Baird v. Holie

Decision Date01 August 1931
Docket Number5941
Citation237 N.W. 786,61 N.D. 280
CourtNorth Dakota Supreme Court

Appeal from the District Court of Sargent County Hutchinson, J.

Reversed in part and affirmed in part.

J E. Hendrickson and C.G. Dosland, for appellants.

To set aside a transfer of property on the grounds that the transfer was fraudulent, it must be proven that the transferrer and the transferee co-operated to consummate the fraud. Bank of Sanborn v. France, 49 N.D. 1, 177 N.W. 375; Paulsen & Co. v. Ward, 4 N.D. 100, 38 N.W. 792; Salemonson v. Thompson, 13 N.D. 182, 101 N.W. 320; Dalrymple v. Security Loan & T. Co. 9 N.D. 306, 83 N.W. 235; Stevens v. Meyers, 14 N.D. 398, 104 N.W. 529.

Transactions between parties closely related should be carefully scrutinized but are not presumptively fraudulent. Hohaus v. Argersinger, 58 N.D. 704, 227 N.W. 197; Armacoast v. Lindley, 116 Ind. 295, 19 N.E. 138; Stickney v Stickney, 131 U.S. 227, 33 L. ed. 136, 9 S.Ct. 677; Lyle's Estate, 11 Phila. 64; Bartlett v. Wright, 29 Ill.App. 239; Berry v. Wiedman, 40 W.Va. 36, 20 S.E. 817.

Suspicious circumstances alone are not equivalent to proof of fraud. First Nat. Bank v. Mensing, 46 N.D. 184, 180 N.W. 58; Finch, Van S. & McC. v. Styer, 51 N.D. 148, 199 N.W. 444; Tomlinson v. Farmers & M. Bank, 58 N.D. 217, 225 N.W. 315; Rasmussen v. Chambers, 53 N.D. 648, 204 N.W. 178; Johnson v. Spoonheim, 19 N.D. 191, 123 N.W. 830.

As between a creditor and one claiming title to property under the grantor it certainly cannot be that the latter can show himself a bona fide purchaser for value by self-serving declarations of the grantor as to the object and purpose he had in making the deed, no matter when made. Johnson v. Burks, 103 Mo.App. 221, 41 L.R.A.(N.S.) 3, 77 S.W. 133; Tucker v. Tucker, 32 Mo. 464; Harwick v. Weddington, 73 Iowa 300, 34 N.W. 868.

Charles S. Ego, for respondent.

Transactions between husband and wife are always to be scrutinized very closely. 27 C.J. para. 718; Meighan v. Chandler, 20 N.D. 238, 126 N.W. 992; Stevens v. Meyers, 14 N.D. 398, 104 N.W. 529; Johnson v. Rutherford, 147 N.W. 390; Mace v. Roberts (Wis.) 72 N.W. 866; Glenn v. Glenn, 17 Iowa 493; Kaine v. Weigley, 22 Pa. 179; Holler v. Amodt, 31 N.D. 11, 153 N.W. 465; Isenburg v. Goldsmith, 113 P. 1127; Pom. Eq. Jur. paras. 1040, 1049; Walston v. Smith, 70 Vt. 19, 39 A. 252; Strimpfler v. Roberts (Pa.) 23 A.L.R. 1516, 57 Am. Dec. 606.

Burr, J. Christianson, Ch. J., and Nuessle, Birdzell, and Burke, JJ., concur.


During all of the time involved herein the defendants were husband and wife. In 1902 three contracts for sale of three quarter sections of school lands -- being part of the land involved herein -- were executed with the defendant R. M. Holie as stated purchaser, the initial payments totaling $ 1952.00. Thereafter deeds were issued to R. M. Holie. The remainder of the land involved -- three hundred and twenty acres -- was also held in the name of the same defendant.

The Farmers State Bank at Gwinner, in which the defendant R. M. Holie was a stockholder, became insolvent in October 1927 and the plaintiff is now the receiver.

Ever since 1919 the defendants have been residents of Minnesota and in September 1928 the defendant R. M. Holie conveyed all of the eight hundred acres of land to his co-defendant Clara Holie, the deed being duly recorded.

In March 1929 the plaintiff commenced two actions against the defendant R. M. Holie in the district court of Hennepin county, Minnesota -- one because of defendant's liability as a stockholder of the defunct bank, and the other on a promissory note given to the bank. Judgments for $ 2262.00 and $ 697.00 respectively, were entered in April 1929.

