MURRAY v. Donald N. Uthus, Real Party in Interest.

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District Court of Appeal, First District, Division 2, California.

Harold Donald MURRAY, Petitioner, v. SUPERIOR COURT IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, and Honorable Milton D. Sapiro, and Honorable Harry J. Neubarth, as Judges thereof, Respondents. Donald N. Uthus, Real Party in Interest.

Civ. 16413.

Decided: November 19, 1954

Frank J. Perry, George Olshausen, San Francisco, for petitioner. Dan L. Garrett, Jr., San Francisco, for respondents.

Petitioner herein, Harold Donald Murray, sought by a writ of certiorari a determination of the lawfulness of an order of civil arrest issued by respondent court on August 12, 1954.

On August 12, 1954, Donald N. Uthus filed an action upon common counts against petitioner for the sum of $10,124.89 in the Superior Court of the State of California, in and for the City and County of San Francisco. On the same date, plaintiff filed two affidavits in said action asking for an order of civil arrest of petitioner as defendant in said action. One affidavit, Exhibit ‘B’, executed by Donald N. Uthus in Washington, D. C., was dated August 6, 1954. Another affidavit, Exhibit ‘C’, was executed in San Francisco by William Stelter, a private investigator employed by plaintiff's San Francisco attorney.

Petitioner was arrested on August 12, 1954, in pursuance of the order of civil arrest issued on that date, and on August 16, 1954, his attorney made a motion to quash said order on the ground that the allegations in the supporting papers were insufficient to authorize the order. The motion to quash was heard and denied on August 16, 1954, and petitioner posted bail in the sum of $10,124.39, as specified in the order of civil arrest.

It is contended that the affidavits filed herein fail to show that Donald N. Uthus has a cause of action against petitioner, and that they fail to show that he removed or disposed of his property, or is about to do so, with intent to defraud his creditors within the meaning of Section 479(5) of the Code of Civil Procedure, or that he is about to depart from the State with intent to defraud his creditors within the meaning of Section 479(1) of that code. Petitioner maintains that the affidavits include statements based on information and belief without stating the facts upon which the information and belief are based, and hence are insufficient under Sec. 481, Code of Civil Procedure.

It is, of course, well established that where the supporting affidavits aver insufficient facts, the Superior Court is without jurisdiction to make an order of civil arrest. Ex parte Fkumoto, 120 Cal. 316, 321, 52 P. 726; Neves v. Costa, 5 Cal.App.2d 111, 115, 89 P. 860; Lay v. Superior Court, 11 Cal.App. 558, 560, 105 P. 775.

The affidavit of Donald N. Uthus, recited that affiant is in the export-import business in the City of Washington, D. C., and that in September 1952 he hired defendant Harold Donald Murray to work for him on a commission basis, agreeing to loan to him money for living and travel expenses during the time required for defendant to establish himself in the business, affiant to reimburse himself out of commission earned by defendant. From September 15, 1952 through December 30, 1953, affiant loaned to defendant the sum of $10,124.39 over and above all off-sets on account of commissions earned.

The affidavit then continues as follows:

‘Prior to defendant's employment with affiant, defendant and his wife had resided in the State of Virginia, and defendant had owned the family residence therein. During the month of May, 1954, defendant sold said home, and informed affiant that defendant received approximately $40,000.00, net, from the sale of said home. At or about said time, defendant booked passage upon the SS President Monroe, a ship owned and operated by the American President Lines, for himself and his wife, to depart from the City and County of San Francisco, State of California, on August 17, 1954, for a round-the-world trip, which said trip is due to return to the City of New York, State of New York, during the month of October, 1954; and

‘That affiant is represented by Byron N. Scott, Esquire, in Washington, D. C., and that at or about the time the sale of defendant's said family residence, said counsel, at affiant's request, conferred with defendant with regard to an accounting for, and repayment of, monies loaned to defendant by affiant. On said occasions, defendant stated that he could not discuss the matter at that time, but that he would call said counsel at an early date and discuss the matter. Defendant has failed and refused to ciscuss the matter further with said counsel, and has left Washington, D. C., and the State of Virginia, as hereinafter described; and

‘Following the sale of said family residence, affiant demanded of defendant that he make payment on account of said loans and defendant at said time stated to affiant that he would see what he could do. During the next meeting between affiant and defendant, which occurred during late June or early July, 1954, affiant again demanded payment on account of said loans, and on said occasion, defendant informed affiant that defendant had transferred all of his funds to his wife's name and that he was therefore unable to pay affiant; and

