Saper v. Wood

• Decision Date: 06 November 1957
• Docket Number: No. 15086.,15086.
• Citation: 249 F.2d 401
• Parties: Lewis H. SAPER, as Trustee in Bankruptcy of Riverside Iron & Steel Corporation, Appellant, v. Thomas A. WOOD, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

249 F.2d 401 (1957)

Lewis H. SAPER, as Trustee in Bankruptcy of Riverside Iron & Steel Corporation, Appellant, v. Thomas A. WOOD, Appellee.

No. 15086.

United States Court of Appeals Ninth Circuit.

May 7, 1957.

Rehearing Denied November 6, 1957.

Alex D. Fred, Beverly Hills, Cal., Louis M. Brown, Los Angeles, Cal., for appellant.

Thomas A. Wood, Charles W. Wolfe, Los Angeles, Cal., for appellee.

Before POPE, FEE and BARNES, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

The claim of the plaintiff-appellant Trustee, set up in an action in the District Court, is that the defendant-appellee Wood received a preference from Riverside Iron & Steel Corporation, in that, within four months prior to the filing of a voluntary petition in bankruptcy by the latter, Wood had by writ of execution received payment of an antecedent debt whereby Wood obtained a greater percentage of his debt than any other creditor of his class. The court tried only this one issue upon stipulated facts, reserving questions of insolvency of Riverside and knowledge thereof by Wood at time of alleged transfer. The salient facts are set out below.

Wood filed action in the Superior Court of the State of California against Riverside for attorney fees on December 5, 1946. This will be referred to herein as the "Wood action." Some time previous to the institution of the Wood action, one E. T. Foley had brought action in the same state court against Riverside and others, in which Riverside had filed a cross-complaint against Foley. Hereinafter this will be called the "Foley action." This action was pending, but not decided, when Wood filed his action.

A writ of attachment was issued in the Wood action by Wood against Riverside on the day the Wood action was filed and served on Foley. The return to this writ by Foley stated he did not know whether or to what extent he was indebted to Riverside because of the situation in the Foley action above outlined. Later, on July 28, 1948, a stipulation was entered by Foley, Riverside, Bradt and all other parties in the Foley action, wherein, among other recitals, it was agreed that an attachment had been served on Foley in the action of Wood against Riverside. It was further provided by the stipulation that nothing therein contained should be construed to be an admission by Riverside or Bradt that anything was due on the attachments in any of the cases, including the Wood action, referred to therein. This stipulation was also signed by the judge of the state court where these actions were pending.

Judgment was entered in the Foley action on July 30, 1948. Thereby Foley was directed to deposit $329,263.46 with the Clerk of the court. This was done August 1, 1948. On August 4, Foley made a supplemental answer to the garnishment pursuant to the writ of attachment of December 5, 1948, in the Wood action, reciting the deposit and the direction on final judgment in the Foley action to pay $82,619.69 to Riverside and Bradt. On August 12, 1948, an attachment was run by Wood against the Clerk of the court, who held the funds deposited by Foley.

The judgment in the Foley action was amended on October 6, 1948, and thereupon Riverside and Bradt took an appeal.

Wood obtained judgment against Riverside in his action April 8, 1949, and on June 28, 1949, served a writ of execution on the Clerk of the court. A return was made by the Clerk on July 5, 1949, stating that $329,263.46 was held by him on deposit for distribution among various litigants, of whom Riverside was one, when judgment in the Foley action became final. The Sheriff returned the execution in the action of Wood "wholly unsatisfied."

The judgment in the Foley action was affirmed by the District Court of Appeal.¹ A petition for hearing in the Supreme Court of California was denied and remittitur was filed in the Superior Court November 20, 1950.

On the following day, November 21, 1950, Wood caused a second writ of execution to be served upon the Clerk of the court, and the latter returned that he held $82,219.08 on deposit, "which amount is being held subject to further order of court." On December 1, 1950, Wood served an order on the Clerk of the court in the Foley action and on "LeRoy B. Lorenz, the assignee of the judgment in favor of Riverside Iron and Steel Corporation, and Harlan H. Bradt, in the above entitled cause," to show cause why judgment in the Wood action should not be paid out of the deposit in the hands of the Clerk in connection with the Foley action. The show cause proceeding was based upon the answer of the County Clerk, as garnishee upon the second execution, to the effect:

"That we have the sum of $82,219.08 on deposit, which amount is being held subject to further order of court."

The Superior Court, after hearing, entered findings and final order in the show cause proceeding:

"The above-entitled matter coming on for hearing on the 8th day of December, 1950, pursuant to order to show cause issued on the 1st day of December, 1950, Thomas A. Wood appearing for the moving party and Harold W. Kennedy, County Counsel, by John B. Anson, Deputy County Counsel, appearing for Harold J. Ostly, County Clerk and Clerk of the Superior Court of the State of California, in and for the County of Los Angeles, LeRoy B. Lorenz, assignee of the judgment in favor of Riverside Iron and Steel Corporation and Harlan H. Bradt having been served with said order to show cause on the 1st day of December, 1950, and having defaulted and the default of the said LeRoy B. Lorenz having been entered, the matter having been submitted to the court for decision on the affidavits and oral argument,

"Now Therefore, Harold J. Ostly, County Clerk and Clerk of the Superior Court of the State of California, in and for the County of Los Angeles, is hereby ordered to pay over to Eugene W. Biscailuz, Sheriff of the County of Los Angeles, State of California, the sum of $4,012.98 with interest at the rate of 7% per annum from the 27th day of June, 1944, plus $18.00 costs, in response to the writ of execution issued in that certain action styled Thomas A. Wood vs. Riverside Iron and Steel Corporation, a corporation, numbered 522523 and heretofore served upon said Harold J. Ostly, County Clerk and Clerk of the Superior Court of the State of California, in and for the County of Los Angeles, by said Sheriff, and to pay said money out of funds heretofore deposited in the above entitled action by the plaintiff E. T. Foley pursuant to order of court, for the use and benefit of Riverside Iron and Steel Corporation, a corporation, and Harlan H. Bradt."

The Clerk of the court thereupon paid to the Sheriff, on the writ of execution in the Wood action, the sum of $5,838.49, and on January 3, 1951, Wood received $5,800.07, after deduction of the fees and expenses of the Sheriff.

The petition in voluntary bankruptcy by Riverside was filed March 14, 1951.

The federal trial court heard the instant case and filed elaborate findings of fact setting up many of the stipulated documents. The District Court found that the state court had specifically provided that the fund paid in by Foley in the Foley action, when on deposit with...