Bank of Sun Prairie v. Hovig

• Decision Date: 18 June 1963
• Docket Number: Civ. A. No. 873.
• Citation: 218 F. Supp. 769
• Parties: BANK OF SUN PRAIRIE, a Wisconsin Banking Corporation, Plaintiff, v. A. Kenneth HOVIG and Vanassa G. Hovig, Husband and Wife, Leland E. Seba and Dixie Lee Seba, Husband and Wife, and Alpine, Inc., an Arkansas Corporation, Defendants.
• Court: U.S. District Court — Western District of Arkansas

218 F. Supp. 769

BANK OF SUN PRAIRIE, a Wisconsin Banking Corporation, Plaintiff, v. A. Kenneth HOVIG and Vanassa G. Hovig, Husband and Wife, Leland E. Seba and Dixie Lee Seba, Husband and Wife, and Alpine, Inc., an Arkansas Corporation, Defendants.

Civ. A. No. 873.

United States District Court W. D. Arkansas, Hot Springs Division.

June 18, 1963.

COPYRIGHT MATERIAL OMITTED

C. Floyd Huff, Jr., Hot Springs, Ark., for plaintiff.

Michael B. Heindl, Hot Springs, Ark., for Hovigs.

Sigun Rasmussen, Hot Springs, Ark., for Seba and Alpine, Inc. JOHN E. MILLER, Chief Judge.

This is an action by the plaintiff to set aside an alleged fraudulent conveyance by Mr. and Mrs. Hovig, defendants, of certain lands, together with furniture, furnishings, and fixtures located thereon, to the defendant, Leland E. Seba as Trustee, and the conveyance by Seba individually and as Trustee, and Dixie Lee Seba, individually, of the same land to the defendant, Alpine, Inc.

In their answers and amended answers the defendants denied that the conveyances in question were without consideration or were a fraudulent transfer of property on their part, and in the alternative alleged that since the property in question is exempt as a rural homestead pursuant to the provisions of the Arkansas Constitution of 1874, that it was legally impossible for Mr. and Mrs. Hovig to commit a fraud by the conveyance of their homestead to the defendant, Leland E. Seba, as Trustee.

The case was tried to the court on April 23, 1963, and upon completion of the presentation of all the evidence, the case was submitted and taken under advisement by the court. Since that date the parties have submitted briefs in support of their respective contentions.

In an effort to clarify the issues, it seems advisable to set forth a chronologic statement of the events and property transactions which have a direct bearing on the decision of the issues.

On March 19, 1959, Mr. and Mrs. Hovig, together with Mr. and Mrs. Driggers, as partners, purchased a parcel of land situated on the shore of Lake Hamilton in Garland County, Arkansas, upon which were located a combination office and residence and furnished units used in the operation of a motel. The land in question was purchased from Mr. and Mrs. Cranfill, who, in consideration for the payment of $6,000.00 cash and the execution of a promissory note in the sum of $34,000.00, executed a warranty deed filed for record March 20, 1959, and recorded in Deed Record Book 646 at page 129 of the records of deeds and mortgages of Garland County, Arkansas, in which appears the following description of the land in question:

Part of the SE¼ NE¼ of Section 29, Township 3 South, Range 19 West, Garland County, Arkansas more particularly described as follows: Beginning at the Southwest corner of the said SE¼ NE¼ of Section 29; thence East along the South line of said SE¼ NE¼ for a distance of 445.2 feet; thence North 14 degrees 30 minutes West for a distance of 415.9 feet to a point on the South side of a road, said point being the Northwest corner of the Harrelson Tract as recorded in Book 457, page 277, of the Records of Deeds and Mortgages of Garland County, Arkansas; thence North for a distance of 30 feet to a point on the North side of said road, said point being on the South line of the Maxwell tract as recorded in Book 442, Page 63 of said Record, and being 54.1 feet West of the Southwest corner of the John Park tract as recorded in Book 345, Page 29 and in Book 377, Page 475 of said Record; thence West along the North side of said road and the South line of said Maxwell tract for a distance of 316.9 feet to the Southwest corner of said Maxwell tract; thence North along the West line of said Maxwell tract and the East side of a road for a distance of 86.8 feet to the Northwest corner of said Maxwell tract; thence West for a distance of 40 feet to the West line of said SE¼ NE¼ on the West side of said road; thence South along the West line of said SE¼ NE¼ for a distance of 530 feet to place of beginning.

ALSO Lot 93 of Lakeland Subdivision of part of Section 29, Township 3 South, Range 19 West, Garland County, Arkansas.

ALSO Part of Lot 94 of Lakeland Subdivision of part of Section 29, Township 3 South, Range 19 West, Garland County, Arkansas, more particularly described as follows: Beginning at the common corner of Lots 93 and 94 on the North side of said Lots 93 and 94 in said Lakeland Subdivision; thence South 82 degrees 30 minutes East for a distance of 103.4 feet; thence South 48 degrees West for a distance of 66 feet to the shoreline of Lake Hamilton at elevation of 395 feet above mean sea level; thence Northwesterly along said contour elevation of 395 feet above mean sea level for a distance of 48 feet to the dividing line between said Lots 93 and 94; thence Northwesterly along the dividing line between said Lots 93 and 94 for a distance of 48 feet to the place of beginning.

