Anderson v. Hultberg

• Decision Date: 07 January 1918
• Docket Number: 4837.
• Citation: 247 F. 273
• Parties: ANDERSON v. HULTBERG.
• Court: U.S. Court of Appeals — Eighth Circuit

247 F. 273

ANDERSON v. HULTBERG.

No. 4837.

United States Court of Appeals, Eighth Circuit.

January 7, 1918

Axel Chytraus, of Chicago, Ill., and Charles Blood Smith, of Topeka, Kan. (John J. Healy and E. Allen Frost, both of Chicago, Ill., on the brief), for appellant.

Harris F. Williams, of Chicago, Ill., and David Ritchie, of Salina Kan. (John Barton Payne, Silas H. Strawn, and Walter H Jacobs, all of Chicago, Ill., on the brief), for appellee.

Before SANBORN and CARLAND, Circuit Judges, and BOOTH, District Judge.

SANBORN Circuit Judge.

On September 7, 1907, the plaintiff below, Nels O. Hultberg filed a creditors' bill against Mrs. Friedborg A Anderson, the wife of Peter H. Anderson, founded on a judgment in favor of Hultberg and against Anderson for $264,708, rendered by the District Court of Dickinson county, Kan., on January 31, 1907, and upon executions thereon returned nulla bona, to avoid a deed to Mrs. Anderson made by the Northwestern Mutual Life Insurance Company for $12,500, dated December 26, 1899, recorded January 8, 1900, of land in Kansas called the Hafner farm, and a deed to Mrs. Anderson made by Gustaf A. Alstrom for $6,000, dated April 1, 1901, and recorded April 15, 1901, of land in Kansas called the Alstrom farm, and to subject these lands to the payment of the judgment against Anderson on the grounds (1) that Anderson bought these lands, caused them to be conveyed to his wife, and paid for them with the proceeds of a mining claim that he held in trust for Hultberg's assignor; (2) that Anderson bought and paid for the lands, and caused them to be conveyed to his wife, when he was indebted to the assignor of Hultberg for the proceeds of the mine and was insolvent, with the intent and purpose to defraud his creditors; (3) that he bought and paid for the lands, and caused them to be conveyed to his wife, with actual intent to hinder, delay, and defraud his creditors; and (4) that he caused the lands to be conveyed to Mrs. Anderson for himself and for his benefit, and that she has since held them in trust for him, and he has ever since been and still is the real owner thereof. Mrs. Anderson by her answer denied all the equities alleged in the bill, evidence was taken, there was a final hearing, and the court below rendered a decree for the plaintiff, Hultberg, on the ground that Anderson paid for the land with the proceeds of the mine, which he held in trust for the assignor of Hultberg.

Mrs. Anderson has appealed, and her appeal presents two questions: First, were the judgment against Anderson in the Kansas court, and an award and decree in Illinois on which that judgment was based, and the evidence or testimony in those cases, to none of which Mrs. Anderson was a party, or any of them, competent evidence against her of any of the essential facts requisite to establish the claim of Hultberg against her, except the fact that the Kansas judgment was rendered, and that at the time of its rendition, January 31, 1907, Anderson was indebted to Hultberg in the amount of $264,708; and, second, was the decree below sustained by sufficient competent evidence upon the merits of the issues?

