Case Name: LEAVENGOOD v. McGEE
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1907-08-20
Citations: 50 Or. 233
Docket Number: 
Parties: LEAVENGOOD v. McGEE.
Judges: 
Reporter: Oregon Reports
Volume: 50
Pages: 233–243

Head Matter:
Argued 16 July,
decided 20 August, 1907.
LEAVENGOOD v. McGEE.
91 Pac. 453.
Appeal—Dismissing Because of Defective Record.
1. A suit will not be. dismissed because the testimony and exhibits, or either of them, have not been transmitted to the supreme court with the rest of the record, as required by Section 553, B. <& O. Clomp., Subd. 1 and Rule 1 of the court, since there may be questions in the case not arising on the testimony.
Effect of Motion to Dismiss—Completing Record.
2. A motion to dismiss an appeal for want of specified parts of the record may be treated as a suggestion of diminution, and the court may in its discretion alloiv the record to he completed rather than dismiss the appeal.
Creditor’s Suit—Necessity of Dien by Plaintiff.
3. To enable a creditor to maintain a suit to uncover hidden assets of a debtor, he must have a judgment or an attachment on specific property.
Creditors’Suit by Bankruptcy Trustee—Basis of Suit. ■
4. A trustee in bankruptcy cannot maintain a suit in the nature of a creditors’ bill until he has shown by the record of the referee in bankruptcy that the claims to enforce which the suit is brought have been ascertained and established in the manner provided by the bankrupt act.
Creditors’ Suit—Pleading E'raud.
5. In pleading fraud more than a general allegation is necessary—facts must be specifically alleged showing actual fraud, or facts from which the law will construct fraud,
Conveyance Fraudulent Against Subsequent Creditors.
(Í. Constructive fraud will not support a suit by subsequent creditors to set aside conveyances, as to them the fraud must have been specific and actual.
Sufficiency of Evidence.
7. The evidence In this case does not satisfactorily show the fraud claimed, and is not sufficient to support a decree for plaintiff.
When Corporation is De Facto.
K. When business w'hieh might be transacted under its articles of incorporation has actually been carried on by an organization purporting to be a corporation, such organization is a de facto corporation.
Corporation—Right to Attack Validity of.
9. The legality of the organization of what appears to be at least a de facto corporation can be questioned by the State only and in a suit brought for that purpose.
From Douglas: James W. Hamilton, Judge.
Statement by Mr. Commissioner Slater.
This is a suit by C. I. Leavengood against James T. and Euth McGee, the McGee Co. and Frances McGee, wife of one P. T. McGee. Plaintiff sues, as a trustee in bankruptcy of PT. McGee,' a bankrupt, to set aside, as fraudulent as to bis cred itors, two deeds ultimately conveying to J. T. McGee certain lots in the Town of Myrtle Creek, Douglas County. James T. McGee and Kuth, his wife, Frances, wife of P. T. McGee, and . the McGee Co., a corporation, are made defendants. The first of these deeds is alleged to have been made on November 29, lá9T, by P. T. MieGee and his wife, for the expressed consideration of $2,600, to -the McGee Co., which was incorporated on that date by P. T. McGee, his wife, and son Hugh, with a capital stock of $5,000, for the purpose of carrying on a general merchandise business at Myrtle Creek. But it is alleged that no ■stock was subscribed or paid for; that the corporation was not organized, and for that reason had no power or authority to make or enter into a contract for' the purchase of real property; that, in fact, no contract was made by and between P. T. McGee and the corporation for the purchase of real property described in the deed; but that the conveyance was voluntary, and wholly without consideration, and made with the intent and purpose of putting the title in such a condition that it could not be reached by McGee’s creditors. The second deed is alleged to have been made on March 2, 1902, by the McGee Company, conveying the same property to James T. McGee, also' a son of P. T. McGee, for the expressed consideration of $1,000, when the company was in failing circumstances and unable to meet its liabilities, and was in fact insolvent; that the execution of the deed was not authorized by any acting board of the corporation, and was without consideration, and was made for the purpose of putting the property beyond the reach of the creditors of P. T. McGee and of the corporation, with the intent and for the purpose of defrauding them. It is also further alleged that since the making of this conveyance P. T. McGee has had the management and control of the property thereby convej'ed to Jam.es T. MieGee, and has collected the rents, and has assumed to be, and is in fact, the owner of the property; that claims amounting to about $1,500 have been presented and allowed against the estate of P. T. McGee, and that the debts which are the basis of these claims were incurred at divers dates between January 1, 1897, and December 1, 1904; that the assets of the estate amount to no more than the sum of $60. A demurrer to the complaint was interposed, assigning all of the grounds allowed by statute, which being overruled, J. T. McGee answered separately, with a general denial of the complaint, and alleging affirmatively that about March 1, 1898, P. T. McGee and his wife sold and conveyed the real property mentioned in the deed, together with some store fixtures and a stock of goods, to the defendant company for the consideration of $2,600; that the corporation held the title and the possession of the lots until December 14, 1900, when it sold and conveyed the lots to him for the sum of $1,000, which he paid, and that his transaction with the company was in good faith, without notice or knowledge of any intended fraud by P. T. McGee or by the company upon his or its creditors. The remaining defendants answered jointly to the same effect. Plaintiff replied, denying the new matter of the separate answers. The cause was referred to a referee for the taking of testimony, and, on his report coming in and being considered by the court, findings were made in plaintiff’s favor, and thereon a decree was entered, setting aside each of the deeds, and the property ordered sold and the proceeds applied to the payment of the indebtedness of P. T. McGee, as allowed in the administration of his estate as a bankrupt. From this decree all of defendants appeal.
Reversed.
On Motion to Dismiss the Appeal.
For the motion there was an oral argument by Mr. James Corwin Fullerton.
Contra, there was an oral argument by Mr. Commodore Stephen Jackson.

Opinion:
Opinion by
Mr. Commissioner Slater.
1. At the hearing in this court a motion to dismiss the appeal was entered by plaintiff on the ground that the original testimony, and other papers in this cause, on which the decree of . the circuit court was based., had not been transmitted to the clerk of this court as required by Section 553, subd. 1, B. & C. Comp., and by Rule 1 of this court: 35 Or. 587 (37 Pac. -v). Before argument thereon defendants filed a counter motion, supported by an affidavit, for an order on the county clerk of Douglas County requiring him to complete the record by forwarding all the testimony and exhibits produced at the trial in the court below. A transcript in this ease was filed in this court on June 15, 1906, which, besides the pleadings, includes copies of the findings, the decree, notice of appeal and undertaking on appeal. No question is made by plaintiff that any of the necessary steps to perfect the appeal were omitted or were not taken in the time required by law to confer jurisdiction upon this court of the cause, and the filing of such a transcript here did confer jurisdiction. The filing of the testimony was not necessary to confer jurisdiction, and its absence would not destroy that jurisdiction, for there may be questions arising upon the pleadings to be tried on appeal, as well as whether the decree is supported by the pleadings and'the findings; but the absence of the testimony would prevent this court from trying the case de novo on the facts.
For appellants there was a brief and an oral argument by Mr. Commodore Stephen Jackson.
¡For respondent there was a brief over the names of C. I. Leavengood and Fullerton & Orcutt, with an oral argument by Mr. James Corwin Fullerton.
2. The plaintiff's motion, however, amounts to a suggestion of a diminution of the record, and the deficiency may be supplied on order at any time before the final disposition of the cause: B. & C. Comp. § 445. The motion, therefore, must be depied, and, the testimony having been received by the clerk •since the submission of the case, it should be ordered filed.
Motion Denied.