Earle v. Froedtert Grain & Malting Co.

• Decision Date: 14 December 1938
• Docket Number: 27147.
• Court: Washington Supreme Court
• Parties: EARLE v. FROEDTERT GRAIN & MALTING CO.

85 P.2d 264

197 Wash. 341

EARLE v. FROEDTERT GRAIN & MALTING CO.

No. 27147.

Supreme Court of Washington

December 14, 1938

As Amended on Denial of Rehearing March 23, 1939.

Department 1.

Action by Dan Earle, receiver of the Olympic Club Company, against the Froedtert Grain & Malting Company to recover a sum of money paid to the defendant by the Olympic Club Company, on ground that the payment constituted an unlawful preference. From an adverse judgment, the defendant appeals.

Reversed.

Appeal from Superior Court, King County; Hugh C. Todd, Judge.

Wright Jones & Bronson, of Seattle, for appellant.

J. Will Jones, of Seattle, for respondent.

HOLCOMB, Justice.

This action was instituted in November, 1936, by the receiver of the Olympic Club Company, a corporation, hereinafter referred to as the Olympic Company, to recover a sum of money paid to appellant corporation on August 4, 1930, on the ground that such payment constituted an unlawful preference.

Appellant demurred to respondent's amended complaint, and the demurrer was overruled. Appellant answered, pleading two affirmative defenses, the second of which is that this action was not commenced within six months from the time of the filing of the application for the appointment of a receiver as is required by Rem.Rev.Stat. § 5831-1.

Respondent replied, denying that this action was barred by virtue of the allegations in the second affirmative defense, and alleged that the law as raised by the allegations was decided adversely to appellant by the order overruling the demurrer to the amended complaint.

The case was tried to the court without a jury, and resulted in findings of fact from which it was concluded that the Olympic Company was insolvent when the payment in question was made that such payment created an unlawful preference, and that the money should be returned. Judgment was entered as prayed for in the sum of $1,688, together with interest at six per cent per annum from August 4, 1930. This appeal resulted.

The essential facts are these: The Olympic Company is a brewery corporation organized under the laws of this state, with its principal place of business at Walla Walla, and appellant, a Wisconsin corporation, with its principal office in Milwaukee, is engaged in marketing malt and brewery supplies. The Olympic Company had been a customer of appellant and had purchased supplies from it on credit for several years prior to the date of the alleged preferential payment. For several months prior to August 4, 1930, appellant had been attempting to obtain payment on the Olympic Company's overdue accounts without much success. In July 1930, further credit was desired by the Olympic Company, and after the exchange of a number of telegrams and considerable correspondence, appellant agreed that if the Olympic Company would pay its outstanding indebtedness that it would ship to it another carload of malt on credit. Acting on the strength of that promise respondent wired the sum of $1,688 in payment of its indebtedness, but after the receipt of this money appellant retained the money forwarded and notified the Olympic Company that no further credit would be extended to it, and no malt was shipped.

August 14, 1930, an application was made by a creditor of the Olympic Company for the appointment of a receiver upon the ground of insolvency, and February 5, 1931, a receiver was appointed. He, in turn, brought this action to recoup the money paid in August, 1930, alleging that such payment was made while the Olympic Company was insolvent, and therefore it was an unlawful preference.

Appellant contends the trial court erred in not holding that chapter 47, § 1, p. 160, Laws of 1931, Rem.Rev.Stat. § 5831-1, barred this action by the receiver.

Respondent, however, urges that the case of Sterrett v. White Pine Sash Co., 176 Wash. 663, 30 P.2d 665, is adverse to appellant's contention, because it holds that Rem.Rev.Stat. § 5831-1 et seq., relating to preferences of insolvent corporations, cannot apply retroactively, and hence has no application to an alleged preferential payment made and a receiver appointed prior to the enactment of Rem.Rev.Stat. §§ 5831-1 to 5831-3, inclusive. That statute became effective on June 10, 1931.

We cannot agree with respondent's contention. The Sterrett Case holds that Rem.Rev.Stat. § 5831-1 et seq., is not retroactive in respect to substantive rights. That is to say, that portion of the 1931 statute, which qualified the trust fund doctrine so that thereafter it was necessary to show the recipient of the alleged preferential payment had 'reasonable cause to believe' the corporation tendering payment was insolvent at the time payment was made, could have no application to such alleged preferences made prior to the effective date of that act. While that case also holds that the statute of limitations, fixed by Rem.Rev.Stat. § 5831-1, could have no retroactive application, no statement was made relative to the prospective application of the statute of limitations fixed by the 1931 act from its effective date.

Rem.Rev.Stat. § 5831-1, provides: 'Actions in the courts of this state by a trustee, receiver or other liquidating officer of an insolvent corporation, to recover a preference as herein defined may be commenced at any time within six months from the time of the filing of the application for the appointment of such trustee, receiver or other liquidating officer.'

It is a fundamental rule of statutory construction that a statute is presumed to operate prospectively and ought not to be construed to operate retrospectively in the absence of language clearly indicating such a legislative intent. Teed v. Brotherhood of American Yeomen, 111 Wash. 367, 190 P. 1005; Hanford v. King County, 112 Wash. 659, 192 P. 1013; State ex rel. Chapman v. Edwards, 161 Wash. 268, 295 P. 1017; State ex rel. French v. Seattle, 187 Wash. 58, 59 P.2d 914.

The statute is not made retroactive merely because it draws upon facts antecedent to its enactment for its operation. Cox v. Hart, 260 U.S. 427, 43 S.Ct. 154, 67 L.Ed. 332; Great Northern Railway Co. v. Sutherland, 273 U.S. 182, 47 S.Ct. 315, 71 L.Ed. 596; Lewis v. Fidelity & Deposit Co., 292 U.S. 559, 54 S.Ct. 848, 78 L.Ed. 1425, 92 A.L.R. 794.

The 1931 act, supra, changed the then existing adjective law in so far as it provided that to recover a preference a receiver of an insolvent corporation must bring the action within six months from the time of the filing of the application for his appointment. The time provided for the commencement of actions relates only to the remedy, and hence may be abridged by subsequent legislation at the pleasure of the legislature. McQuesten v. Morrill, 12 Wash. 335, 41 P. 56; Hanford v. King County, supra. See, also, 1 Wood, Limitation of Actions (4th ed.) 76, § 12c.

In Packscher v. Fuller, 6 Wash. 534, 33 P. 875, a cause of action had accrued and thereafter an act was passed changing the statute of limitations to recover real estate from twenty to ten years. The court concluded that the later statute governed and applied to the preexisting cause of action, and said [page 876]:

'* * * We think the statute of 1881 must govern, unaffected by the provisions of the prior law, and that the plaintiff (appellant here) had the full period of 10 years after it took effect in which to commence

...