California Supreme Court Apr 9, 1898 No. L. A. No. 286Published
Before: Britt
Synopsis
Action by Assignee op Insolvent—Fraud—Circumstantial Evidence.— In an action by an assignee in insolvency to recover the value oí property of the insolvent debtor, alleged to have been fraudulently secreted and concealed by the insolvent and her husband, who was manager of her business, to prevent the property from coming into the possession of the assignee, and to have been converted and sold by the defendant with knowledge of such concealment, the fraudulent secretion, and the conversion of the property with knowledge of its concealment, may be proved by circumstantial evidence. The.evidence reviewed, and held sufficient to warrant a recovery by the assignee.
Id.—Estimate op Evidence—Failure to Explain Possession.—Under section 2061 of the Code of Civil Procedure, evidence is to be estimated not only- by its intrinsic weight, but also according to the evidence which it is in the power of one side to produce, and the other to contradict; and where the evidence points to the fraudulent concealment of a very large part in value of the insolvent’s stock in trade prior to the filing of the petition, and shows that the similar stock in trade of the defendant and sales thereof were largely augmented from some undisclosed source, and included goods identified aa having been purchased by the insolvent, it being an easy matter for the defendant to prove whether they were legitimately obtained and how they were so obtained, and difficult for the plaintiff to prove the contrary, the failure of the defendant to offer any proof upon the subject, justified unfavorable inferences against him, that the sale made by him included goods surreptitiously Withheld from the assignee.
In.’—Description of Property—Certainty.—No such degree of certainty in the 'description of the property converted as will identify the particular goods concealed and converted is required, when from the dispersion of the goods in the usual course of retail traffic, and other difficulties apparent from the evidence, identification was virtually impossible to the plaintiff.
In.—Appeal from New Trial Order—Defective Complaint not Reviewable.—If the complaint was defective in Jailing to show why the property was not more specifically described therein, such defect cannot be reviewed on appeal from an order denying a new trial.
Id.—Amount of Sales.—The amount of sales made by the defendant of goods purchased by the insolvent, being peculiarly within the knowledge of the defendant, and difficult to be ascertained by the plaintiff, the defendant, upon failing to make any proof thereof, cannot complain of any fair deduction as to such value from the estimates before the court.
New Trial—Statement—Insufficient Specifications.—A specification of errors in a statement on motion for a new trial that they are “pointed out and designated in the foregoing transcript by exceptions Nos. 1, 2, 3, etc., to 25, and the court erred in each of its said rulings,” is not such a specification of particular errors as the statute requires, and is especially defective where it appears that the exceptions are not numbered in the transcript.
BRITT, C. This case in a different phase was before the court on a former appeal. (Hall v. Susskind, 109 Cal. 203.) [561]Plaintiff sues as assignee in insolvency of one L. M. Wagner, who, prior to her insolvency, was engaged in business as dealer in jewelry, diamonds, watches, silverware, etc., at the city of Los Angeles. In his complaint plaintiff charged that defendant conspired with said insolvent and her husband (one J. B. Wagner who was her managing agent)-' to secrete and conceal a portion of her estate, described as “consisting of diamonds, watches, and jewelry,” to prevent the same from coming into the possession of the assignee; that the insolvent did conceal property not exempt by law;.that the defendant took possession of said concealed property knowing it to be part of the insolvent’s estate, converted the same to his own use, and sold ai portion thereof of the value of thirty thousand dollars. The court found among other things that after said J. B. Wagner, acting on behalf of said insolvent, had concealed and secreted part of her estate—described as in the complaint—the defendant, with knowledge of such concealment, and that the property concealed was part of the insolvent’s estate, took possession of the same and sold a portion thereof for cash, between November 16, 1892, and July 26, 1893, and that the value of the goods thus sold was fifteen thousand dollars—for which sum plaintiff had judgment.
