Court Opinion

ID: 6641452
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:45:28.796513+00
Date Added: 2024-06-11T15:59:15.029800
License: Public Domain

GILBERT, Circuit Judge
(dissenting). The court made no finding of fact. Confronted upon the one hand with the positive testimony of witnesses who had knowledge of the facts, and upon the other by circumstantial evidence apparently inconsistent therewith, the court was unable to decide that the one outbalanced the other, and rendered a decree for the appellee upon the ground that the appellants had failed to sustain the burden of proof. Upon a careful consideration of the testimony I am wholly unable to assent to the proposition that the evidence so offered upon the part of the respective litigants stands in equilibrio. The witnesses for the appellants, while in the main they were interested parlies, are unimpeached, and presumably are reputable persons entitled to credit. Their testimony is positive and direct, and they had first-hand knowledge of the matters of which they testified. Their evidence should receive credence as against the suspicious circumstances which are relied upon by the appellee, and which, for the most part, are explained.
Warren R. Porter was indebted to the Porter Company on an open account, which had been carried upon the company’s books since 1913. It is not disputed that during, that period ho paid interest thereon, and it is shown that his last payment covered the interest to December 12, 1919. There is nothing improbable, or even suspicious, in the testimony that on January 16, 1920, he executed a note in payment of the account, or that in so doing he dated the note as of December 22, 1919, to which date the interest had been paid. It is not incredible oír *480improbable that in so doing he inadvertently wrote the current year 1920, instead of 1919. It is a significant fact, however, that on discovering the mistake he corrected it by drawing a pen through the 1920 and inserting above it the figures “1919.”
It is the contention of the appellee that the note was «drawn on December 12, 1920, and was thereafter fraudulently altered, so as to appear to have been made a year earlier. Two circumstances render this contention éxtremely improbable. In the first place, the date of December 12, 1920, fell on a Sunday, and it is not supposable that a promissory note would have been made on that date; in the second place, if the note was changed with a fraudulent intent, it is not conceivable that it would have been done by altering the date of the written instrument. The commonest impulse of prudence would have led to the execution of a new note. There is abundant corroborating evidence that the note was made long prior to December 12, 1920, and must have been made early in January of that year. The testimony of Warren R. Porter and the manager, the secretary, and the bookkeeper of the company was all to the effect that on April 26, 1920, Warren R. Porter pledged to the Porter Company the shares of stock in controversy here, and at or about the same time the open account of Warren R. Porter was changed on the company’s books to bills receivable. I do not find it a suspicious circumstance that the entry of the indebtedness as a bill receivable was made originally on May 25, as of the date of April 30, 1920. The testimony, of the bookkeeper apparently a candid witness is distinct and positive that the entries were made prior to June 1, 1920, and strong corroborative evidence of her statement is found'in the sequence of the vouchers of the Porter Company. Voucher No. 2344 was entered May 15,1920, voucher No. 2346 was entered June 1, 1920, and the intermediate voucher, No. 2345, which represents the entry of the $19,000 note as a bill receivable, must have been entered at an intermediate date, and certainly upon some date between May 15 and June 1.
One of the circumstances relied upon by the appellee is the failure of the Porter Company to list the note as a solvent credit in its return of taxable property possessed by it on the first Monday in March, 1920. That failure it seems to me is void of significance. On that date the note had not been entered upon the account of bills receivable. The manager of the Porter Company, who made the return, testified that it was never the custom to make returns of debts due, such as book accounts, and it was not the custom for the assessors to make inquiry as to debts due from others. “All they are interested in is the property enumerated on the sheet there.” The sheet so referred to enumerated only items of real estate, and the manager testified that the sheet with the real estate listed thereon was made out and presented by the assessor with "the question, “All of this is the property of John T. Porter Company?” to which the answer was returned: “Yes, it is.” The fact, therefore, that the $19,000 note was not included in the return has no .probative value to show that the note had not then been made; for,, if it had not then been made,, the obligation to list the $19,000 open account item would have been as great as an obligation to list a note for that amount. As a matter of fact, all stocks, moneys, and bank credits of the Porter Company were omitted from the tax return.
Attention is directed to Warren R. Porter’s oaths of January, 1921, and January, 1922, as director, of the Pajaro Valley Banks to the effect that he owned on those dates shares of stock of the par value required by the Bank Act, and that the same were not hypothecated or in any way pledged as security for any loan or debt. But those oaths . seem to me to have an effect contrary to that which is claimed for them. If at those dates Warren R. Porter had not yet pledged the shares in controversy here, those shares would have been sufficient to qualify him as director; but the evidence shows, and it is not disputed, that in order to qualify him" to take the oath of director on each of those dates .he procured from Pfingst the transfer of ten shares belonging to the latter.
The fact that a dividend declared on the shares of stock in July, 1920, was paid to Warren R. Porter, and not to the pledgee, is referred to as indicating that at that date the shares had not been pledged. No reference was made to dividends in the contract by which the shares were pledged., Whether or not Porter was aware of the law. that all dividends were payable to the. pledgee does not appear. The payment to him charged him therewith as trustee for the pledgee (4 Thomp. Corp. § 4238), and the fact that he received it has but little, value as evidence.
Perhaps the strongest circumstance tending to sustain the appellee’s contention is that on October 2, 1920, the manager of the. Porter Company answered the, appellee’s, *481garnishment, stating that there was on the books of the Porter Company one share of stock in the name of Warren R. Porter, and that no funds were duo him by the company; whereas, on March 21, 1921, answering a later garnishment the manager stated that the Porter Company owned by way of pledge the shares of stock pledged as security for Warren R. Porter’s note. To this it is to be said that as a matter of fact, if the shares had then been pledged, the Porter Company had at neither of those dates any property of Warren R. Porter which could have availed the appellee by the service of its writs. The shares of stock so pledged were of considerably less value than the sum which they were pledged to secure, and it is not unreasonable to assume that for that reason the manager may have answered Ihe first writ as ho did.
As against the direct testimony of unimpeached witnesses facts eannot be established by circumstantial evidence, even in a civil action, unless the circumstances are of such a. nature and are so related to each other that no other conclusion can fairly or reasonably be drawn from them. Here the circumstances fall far short of! that tost. They do not rise above the rank of suspicious incidents.