Morgan v. Bruce, 5735
| Decision Date | 13 July 1953 |
| Docket Number | No. 5735,5735 |
| Parties | MORGAN v. BRUCE |
| Court | Arizona Supreme Court |
James Elliott Dunseath, of Tucson, for appellant.
Judge & Gordon, of Tucson, for appellee.
George W. Morgan, appellant herein, filed suit for declaratory judgment against Frank H. Snodgrass, Dusty Bruce (former wife of Snodgrass), and the Southern Arizona Bank and Trust Company seeking a declaration of the rights of the parties to a certain fund held by the bank. The bank claims no interest therein, Snodgrass defaulted, and the dispute in this court concerns the respective rights of Morgan and Bruce. At the close of plaintiff's evidence, the court on motion of Bruce rendered judgment dismissing the complaint and declaring Bruce entitled to the funds. Morgan appeals. The parties will be referred to as plaintiff and defendant respectively.
The essential undisputed facts, ad taken largely from appellee's brief, are that in 1948 Morgan entered the used car business under the name of Morgan Auto Sales. Cars were financed by the bank, and in the process the bank retained some moneys belonging to the plaintiff to secure it against losses in the event of failure of car purchasers to pay for cars financed by the bank. These are the funds, the right to which is in dispute. About the middle of 1949, Snodgrass came into the picture under an arrangement with Morgan, whereby he (Snodgrass) was to have a drawing account and the parties were to split the profits, if any. He made no capital investment in the business. The fund accrued prior to November 3, 1949. Frank H. Snodgrass and Dusty Bruce were married in July, 1950, and have since been divorced. On December 19, 1950, the business being in failing condition with outstanding debts in the approximate amount of $4,000, Morgan assigned to Snodgrass this fund in consideration of the latter's agreement to pay these outstanding bills. Snodgrass left the business and it ceased operation; he paid none of the bills and Morgan is now paying thereon. Bruce and Snodgrass at the time of the assignment were husband and wife. On January 4, 1951, Snodgrass assigned the fund to Bruce, his then wife, she claiming the consideration therefor was to pay a prior indebtedness Snodgrass owed her for separate funds theretofore loaned him. The evidence is in conflict as to whether Bruce at the time of the assignment to her knew the conditions under which the original assignment was made, she claiming to have been informed by Snodgrass that it was made to him in payment of a debt owing him by Morgan and that she knew nothing of any possible equities between Morgan and Snodgrass.
The foregoing is somewhat confusing, but simply stated the picture is that a husband, with some working arrangement in a failing business in which he made no capital investment, acquired by assignment from the owner of the business a fund in consideration of his promise to pay the accrued debts of the business; and thereafter he transferred the fund thus acquired to his wife, allegedly in payment of a debt which the husband owed the wife for a loan made from her separate funds.
There is also some confusion concerning the issues framed by the pleadings. The defendant Bruce filed an answer setting up the original assignment and the assignment to her, and asking a declaratory judgment adjudging her to be owner of the fund, together with a counterclaim to the same effect. Plaintiff replied to the counterclaim, alleging the agreement of Snodgrass to pay the debts in consideration of the original assignment and his failure so to do. After trial the court permitted plaintiff to file an amended reply to the counterclaim, alleging fraud on the part of Snodgrass and defendant Bruce and that the transaction between them was a community transaction. In deciding the case, the court concluded it was an error to permit plaintiff to file the amended reply to the counterclaim and decided the matter on the issues framed by the complaint and the answer thereto. From the record, it appears that the trial court was of the opinion that defendant Bruce was an innocent purchaser for value, and that as against her plaintiff could not take advantage of the equities between himself and Snodgrass arising out of his failure to perform by paying Morgan's debts as agreed.
Plaintiff's first assignment of error is that the court could not weigh conflicting evidence in rendering judgment at the close of plaintiff's case. This matter has recently been decided adversely to plaintiff in the case of Chadwick v. Larsen, 75 Ariz. 207, 254 P.2d 1020, and further reference thereto is unnecessary.
It is claimed the court erred in rendering judgment for the defendant Bruce for the reason that the undisputed facts and the law require a judgment in favor of the plaintiff. This calls for an analysis of the relative legal rights as between plaintiff Morgan and defendant Bruce resulting from the assignment to Snodgrass and his subsequent assignment to his wife. Bruce's rights are virtually controlled under the present fact situation by whether the assignment to Snodgrass was a community transaction which would result in any property rights gained thereunder being community property and the necessary corresponding result in the obligations of Snodgrass to pay the business debts becoming community obligations. Defendant argues that Snodgrass' interest in the business was acquired prior to his marriage and that he was therefore dealing with his separate property; that the business at that time was bankrupt and there was no commingling of separate and community property. In this argument defendant is shooting a blank. The true situation is that Snodgrass was purchasing from Morgan the fund and agreeing to pay therefor by paying Morgan's business debts. By this transaction, he was acquiring from Morgan the latter's property. In the absence of a showing to the contrary, presumably such an acquisition during coverture is community property. Benson v. Hunter, 23 Ariz. 132, 202 P. 233. For...
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