Smith v. Weed

• Decision Date: 19 September 1913
• Citation: 134 P. 1070,75 Wash. 452
• Parties: SMITH et al. v. WEED et ux. ELECTRIC LOGGING CO. v. SAME. (WEED INV. CO., Garnishee.
• Court: Washington Supreme Court

134 P. 1070

75 Wash. 452

SMITH et al. v. WEED et ux.

ELECTRIC LOGGING CO. v. SAME. (WEED INV. CO., Garnishee.

Supreme Court of Washington

September 19, 1913

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

Two actions by Michael J. Smith and others and the Electric Logging Company respectively, against James Weed and wife, in which proceedings supplemental to execution and also garnishment proceedings against the Weed Investment Company were instituted. From an order in the supplementary proceedings, the defendants appeal. Remanded, with directions to modify.

Murphy & Wall and Robt. G. Cauthorn, all of Seattle, for appellant.

C. E Stevens and T. W. Hammond, both of Tacoma, for respondents.

ELLIS J.

Two actions were brought, one by the Electric Logging Company another by Michael J. Smith and wife, and Christian Schultz and wife, against James Weed and Susan Weed, to recover damages for the burning of property of the respective plaintiff by fires set out by James Weed on land of which he was in control and negligently allowed to spread. The two actions, being based on the same facts, were consolidated. Each of the two sets of plaintiffs recovered judgment satisfiable out of the separate property of James Weed and the property of the marital community consisting of James Weed and Susan Weed, but not out of the separate property of the defendant Susan Weed. The plaintiff's then instituted proceedings supplemental to execution against the defendants and also garnishment proceedings against the Weed Investment Company, a corporation, as garnishee defendant. Upon the hearing the court appointed a receiver for the defendants.

The evidence showed that for some time prior to the fire, which took place on September 14, 1910, and at the time of the commencement of the original actions, the defendants were the owners in community estate of a lease covering 80 acres of school land situated in Pierce county; that on October 10, 1910, the lease was assigned to Clarence A. Weed, a son of the defendants; and that Clarence A. Weed thereafter transferred the lease to the Weed Investment Company on March 2, 1911, and subsequently, but prior to the hearing on supplementary proceedings, he transferred the lease to one A. G. Keene; and that ever since these transfers Weed and wife and their family have held possession of the property and have been cutting and removing timber therefrom, as it is claimed, under an agreement with Keene. The evidence further showed that at the commencement of the actions there was standing in the name of James Weed one share of the capital stock of the Weed Investment Company, and in the name of the defendant Susan Weed 129 shares of the capital stock of that company, and that on the day following the court's verbal announcement of his decision in the consolidated cases, Mrs. Weed caused to be transferred on the books of the corporation 10 shares of stock to the attorney for the defendants, 40 shares to Helen M. Weed, a sister-in-law of the defendants, and 62 shares to the children of the defendants, leaving standing in her own name 17 shares of stock, and that the defendant James Weed has at all times since the organization of the corporation had the active management and control of its affairs. It is admitted that the Weed Investment Company was organized as a holding company for the Weed family in February, 1907, with a capital stock of $20,000 divided into 20 shares, of a par value of $100 each; that this stock was fully paid up by deeding to the corporation certain property belonging to some of the children, which is not material to this inquiry, and also property described as follows: The S. 1/2 of the S. 1/2 of the N.E. 1/4 of the N.E. 1/4 of section 8, township 23 N., range 5 E. W. M., containing 10 acres; tract 19 of Rainier Beach Garden tracts; and lot 11 of block 40 Rainier Beach addition to Seattle. The evidence further showed that on about September 22, 1910, the defendants caused to be recorded in the auditor's office of King county a deed from James Weed to his wife, Susan Weed, covering lots 22 to 30, inclusive, of block 55, Rainier Beach addition, and lots 5 to 8, inclusive, of block 6, Northern Pacific addition to Seattle. This deed, which is in evidence, bears date February 7, 1907, and purports to have been acknowledged on the same day; but by reason of certain ink blots covering the year, it is impossible to determine from the deed the date of the acknowledgment, though it purports to have been made on February 7th of some year. Both of the defendants testified that this deed was delivered to the defendant Susan Weed on February 7, 1907, and that it remained in her possession until it was filed for record. There was a small house on one of the lots in block 55, plat of Rainier Beach, which is actually occupied by the defendants as their home, and on others of these nine lots is situated a large house which the defendants lease to other persons. Lots 5 to 8 in block 6, Northern Pacific addition, are located in West Seattle, several miles from the other lots.

