Beach v. Faust

WASTE, C. J.

This controversy involves a one-third interest in a vacant tract of land in Kings County near the Kettleman Oil Field. This interest originally stood of record in the name of B. W. Marks. While the interest in the property stood of record in Marks’ name, he filed a petition in bankruptcy, and was adjudicated a bankrupt by the United States District Court for the Southern District of California, which includes Kings County. The order of adjudication was made January 29, 1929. No certified copy of the decree of adjudication of bankruptcy was filed in Kings County, as required by the Bankruptcy Act. Marks did not include the property in controversy in the schedule of assets, and the trustee in bankruptcy did not learn of its existence until some time later. Without any knowledge of the bankruptcy, T. A. Slocum, in May, 1929, paid Marks one hundred dollars for a quitclaim deed to the property. Shortly thereafter, Frank F. Faust, one of the appellants, obtained a search of title which showed title vested in Marks, and contained no reference to any bankruptcy proceedings. Faust then called on Marks, ,who told him that he (Marks) had conveyed his interest in the property to Slocum, but

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did not mention, his (Marks’) bankruptcy. Faust, without any knowledge of the bankruptcy, then paid Slocum two hundred and fifty dollars for a deed to the property. Thereafter, and on January 7, 1930, the trustee in bankruptcy, having learned of Marks’ interest in the property, sold the one-third interest to the plaintiff Beach, who bought the property for Frank C. Ayars, and the latter has been substituted as the plaintiff in this action. In the meantime, one C. A. Walker instituted an action to quiet title against Marks and others, covering the property.

Lis pendens

in usual form was recorded. Walker obtained judgment against Marks, and subsequently quitclaimed the property to appellant Faust.

Upon this state of facts the trial court gave judgment for the plaintiff on the theory that the bankruptcy proceeding in the federal court was constructive notice

per se

to all intending purchasers that Marks, the original owner of the property, had been declared a bankrupt. There is some evidence that Marks told Slocum at the time he paid Marks the one hundred dollars for a quitclaim deed that he did not think he was the owner of the property. As already stated, Marks made no reference to his previous adjudication in insolvency. Concisely stated, the respondent claims under the court sale in the bankruptcy proceeding, while the appellants claim under the quitclaim deeds from the bankrupt Marks and Slocum and under the Walker judgment.