Duhart v. O'Rourke

California Court of Appeal Aug 30, 1950 No. Civ. 17427Published

Before: Vallee

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Holding. The court held that a homestead declaration is invalid against a creditor when the funds used to acquire the homesteaded property were obtained from that creditor through fraud. Furthermore, the court affirmed that the plaintiffs' attachment lien, which ripened into a judgment and execution sale, took priority over the defendants' subsequent trust deeds.

Issues

Whether a homestead declaration is valid when the property was acquired using funds obtained through fraud.
Whether an attachment lien that ripens into a judgment and execution sale takes priority over subsequent trust deeds.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“A homestead may, however, be successfully attacked by a creditor where money fraudulently obtained from him is invested in and constitutes part of the homestead.”

“Under such circumstances, the right of the creditor so defrauded becomes paramount to that of the owner of the homestead”

[278]

VALLÉE, J.

Appeal by defendants Abbot Bernay, Maurice T. Leader, Richard H. Sampson, A. W. Appel, and Northwest Casualty Company, a corporation, from a judgment for plaintiffs in an action in which plaintiffs sought a declaration of rights with respect to a parcel of realty standing of record in the name of Lizzie O’Rourke, a married woman, as her sole and separate property.

Prior to October 21, 1946, the property stood of record in the names of John O’Rourke and Lizzie O’Rourke, husband and wife, as joint tenants. On October 19, 1946, a deed was executed by them granting the property to Lizzie O’Rourke as her sole and separate property. On the same day she executed a declaration of homestead on the property. The deed and the declaration of homestead were recorded October 21,1946.

Appellants claim a superior interest in the property as lien-holders under trust deeds executed by Lizzie O’Rourke. Respondents, judgment creditors of John O’Rourke, assert a superior interest by reason of their purchase of the property at execution sale.

The litigation stems from the following: Between August 28 and September 6,1946, John O’Rourke and Albert Daener, by false representations, defrauded plaintiffs of 2,000 sacks of wheat, valued at $10,000. They sold the wheat for $9,600 and retained the proceeds.

On November 21, 1946, plaintiffs commenced an action in the superior court of Los Angeles County (No. 521905) against John O’Rourke and Albert Daener for the value of the wheat fraudulently obtained by them and caused a writ of attachment to be levied on the real property involved here. The attachment was levied against the property standing in the name of Lizzie O’Rourke and against the interest of John O ’Rourke therein. Lizzie O ’Rourke filed a complaint in intervention alleging the property was her sole and separate property and praying that the writ of attachment be released. Plaintiffs answered, alleging that the deed of October 19,1946, was executed to hinder, delay and defraud the creditors of John O’Rourke, including plaintiffs, and to prevent them from reaching the property. Plaintiffs recovered judgment against O’Rourke and Daener. Lizzie O’Rourke was denied any relief. The court found that the attached property was conveyed in fraud of the creditors of John O’Rourke, including plaintiffs, and that the property, irrespective of its record title,

Duhart v. O'Rourke

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