Where a person has succeeded to a valuable property, to wit, a judgment on an allowed claim against a person or an estate, he can maintain an action to recover property which justly belonged to him or his assignors to satisfy their judgment claim. (Freeman on Executions, sec. 431; Bump on Fraudulent Conveyances, 506; Estate of Hidden , 23 Cal. 363; Civ. Code, sec. 3439; Van Heusen v. Radcliff , 17 N.Y. 580; Francisco v. Aguirre , 94 Cal. 180.)
JUDGES: McFarland, J. Temple, J., and Henshaw, J., concurred.
OPINION
McFARLAND, Judge
The plaintiff is the assignee of several money demands against the estate of Robert Barton, deceased, which had been presented to the executrix of said estate and allowed as valid claims. The defendant, Ella G. Barton, is the surviving widow of said Barton, deceased, and also executrix of his will. During the lifetime of said deceased, on July 1, 1890, he by deed conveyed to defendant, then his wife, certain real property, being certain lots in the city of Fresno. It is averred in the complaint that said conveyance was without consideration and for the purpose of hindering and defrauding the creditors of said Robert Barton; and that the assets of said estate other than the real property described in said deed are insufficient to pay the said claims assigned to plaintiff as aforesaid. The prayer of the complaint is that said deed be declared fraudulent and void as against plaintiff, and that the property therein described be added to the assets of the estate, to be applied in due course to the discharge of plaintiff's said claims. The court found for plaintiff on nearly all issues, and entered judgment in accordance with his prayer. Defendant appeals from the judgment and from an order denying her motion for a new trial.
A demurrer to the complaint was overruled, and appellant attacks the complaint upon two grounds which present debatable questions. It is contended that respondent cannot maintain this action, because he has only an assignment of a bare right to sue in equity for a fraud committed on his assignors, and that such assignment is void as against public policy. There is no doubt of the general rule that a mere right to complain of fraud is not assignable -- fraud not being a vendible commodity. (1 Parsons on Contracts, 226; Story's Equity Jurisprudence, sec. 1040 g; Cross v. Sacramento Sav. Bank , 66 Cal. 462; Whitney v. Kelley , 94 Cal. 146; 28 Am. St. Rep. 106.) In Whitney v. Kelley, supra, Mr. Justice Garoutte reviews a great many authorities upon the subject; and other cases to the point are to be found in Crocker v. Bellangee , 6 Wis. 645; 70 Am. Dec. 489. But the rule in question, as established by the authorities, applies only to a case where the assignment does not carry anything which has itself a legal existence and value, independent of the right to sue for a fraud. It does not apply to a case where the right to sue for a fraud is merely incidental to a subsisting substantial property which has been assigned, and which is itself intrinsically susceptible of legal enforcement. An examination of the authorit ies -- many of which are quoted and referred [42 P. 304] to in Whitney v. Kelley, supra -- discloses that the rule in question does not govern in cases where the assignors "have some substantial possession and some capability of personal judgment, and not a mere naked right to overset a legal instrument or to maintain a suit." In Whitney v. Kelley, supra, all that the assignee got was the mere right to maintain a suit to set aside a judgment against his assignor on the ground of fraud. In Sanborn v. Doe , 92 Cal. 152, 27 Am. St. Rep. 101, cited by appellant, the case was really decided upon the particular language of the insolvent law; but, in addition, the attempted assignment there was of debts which had been fully discharged by a decree in insolvency, and had no legal value whatever, unless the decree could be set aside for fraud. In the case at bar the things assigned were money claims against an estate which had been allowed by the executrix, and were really, in effect, judgments. They had legal existence and value in themselves, were capable of enforcement by ordinary methods, and were proper objects of sale and assignment. What their financial value may be without resort to an action to set aside the alleged fraudulent conveyance is a question which does not affect the validity of the assignment, although it does appear that there are other assets of the estate, out of which the assigned claims could be partly satisfied. We think, therefore, that the right to maintain this action is merely incidental to the claims assigned and that the appellant is entitled to maintain it if his assignors would have been so entitled.
