Dill v. Carver

• Decision Date: 04 September 1912
• Parties: DILL v. CARVER et al.
• Court: Washington Supreme Court

126 P. 86

70 Wash. 103

DILL v. CARVER et al.

Supreme Court of Washington

September 4, 1912

Department 1. Appeal from Superior Court, Spokane County; Henry L Kennan, Judge.

Action by C. C. Dill, as trustee of Fred R. Carver, bankrupt against Lena L. Carver and others. From a judgment for defendants, plaintiff appeals. Reversed and remanded.

Post Avery & Higgins, of Spokane, for appellant.

Campbell & Goodwin, of Spokane, for respondents.

MORRIS J.

Appellant brought this action to recover 199 shares of stock of the Bartlett-Carver Company, a corporation, alleging that the bankrupt had without consideration transferred the same to his wife, Lena L. Carver, with intent to defraud his creditors, and appeals from an adverse judgment.

The only creditor of the bankrupt whose claim is involved in this action is James D. Murphy, whose claim was merged into a judgment in the sum of $8,900 on June 18, 1910, about two months prior to the filing by Fred R. Carver of the petition in bankruptcy. Murphy's claim, as set forth in his complaint, upon which judgment was entered, is that, on May 4, 1907, Fred R. Carver sold him 200 shares of the capital stock of the Forsyth Automatic Air & Steam Coupler Company for $7,500, conditioned that, if at any time during the next two years Murphy was dissatisfied with the stock and desired to return it, Carver would accept such return and pay Murphy the $7,500, with 6 per cent. interest; that Murphy within the two years became dissatisfied and tendered the stock to Carver, demanding the repayment of his money, with which demand Carver refused to comply. These facts, although disputed by Carver, having been established by the judgment, the only question to be considered is the character of the transfer of the stock from Carver to his wife. At the time of the deal in the Forsyth stock, between Carver and Murphy, they were both residents of Chicago. In February, 1908, Carver disposed of his business at Chicago, and came to Spokane to complete a business arrangement with J. D. Bartlett, who was then engaged in business at Spokane. This arrangement was consummated by the organization of the Bartlett-Carver Company, capitalized at $40,000, divided into 200 shares of stock. Into this business Bartlett turned over the business he had previously been carrying on, and received from Carver $15,600 for a half interest. On March 7, 1908, Carver subscribed for 199 shares of the stock of the Bartlett-Carver Company in his own name, and for 1 share as attorney in fact for his wife, who was still at Chicago, and did not arrive at Spokane until April 20, 1908. Soon after Carver's arrival at Spokane, Murphy began writing him from Chicago, calling his attention to the agreement under which they entered into their stock deal, and expressing his dissatisfaction, demanded the return of his money. There is much of this correspondence in the record; but, in view of the judgment obtained by Murphy, it is immaterial, and not necessary to be referred to, other than as indicating the fact that Murphy was pressing Carver for the return of his money, and threatening to institute legal proceedings to enforce its collection, and as further supplying the reason, as contended by appellant, why subsequently, and on October 9, 1908, Carver transferred his stock in the Bartlett-Carver Company to his wife.

This, being a transaction between husband and wife, is covered by Rem. & Bal. Code, § 5292, providing that: 'In every case where any question arises as to the good faith of any transaction between husband and wife, whether a transaction between them directly or by intervention of a third person or persons, the burden of proof shall be upon the party asserting the good faith.' Under this statute we have uniformly held that any transfer of property between husband and wife was presumptively fraudulent as against creditors, and that whosoever asserts the good faith of such a transaction must overcome this presumption and establish such good faith by clear and satisfactory proof. Liebenthal v. Price, 8 Wash. 206, 35 P. 1078; Bates v. Drake, 28 Wash. 456, 68 P. 961; Canedy v. Skinner, 50 Wash. 501, 97 P. 497; Adams v. Wingard, 53 Wash. 560, 102 P. 426; Kalinowski v. McNeny, 123 P. 1074.

We are therefore brought to an examination of the evidence offered by Carver, to ascertain whether he has overcome this presumption of fraud and established the good faith and honesty of this transfer to his wife of all his interest in a good business, save the one share which was subscribed for in the name of the wife by Carver as attorney in fact, which Mrs. Carver has transferred to him. First, Carver says that at the time of this transfer to the wife he did not know he was indebted to Murphy. The judgment in the action brought against him by Murphy, which was entered with his consent, concludes this fact against him. It is to be noted in this connection, also, that as early as July, 1908 Murphy, who had been writing him since the previous March, claiming an indebtedness of $7,500, and demanding its payment, informed him that he would place the matter in the hands of attorneys, with instructions to commence action against him, and that Murphy's attorneys had called on him demanding payment. In the face of the judgment this is not material, except as it may reflect upon the purpose and intent of Carver to so manipulate his property affairs as to hinder Murphy in his attempt to carry out...