Foster v. Foster

California Court of Appeal Apr 22, 1932 No. Docket Nos. 8263, 8264.Published

Before: Dooling

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Holding. The court held that the transfers of real property and corporate stock from the debtors to the respondent were supported by sufficient consideration in the form of a pre-existing debt and were not fraudulent, even if they rendered the debtors insolvent.

Issues

Whether the transfers of real property and stock were made in fraud of creditors.
Whether a pre-existing debt constitutes sufficient consideration to validate a transfer of property against a creditor's claim of fraud.
Whether a debtor may legally prefer one creditor over another even if it renders the debtor insolvent.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The pre-existing debt was a sufficient consideration for the transfers”

“a transfer cannot be attacked by one creditor simply because the transferor has seen fit to give a preference to another creditor”

DOOLING, J.,

pro tem.

These two eases were tried together and are here presented on appeal upon one set of briefs. Appellant secured a judgment against defendants Frank W. Foster and Effie L. Foster, his wife, for the foreclosure of a chattel mortgage. The mortgaged property was sold for $422.25, leaving a balance due on the judgment of a little more than $6,000. A deficiency judgment was entered for this balance and to satisfy this judgment appellant caused to be sold at execution a certain ten acres of real estate and over 200,000 shares of the capital stock of Huntington Signal Oil Company then standing in the name of respondent Bertha E. Foster, but formerly standing in the names of Frank W. Foster and his wife. Appellant Lingo was herself the purchaser at the execution sales. In the action numbered herein 8263 respondent Bertha E. Foster sued to quiet title to the real property and judgment went in her favor. In the action numbered herein 8264 appellant asked to have herself adjudged owner of the stock and judgment went in favor of respondent Bertha E. Foster, adjudging her to be the owner of all of such stock.

Appellant claimed in the trial court and claims here that the land and stock were transferred by her debtors Frank W. Foster and his wife to Bertha E. Foster in fraud of creditors. As to a portion of the stock the trial court found that while standing in the name of Frank W. Foster

[3]

and wife it was at all times in fact the property of R. J. Foster and Bertha E. Foster. There was evidence to support this finding. As to the balance of the stock and the land the trial court found that the transfers were

bona fide

and for adequate consideration. In this behalf the proof showed that Bertha E. Foster is the wife of one R. J. Foster; that R. J. Foster is a brother of Frank W. Foster,- that at the time of the transfers from Frank W. Foster and wife to Bertha E. Foster, Frank W. Foster and his wife were indebted to R. J. Foster and Bertha E. Foster in an amount exceeding $25,000 and that the transfers were made to satisfy this indebtedness. While there is much in the evidence which might cast doubt on the

bona fides

Foster v. Foster

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DOOLING, J.,

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