‘That during the month of June and to and including July 9, 1954, defendant's visits to affiant's offices became very infrequent, and were customarily made when affiant was absent therefrom. On or about July 7, 1954, affiant questioned defendant as to his plans, and on said occasion, defendant stated to affiant that so far as he knew, he would return to Washington, D. C., from his round-the-world trip and would pick up where he left off with regard to his employment with affiant; and that he would leave Washington, D. C., on July 15, 1954, to drive to the City and County of San Francisco, State of California, in order to arrive in time to sell his automobile prior to embarking upon the SS President Monroe on August 17, 1954. During said conference of July 7, 1954, affiant advised defendant that it was urgent that a discussion he held with regard to an accounting for, and repayment of, said loans to defendant, and defendant agreed that he would meet with affiant on the following day, July 8, 1954, to settle the matter. Defendant, however, did not appear for said meeting, and affiant instructed his counsel, Byron N. Scott, Esquire, to contact defendant. Said counsel tried without success to contact defendant, and July 9, 1954, affiant found a note in defendant's handwriting addressed to affiant which had been left at affiant's offices some time after the close of business on July 8, 1954, which read as follows:

“Dear Don:

“I have decided to leave a little sooner than I contemplated. Am enclosing all the keys for office and desk and have left everything as far as files are concerned, etc.

“As I told you the other day, I believe I will look for something to do out of Washington when I come back. I have made no plans, and have no idea where I will wind up. If we have another war, perhaps I will come back here.

“I know you disapprove of this trip and there has been considerable resentment in evidence around the office, that is one reason I have spent so little time there.

“In any event, I wish you the best of everything, and thank you for your many kindnesses.

“In the end I am sure it will be much better this way, and perhaps someday you will know the entire story of what prompted this action in (sic) my part.

“Sincerely, Don'

‘That prior to this time, affiant at no time was advised, or had any indication that defendant did not intend to return to his said employment with affiant at the termination of said trip; and affiant has been unable to locate or contact defendant since said time; and

‘That defendant has made application to the American President Lines to interrupt his said round-the-world trip at an Italian Port unknown to affiant, to permit himself and wife to travel in Europe for an indefinite period of time; and

‘That prior hereto, affiant has filed suit and said suit is now pending against said defendant in the Superior Court, in and for the County of San Francisco, State of California, for the recovery of said sum of $10,124.39, and a copy of said complaint on file herein is attached hereto, and made a part hereof; and that all of the allegations of said complaint are true; and

‘That based upon the foregoing facts, affiant fears, and believes, and therefore alleges upon the basis of such belief that defendant is about to depart the jurisdiction of this Court, and to depart from the State of California and from the Continental Limits of the United States with the intent to defraud his creditors; and that defendant has removed, disposed of, and concealed his property, and is about to remove said property from the United States with the intent to defraud his creditors; * * *’.

The affidavit of Stelter, the private investigator, simply states that he was employed by plaintiff's attorney, that on the night of August 9, 1954, defendant Murray registered at the St. Francis Hotel in San Francisco, and that affiant personally observed defendant in the St. Francis Hotel and in the offices of the American President Lines in San Francisco on August 11, 1954, and that defendant therefore was within the jurisdiction of the Superior Court of San Francisco.

Petitioner contends that the allegations of the affidavit alone are insufficient to show that a cause of action exists against defendant without incorporation of the complaint, for the affidavit does not allege that the debt is due and payable.

The complaint cannot be incorporated, it is contended, because it was filed in San Francisco on August 12, 1954, and the affidavit of August 6, 1954 made in the District of Columbia, falsely asserts that a copy of ‘the complaint on file is attached hereto and made a part hereof.’ Obviously, the statement in the affidavit, that the complaint was on file and the action pending, was false at the time it was made. The complaint had been filed, however, at the time the order for civil arrest was issued. If no complaint had been on file at the time of issuance of the order of arrest the court clearly would be without jurisdiction, for unless an action is pending, there can be no defendant against whom such an order can issue. There was the situation in Ex parte Cohen, 6 Cal. 318, where the order was held invalid.

Section 481, Code of Civil Procedure, requires that the affidavits must show that a cause of action exists. Peterson v. Nesbitt, 11 Cal.App. 370, 105 P. 135. The affidavit herein attempts to incorporate the allegations of the complaint by reference. On the date on which the affidavit is sworn to, no complaint was on file and no action was pending. It is true that a copy of the complaint was attached to the affidavit and it was averred that all of the allegations of said complaint were true. It is the copy attached which the affidavit attempts to incorporate by reference. Petitioner notes that in Ex parte Howitz, 2 Cal.App. 752, 84 P. 229, it was held that the affidavit could incorporate the allegations of the complaint by stating that the allegations of the complaint are true, but argues that here the affidavit purports to incorporate a non-existent complaint. However, the affidavit clearly states that it is the copy of the complaint attached to the affidavit which is the document incorporated, and this document undoubtedly shows that a cause of action exists.

