Wilhoit v. Cunningham

25 P. 675, 87 Cal. 453, 1891 Cal. LEXIS 1003
CourtCalifornia Supreme Court
DecidedJanuary 6, 1891
DocketNo. 13495
StatusPublished
Cited by10 cases

This text of 25 P. 675 (Wilhoit v. Cunningham) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wilhoit v. Cunningham, 25 P. 675, 87 Cal. 453, 1891 Cal. LEXIS 1003 (Cal. 1891).

Opinion

Gibson, C.

This is an appeal by the plaintiffs from a final judgment entered against them upon defendants’ demurrer to their complaint praying that defendants be enjoined from selling the realty in controversy under certain writs of execution.

It appears by the complaint that Ella Averill, on the sixth day of October, 1885, commenced two separate actions in the superior court of San Joaquin County against M. E. Bryant to recover of him the amounts due upon two promissory notes, and on the same day caused a writ of attachment to issue in each action, and be levied upon certain real estate then belonging to Bryant; that thereafter, on the thirty-first day of the same month, Bryant was by and in the same court adjudged an insolvent debtor, against whom the said creditor, Averill, on the twenty-seventh day of the same month, proved her several claims, including the two promissory notes above mentioned; that on or about the thirtieth day of January, 1886, by the consent of defendant Averill, as such creditor, and all the other creditors, the'insolvency proceedings were by an order of the court duly dismissed; that on the sixteenth day of February, 1886, Bryant being still insolvent, at the request of defendant Averill, and his other creditors, executed and delivered to plaintiffs a deed of assignment of all his property not exempt from execution, for the benefit of his creditors, pursuant to division 4, part 2, title 3, of the Civil Code, which deed-embraced the real estate levied upon by the writs of attachment above mentioned; that the plaintiffs, as such [455]*455assignees, accepted the trust, and in due time qualified as required by law, and entered upon, and still continue in the discharge of the duties of the said trust; that the said deed and a proper inventory were duly filed for record; that defendant Averill assented to the execution and delivery of the deed of assignment to the plaintiffs, and also to the acceptance, by plaintiffs, of the trust thus created; that since the said trust was created, the plaintiffs have been the owners and in the possession of the real estate in controversy, in trust for the benefit of all of the creditors of Bryant, including the defendant Aver-ill; that prior to the execution of said deed, the levies under the writs of attachment above mentioned were dissolved; that on the twenty-first day of September, 1887, in the superior court aforesaid, the defendant Averill obtained a judgment in her favor in each of the suits upon the promissory notes, and caused a writ of execution, regular in form, to-issue in each case, and to he placed in the hands of her co-defendant, Cunningham, as sheriff of Sam Joaquin County, for service; that the said sheriff has by virtue of said writs of execution levied upon and threatens to, and unless restrained by injunction will, sell the real estate in question, and thereby cast a cloud upon the plaintiffs’ title thereto, which will prevent them from executing their trust expeditiously and with advantage to the creditors of Bryant; that the said execution levies were made for the express purpose of hindering the plaintiffs from executing their trust.

The grounds of demurrer are:—1. Insufficiency of the facts stated to constitute-a cause of action. 2. Ambiguity and uncertainty of the facts in certain specified particulars. 3. Incapacity of the plaintiffs to sue, because it does not appear that the inventory was verified, as required by section 3462 of the Civil Code.

1. In support of the first ground of demurrer, the respondents contend that the assignor still retains an equitable interest in the land in controversy, which was [456]*456included in the deed of assignment, and that it is subject to sale upon execution. But this argument does not apply to the facts. The allegation is, that the defendant Cunningham, as sheriff, has levied upon and threatens to sell, not only the assignor’s equitable interest in the residuum of the property assigned, but the whole of the property itself, thereby including the assignees' legal title thereto, as well as the equitable interest of the assignors in the residuum, if there should be any.

The deed of assignment is controlled by the provisions of the Civil Code relative to trusts. (Civ. Code, sec. 3449.) Those provisions, so far as applicable here, are as follows:—■

“Sec. 863. Except as hereinafter otherwise provided, every express trust in real property, valid as such in its creation, vests the whole estate in the trustees, subject only to the execution of the trust. The beneficiaries take no estate or interest in the property, but may enforce the performance of the trust.
“Sec. 864. Notwithstanding anything contained in the last section, the author of a trust may, in its creation, prescribe to whom the real property to which the trust relates shall belong, in the event of the failure or termination of the trust, and may transfer or devise such property, subject to the execution of the trust.”

The trust created by the deed of assignment here relates to real property, and was expressly created for the benefit of the creditors of the assignor. There was no reservation in it of any estate or interest to the assignor except that authorized by section 864 of the Civil Code, wherein the assignor provides that the residuum left after his creditors are satisfied shall be returned to him, his executors, administrators, or assigns. No other estate or interest could be reserved in a trust of this character. (Civ. Code, sec. 3457, subd. 4.) The effect of the deed, then, was to divest the assignor of his entire interest and estate in the property assigned, subject to [457]*457the right to a reconveyance of any residue remaining undisposed of after the creditors are satisfied, or payment of the surplus of the proceeds of the sales of the property.

This is in accordance with the weight of authority in other jurisdictions, as shown in Burrill on Assignments, 5th ed., sec. 298.

Under our law as declared in the Civil Code, an insolvent may, in good faith, make an assignment for the benefit of his creditors, with or without the consent of the latter; and when such an assignment is made, the creditors must either avail themselves of the assets without preference (section 3457), or not at all.

The object of the law is to enable a debtor, through his assignee, to dispose of his property for the benefit of his creditors. This object would be defeated if one of the creditors could ignore the assignment, and sell the property to satisfy his particular claim. Such a sale would, if it could be made, deprive the assignees of the property; or if it would not, still the sale would cloud the title of the assignees, because in any action they might have to prosecute for the removal of the cloud so cast, the evidence of the purchaser’s title would show that such latter title was derived from the assignor, to overcome which the assignees would have to prove that the judgments were obtained in actions commenced before the deed of assignment was made upon debts covered and provided for by the deed of assignment. (Pixley v. Huggins, 15 Cal. 137; Porter v. Pico, 55 Cal. 165; Roth v. Insley, 86 Cal. 134.) Such a cloud, it is evident, would prevent them from disposing of the property to the advantage of the creditors in the performance of their trust.

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Cite This Page — Counsel Stack

Bluebook (online)
25 P. 675, 87 Cal. 453, 1891 Cal. LEXIS 1003, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wilhoit-v-cunningham-cal-1891.