The action at bar was commenced in August 1929. A warrant of attachment was issued and all of the lands involved herein attached. The affidavit for attachment sets forth that the "action is based on a judgment for the recovery of money only;" that the defendants are nonresidents of the state; and that "the defendant R. M. Holie, sold, assigned, transferred, secreted and otherwise disposed of his property with the intent to cheat or defraud his creditors or to hinder or delay them in the collection of their debts."

The complaint sets forth three causes of action, viz.: first, upon the judgment obtained in Minnesota because of the liability on the bank stock; second, upon the judgment obtained in Minnesota because of the indebtedness evidenced by the promissory note; and third, to set aside the transfer of all of the real estate from the husband to the wife, so far as this plaintiff is concerned, and subject the same to the judgments obtained on the first and second causes of action, and to declare any interest of the defendant Clara Holie in said land inferior to that of the plaintiff.

The complaint alleges in substance that the transfer of the property was made by the defendant R. M. Holie to his wife without any consideration whatsoever and "for the purpose and with the intent to cheat and defraud his creditors and hinder and delay them in the collection of their debts;" that the defendants planned and connived each with the other to the end that the said defendant, R. M. Holie, might be enabled to dispose of his property for that purpose; and that by reason of such transfer the defendant Holie was intentionally rendered insolvent.

The complaint was verified and filed with the clerk of the court on August 7, 1929 and the affidavit for publication of the summons on August 22, 1929. This affidavit sets forth that the defendants are non-residents of the state, and that the relief sought in the action consists of defining and limiting the interest and lien of the parties to this action in the real property described in the complaint, and excluding the defendant Clara Holie therefrom or subjecting her interest therein to the interest of the plaintiff -- following the provision of § 7428 of the Comp. Laws. Upon filing the affidavit the summons was published, the date of the first publication being within sixty days after the filing of the affidavit for publication as required by § 7432 Comp. Laws, the first publication being had on August 29, 1929, and the last on October 3rd. When a copy of the summons and complaint was mailed to the defendants as required by § 7430 of the Comp. Laws and the summons published "once in each week for six successive weeks" the service by publication was complete upon the expiration of thirty-six days after the first publication of the summons. See §§ 7429, 7430, and 7433 of the Comp. Laws. There is no claim copies of summons and complaint were not mailed as required.

The defendants appeared specially on October 18, 1929, objecting to the jurisdiction of the court on the ground of no service of the summons and complaint made upon them in North Dakota, and that the action was one in personam and not in rem. At the hearing they again appeared "specially" and moved, for dissolution of the attachment on the ground of no service on them in this state, that R. M. Holie had no interest in the land attached, the same belonging to the defendant Clara Holie and that the complaint showed that "no debt exists against" her in favor of the plaintiff. These motions were denied, with leave to defendants to answer upon payment of terms fixed.

The defendants answered, objecting to the jurisdiction of the court on the grounds heretofore stated and alleging that the defendant R. M. Holie was not the owner of the property involved at any time. The answer denies fraudulent transfer and insolvency of R. M. Holie, and alleges that at the time the transfer was made and for all the time involved the defendant Clara Holie was the owner of said land, though taken in her husband's name; that her co-defendant at no time had any interest therein; and that when she purchased the land she paid full value therefor; that she was in no way indebted to the plaintiff; that the transfer was not fraudulent and not made to injure or delay creditors of any one.

The case was tried to the court without a jury. Both sides rested at the close of the plaintiff's case. Judgment was entered against the defendant R. M. Holie for the amount of the judgments obtained in Minnesota with interest, and against both defendants for the setting aside of the transfer of all the eight hundred acres of land involved and subjecting same to the lien of the attachment. Defendants appeal, demanding a trial de novo.

Appellants contend that this is not an action "on a contract or judgment for the recovery of money only," claiming it is an action in equity to set aside an alleged fraudulent conveyance, that no property of the defendant R. M. Holie has been attached, and that this is shown by the complaint, for the complaint admits that the property attached is now and was in the name of Clara Holie at the time of the commencement of the action; that this is not a case wherein an attachment may issue, therefore there is no attachment and without a legal attachment there is no jurisdiction to hear and determine the allegations set forth in the complaint. No attack is made on any other preliminary step taken -- no defect claimed in the summons, its publication, mailing, etc.

Respondent claims he may combine the three causes of action and attach property standing in the name of Clara Holie for the purpose of collecting the judgments obtained in Minnesota, because the property in truth and fact belongs to R. M Holie; that this is an action for the recovery of money only, for it is an attempt to collect money judgments obtained in Minnesota; that the proceedings to set aside...

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