Raine v. Spreckels

California Court of Appeal Aug 26, 1942 No. Civ. 12170Published

Before: Nourse

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Holding. The court held that the trial court's findings of fact, which determined that a property sale between spouses was made for fair consideration and without fraudulent intent, were supported by substantial evidence.

Issues

Whether the trial court's findings that a property sale was made for fair consideration and without intent to defraud creditors are supported by substantial evidence.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The presumption is always against fraud, a presumption approximating in strength to that of innocence of crime, and it should not be deemed overcome, even prima facie, upon a showing so intangible and shadowy.”

“If there be two inferences equally reasonable and equally susceptible of being drawn from the proved facts, one favoring fair dealing and the other favoring corrupt practice, it is the duty of court or jury to draw the inference favorable to fair dealing.”

NOURSE, P. J.

On June 17, 1930, Rudolph Spreckels sold to his wife Eleanor their residence in Hillsborough for the sum of $100,000, which was paid to him in cash out of the separate funds of Mrs. Spreckels. The entire sum was deposited in Mr. Spreckels’ account in the Bank of America and used by him to pay existing obligations. On November 9, 1936, the plaintiff, as assignee of the Bank of America, commenced this action to set aside the sale upon the grounds

[170]

that the transaction was made without consideration and with the intent to defraud the creditors of the grantor. A trial was had before the court and judgment followed for the defendants. Plaintiff’s appeal from this judgment, in the final analysis, raises the single question whether the findings of the trial court are supported by substantial evidence.

In the year 1928 Mr. Spreckels had a net taxable income of over $13,000,000, on which he owed a federal income tax of over $2,000,000. In September, 1929, he borrowed from the Bank of America $500,000 to pay the third instalment of this tax. In December, 1930, this indebtedness was paid by a substituted note of a corporation which was guaranteed by Mr. Spreckels. Execution on a judgment based upon this note was returned unsatisfied, and in November, 1936, this action was commenced. The answers denied the allegations of fraud and alleged that Mrs. Spreckels had purchased the property for cash paid out of her separate property, that the sum paid was not less than the market value of the property, that the proceeds of the sale were used by Mr. Spreckels in paying various obligations, including interest paid to the Bank of America on the existing indebtedness, and that Mr. Spreckels was not insolvent at the time of the sale.

The trial court found that the property, consisting of 20.65 acres, was sold as alleged for the sum of $100,000 which was paid in cash out of the separate property of the grantee, that “the said sum of $100,000 was a substantial and valuable consideration for said purchase and represented the fair and reasonable market value of said property for cash at said time; that defendant Rudolph Spreckels in making said sale and defendant Eleanor J. Spreckels in making said purchase dealt at arms length.

“V

Raine v. Spreckels

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NOURSE, P. J.

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