Eustace v. Lynch, 7889.

Decision Date17 December 1935
Docket NumberNo. 7889.,7889.
Citation80 F.2d 652
PartiesEUSTACE et al. v. LYNCH.
CourtU.S. Court of Appeals — Ninth Circuit

Hiram E. Casey and Chas. W. Fourl, both of Los Angeles, Cal., for appellants.

Before WILBUR, DENMAN, and HANEY, Circuit Judges.

WILBUR, Circuit Judge.

This is an appeal from an order adjudging Katie M. Eustace and Charles W. Fourl guilty of contempt of court and fining each of them $1,000. In the statement of facts which follows we will not undertake for the moment to distinguish between facts which appellants offered to prove and those which otherwise appeared in the record:

John M. Eustace was engaged in the plumbing business at three separate places under the fictitious name of Eustace Plumbing Company. This name had been filed with the county clerk after due notice, as required by law, and the information therein contained was accessible to the public. He had owned a plumbing business for many years before his marriage, in all about 30 years. Katie M. Eustace is his wife and they were living together at the time of the occurrences herein stated. The California law covering the ownership of such property is well settled but difficult of application, and may be briefly stated at this juncture to clarify what follows. In so far as the business and property used therein could be traced as the rents, issues, and profits thereof, it was the separate property of the husband. Cal.Civ. Code, § 163. In so far as the property was the result of the earnings of the husband or the wife after marriage, it was the community property. Cal.Civ.Code, § 164. It was under his exclusive management and control whether his separate or community property. Cal.Civ.Code, §§ 172, 172a. Neither the separate property of the husband nor the community property was liable for the debts of the wife. Cal.Civ. Code, § 167. We again state these general principles of the California law applying to community and separate property as formulated by the authority of California Jurisprudence:

5 Cal.Jur. p. 282, § 7: "Community Property. * * * In general, under this system, whatever is acquired by the efforts, ability or personal qualities of either spouse, constitutes a part of the community property. Thus, the earnings of the wife as well as of the husband are community property, and this includes gains from business ventures conducted by either, and from contracts for services of whatever nature; and money borrowed on personal credit."

Supplement of 1930, p. 50, § 33, Cal. Jur. by Prof. Orrin K. McMurray: "In General. Difficult questions occur in connection with the commingling of separate and community funds including the application of labor and skill of the spouses, and it cannot be said that the rules governing the rights of the parties have been clearly determined in such cases. The commingling of community and separate funds in such a manner that it becomes impossible to trace the funds renders the whole fund community property. It is clear that the increase in the value of the separate property due to the natural enhancement of values generally, and not attributable to the ability, activity or capacity of the spouses or either of them, is separate property."

5 Cal.Jur. p. 297, § 16: "Impossibility of Tracing Funds. Where the commingling of the separate property with the community property is such that it is impossible to trace the funds, the whole will be treated as community property, upon the principle that the burden is upon the spouse claiming property as separate property to establish its character as such."

It follows that the plumbing store and the supplies therein were either community property and that the possession of the wife was as a member of the community, or that the supplies were the separate property of the husband, and she was in possession as his agent. Mrs. Eustace had engaged in some oil production enterprise, and as result thereof three judgments had been obtained against her in the superior court of Los Angeles county, Cal.; one for $6,284.02, another for $650, and a third by one A. M. Kupfer for $49.95.

On August 23, 1934, the three judgment creditors filed an involuntary petition in bankruptcy against Mrs. Eustace alleging as acts of bankruptcy the fact that she had permitted one of the petitioning creditors, the Oil Tool Exchange, Inc., to obtain a judgment lien on real estate belonging to her on April 24, 1934, and had failed for 30 days thereafter to vacate or discharge the lien. It is also alleged that within four months preceding August 23d Mrs. Eustace had transferred to Charles W. Fourl and I. Henry Harris an oil and gas leasehold in the Baldwin Hills, Los Angeles, and that within four months, with intent to injure her creditors, she had transferred to one G. Dibetta certain real estate situate at Huntington Beach, Orange county, Cal. It is alleged in the petition that Mrs. Eustace was engaged in the plumbing business at 1246 East Ninth street, in the city of Los Angeles. The petition was entitled: "In the Matter of Katie M. Eustace, doing business under the name of Eustace Plumbing Company, an alleged bankrupt."

