Sallaske v. Fletcher

• Citation: 132 P. 648,73 Wash. 593
• Parties: SALLASKE v. FLETCHER et al.
• Decision Date: 24 May 1913
• Court: United States State Supreme Court of Washington

132 P. 648

73 Wash. 593

SALLASKE v. FLETCHER et al.

Supreme Court of Washington

May 24, 1913

Department 2. Appeal from Superior Court, Spokane County; M. L Clifford, Judge.

Suit by Rachel Sallaske against Londa L. Fletcher and others. From a decree for defendants, plaintiff appeals. Affirmed.

Samuel R. Stern, of Spokane, for appellant.

Danson Williams & Danson, of Spokane, for respondents.

ELLIS J.

This is an action to restrain the sale of property under executions issued upon judgments against the plaintiff's husband the plaintiff claiming the property as her separate property. The court by separate findings, among other things, found, in substance, the following facts, which we deem controlling: In February, 1911, the plaintiff's husband leased certain premises from the defendants Fletcher and Stebbins for a term of one year at an agreed rental of $165 a month. The premises were used by the husband in carrying on a clothing business. In March, 1911, he sold this stock of goods and assigned the lease to one Herwig, who immediately entered into possession, occupied the premises, and paid the rent until July, 1911. The plaintiff's husband sought to be released from his lease of the premises upon this assignment, but was informed by the agent for Fletcher and Stebbins that they would not release him. On May 9, 1911, her husband conveyed to the plaintiff without consideration all the property owned by the community composed of himself and the plaintiff, which was of a value of from $30,000, to $35,000, subject to a mortgage of $2,500. The money derived from the mortgage was used in paying all debts against the community, excepting the contingent liability arising from the lease. At the time of this conveyance there was no rent due upon the lease. On July 1, 1911, Herwig defaulted in payment of the rent, and in September of the same year Fletcher and Stebbins recovered a judgment in the superior court of Spokane county against the plaintiff's husband and the community composed of himself and the plaintiff for the rent due upon the lease to that date, and again in January, 1912, they recovered a similar judgment for the balance of the rent. About the time the last judgment was rendered, the plaintiff's husband was adjudged a voluntary bankrupt in the federal court, and the judgments were filed as claims in the bankruptcy proceedings, in which no assets were scheduled by the bankrupt. Thereafter the defendants Fletcher and Stebbins through the trustee in bankruptcy caused executions to be issued. Returns nulla bona were made. Alias executions were then issued and levied upon the property which had been conveyed to the plaintiff herein. The court made appropriate conclusions upon these findings and decreed that the judgments constituted valid and subsisting liens upon the property in question. From that decree the plaintiff appeals.

The only exception taken to the findings of fact and the conclusions of law based thereon was a general exception as follows: 'To all of which plaintiff at the time excepts, which exception is allowed by the court.' No exception of any kind was taken to the refusal of the court to make certain findings requested by the appellant. Such an exception is, as we have repeatedly held, wholly insufficient to permit a review of the evidence on appeal. Pederson v. Ullrich, 50 Wash. 211, 96 P. 1044; Warehime v. Schweitzer, 51 Wash. 299, 98 P. 747; Snohomish River Boom Co. v. Great Northern Ry. Co., 57 Wash. 693, 107 P. 848; Pease v. Clayton, 62 Wash. 26, 112 P. 943. The same rule is applicable even in equitable causes where findings are made. Yakima Grocery Co. v. Benoit, 56 Wash. 208, 105 P. 476. Being precluded from reviewing the evidence, except in one particular, to which we will advert later, we must affirm the decree if these findings are sufficient to support it.