Defendant’s appeal from the judgment was dismissed. On the appeal from the order denying a new trial the main question made is whether the evidence sustained the finding of fraudulent conversion by defendant. The evidence was mostly circumstantial; it tended to show that Mrs. Wagner’s stock in trade in the month of March, 1892, was worth from sixty thousand to seventy thousand dollars; in July, 1892, it was valued at fifty thousand dollars; on September 22, 1892, the same was seized under a writ of attachment, and a few days later, on September 28th, she filed her petition in insolvency; the goods she then had in stock were worth perhaps ten thousand dollars, though there were estimates of witnesses thereon at considerably less than that sum; and on November 16, 1892, plaintiff, as assignee of said insolvent, sold the same at public auction to the defendant for the sum of seven thousand one hundred dollars. Defendant received possession of the goods thus purchased, and embarked in the same business as that previously [562]
conducted by the insolvent and at the same stand; he was assisted therein by said J. B. Wagner, though in what capacity is not clear.' Between November 16, 1892, and July 26, 1893, defendant made sales by auction and otherwise out of his stock to the amount, the evidence tended to show, of about thirty-four thousand dollars. On the date last mentioned all the goods then in his possession were attached as the property of L. M. Wagner, at the suit of one Wunsch and others, creditors of said L. M. Wagner. Some particulars of that action are related in Susskind v. Hall. 44 Pac. Rep. 328. At the time of this attachment defendant had on hand goods of the estimated value of twenty-five to thirty thousand dollars. In the stock then attached in defendant’s possession were found a considerable number of valuable gold watches, also several elaborate pieces of diamond jewelry, which were clearly identified as having been purchased by said insolvent, and it seems carried in stock by her, prior to her insolvency, but which were not included in the assets surrendered to the assignee and sold by him to defendant. In March, 1892, the diamonds held in the Wagner stock were worth twenty thousand dollars or more; at the time of the insolvency the value of the diamonds on hand (and thereafter sold with the general stock by the assignee to defendant) was found to be from thirteen to fifteen hundred dollars; but at the time of the second attachment, in July, 1893, the diamond stock in the hands of defendant was worth some fourteen thousand dollars. The only additions shown to have been made to defendant’s stock by purchase between the time of the sale to him by the assignee—November 16, 1892—and the time of the second attachment—July 26, 1893—consisted of diamonds, watches, etc., to the amount of about four thousand six hundred dollars.
There was also evidence, received without objection, of statements made by said J. B. Wagner shortly after the filing of his wife’s petition in insolvency, to the effect that in anticipation of action by certain creditors, he had secreted goods to the value of fully twenty-five thousand dollars. Some declarations of defendant were given in evidence which tended to show an understanding between him and J. B. Wagner that when defendant was repaid the money he had invested, with certain interest, the stock should belong to Wagner; also that he had been so repaid prior to [563]the second attachment; he continued, however, in possession of the property and claimed to own the same. When that attachment was levied defendant was asked to open the strong box inside the safe belonging to the establishment; he refused, saying that it contained nothing but his private papers; it was opened a few days later and found to contain diamonds and jewelry worth two thousand five hundred dollars or more; it seems that all, or a large portion, of these goods were neither part of the stock sold by the assignee to defendant on November 16, 1892, nor shown to have been purchased by defendant elsewhere. When the case for plaintiff was closed defendant moved for a nonsuit, which being denied, he declined to introduce any evidence.
We think the nonsuit was properly denied, and that the evidence before the court—stated above in outline merely—justified the material findings. It is true, as said in a recent case here, that the presumption of law is always in favor of the fair dealing of the parties to a. transaction, and that mere suspicion of fraud is not sufficient to overcome the presumption (Levy v. Scott, 115 Cal. 39); but it is also true, as virtually conceded in the same case, that fraud is commonly established by facts and circumstances which logically denote its existence rather than by direct proof of covinous contrivance—by circumstances which, taken together, lead to the inference of fraud rather than to that of honesty. “Evidence is to be estimated not only by its own intrinsic weight, but also according to the evidence which it is in the power of one side to produce and the other to contradict.” (Code Civ. Proc., sec. 2061.) Here it appeared that defendant purchased goods at a cost of less than twelve thousand dollars, and which, there was evidence to show, were worth not greatly more than that sum; he made sales amounting to thirty-four thousand dollars, and still had stock in his store worth above twenty-five thousand dollars; admitting that he sold at a profit of fifty per cent, which was said in the testimony to be a fair profit for the retailer over the wholesale price, it is still apparent that his stock was enormously augmented from some undisclosed source. If, now, the estimates and values given in evidence for plaintiff were false, it must have been easy for defendant,, by production of-his books or otherwise, to contradict them; if he received accessions [564]to Ms stock by purchase, gift, or consignment, in addition to' those proved by plaintiff, or if the goods found in his stock which had been formerly owned by Mrs. Wagner and not surrendered by her to the assignee in insolvency, were introduced into his store without his knowledge, or had been in some way legitimately obtained, it was easy for defendant to prove these facts,, and very difficult for plaintiff to prove the contrary. He offered no proof and cannot justly complain if the court viewed his neglect with suspicion, and gave to plaintiff the advantage of the unfavorable inferences which the evidence justified. (Bode v. Lee, 102 Cal. 583; Newman v. Cordell, 43 Barb. 448, 461; Bump on Fraudulent Conveyances, 4th ed., sec. 65.) These considerations suffice to answer the specific objections urged that the evidence showed no ownership of goods alleged to have been converted either in the insolvent or in the plaintiff as her assignee, and that it failed to show that defendant converted any such goods. That the evidence pointed to the fraudulent concealment of a very large part in value of the insolvent’s stock in trade prior to the filing of her petition is clear and is not disputed by counsel; of course, any goods thus concealed' belonged rightfully to the assignee. We may allow that defendant was not shown to have been either party or privy to such concealment in the first instance; but it was not essential to the making out of plaintiff’s case to prove that he was; the important inquiry was whether defendant had knowingly converted to his own use property of the insolvent estate; many articles which, it was reasonable to infer, had heen concealed by Wagner were found in defendant’s possession, and he offered no explanation of this fact; the amount of his sale's and the goods remaining in his stock unsold were out of all proportion to the investment he had made, and as to this incongruity he also remained silent; from these and the other facts developed it was a fair inference that the sales he had made included goods which had been surreptitiously withheld from the assignee.
