Case Name: OTTO GRUNSKY, Assignee, etc., Appellant, v. A. PARLIN, Respondent
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1895-11-26
Citations: 110 Cal. 179
Docket Number: Sac. No. 8
Parties: OTTO GRUNSKY, Assignee, etc., Appellant, v. A. PARLIN, Respondent.
Judges: 
Reporter: California Reports
Volume: 110
Pages: 179–182

Head Matter:
[Sac. No. 8.
Department Two.
November 26, 1895.]
OTTO GRUNSKY, Assignee, etc., Appellant, v. A. PARLIN, Respondent.
Insolvency—Transfer out of Usual Course of Business—Presumption of Fraud—Rebuttal—Conflicting Evidence.—In an action by an assignee in insolvency to recover merchandise transferred by the insolvent to the defendant, the fact that the transfers were not made in the ordinary course of business of the insolvent renders them prima facie fraudulent; but the presumption of fraud is subject to rebuttal, and where there was evidence on behalf of the defendant which tended to show that he had no information of the insolvent condition of the grantor, and that the prices paid and agreed to be paid were the full and fair value of the property purchased, and that he has offered to make deferred payments to the assignee, such evidence, if believed, is sufficient to rebut the presumption of fraud; and where the evidence is conflicting, the credence to be allowed to the evidence for the defendant is-for the trial court to determine, and a decision by the trial court that-the defendant made his purchases in good faith and without fraudulent, intent, and for a sufficient consideration, will not be disturbed upon appeal.
Id.—Fraudulent Intent of Vendor — Omission to Find.—Where the-findings exonerate the vendee of the charge of fraud, the intent of the-vendor becomes immaterial, and an omission to find as to whether the insolvent was guilty of a fraudulent intent in the transfer to the vendeeis not an omission to dispose of a material issue.
Id.—Fraud of Seller—Innocent Purchaser.—A transfer by an insolvent debtor cannot be vacated because of the fraud of the seller in which the purchaser had no part, and of which he had no notice.
Appeal from a judgment of the Superior Court of the County of San Joaquin and from an order denying a new trial. Ansel Smith, Judge.
The facts are stated in the opinion.
Minor & Ashley, and James H. & J. E. Budd, for Appellant.
The transfer was fraudulent, being out of the usual course of business. (Washburn v. Huntington, 78 Cal. 576.) The court having found that the sales were made-out of the usual and ordinary course of business, such finding imports notice of insolvency to the purchaser,, and the court erred in failing to find as to whether the transfer was made by the insolvent in contemplation of insolvency to prevent his property from coming to his assignee in insolvency. (Wait on Fraudulent Conveyances, sec. 376; Ohleyer v. Bunce, 65 Cal. 544; Washburn v. Huntington, supra; Godfrey v. Miller, 80 Cal. 425.) The fact that the defendant paid a valuable consideration is immaterial, as the law requires good faith as well as a valuable consideration. (Blennerhassett v. Sherman, 105 U. S. 100; Kerr on Fraud, sec. 200; Wait on Fraudulent Conveyances, sec. 207.)
Nicol & Orr, for Respondent.
The mere fraudulent intent of the insolvent alone,, not participated in by the purchaser, cannot defeat the. conveyance, and the fact that shortly after the sale the vendor was adjudged an insolvent does not affect the purchaser’s rights. (Merchants’ Nat. Bank v. Northrup, 22 N. J. Eq. 58; Cohen v. Knox, 90 Cal. 273; Priest v. Brown, 100 Cal. 629.)

Opinion:
Britt, C.
Hull was a dealer in stationery and musical instruments. His voluntary petition in insolvency was filed June 16, 1893, and in due course plaintiff was chosen his assignee. At sundry times within three days next before said June 16th, Hull sold to defendant certain pianos and organs, and notes and other contracts previously taken by him in the course of business with his customers; the amount of the sales to defendant was thirteen hundred and eighty-five dollars, of which six hundred and fifty-six dollars was paid in cash, and by agreement the sum of seven hundred and twenty-nine dollars was to be subsequently paid in installments. Plaintiff brought this action to set aside such sales, alleging that the same were made to prevent the coming cf the property to the possession of the assignee, and its ratable distribution among Hull's creditors, and to defeat the objects of the Insolvent Act of 1880. The trial was by the court, which found that the defendant made his purchases in good faith, without the intent charged and for sufficient consideration; defendant had judgment accordingly. Appellant urges that the findings are unsupported by the evidence.
The transfers in question were not made in the ordinary course of the business of Hull, and hence were prima facie fraudulent (Insolvent Act, sec. 55); there was also evidence of other circumstances tending to cast suspicion on them. But on behalf of defendant there was evidence which tended to show that he had no information of Hull's insolvent condition; that the prices paid and agreed to be paid were the full and fair value of the property he purchased; that he has offered to make to the assignee the payments deferred under his arrangements with Hull; and that his conduct, speaking generally, was not inspired by any fraudulent motive. The presumption of fraud was subject to rebuttal (Bernheim v. Christal, 76 Cal. 567); and, though the evidence in some parts wás sharply conflicting, yet there was sufficient, if believed, to rebut such presumption; what credence should be allowed to it was a matter for the trial court to determine.. These remarks apply as well to the choses in action assigned -to defendant as-to the pianos and organs, though appellant argues that the facts were so different regarding the former that as to them, at least, he should have had judgment.
It is also contended that in failing to find whether Hull entertained the fraudulent intent alleged in the complaint the court omitted to dispose of a material issue. But, since the findings exonerated the vendee of the charge of fraud, the intent of the vendor ceased to be of any consequence in the case; a transaction of this nature cannot be vacated because of the fraud of the seller in which the purchaser had no part, and of which he had no notice. (Merchants' Nat. Bank v. Northrup, 22 N. J. Eq. 58.)
The judgment and order appealed from should be affirmed.
Belcher, C., and Searls, C., concurred.
For the reasons given in the foregoing opinion the judgment and order appealed from are affirmed..
McFarland, J., Henshaw, J., Temple, J.
Hearing in Bank denied.