The only question involved in this appeal is: Did the respondents Fletcher and Stebbins have an existing equity by reason of the lease at the time the conveyance was made to the appellant on May 9, 1911, so that the conveyance was as to them fraudulent and void? The statute, Rem. & Bal. Code,§ 8766, provides: 'A husband may give, grant, sell, or convey directly to his wife, * * * his * * * community right , title, interest, or estate in all or any portion of their community real property. And every deed made from husband to wife * * * shall operate to divest the real estate therein recited from any or every claim or demand as community property, and shall vest the same in the grantee as separate property. * * * Provided, however, that the conveyances or transfers hereby authorized shall not affect any existing equity in favor of creditors of the grantor at the time of such transfer, gift, or conveyance.' The appellant contends that the judgment creditor had no existing equity at the time of the husband's transfer to the wife, and there only existed a contingent liability against the husband, which it is claimed was not sufficient under the statute to defeat the transfer. While some courts have held, under statutes declaring conveyances void as to 'existing debts,' that such conveyances are not void per se as to contingent liabilities only, we do not think these decisions applicable under the above-quoted statute. There is a clear distinction between 'existing debts' and 'existing equities.' The Legislature in using the latter expression must be presumed to have used it advisedly and to some purpose. An existing equity, on the one hand, implies an existing liability on the other. That liability may be either present or contingent. In either case it is existent. An existing debt implies a present enforceable liability, a debts as distinguished from an equity. One must be said to have an existing equity when he has an existing right to future payment, though it be contingent, of which it would be inequitable to deprive him. This distinction is made plain in a case chiefly relied upon by the appellant ( Severs v. Dodson, 53 N. J. Eq. 633, 34 A. 7, 51 Am. St. Rep. 641), where the liability of an accommodation indorser, contingently liable upon current notes, was held not to be an 'existing debt' under a statute avoiding transfers as to existing debts. The court intimates that had the statute used the words 'existing liabilities' it would have compelled a contrary decision, though the court reprobates as unwise and inexpedient such a statute as relating to fraudulent conveyances generally. The term 'existing equity' is certainly as comprehensive as the term 'existing liability.'

We have nothing to do with the unwisdom or inexpediency of the statute. Those are matters of legislative concern. We are constrained to give effect to the statute as it is written. The term 'existing equity' is broad enough to include existing contingent liabilities as well as existing absolute debts. It is too broad to include only the latter. To so confine it would be to do violence to the language of the statute and go contrary to the universal rule that such statutes are to be construed liberally as in favor of the enforcement of just obligations. Bump on Fraudulent Conveyances,§ 502; 20 Cyc. 341. We will remark in passing, however, that we do not share in the animadversions of the New Jersey court upon the wisdom or expediency of the broader terms of the statute. The claim that a statute, giving the holder of a contingent liability founded in a definite and certain contract the benefit of the act without proof of actual fraud, would tend to render voluntary settlements uncertain and precarious, appeals to us with less force than the equally certain result that the narrower provision would tend to render the enforcement of contracts solemnly made easily avoided and so precarious that suretyship, guardian's, and personal indemnity bonds, leases, and the like would be of little value, since proof of actual fraudulent intent is usually impossible. The broader construction of the statute has the merit of encouraging honesty and fair dealing. Gannard v. Eslava, 20 Ala. 732, 742. Were the question not a new one, this would end our discussion; but the question being new, and the contrary view being ably presented by counsel, we deem it not improper to consider it from another angle.

It is obvious that under our statute the motive actuating the voluntary conveyance to the other spouse is immaterial. Even assuming, therefore, as counsel would have us assume, that existing debts and existing equities are synonymous terms this statute would be in effect the same as those statutes directed against fraudulent conveyances generally under which, without regard to the actual motive of the donor, voluntary conveyances are universally held void as to existing creditors, the collection of whose debts they hinder or delay. Under such statutes the act of voluntary conveyance itself is conclusive evidence of fraud. 'The intent is presumed from the act.' Bump on Fraudulent Conveyances (4th Ed.) § 242. In this aspect and indulging counsel's assumption, there is absolutely no difference between the statute here involved and the statutes against...