But even if the affidavit is considered without reference to the complaint, it states facts sufficient from which a judge could determine that a ‘sufficient cause of action exists'. It is alleged that the loans from affiant to defendant totalled $10,124.39 over and above all off-sets; that affiant demanded payment in late June or early July 1954 of said loans, and that defendant stated that he had transferred all of his funds to his wife's name and that he was unable to pay affiant; that on July 7, 1954 affiant stated to defendant that it was urgent that they have a discussion in regard to an accounting for and repayment of the loans, whereupon defendant agreed to meet with affiant the following day; that defendant did not keep the appointment, but left a note for affiant stating that he was leaving on his trip sooner than he had contemplated, and that affiant had not been able to locate or contact defendant since.

It is earnestly contended by petitioner that the affidavits are insufficient under Sec. 479(1), Code of Civil Procedure, which allows civil arrest in an action for the recovery of money or damages on a cause of action arising upon contract express or implied ‘when the defendant is about to depart from the state with intent to defraud his creditors.’ Respondent argues that the fact that an affidavit contains some hearsay does not vitiate the entire affidavit if there are otherwise sufficient allegations of legally admissible evidence contained therein. The fact of the making of the loans are within affiant's own knowledge; the statements to affiant that petitioner had sold his home for $40,000, and that he had transferred all his funds into his wife's name are legally admissible evidence, as are the statements of petitioner to affiant that he planned to leave Washington, D. C. on July 15, 1954, on a round-the-world trip, leaving San Francisco on August 17, 1954 on the President Monroe, and that he would return from this trip to his employment with affiant. Also admissible are the statements in the letter that petitioner was leaving earlier than he had planned; that he would probably look for work outside of Washington upon his return. Admissible too, is the fact that defendant did not keep his appointment with affiant. Respondent contends that this is sufficient evidence to justify the conclusion that petitioner was guilty of a design to mislead respondent and to defeat any attempt on his part to institute suit in Washington, D. C., before petitioner's departure.

If sufficient facts within the knowledge of affiant are alleged which would authorize the arrest under the statute, it would seem to be immaterial that some of the statements in the affidavit are conclusions of the affiant. Ex parte Keene, 34 Cal.App. 263, 266, 167 P. 194. It would seem, therefore, that hearsay statements will not vitiate the entire affidavit if it otherwise contains sufficient statements of fact within the knowledge of affiant to make out a case of intent to defraud. We do not believe that Ex parte Fkumoto holds that some hearsay will vitiate the affidavit, but rather that the allegations of the essential facts from which the belief of the intent to defraud must be deduced, cannot rest on hearsay statements.

An averment in the language of the statute is sufficient without a statement of the evidentiary facts from which the intent is to be deduced if the affidavit is made in positive form. Matter of Caples, 26 Cal.App. 786, 148 P. 795; Sec. 481, C.C.P. But the affidavit in the present case contains an averment of intent to defraud creditors based upon information and belief, and must therefore state sufficient legally admissible facts which will induce in a reasonable mind the belief that a fraud was intended. 5 Cal.Jur.2d 166, § 13; Southworth v. Resing, 3 Cal. 377. In Neves v. Costa, 5 Cal.App. 111, 117, 89 P. 860, 862, a case wherein the affidavit was held insufficient, it was said that such facts and circumstances within affiant's knowledge must be set forth as will authorize the officer who is to issue the warrant to find such a state of facts as required by the statute to authorize the proceeding, and that if affiant himself is not personally cognizant of such facts and circumstances he must procure the affidavit of one who is personally cognizant of them, as such warrants cannot be issued upon hearsay “nor upon any statement, however positive, founded upon hearsay.”

We find that but very few cases under Sec. 479(1), Code of Civil Procedure, have reached the appellate courts, for the section has been cited in only five cases. The first was Ex parte Fkumoto, 1898, 120 Cal. 316, 52 P. 726, in which the affidavit was held insufficient. Fkumoto v. Marsh, 1900, 130 Cal. 66, 62 P. 303, 509, was a false arrest case arising out of the earlier case. It held that an action for false imprisonment would lie against a defendant who in a civil action caused the arrest on his alleged debtor on an affidavit so radically defective as not to bring the case within the provisions of the statute. The cases of Neves v. Costa, 5 Cal.App. 112, 89 P. 860, where the affidavit was held insufficient, and Matter of Caples, 26 Cal.App. 787, 148 P. 795, where the affidavit was held sufficient, have been referred to earlier herein. In Carradine v. Carradine, 1946, 75 Cal.App.2d 775, 171 P.2d 911, the only recent case, the order of arrest had been vacated, and the case in reference to that point simply held that the order vacating the prior order of arrest was non-appealable.

