Riego v. Foster
Before: McFarland
Synopsis
Action by Assignee in Insolvency—Evidence oe Authority.—In an action by an assignee appointed under proceedings in involuntary insolvency against a partnership, to recover property assigned by the firm, to the defendants, in violation of the insolvent act, within one month prior to the filing of the petition by the creditors, a certified copy of the assignment to the assignee is conclusive evidence of the right of the assignee to bring the action.
Id.—Collateral Attack upon Creditors’ Petition.—Where the insolvency proceedings were regular on their face, they cannot be collaterally attacked by the defendants in an action by the assignee, upon the alleged ground that the signers of the petition were not actually creditors of the insolvents in the' amount required by the Insolvent Act.
Id.—Order Striking Out Answer—Definiteness—Presumption upon Appeal.—Where the motion to strike out parts of the answer in such action specifically quoted all the parts of the answer sought to be stricken out, and the court granted the motion as to all those parts of the answer which attack the validity of thé insolvency proceedings, and denied it otherwise, the order, though it would be in better form if more fully identifying the part stricken out, is not too indefinite to be sustained, and it will be presumed upon appeal in favor of the judgment that the appellants were not deceived or prejudiced by the form of the order.
Id.—Findings—Consistency—Transfer out of Usual Course of Business—Freedom from Actual Fraud.—A finding, based upon an admission in the pleadings, that the transfer was not made in the usual and ordinary course of business, and that at the time thereof, defendants knew and had reason to believe that the firm was insolvent, and that the transfer was being made with intent to prefer certain creditors, represented by the defendants, and with a view to prevent the property from coming to the assignee in insolvency, et cetera, is not inconsistent with another finding that defendants were free from actual fraud, and believed their conduct to be lawful.
Id.—Actual Fraud Immaterial.—Actual fraud is not an element in the case; and if the provisions of the Insolvent Act are violated, the transfer is void, regardless of any question of honesty and fairness, good faith, or actual fraud.
McFARLAND, J. The plaintiff, as assignee in involuntary insolvency of Briare & Kenny, insolvent debtors, brought this action to recover the value of certain property alleged to have been assigned by said insolvents to the defendants within one month prior to the filing of the petition in insolvency, and in violation of section 59 of the Insolvent Act of 1895. Judgment went for plaintiff, and defendants appeal from the judgment.
The points made for reversal arise upon the pleadings and findings, and a short hill of exceptions showing a certain ruling of the court striking out part of the answer; no other ruling of [181]the court not shown by the judgment roll is before us, nor is any evidence brought up.
The petition of creditors to have the persons named declared insolvent, the decree adjudging them insolvent, and all the proceedings in insolvency down to and including the assignment by the cleric to the respondent, were regular on their face. But the appellants, in their answer in this present case, set up as a defense, among other things, that the signers of the petition were not actually creditors of the insolvents in the amount required by the act, and that therefore the proceedings were void and conferred no authority on respondent.to maintain this action. On motion of respondent, the court-struck out that part of the answer, and the principal contention of appellants is that this ruling was erroneous. This contention, however, cannot be maintained. Section 22 of the Insolvent Act expressly provides that: “In suits prosecuted or defended by the assignee a certified copy of the assignment made to him shall be conclusive evidence of his authority to sue or defend.”) See Fitzgerald v. Neustadt, 91 Cal. 600; Luhrs v. Kelly, 67 Cal. 289.) Moreover, on principle and under the general authorities, the judgment of an insolvent court, regular on its face, like other judgments, cannot be thus collaterally attacked. In Bump’s Rotes of Constitutional Decisions, ninth edition, page 645, many authorities are cited to the principle there stated, as follows: “Reither the validity of the adjudication of bankruptcy, nor the existence, sufficiency, or validity of the debt of the petitioning creditor, can be collaterally drawn in question. In all suits brought by an assignee, the assignment is conclusive evidence of his right to sue.” In Michaels v. Post, 21 Wall. 398, the United States supreme court states the principle (we quote from the syllabus) as follows: “If, on a petition and other proceedings regular in form, a decree in bankruptcy is made in such a case, and an assignee in bankruptcy is appointed in a way regular on its face, the decree of bankruptcy, though it be a decree pro confesso, cannot in a suit by the assignee to recover from a preferred creditor the property transferred, be attacked on the ground that the party petitioning had released his debt, was no creditor, that his petition was accordingly fraudulent and that the decree based on it was void.”
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