It is also contended by appellant that this action, if maintainable at all, could have been properly brought only by the executrix under sections 1589 and 1590 of the Code of Civil Procedure, which provide that when the decedent did in his lifetime convey property with intent to defraud his creditors, and there is a deficiency of assets, the executor or administrator must commence an action for the recovery of such property for the benefit of the creditors, and is bound to do so upon the application of creditors, who must provide for certain costs and expenses of the action. This contention is well worthy of consideration; but we do not think that it can be successfully maintained. In Hills v. Sherwood , 48 Cal. 393, it was expressly held that similar provisions of the old probate act merely gave to executors and administrators the power -- formerly doubted -- to bring such an action, but do not "purport to exclude the creditors from bringing it if they are authorized so to do by the general law"; and that "the creditors have their remedies independently of the administrator." That case, however, was decided under the law as it stood before the codes went into operation; and it probably goes further than would be warranted under our Code of Civil Procedure, which is usually understood as presenting remedies which "when applicable to the relief sought exclude or supplant all other modes of relief." (Freeman on Executions, sec. 394; Herrlich v. Kaufmann , 99 Cal. 271.) Ordinarily an action to recover property fraudulently conveyed by a decedent in his lifetime should be brought by his executor or administrator, and such an action by a creditor would not lie -- at least, unless he shows an exhaustion of all means to procure such an action to be brought by the proper person. But in the case at bar the alleged fraudulent grantee is the executrix; she could not sue herself; this condition of things does not seem to be a statutory cause for her removal; and we see no remedy other than a suit in equity by the creditors themselves. It is a case where the code provision is not "applicable to the relief sought." The circumstances here are analogous to those under which a creditor's bill will lie under our code. In general, proceedings supplementary to execution are regarded as a substitute for a creditor's bill in chancery, and the former must be followed instead of the latter. But there may be cases in which the statutory proceedings would not afford adequate remedy -- "exceptional cases in which it appears that equity must be invoked because legal remedies are unavailing." (Herrlich v. Kauffmann, supra .) In such case the code provisions may be departed from, for it is the province of equity to relieve where legal remedies fail. The case at bar comes within this rule, and a creditor, under the circumstances here disclosed, was entitled to bring this action -- for the benefit of all the creditors. A demand upon the appellant to bring the suit would have been fruitless. (It is to be observed, however, that in a case like this the judgment should be that property fraudulently conveyed, or so much thereof as is necessary, be applied to the satisfaction of the debts, and that the residue, if any, go to the grantee. It is not to go into the assets of the estate for any purpose other than the payments of the debts. The residue does not go to the heir; for he stands in the shoes of the fraudulent grantor.)
There are some other objections to the complaint and to the sufficiency of the findings which are not tenable, and which, in our opinion, need no special notice. The judgment and order appealed from must, however, be reversed for erroneous rulings touching the admissibility of evidence and for want of evidence to support the material finding.
The conveyance in question was made by the decedent to his wife, the appellant, on July 1, 1890, in consideration of love and affection, "and for her better maintenance and support," and it was recorded the same day. At that time the decedent had commenced the erection on the lots conveyed of a large building called the Barton Opera House, upon which a small amount of work had been done. The claims of respondent [42 P. 305] and his assignors are for materials furnished for and work done upon that building, and they mostly accrued after the execution of said conveyance. We do not see that any money remains unpaid which was due before July 1st. The respondent and his assignors had not only constructive but actual notice of the execution of this conveyance at or about the time of its execution. After this, and having this knowledge, they went on furnishing materials, etc., for the building without filing any liens, and relying entirely upon the statements and promises and personal responsibility of the decedent. It appears that the building cost about one hundred and five thousand dollars, and that decedent did pay all of that large sum except the amounts due respondent, which are, exclusive of interest, about twelve thousand dollars. The respondent called the appellant as a witness and asked her what the decedent told her at the time of the conveyance as to his purpose in making it. To this appellant objected upon the ground, among others, that it was a privileged communication. The objection was overruled and appellant excepted. This ruling was erroneous. Section 1881 of the Code of Civil Procedure provides as follows: "A husband cannot be examined for or against his wife without her consent; nor a wife for or against her husband without his consent; nor can either, during the marriage or afterward, be, without the consent of the other, examined as to any communication made by one to the other during the marriage." Respondent has cited no authority, and has made no suggestion that would tend to take the ruling here in question out of this apparently plain provision of the code. On the other hand, the point was substantially decided in favor of appellant's contention in Estate of Flint , 100 Cal. 391. In that case the attempt was to prove by a physician communications made to him by a patient who had afterward died; and the court held that it could not be done, and that the heir could not waive the privilege. Certainly the creditors are in no position to waive such a privilege. That case construed a clause of this same section 1881, and the principle there decided seems directly applicable to the case at bar.