A brief statement of the facts that are conceded or conclusively established and a short history of pertinent proceedings anterior to the Kansas judgment will render the discussion and decision of these questions more intelligible. In 1897 the Swedish Evangelical Mission Covenant of America, a corporation of Illinois organized for religious purposes and not for pecuniary profit, having its principal place of business in Chicago, was maintaining Hultberg at Chinik, in Alaska, as a missionary, and it sent Anderson, who had been a student with it in Chicago, to the same place as an assistant missionary and school-teacher, and paid his expenses of travel and a salary of $700 in goods a year. In the year 1898 gold was discovered near Chinik. In October of that year R.L. Price duly located, gave, filed, and recorded notice of location, and became the owner of placer claim No. 9 Above on Anvil Creek. On November 17, 1898, Price, for a recited consideration of $20, which was paid to the attorney in fact of the grantor by Peter H. Anderson, conveyed this claim to him. In the summer of 1899 Anderson extracted from this claim gold from which he derived a net income of $40,000, and from placer claim No. 2 Above on Anvil Creek, which he also owned, gold from which he derived a net income of $18,000. In the summer of 1900 Anderson extracted from the claim No. 9 a net income of about $175,000. In 1900 the Covenant made a claim that Anderson had acquired and held No. 9 and its proceeds in trust for it, but it never claimed that he so held No. 2 Above, but admitted that he was the owner of that claim, although it was originally located in his name in the autumn of 1898. Anderson denied that he had acquired or held No. 9 or its proceeds in trust for the Covenant, denied that it ever had any interest in it, and continued to work the mine himself, or by a California corporation which he controlled, until the year 1903, when Claes W. Johnson and the White Star Mining Company of Illinois secured from Anderson, or from his California corporation, a contract of purchase and went into possession thereof. Thereafter, and in the year 1903, the Covenant, for a recited consideration of $1, conveyed all its title and interest in No. 9 and in its proceeds, and all its claims against Anderson, to the plaintiff, Hultberg. In the same year Hultberg and Anderson made a written agreement to submit to three arbitrators all the claims of Hultberg, as successor of the Covenant, against Anderson, and all the latter's defenses and contentions, and to abide and perform the award of these arbitrators. The White Star Mining Company and Claes W. Johnson were parties to this agreement, but Mrs. Anderson was not. Much evidence and the testimony of many witnesses was introduced before the arbitrators, and their award, made on April 13, 1904, was that Hultberg was entitled to recover of Anderson $232,200, to be paid by him immediately. Thereafter, in a suit in the circuit court of Cook county, Ill., to which Hultberg, Anderson, and others were parties, a decree was rendered on June 13, 1904, whereby the court adjudged that the award was valid, and that Anderson pay to Hultberg $232,200 and interest from April 13, 1904. This decree is the cause of action, and the only cause of action, upon which the judgment of the Kansas court of $264,708, against Anderson, which was rendered January 31, 1907, was founded.

At the final hearing before the court below counsel invoked, and now in this court counsel for the plaintiff, Hultberg, invoke, the award, the decree of the Illinois court, the testimony of stenographers that certain witnesses testified to certain facts before the arbitrators, and the testimony of witnesses to statements of Anderson derogatory to the title of Mrs. Anderson to the land in controversy, which were made long after the deeds were delivered to Mrs. Anderson and recorded, as evidence against her that Anderson held claim No. 9 Above and its proceeds in trust for the Covenant at the time her deeds were made, that he was then indebted to the Covenant, that he paid for the land with moneys he held in trust for the Covenant, that the land was bought and conveyed to her by Anderson with intent to hinder, delay, and defraud his creditors, and that she has always held the land in trust for Anderson, and it has always been really his. The court below seems to have held that such evidence was competent to prove that Anderson held claim No. 9 and its proceeds in trust for the Covenant.

But it was indispensable to the maintenance of the plaintiff's suit that he should clearly prove that at the times the deeds to Mrs. Anderson were made in December, 1899, and April, 1901, not on January 31, 1907, when the Kansas judgment on which his suit is founded was rendered, Anderson held the title and the proceeds of claim No. 9 in trust for the Covenant, or that at those times he was indebted to the Covenant, and his payment for the lands deeded to Mrs. Anderson deprived him of the means to pay his just debts then existing, or that he bought the lands and caused them to be conveyed to his wife with the actual intent to hinder, delay, or defraud his creditors, or that she has always held them in trust for him and they have been really his. It is indispensable to the maintenance of a suit on a creditors' bill to avoid conveyances made or caused by the debtor before the judgment on which the creditors' suit is founded was rendered against the grantor as in fraud of the latter's creditors that the plaintiff prove the existence, at the times the conveyances were respectively made, of the trust, the indebtedness, or the actual fraudulent intent of the judgment debtor on which the plaintiff relies. Horbach v. Hill, 112 U.S. 144, 149, 5 Sup.Ct. 81, 28 L.Ed. 670; Bruggerman v. Hoerr, 7 Minn. 337, 343 (Gil. 264-269), 82 Am.Dec. 97; Burton v. Platter, 53 F. 901, 906, 907, 4 C.C.A. 95, 100, 101; Tunison v. Chamblin, 88 Ill. 378, 385; Mattingly v. Nye, 8 Wall. 370, 373, 375, 19 L.Ed. 380; Clark v. Killian, 103 U.S. 766, 768, 769, 26 L.Ed. 607.

The subsequent judgment against the debtor in an action to which the prior grantee was not a party or privy estops the grantee from denying that the judgment was rendered at the time specified in its record and that the grantor was at that time indebted to the judgment creditor in the amount therein stated, but it estops him no farther. Because such a prior grantee is not a party or privy to the subsequent judgment against his grantor in an action commenced after the grants were made, as in this case, and because 'no grantee can be bound by any...