A study of the cases of Ex parte Fkumoto and Neves v. Costa, supra, leads to the conclusion that the courts are very cautious in the interpretation of affidavits in this type of case. Where the acts of defendant are equivocal, the courts will place the construction of innocence upon them rather than the construction of fraud. Arrest for debt has been prohibited by constitutional provision in any civil action except in cases of fraud. Cal.Const. Art. I, § 15. “Where, in a civil action, the plaintiff desires, so to speak, to enforce his claim at the outset by arrest and imprisonment of the defendant—in other words, to have execution before obtaining judgment, it is not too much to ask him to present such evidence as alone would be receivable upon the trial of the action to justify an ordinary judgment for money.” Neves v. Costa, supra; and, see, In re Miller, 60 Cal.App. 39, 42, 212 P. 54; Ex parte Gillett, 47 Cal.App. 107, 190 P. 209.

It is noteworthy that the affidavit of respondent herein does not aver that defendant has no property subject to attachment at his place of residence or that respondent made any efforts to ascertain whether there is other property belonging to defendant. There is the statement that defendant said he had transferred all of his funds to his wife's name and was therefore unable to pay, but that statement does not negative the existence of other property. It is not alleged that defendant was left insolvent by the transfer of these funds. Apparently defendant was still in possession of an automobile, since he told respondent that he would drive it to San Francisco and sell it prior to embarking on the ship. The affidavit really shows only that respondent was trying to secure payment of the alleged indebtedness out of the proceeds of the sale of the home, and discloses nothing further as to what property petitioner possessed, and makes no averment that there is no other property or that any search has been made.

The fact that petitioner is taking a round-the-world trip leaving August 17, 1954, and returning to the United States on some date in October, 1954, is not evidence of fraud. If petitioner were leaving the country with no plan to return in the near future, such inference might be justified. The averment that defendant ‘has made application to the American President Lines to interrupt his round-the-world trip at an Italian Port unknown to affiant, to permit himself and wife * * * to travel in Europe for an indefinite period of time’ might be construed as an attempt to evade creditors, but the averment as it appears in the affidavit is clearly hearsay, and must be disregarded.

The averments in the affidavit that might point toward an attempt to evade his creditor is the statement that he agreed to meet with affiant on July 8 and did not keep the appointment, and the statement in petitioner's letter to affiant that he had decided to leave sooner than contemplated. Affiant states generally that petitioner did not keep the appointment. No details are given. It is not shown whether the appointment was at affiant's office, his lawyer's office, or at some other place. It does not show what efforts affiant's counsel made to locate petitioner. Although affiant states that he found petitioner's note which had been left after office hours, it is not shown how he secured this information. Affiant does not state whether or not he was in his office at all on July 8, nor whether or not petitioner was there at all during office hours.

The affidavit shows that petitioner informed respondent of his plans for the round-the-world trip, that when he made a change of a few days in the date of his departure from Washington, he informed respondent of that fact. He arrived in San Francisco as he had informed respondent that he would, and registered under his own name at a well known hotel. Had petitioner used a false name or attempted to take a ship from some other port than that which he had disclosed to respondent, there would be a basis for the inference of fraud.

We do not think the affidavit herein meets the requirements of Sec. 481, Code of Civil Procedure, for sufficient facts are not alleged which justify the conclusion that the case is one which falls under subdivisions (1) or (5) of Sec. 479, Code of Civil Procedure.

That the remedy sought herein is rarely granted is demonstrated by the paucity of cases under subdivisions (1) and (5) of the aforementioned section which have reached the appellate courts. Apparently there have been only two cases in which the appellate courts have upheld a civil arrest under these two subdivisions. In re Crane, 26 Cal.App. 22, 25, 145 P. 733; Matter of Caples, 26 Cal.App. 786, 148 P. 795. Most of the cases upholding civil arrest have arisen under subdivision (4) where defendant has been guilty of fraud in making the contract or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought.

We conclude, therefore, that we should annul the order of civil arrest made on August 12, 1954, against Harry Donald Murray, the petitioner herein.

Order annulled. Petitioner's bail is exonerated.

KAUFMAN, Justice.

NOURSE, P. J., and DOOLING, J., concur.