Statements of the deceased husband concerning the title to the property conveyed, made after the execution of the conveyance, were also erroneously admitted over the objections of appellant. This occurred particularly in the testimony of the respondent and the witness Kirby. The declarations of a grantor made after the grant are not admissible in evidence against the grantee. Under section 1849 of the Code of Civil Procedure the declarations, etc., of a grantor of real property are evidence against the grantee only "while holding the title." (Tompkins v. Crane , 50 Cal. 478; Ord v. Ord , 99 Cal. 523; Bury v. Young , 98 Cal. 446; 35 Am. St. Rep. 186.) And the fact that the grantor was in possession of the real property conveyed at the time of the alleged subsequent declarations does not change the rule. (Bigelow on Fraud, 171.) There are cases which hold that where personal property has been left after sale in the possession of the vendor the declarations of the latter while in possession are evidence against the vendee.
For the reasons above stated the judgment must be reversed. We may say, however, that we do not see how it can be successfully maintained that the evidence justifies the finding that said conveyance was made "for the purpose of delaying, hindering, and defrauding the said several creditors and other creditors of said Robert Barton." It is clear that a conveyance made by a husband or father to his wife or child is valid as against creditors, although the consideration was love and affection alone, unless it was made with intent to defraud his creditors. (Peck v. Brummagim , 31 Cal. 441; 89 Am. Dec. 195; Barker v. Koneman , 13 Cal. 1; Wells v. Stout , 9 Cal. 480; In re McEachran , 82 Cal. 219; Cohen v. Knox , 90 Cal. 266; Knox v. Moses , 104 Cal. 502.) If such a conveyance be made with intent to defraud creditors it is void as against the creditors; but the intent is a question of fact and must be averred and proved. A voluntary conveyance is not prima facie fraudulent, and a fraudulent intent is not to be arrived at as a presumption of law. (Civ. Code, sec. 3442; Threlkel v. Scott , 89 Cal. 351; Windhaus v. Bootz , 92 Cal. 617; Bull v. Bray , 89 Cal. 286.) Therefore, in a case like the one at bar, there must be evidence upon which the jury or court can base a finding of the fact that the intent of the grantor, at the time of the grant, was to defraud his creditors. And in the case at bar we see no evidence sufficient to support such a finding. Pronounced insolvency at the time of the grant would, no doubt, be a strong circumstance tending to show fraudulent intent, and, in the absence of other controlling facts, it would be sufficient to justify a finding of such intent. But in the case at bar we see no evidence of such insolvency. The decedent died about a year after the execution of the deed to his wife, and afterward it was found that there would be a few debts of the estate which its assets would not satisfy -- the aggregate being exceedingly small when compared with the volume of his business. As stated above, the building cost about one hundred and five thousand dollars, which seems to have been all paid by the decedent except the amounts alleged to be still due respondent -- aggregating about twelve thousand dollars, and interest, while the appraisement shows assets of the value of over nine thousand dollars. Nearly all of the one hundred and five thousand dollars was paid after the date of the deed, and was for debts accruing after that date. So far as the evidence which bears directly upon his financial condition at the time of the deed is concerned, there is nothing in it tending to [42 P. 306] show insolvency at that time; on the other hand, it affirmatively appears that at that time his financial standing was exceedingly good, and that he had property, apart from the land conveyed to his wife, which was amply sufficient to pay all debts which he then owed. Indeed, it is quite apparent that his financial condition at the time of his death was caused, as suggested by his banker, the witness Ernstein, by his unwise investment after the deed of too much money in an unprofitable enterprise. It is true that the deed to his wife was of the greater part of his property; but that which he retained was more than was necessary to meet all demands of creditors at that date.
Respondent asked appellant, when a witness, this question: "It was not intended that this deed should operate to take away the property from the creditors?" and she answered, "No, sir"; and some importance is attached by respondent to this answer. We do not, however, consider it of any more significance than the following question and answer: "Was this deed made with any intent to hinder, delay, or defraud any creditor of Mr. Barton?" to which she answered, "Positively, no." These questions and answers merely meant that the deed was not made with any intent to defraud creditors.
Respondent's assignors will no doubt feel aggrieved if they shall fail to get all the money owing them from the estate; but, knowing that the conveyance had been made, they chose to rely upon the statements of the deceased, and neglected to protect themselves by filing liens for their materials and work. And they should not be surprised because a widow, whose deceased husband had been in affluent circumstances, takes all legal means to save what she can of his wrecked fortune.
The judgment and order appealed from are reversed.
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