On September 30, 1959, Mr. and Mrs. Driggers, by warranty deed, conveyed to Mr. and Mrs. Hovig all of their interest in the land in question subject to the mortgage held by Mr. and Mrs. Cranfill, said deed being recorded on October 13, 1959, in Deed Record Book 473 at page 689 in Garland County, Arkansas.

On November 10, 1959, Mr. and Mrs. Hovig, by warranty deed, conveyed an undivided one-half interest in the above described land to Mr. and Mrs. Hart for a consideration of $10,000.00 evidenced by a note secured by a mortgage dated November 10, 1959, which represented a purchase of a partnership interest by the Harts. The deed and the mortgage were recorded on November 30, 1959, in Deed Record Book 475 at pages 649-650, respectively, in Garland County, Arkansas. This indebtedness on the part of the Harts was subsequently paid, as evidenced by a release deed dated December 20, 1960, filed for record on January 2, 1961, and recorded in Deed Record Book 492 at page 106 in Garland County, Arkansas.

During the period from March 1959, Mr. and Mrs. Hovig commuted back and forth between their residence in Hot Springs and their residence in Sun Prairie, Wisconsin, where they had formerly lived full-time and where Mr. Hovig was engaged in constructing a number of residential units in Sun Prairie. Sometime later in 1960, Mr. Hovig's building project in Sun Prairie encountered financial difficulties and became enmeshed in litigation. On September 26, 1960, Mr. and Mrs. Hovig, having returned to Arkansas, took over the active management and control of the land in question, now known as the Alpine Courts, and on said date moved on the property and occupied the residence thereon with the intention of making it their permanent home.

On October 18, 1960, a judgment was entered in the Circuit Court of Dane County, Wisconsin, in favor of the plaintiff in the instant case, Bank of Sun Prairie, and against the defendants, Mr. and Mrs. Hovig, in the total sum of $20,266.93, which judgment was based upon a loan of $19,000.00 at 6 percent interest from the plaintiff bank. This loan was secured by stock in a Wisconsin corporation of a par value of $30,000.00.

On December 30, 1960, the defendant, A. Kenneth Hovig, conveyed his interest in the land, fixtures, etc., in question to Leland E. Seba as Trustee by a warranty deed for good and valuable consideration, and the assumption by Seba as Trustee of indebtedness specified in a memorandum agreement entered into by the same parties on December 29, 1960, which indebtedness owed by the partnership of Hovigs and the Harts amounted to approximately $61,500.00. Also, on the same date, Leland Seba, for valuable consideration, agreed to sell to Mr. and Mrs. Hovig 39 percent of the interest or any portion thereof in the real and personal property in question for $3,900.00, which option was not assignable and was to be exercised within a period of 24 months from December 29, 1960. The deed was recorded on January 2, 1961, in Book 492 at page 111 of the records of deeds and mortgages of Garland County, Arkansas.

On December 31, 1960, Vanassa G. Hovig executed a warranty deed of the same land, fixtures, etc., to Leland E. Seba, Trustee, which was based on the same consideration as the deed executed by her husband to Seba. This deed was recorded on January 2, 1961, in Deed Record Book 492 at page 114 in Garland County, Arkansas.

On December 31, 1960, Mr. and Mrs. Hart executed a warranty deed which conveyed their undivided one-half interest in the lands, fixtures, etc., to Leland E. Seba, the consideration for which Seba was to assume indebtedness as specified in the memorandum agreement between Mr. and Mrs. Hovig and Mr. Seba dated December 29, 1960, as well as the payment of $13,500.00 in cash to Mr. and Mrs. Hart.

On April 8, 1961, the defendants, Leland E. Seba, individually and as Trustee, and his wife individually, by quitclaim deed conveyed all their interest in the above described lands, fixtures, etc., to the defendant, Alpine, Inc., an Arkansas corporation, which deed was filed for record on October 13, 1961. The defendant, Alpine, Inc., was incorporated on April 3, 1961, the incorporators being Leland E. Seba, A. Kenneth Hovig and Dixie Lee Seba.

The lands, fixtures, furnishings and furniture in question were subject to liens held by the following individuals or corporations on December 31, 1960, all of which were superior and prior to that of the plaintiff, to-wit: J. A. and Helen Cranfill, approximately $31,000.00 secured by a first mortgage; First Federal Savings and Loan Association of Hot Springs, Arkansas, approximately $2,500.00 secured by a second mortgage; Holiday Homes, Inc., approximately $9,500.00 secured by a third mortgage; National Theater Supply, approximately $13,400.00; Universal C.I.T., approximately $2,700.00; and the Arkansas First National Bank, approximately $900.00, the total of which amounts to $60,000.00. These liens were either secured by the real or the personal property above described in...