Opinion
Department One
Appeal from a judgment of the Superior Court of Santa Clara County, and from an order refusing a new trial.
COUNSEL:
Hiram D. Tuttle, and John Reynolds, for Appellant.
T. H. Laine, for Respondent.
JUDGES: Works, J. Fox, J., and Paterson, J., concurred.
OPINION
WORKS, Judge
[22 P. 405] The only question presented by the appeal is, whether the answer of the defendant and the findings of the court show that the conveyance of the property in controversy to the plaintiff was fraudulent as against the creditors of his grantor. The answer alleges: "Defendant further alleges, upon and according to his information and belief, that heretofore, to wit, on the fourth day of July, 1885, Serefino Albertini, hereinbefore mentioned, was the owner and in possession of all the property sued for in this action, described in the complaint herein; and that he was then justly indebted to divers persons in large sums of money, and, among them, to Attilio Agustini, to whom he was indebted in the sum of $ 387.85, and to whom he is now justly indebted in a large amount, to wit, in the sum of $ 955.94, the judgment hereinbefore mentioned and referred to; that the plaintiff herein and the said Serefino Albertini, with a full knowledge of said indebtedness of said Albertini to said Attilio Agustini and others, thereafter, and on or about the eighteenth day of July, 1885, for the purpose of hindering, delaying, and defrauding the said Attilio Agustini and the other creditors of said Serefino Albertini in the collection and recovery of their just debts and claims against the said Albertini, made a pretended sale and transfer of the whole of said personal property (seized as aforesaid) from said Albertini to the plaintiff herein; that at the time of said transfer said plaintiff knew that said Albertini was insolvent; and defendant avers that said transfer was made with the intent on the part of plaintiff and said Albertini to hinder, delay, and defraud the said creditors of said Albertini, including said Attilio Agustini; and he further avers that said Serefino Albertini, at the time of said pretended sale and transfer to the plaintiff herein, had the possession and control of all of said personal property seized by defendant as aforesaid; and he avers that said sale and transfer was not accompanied by an immediate delivery of said property, nor followed by an actual or continued change of possession thereof." The court found on this issue as follows: "That on said eighteenth day of July, 1885, said Serefino Albertini made a sale to the plaintiff of his said leasehold interest, and of his right and title to all said property sued for in this action, except said ninety-six cheeses herein, and then and there delivered said property so sold to the plaintiff herein, all of which was situated on said leased lands; that said sale was made with the intent to hinder, delay, and defraud the creditors of said Albertini on the part of both of said parties thereto, and especially to hinder, delay, and defraud the said Attilio Agustini and those who assigned their demands to him, as hereinbefore stated; that said sale involved and comprehended all the property of said Albertini, and left him without any visible property." It is contended by the appellant that the answer stated nothing more than the conclusion that the conveyance was made to hinder and defraud creditors, and not the facts constituting such fraud. It is well settled that in pleading fraud it is not sufficient to allege it in general terms, and that the facts constituting the fraud must be stated. (Pehrson v. Hewitt , 79 Cal. 594; City of Oakland v. Carpentier , 21 Cal. 642; Castle v. Bader , 23 Cal. 76.) The only fact alleged in the answer sufficient to avoid the transfer was, that the sale "was not accompanied by an immediate delivery of said property, nor followed by an actual or continued change of possession thereof," and the findings do not support this allegation. Where a creditor attacks a transfer of property made by his debtor on the ground that such transfer was made to defraud, hinder, or delay creditors, facts must be alleged showing that the conveyance was made in such manner and under such circumstances as to have that effect. Therefore, it must appear that at the time the conveyance was made the debtor had not other property subject to execution out of which his debts could be satisfied. (Evans v. Hamilton , 56 Ind. 34; Deutsch v. Korsmeier , 59 Ind. 373; Pfeifer v. Snyder , 72 Ind. 78.) This allegation is necessary to show that the conveyance was in fact fraudulent as against the creditors. If the debtor has other property subject to execution sufficient to satisfy his indebtedness, the conveyance cannot amount to a fraud on his creditors. And where the attempt is made to set aside a conveyance on such grounds, it must appear from the complaint that at the time the action is commenced the debtor has not other property sufficient to satisfy his debts. (Bruker v. Kelsey , 72 Ind. 51; Sherman v. Hogland , 73 Ind. 472.) This is for the reason that the conveyance, although made for the purpose of defrauding creditors, is valid as between the parties, and cannot be set aside, unless it appears to be necessary for the protection of the creditor, and no such necessity exists if at the time he commences his action there is other property of the debtor out of which his debt can be made. In this case it should have been alleged, for a like reason, that at the time of the levy of the execution under which the defendant attempted to justify his possession of the property, there was not other property of the debtor subject to such execution sufficient to satisfy the debt for which the levy was made. In the answer before us no such allegations are to be found. The court found that the transfer left the debtor without visible property, but this was a finding outside of the issues. There is no direct allegation that at the time the conveyance was made, or at any time subsequent thereto, the debtor did not have other property sufficient to satisfy his debts, nor is it alleged that the conveyance was without consideration. If full consideration was paid for the property, the creditors were not defrauded, and unless the grantee of the property had notice of the intended fraud of the debtor, he would be protected, having paid a valuable consideration. The only allegation of fact tending to show knowledge on the part of the plaintiff that the conveyance was for the purpose of defrauding creditors was, that [22 P. 406] he knew at the time that his grantor was insolvent. This was not sufficient, as there is no reason why an insolvent debtor may not convey his property for full value, which may have been the case here. It was not sufficient to characterize the conveyance as pretended and fraudulent (Pehrson v. Hewitt , 79 Cal. 594), and this was all that was done, except for the allegation of non-delivery, which, as we have said, was found against the defendant. We have in this case, as in many others, found it difficult to separate the different counts of the pleadings, and desire to suggest to attorneys that if the several counts of the pleadings were consecutively numbered in all cases, the practice would be much improved.
The judgment and order are reversed, and cause remanded for a new trial, with instructions to the court below to allow the parties to amend their pleadings.