In re Hurt
| Decision Date | 23 February 1955 |
| Docket Number | No. 7714.,7714. |
| Citation | 129 F. Supp. 94 |
| Court | U.S. District Court — Southern District of California |
| Parties | In the Matter of GEORGE & JOHN HURT, co-partnership composed of George Euel Hurt and John Harvey Hurt, and George Euel Hurt and John Harvey Hurt, as individuals, Debtors. |
COPYRIGHT MATERIAL OMITTED
Thompson & Thompson, William P. Irwin, Fresno, Cal., for receiver.
Hansen & Hansen, N. Wendell Hansen, Fresno, Cal., for debtors.
Preston, Braucht & George, H. C. George, Merced, Cal., for Anglo California Nat. Bank.
Morrison, Hohfeld, Foerster, Shuman & Clark, J. F. Shuman, Scott L. Harrington, San Francisco, Cal., for California Bankers Ass'n as amicus curiae.
On July 21, 1953, George E. and John H. Hurt, a copartnership (to be referred to as "the debtors"), filed a petition for an arrangement under Chapter XI of the Bankruptcy Act.1 The schedules accompanying the petition listed the chattel mortgage here involved.
On July 23, 1953, the Court approved the petition. Thereafter, on August 10, 1953, the debtor in possession, John Harvey Hurt, filed before the Referee a petition for an Order to Show Cause why certain alleged secured creditors of the debtors should not be hereafter scheduled and treated as unsecured creditors. The Referee issued an order to one such claimed secured creditor, the Anglo California National Bank, Merced Branch (to be referred to as "the bank"), to show cause.
Hearings were had thereafter, and on February 18, 1954, the Referee made his findings, conclusions of law and order, in which he held that a certain chattel mortgage given to the bank to secure the payment of two promissory notes, — one in the sum of $44,583.08, and the other in the sum of $9,600, to the order of the bank as payee, and on which, according to the filed schedules, the sum of $39,273.52 was still due, — and which was recorded in Merced County on December 2, 1952, and in Madera County on December 3, 1952, — was invalid as to the creditors because of defective acknowledgment.
More specifically, the Referee found, in Finding 6, that the bank knew, through its officers, that the property was partnership property, and that George E. Hurt and John H. Hurt were copartners, and were refinancing a debt of the partnership incurred in the purchase of a dairy herd.
The chattel mortgage recited that it was made by "George E. Hurt and John H. Hurt, his son", and mortgaged certain live-stock, as well as certain equipment and alfalfa, located on the premises described as "the Joe F. Silveira Ranch at Le Grand, California, nine miles southeast of Merced." It was on a standard California form, and the acknowledgment read as follows:
The Existence of a Partnership.
The summary of the evidence attached to the Referee's certificate states that John Hurt testified in substance as follows:
"That he and his father signed the said note and chattel mortgage and thereafter continued to buy feed from the said Grain Company; that on June 6, 1953 they executed another note and chattel mortgage and that at the time they signed the said notes and chattel mortgages they were partners and the property given for security therein was partnership property and the debt was a partnership debt, and that it was their intention to mortgage the property belonging to the partnership; that Ruby and Lillian Hurt, the wives of the partners, are not members of the partnership."
Other testimony by the same witness need not be referred to.
The same summary contains the gist of the testimony of Letus A. Wallace, in which he stated:
"That he was the manager of the Merced Branch of the Anglo Bank; that at the time the Hurts signed the notes and chattel mortgage he was the assistant manager of said Bank; that the Hurts gave the bank the financial statement given in evidence as Exhibit F of said Bank; that the Hurts' bank account in the bank was under the name of John and George Hurt, a partnership and that he knew that the said Hurts were a partnership."
A transcript of the testimony is not before the Court. Indeed, we are informed that no shorthand reporter was present at the hearings before the Referee. There being no evidence before us to show that the summary is incorrect, it must be presumed to be correct. We must also assume that the finding that the Hurts were partners is sustained by the evidence,2 although there is no evidence as to the respective interests of the two members in the partnership, whether or not it was an equal partnership, whether the son was taken in by the father, — as sometimes happens in family partnerships, — without any contribution to the capital, — what share of the profits he received, or losses he shared, or any of the other conditions which go into an agreement of partnership.3
The Acknowledgment.
