Court Opinion

ID: 3839984
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:09:03.775767+00
Date Added: 2024-06-11T13:04:55.276732
License: Public Domain

Rehearing denied January 26, 1926.                       ON PETITION FOR REHEARING.                             (242 P. 1112.)
For the facts in this case and the issues made by the pleadings, see our original opinion rendered on November 24, 1925, and reported ante, p. 107 (241 P. 62). In that decision, we discussed the case on the theory upon which it had been tried in the court below and upon the assignments of error. After hearing the evidence, the trial court found:
"The said deeds were given by the said John Peyree to the said J.B. Peyree as security, to secure the said J.B. Peyree in the payment of the moneys advanced *Page 122 
to the said John Peyree, and such deeds constitute mortgages; that at the time of said transfers, to wit, on the 3d day of November, 1920, and at the time said transfers were accepted by the said defendant, J.B. Peyree, said J.B. Peyree did not know that defendant John Peyree was insolvent, or that said defendant John Peyree intended thereby to create a preference, nor did said defendant J.B. Peyree have such reasonable cause to believe that the said John Peyree was insolvent or intended thereby to create a preference, nor did the said defendant J.B. Peyree at said time have sufficient knowledge or information to put him upon his inquiry as to the financial condition of the said John Peyree or as to his intention in making said deeds, and that the said J.B. Peyree, in accepting said deeds as security, acted in good faith."
The assignments of error relate to the admissibility of evidence, and to the findings set forth above.
Our discussion on the merits did not go beyond the assignments of error. For the purpose of this opinion, we shall assume that the petition is based upon an assignment of error involving Section 67e of the federal Bankruptcy Act (U.S. Comp. Stats., § 9651). Plaintiff not only attempted to prove that the father knew his son to be insolvent, but he undertook to prove that no consideration at any time passed from father to son for the conveyances. His contention was defeated, however, by the evidence, which clearly established a pre-existing and present valuable consideration. The testimony showed that the making and delivery of the deeds was the culmination of a contract long in existence.
Now, referring to the cause of suit based upon the alleged fraud of John Peyree: The plaintiff failed to prove as an essential element of his cause of suit *Page 123 
that the son made the conveyance to the father with the intent and purpose of defrauding creditors. Such proof is a prerequisite of the annulment of a conveyance of property on the ground that the transfer was made to defraud creditors within the meaning of Section 67e of the federal Bankruptcy Act: Coder v. Arts,213 U.S. 223 (53 L.Ed. 772, 16 Ann. Cas. 1008, 29 Sup. Ct. Rep. 436, 22 Am. Bankr. Rep. 15, see, also, Rose's U.S. Notes). To establish his cause, plaintiff placed each of the then codefendants upon the witness-stand. They failed to support his averments of fraud.
"When a party producing a witness calls him to the stand, he thereby represents him to the court as worthy of credit, or at least not so infamous as to be wholly unworthy of it." State v.Steeves, 29 Or. 85, 103 (43 P. 947, 952).
To like effect is Gowan-Lenning-Brown Co. v. Kingman (Or.),242 P. 351, decided by this court on January 12, 1926. We find a similar situation in the case of Chance v. Graham, 76 Or. 199
(148 P. 63). In that case the plaintiff called the defendant as a witness. Concerning such procedure, this court, speaking through Mr. Justice BURNETT, said:
"The plaintiffs called as their first witness the defendant Marion C. Young, thereby vouching for his credibility."
Under the federal Bankruptcy Act, deeds or mortgages executed within four months prior to the filing of a petition in bankruptcy are not prima facie fraudulent. The burden of proving that the transaction is fraudulent is upon the person instituting the suit to annul the transfer: Halbert v.Pranke, 91 Minn. 204 (97 N.W. 976, 11 Am. Bankr. Rep. 620). *Page 124 
In Coder v. Arts, 152 Fed. 943, 947 (82 C.C.A. 91, 15 L.R.A. (N.S.) 372), we find the following illuminating exposition of the provisions of Section 67e from the pen of Judge SANBORN.
"It is every intent to hinder, delay, or defraud creditors unlawfully only, not every intent to hinder or delay them, that avails to avoid a transfer made for a pre-existing debt under Section 67e. * * A transfer made in good faith to pay or to secure an honest antecedent debt by an insolvent within four months of the filing of a petition in bankruptcy by or against him constitutes no evidence of an intent on his part to hinder, delay, or defraud other creditors, within the meaning of Section 67e of the Bankruptcy Law, notwithstanding the fact that its necessary effect is to hinder and delay them, and to deprive them of the opportunity they otherwise might have had to collect their claims in full."
That case was appealed to the Supreme Court of the United States, where Mr. Justice DAY, in rendering the opinion, wrote:
"What we hold is that, to constitute a conveyance voidable under Section 67e, actual fraud must be shown." Coder v.Arts, 213 U.S. 223 (53 L.Ed. 772, 16 Ann. Cas. 1008,29 Sup. Ct. Rep. 436, see, also, Rose's U.S. Notes).
That the transfer of the real property involved herein was made by John Peyree to J.B. Peyree with the intent upon the part of John to defraud his creditors is not established by the evidence submitted by plaintiff.
The petition for rehearing is denied.
REHEARING DENIED.
McBRIDE, C.J., and BEAN and BELT, JJ., concur. *Page 125