She paid off a loan he had made on his life insurance in the sum of $900. She paid back rent he owed on his office in the sum of $400. She paid $75 to the telephone company, and she paid Mr. Vaughn for atorney’s services the sum of $1,800. She paid lodge dues in the sum of $100, and in addition she forwarded to Thomas such moneys as the authorities would permit him to receive. These sums aggregated $840. After his parole and for a period of five months she paid him $200 a month for his support. She expended several thousand dollars in improving her home in which she and Thomas reside. When Thomas was in-dieted for the felony of which he was convicted, there were indicted with him several other persons, including one Green

Excluding the value of the automobile transferred to her, the record supports the following values of property transferred :

Banehes ................................$40,000

Bank Account........................... 200

Merchants’ National Bank shares ......... 4,650

Pacific Coast Aggregates shares........... 8,000

Total ..............................$53,850

If, for the $40,000 value, based as it is upon the testimony of Thomas, we substitute the sale price actually received, the total is reduced to $42,610.

Turning now to the other side of the ledger, the court could disallow payments made by Abbie in performance of her obligation under the assignment agreement which were for the purpose of supporting Thomas and could also disallow such sums as Abbie spent upon her home, since that was not included within the obligations she assumed. As to dis-allowance of the items paid for the support of Thomas, see Hansen v. Cramer, 39 Cal.2d 321 [ 245 P.2d 1059 , 30 A.L.R.2d 1204 ]; Baxter v. Baxter, 19 Cal.App. 238 , 239 [ 125 P. 359 ] ; First Nat. Bank v. Smith, 217 Cal. 394 , 395-396 [ 18 P.2d 930 ] ; Sudbrock v. Kroener, 136 Cal.App. 624 , 630 [ 29 P.2d 435 ]. Crediting all other disbursements Abbie made, they total the sum of $30,151.35. The disparity in value between the consideration received by Abbie and the obligations incurred by her is thus shown to be so great that the finding of the court that the transfer which rendered Thomas insolvent was not for a fair consideration is amply supported.

Turning now to the contention that the cause should be reversed for failure of the trial court to make necessary findings, the following situation is presented: There was no specific finding as to whether or not Thomas and Abbie had ever entered into the antecedent oral agreement setting up

“Under Code of Civil Procedure, section 647, ‘the final decision’ is ‘deemed to have been excepted to’ and the insufficiency of the finding to support the judgment may be urged on appeal although appellant neither excepted to the findings nor sought their amendment.”

A failure to find upon material facts may be held to be reversible error. (Krauss v. Strop, 47 Cal.App.2d 452 [ 118 P.2d 332 ].) However, if we assume the trial court fell into error when it did not make the specific findings, the lack of which we have noted, still the error is one in procedure and therefore not reversible under the Constitution (art. VI, § 4½), unless from an examination of the entire record we can say that the error complained of has resulted in a miscarriage of justice.

Looking at the record now in the light most favorable to appellants, we will assume that the appellants made the agreement in June of 1952, which they say they did; we will assume that the ranches transferred were worth no more than the sale price; we will assume that the other values be taken as either stipulated to or as the least values testified to; we will allow all the expenditures made by Abbie in consideration of the transfer, excepting only the expenditures for future support and upon her home, which as a matter of law cannot