Upon this evidence the court found that the several transfers of the school land lease were made for the purpose of placing the property beyond the reach of execution upon the plaintiff's judgments and that the leasehold interest still remains community property of the defendants; that the transfer by Susan Weed of 10 shares of the capital stock of the Weed Investment Company to the attorney and of 40 shares to the sister-in-law, Helen M. Weed, was made for the purpose of defrauding their creditors, and especially the plaintiffs, and for the purpose of placing this stock beyond the reach of the plaintiffs in this action, and that these shares of stock, together with the 17 shares still held by Susan Weed and one share held by the defendant James Weed, are community property of the defendants and of an actual value of $6,800. The court also found that the transfer from the defendant James Weed to Susan Weed of the nine lots in block 55, plat of Rainier Beach, and the four lots in block 6, Northern Pacific addition to Seattle, was made as a matter of convenience for the benefit of the entire family, including the husband, and not for the purpose of vesting title in the defendant Susan Weed as her separate property, and that all of these lots are owned by the defendants in community estate.

Upon its findings the court made conclusions of law appropriate to an order appointing a receiver which was entered June 21, 1912, without notice. The order was in substance that the receiver take charge of the property of the defendants and dispose of so much as necessary to satisfy the judgments of the plaintiffs with expenses of the proceedings and the receivership; that the receiver is authorized to institute such suits as may be necessary after the application of the proceeds of property coming to his hands by conveyance from the defendants to the satisfaction of the judgment, for the purpose of setting aside the transfers of the leasehold interest in the school lands and the transfers of stock of the Weed Investment Company to defendants' attorney and to Helen M. Weed; that the defendants be and are ordered to forthwith assign to the receiver his or their interest in the 68 shares of the capital stock of the Weed Investment Company and convey to the receiver the Seattle lots, failing in which the interest of the defendants in the lots and stock shall be deemed vested by the order in the receiver; that the receiver set apart as the homestead of the defendants such portion of the nine lots in block 55, plat of Rainier Beach, with the dwelling house in which the defendants reside, which shall not exceed a value of $2,000. The order further enjoined the defendants and all persons having notice of the supplementary proceedings or garnishment from in any manner making or suffering any transfer, conveyance, or disposition of or interfering with the property of the defendants, or the stock, property, or holdings of the Weed Investment Company, pending the further order and direction of the court, and that the order should become effective upon the receiver filing bond in the sum of $6,000 to be approved by the court. From the order appointing the receiver, the defendants appeal.

The appellants' contentions may be reduced to these: (1) That the title to property claimed by the wife as her separate property could not be litigated or determined in proceedings supplementary, and that in any event such proceedings have no application to real property. (2) That the evidence did not in any event justify the finding that the 17 shares of stock in her name were community property. (3) That the evidence did not justify the order authorizing the receiver to sue to set aside the transfers of 40 shares of stock to Helen M. Weed and the 10 shares to appellants' attorney. (4) That there was no evidence to support the finding that the 13 Seattle lots were community property. (5) That the court erred in authorizing the receiver to institute suit to set aside the transfers of the school land lease. (6) That no necessity was shown justifying the appointment of a receiver. (7) That the court in any event erred in ordering the expenses of suits to be said out of the property ordered to be turned over to the receiver. (8) That the injunctive part of the order was erroneous.

1. It is contend that the title to the 17 shares of stock and of the 13 Seattle lots standing in the name of the appellant Susan Weed could not be litigated or determined in proceedings supplementary because she asserted ownership of these properties as her separate estate, and that the order to turn these properties over to the receiver was therefore void. The...