OWINGS v. LAUGHARN

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District Court of Appeal, Second District, Division 3, California.

OWINGS v. LAUGHARN.*

Civ. 13278.

Decided: May 04, 1942

Zuckerman & Stein, Edward K. Zuckerman, and Arthur Edmund Stein, all of Los Angeles, for appellant. John C. Kleber, of Los Angeles, for respondent.

The defendant is the trustee in bankruptcy of the plaintiff's husband and as such trustee claims an interest in certain real property on the ground that a transfer thereof by the husband to the plaintiff is void as against defendant for various reasons. Plaintiff brought this action against defendant to quiet her title to the real property in question. Defendant filed an answer and a cross–complaint setting up his various claims of invalidity of the transfer to plaintiff. From a judgment against him he appeals.

All of defendant's claims that the transfer made by plaintiff's husband to plaintiff is void as to him require, as an essential foundation, the fact that the husband was insolvent at the time he made the transfer. This fact was alleged in the cross–complaint, but it was denied in the answer thereto, and the court found against the defendant on the issue thus made. We find in the evidence no reference to this fact of insolvency. Examination of the pleadings discloses allegations of the cross–complaint, not denied and therefore to be taken as true, that at the time of the transfer, June 19, 1939, and long prior thereto, the husband owed more than $1,800 to his creditors (not saying how much more), that he has ever since been so indebted, and the claims against his estate exceed $1,800; that the petition in bankruptcy upon which he was adjudicated a bankrupt was filed July 11, 1939; and that “there are no assets of such bankrupt estate other than” the property so transferred. A cross–complaint is for many purposes regarded as the beginning of an entirely new action and the issues presented upon it are entirely separate and distinct from those upon the original complaint and answer (Pacific Finance Corp. v. Superior Court, 1933, 219 Cal. 179, 182, 25 P.2d 983, 90 A.L.R. 384); hence the allegation just quoted must be deemed to speak as of the date the cross–complaint was filed, March 20, 1940. These allegations show that when the transfer was made the husband owed $1,800 and that nine months later his estate in bankruptcy had no assets unless the transferred property could be recovered. This is not enough to show that the transfer rendered him insolvent. It does not exclude the possibility that he had $1,800 or more in other property at the time of the transfer which has since been expended or lost. It may be that the adjudication of bankruptcy should be regarded as establishing the husband's insolvency when the petition was filed, July 11, 1939; but if so, this does not show that such insolvency existed nearly a month earlier, when the transfer attacked was made. Many a man has become insolvent in a period of time even shorter than this. It is therefore unnecessary to consider any of the argument based on the assumption of insolvency.

The judgment is affirmed.

SHAW, Justice pro tem.

SCHAUER, P. J., and SHINN, J., concurred.