Williams v. Winter

STONE, J.

Plaintiffs filed an action on a $5,000 promissory note, alleging as follows: that defendants induced plaintiffs to make the loan by executing a bill of sale to certain personal property; that the property was subject to a conditional sales contract and to a chattel mortgage; that by reason thereof plaintiffs received no security for their loan; that the prior encumbrances were not disclosed to plaintiffs; that defendants gave said bill of sale and concealed the facts with the fraudulent intent to obtain money from plaintiffs; that except for said written inducement plaintiffs would not have made the loan.

Plaintiffs further alleged that the due date of the note was extended from June 19, 1957, to January 1, 1958, by an agreement in writing. The complaint is concluded with the standard allegation of nonpayment, and that the same is due, owing and unpaid.

Defendants Winter and Sherwood Motors, by answer, set up the affirmative defense of an adjudication in bankruptcy, alleging: the listing of plaintiffs as creditors in the bankruptcy; plaintiffs’ knowledge thereof; that the obligation is dischargeable in bankruptcy; and that defendants received their discharge. They also denied plaintiffs’ allegations of fraud surrounding the transaction. Defendant Coker filed a similar answer, and additionally alleged affirmatively that the obligation is barred by the provisions of section 338, subdivision 4, California Code of Civil Procedure.

[476]

Plaintiffs then moved, pursuant to Code of Civil Procedure section 437c, for an order striking the answers of defendants, and for entry of summary judgment in favor of plaintiffs and against each defendant. Plaintiffs filed a declaration in support of the motion for summary judgment, setting forth evidentiary facts to support the ultimate facts alleged in the complaint. A memorandum of points and authorities accompanied the motion for summary judgment, citing the well established principle of law that any liability for obtaining money or property or credit by false pretenses or false representation or by a materially false statement in writing respecting the financial condition of the obligor made or published in any manner whatsoever with intent to deceive, shall not be dischargeable in bankruptcy.

Defendants filed a declaration in opposition to the motion for summary judgment and by way of answer to the declaration filed on behalf of plaintiffs. In the declaration it is alleged that the total encumbrance against the personal property was the sum of $1,004.06 and that the property had a reasonable value in excess of $6,500. Defendants also declared that negotiations for the loan were handled on behalf of plaintiffs by Chester Ashford, who was their agent; that Chester Ashford had negotiated loans for plaintiff Daisy Williams prior to the loan in question; that Chester Ashford had full knowledge of the encumbrances, which information he conveyed to plaintiff Daisy Williams. Further, it was alleged that all of the defendants were individually adjudicated bankrupt, citing the title and number of each proceeding; that the obligation was listed by defendants in the bankruptcy proceedings; that the debt is a dischargeable debt and that no fraud was perpetrated by defendants; that a discharge was received by each defendant. The declaration also stated that there was no change of possession of the personal property or recordation or publication of the execution of the bill of sale pursuant to Civil Code sections 3440 and 3440.1. Points and authorities were submitted on behalf of defendants in support of their counterdeclaration on motion for summary judgment.