The Referee found in Finding 8:
"The debt evidenced by the said notes and for which the said Mortgage was given as security was incurred on behalf of the partnership George & John Hurt by the said George E. Hurt and John H. Hurt."
In his legal conclusions he concluded, conclusion 1, that:
"The Anglo California National Bank mortgage of live-stock dated the 1st day of December, 1952, was not acknowledged, proved, or certified in manner as required by the law of the State of California thereunto pertaining and is void as against the debtors in possession appointed by this court to operate the business of the said debtor partnership in their capacity as representing the creditors and the subsequent purchasers and encumbrancers in good faith and for value of the personal property described in the said mortgage, and that the personal property so described therein is free and clear of any lien for security in favor of the Anglo California National Bank of San Francisco purporting to exist against the same by virtue of the said chattel mortgage."
On the same day, the Referee made an order classifying the creditors, and in Paragraph 1, found that the mortgage of the bank was invalid as against subsequent creditors, and that the bank was not a secured creditor, but was a general unsecured creditor, and entitled to such classification only.
The Findings and Order were made for the purpose of determining how certain creditors were to be treated in any arrangement to be made.
The conclusion of the Referee is based upon the contention that there was no "substantial" compliance with Section 1190(a) of the California Civil Code which reads:
I am of the view that the Referee was wrong in his interpretation of the requirements of this section.
The Purpose of the Uniform Partnership Act.
Legislative history shows that this form of acknowledgment was intended to implement the changes made in the partnership law of California in 1929, when the Uniform Partnership Act was adopted which, among other rights, gave to one of the partners the right to execute a valid deed to the property of the partnership.4
Before the adoption of this Act, a partnership was not considered a legal entity in California and real property acquired by it could be transferred only by a conveyance joined in by all the partners. Subject to equitable rights, which do not concern us here, a conveyance executed by one of the partners transferred his interest only.5
A study of the Section of the Uniform Partnership Act which is now Section 15010 of the California Corporation Code, makes it quite evident that one of the objects of the enactment was to do away with this rule and to make a conveyance by one of the partners effective not only as to his interest in the partnership, but as to all the partnership property, provided the acknowledgment conformed to the requirements of Section 1190(a) of the California Civil Code. The execution of an instrument by one of the partners is only one of the methods recognized by Section 15010 of the California Corporation Code for conveying property belonging to a partnership. A breakdown of this section will demonstrate the variety of conveyancings it was to cover and show the instances in which the provisions of Section 1190(a) of the California Civil Code were or were not intended to apply.
Subsection (1), in the part material here, reads:
"(1) Where title to real property is in the partnership name, any partner may convey title to such property by a conveyance executed in the partnership name * * *."
This provides for a situation where the property is in the partnership name, — that is, Smith & Jones, a co-partnership, or Smith & Jones Cattle Company, a co-partnership, — in which event one member of the partnership may execute the instrument of conveyance for the partnership and the certificate in the form required by Section 1190(a) would be necessary.
Subsection (2) reads:
"(2) Where title to real property is in the name of the partnership, a conveyance executed...
To continue reading
Request your trial
-
In re BBT
...15 N.Y.S.2d 903 (1939). The requirements of both Federal law and California law are met by substantial compliance. In In re Hurt, 129 F.Supp. 94, 101 (S.D.Cal.1955), a California bankruptcy case, Judge Yankwich held that "statutory provisions relating to acknowledgments are construed libera......
-
In re Great Plains Western Ranch Co., Inc.
...but it seems to be what the Code prescribes. Cf. In re Browning Crane & Shovel Co., 133 F.Supp. 653 (N.D. Ohio 1955); In re Hurt, 129 F.Supp. 94 (S.D.Cal.1955). And that is why Section 541 does not end the inquiry in this case. Even conceding that the property rights of the estate are deriv......
-
Block v. Lea
...deed to the property, as an agent of the other partners, if the act is performed within his real or apparent authority. See In re Hurt, 129 F.Supp. 94 (S.D.Cal.1955); 60 Am.Jur.2d Partnership § 148 (1972). The statute speaks of the conveyance as passing "the equitable interest of the partne......
- Irby v. REPUBLIC CREOSOTING COMPANY