It is claimed that there was no proof to sustain the court’s finding of value of the goods converted—fifteen thousand dollars. But given thé fact found, upon sufficient evidence as we hold, that defendant sold property belonging to the assignee, and it is apparent that the amount of such sales was peculiarly [565]within the knowledge of defendant and extremely difficult to •ascertain by plaintiff; defendant offering no proof, the court was forced to deduce the conclusion of value from the estimates before it, and of this defendant ought not to complain, provided the deduction was fairly made. We think it was; defendant’s •sales had amounted approximately to thirty-four thousand dollars; assuming-—what is improbable—that all the goods shown to have been purchased by him were again sold, and at a liberal margin of profit, the proceeds thereof would still be short of the total amount of sales by the sum of fifteen thousand dollars or more. It is unnecessary to specify other elements which may have entered into the estimate made by the court.
It is further urged that the evidence was fatally deficient in that it did not identify the goods in question—that is, as we understand the argument, describe with certainty sufficient for identification the “diamonds, watches, and jewelry” mentioned in the findings, and show: 1. The concealment; and 2. The conversion of goods so identified. We do not think this degree of certainty can be required in an action like the present, where from the dispersion of the goods in the usual course of retail traffic, and other difficulties apparent in the evidence, identification was virtually impossible to the plaintiff; in modern times, the rule of the action of trover, invoked by defendant, has not been considered hard and fast, but, on the contrary, as one amenable to circumstances. Thus, at a period when more strictness was required than now, trover was allowed for a. “library of books,” without expressing what they were, “because to set down the particular books would make the record too prolix.” (Emery’s case, cited in Elpicke v. Acton, 1 Vent. 114); also for a parcel of diamonds; ” ( White v. Graham, 2 Strange, 827. And see Bode v. Lee, 102 Cal. 590, pl. 4; Seligman v. Armando, 94 Cal. 314; First Nat. Bank v. Montgomery, 70 Miss. 550; Taylor v. Wells, 2 Saund. 74, note.) Possibly, the complaint was defective, as contended by defendant, in failing to show why the property was not more specifically described therein, but defects in the complaint are not reviewable on appeal from an order denying a new trial (Brison v. Brison, 90 Cal. 323); the finding followed the description in the complaint and is sus[566]tained by the evidence, which discloses also sufficient reason for the generality of the finding.
It is argued that the court erred in several rulings regarding the admission of evidence; the only specification of such errors contained in the statement on motion for new trial is that they are “pointed out and designated in the foregoing transcript by exceptions Nos. 1, 2, 3, etc., to 25, and the court erred in each of its said rulings.” This was no more than to say that the court erred in the various rulings excepted to by defendant as shown in the transcript and can scarcely be regarded as such a specification of particular errors as the statute requires (Code Civ. Proc., sec. 659, subd. 3); moreover, we have been unable to fmd an exception in the transcript numbered in any manner. The order appealed from should be affirmed.
Chipman, C., and Haynes, C., concurred.
For the reasons given in the foregoing opinion the order appealed from is affirmed.
McFarland, J., Temple, J., Henshaw, J.
Hearing in Bank denied.
AI Brief
AI-generated · verify before citing
Holding. The court held that the evidence was sufficient to support the finding of fraudulent conversion of an insolvent's property by the defendant, noting that the defendant's failure to produce evidence within his control justified unfavorable inferences.
Issues
Whether the evidence was sufficient to sustain the finding of fraudulent conversion by the defendant.
Whether the plaintiff was required to identify the specific goods converted with absolute certainty in an action for conversion.
Whether the defendant's failure to produce evidence regarding his stock and sales justified the court's findings of value and conversion.
Disposition. affirmed
Quotations verified verbatim against the opinion
“fraud is commonly established by facts and circumstances which logically denote its existence rather than by direct proof of covinous contrivance”
“Evidence is to be estimated not only by its own intrinsic weight, but also according to the evidence which it is in the power of one side to produce and the other to contradict.”
“the rule of the action of trover, invoked by defendant, has not been considered hard and fast, but, on the contrary, as one amenable to circumstances.”