Before adjudication of bankruptcy on September 7th a petition for the appointment of a receiver was filed in the above-entitled matter, verified by A. M. Kupfer, whose judgment claim amounted to $49.95. It was alleged in the petition that it was absolutely necessary for the preservation of the estate that a receiver be appointed for the reason that Mrs. Eustace had been for a long time engaged in the plumbing business under the name of the Eustace Plumbing Company; that she had been the manager and operator of the business; that she had stored a large amount of miscellaneous plumbing supplies, fittings, etc., at 1246 East Ninth street, also at 166½ North La Brea and 828-830 Ceres avenue, Los Angeles, and that she planned and intended to dispose of and conceal such stock of plumbing supplies so as to defeat her creditors, and that she had been concealing real estate and personal property in the name of dummies; that it was for the best interests of the estate that a receiver, if appointed, be authorized to continue the business of the bankrupt until the appointment of a trustee "for the reason that said business would be of great value to the creditors as a going concern." On the same day an ex parte order was made appointing E. A. Lynch as receiver. This order did not specifically describe any property whatever. It did not directly or indirectly refer to the plumbing business conducted at the three places of business described in the petition for the appointment of a receiver nor in the place of business described in the petition in bankruptcy. It was ordered that E. A. Lynch be appointed receiver "of all property of whatsoever nature and wheresoever located now owned by or in the possession of said bankrupt," etc. It was ordered that all persons, etc., including the bankrupt, forthwith deliver to the receiver all property in the "possession of them or any of them and owned by said bankrupt," and that the bankrupt forthwith deliver to the receiver "all and any of such property now in the possession of said bankrupt." All persons were enjoined from disposing of any property in the possession of the bankrupt or owned by said bankrupt. The order authorized the receiver to conduct the business and sell the same as a going concern "if it can be done to the benefit of said estate."

On September 10th the receiver visited the premises at 1246 East Ninth street and attempted to take possession thereof and was ejected therefrom by appellant Charles W. Fourl; on September 11th the receiver filed a petition for an order to show cause directing each of the appellants to show cause "why they should not be held in contempt of court for interfering with the possession of the receiver of said premises and why possession of said premises should not be restored forthwith to your receiver." In this petition it is alleged that the receiver, accompanied by J. C. Keenan and W. D. Hunt, visited 1246 East Ninth street and found J. G. Stevenson in charge of the premises; that Stevenson told them he had been working for Mrs. Eustace for about 70 weeks, and that so far as he knew Mrs. Eustace had been conducting the business during that period and was the owner thereof; that she had paid his compensation; and that the receiver at that time left with Stevenson "a certified copy of the order of his appointment"; that at about 12 o'clock Mrs. Eustace appeared with the appellant Charles W. Fourl, and Fourl then and there advised the receiver that the premises and business were owned by John M. Eustace and ordered the receiver to quit the premises claiming that he was an interloper and trespasser; that thereupon the receiver communicated with the attorney for the petitioning creditors, Raphael Dechter, and was advised by him that if the bankrupt was in possession of the premises or in control thereof that the receiver had succeeded to such possession and control, and that if anybody else desired to obtain possession of the premises to instruct them to file a petition in court for that purpose; that the receiver transmitted such advice and instructions to Mrs. Eustace and Charles W. Fourl, but that she continuously threatened and ordered the receiver to quit the premises and stated she was going to use all kinds of force to evict...

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    ...... "* * * Such advice is no defense. Eustace v. Lynch, 9 Cir., 1935, 80 F.2d 652, 656. See also Taylor v. United States, 6 Cir., 1955, 221 F.2d ......
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