Moses La Point v. Blanchard

California Supreme Court Mar 12, 1894 No. No. 18241Published

Before: Temple

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Holding. The court held that a transfer of property made in violation of the Insolvent Act cannot be defended on the grounds that the property might have been set apart as a homestead, as such property was not exempt from execution at the time of the transfer.

Issues

Whether a transfer of property that violates the Insolvent Act is valid if the property could have been set apart as a homestead by the court.
Whether a creditor may defend a fraudulent preference by claiming the property could have been declared a homestead for the insolvent.

Disposition. reversed

Quotations verified verbatim against the opinion

“The premises had not been selected as a homestead by a declaration by either husband or wife at the time of the transfer, and might have been attached by the creditors. It was not, therefore, property exempt from execution.”

“Had the property, when conveyed, been exempt from execution and therefore then beyond the reach of creditors, there would have been much force in the argument of the respondent, but I think it is going too far to hold that when one is charged with taking property in violation of the Insolvent Act, he may defend by showing that the property was of such a nature that it might have been made exempt from execution.”

Synopsis

Insolvency—Fraudulent Preference of Creditor—Transfer of Unclaimed Homestead—Recovery by Assignee.—Where all the facts are found to exist, which, under section 55 of the Insolvent Act, are required to render fraudulent and void a transfer of property from the insolvent to a creditor by way of preference, except that it is found that the property transferred consisted of lots with a dwelling-house thereon worth three thousand five hundred dollars, where the debtor was residing with his family, but which had not been claimed as a homestead by a declaration by either husband or wife at the time of the transfer, such premises are not exempt from execution, and the assignee of the insolvent is entitled to a decree canceling the conveyance and restoring the property as part of the estate of the insolvent debtor.

Id.—Setting Apart Homestead For Insolvent. —While it is the duty of the court in a proper case, to set apart a homestead for the insolvent, if he desires it; it can only be set apart upon his request, and a creditor to whom land suitable for a homestead has been conveyed, cannot insist upon having such property set apart as a homestead for the insolvent’s benefit.

Temple, C.— The complaint shows that on the tenth day of September, 1892, a petition was filed in the superior court of Butte county, under the Insolvent Act of 1880, praying that Thomas Boulware be adjudged an insolvent debtor. That thereafter such proceedings were had that on the nineteenth day of December, 1892, an order was duly given and entered adjudging said Boulware to be an insolvent debtor.

That plaintiff having been duly elected assignee of said insolvent on the twenty-third day of January, 1893, duly qualified as such, and on the same day an assignment of the estate of the insolvent was executed by the clerk, as required by said act.

That on the first day of September, 1892, and within one month before the filing of the petition in insolvency, the insolvent assigned, transferred, and conveyed to defendant certain real property, which is specifically described in the complaint.

That at the time of said transfer said Boulware was, now is, and ever since has been indebted to a large -number of persons in a large amount, and then was, ever since has been, and now is, wholly insolvent. ■

That at the time of the transfer said Boulware was also indebted to the defendant, and that the transfer was made with the intention of giving defendant a preference, and of preventing the property so transferred from coming to the assignee in insolvency—under the act—-and to prevent the same from being ratably distributed among his creditors, and that defendant accepted said property as a preference as a payment of her indebtedness, and at the time had reasonable cause to believe, and did believe and know, that said property was transferred to her with the intention of giving her the preference and of preventing the property from being divided ratably among the creditors of said insolvent debtor.

That the transfer was not made in the usual course of business, but was made and accepted with the view of preventing the property from coming to the assignee [551]of the insolvent, to prevent it from being'distributed among the creditors of the insolvent, and to delay the operation and evade the provisions of the Insolvent Act of 1880, of the the state of California.

That the property is of the value of three thousand five hundred dollars. Wherefore he asks that the conveyance be canceled, etc.

Moses La Point v. Blanchard

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