Behr v. Bird Way, Inc., No. 20018

CourtMissouri Court of Appeals
Writing for the CourtBARNEY; MONTGOMERY, P.J., and GARRISON
Citation923 S.W.2d 470
PartiesPaul E. BEHR, Jr., Plaintiff-Respondent, v. BIRD WAY, INC., a Missouri Corporation, et al., Defendants-Appellants.
Decision Date15 May 1996
Docket NumberNo. 20018

Page 470

923 S.W.2d 470
Paul E. BEHR, Jr., Plaintiff-Respondent,
v.
BIRD WAY, INC., a Missouri Corporation, et al., Defendants-Appellants.
No. 20018.
Missouri Court of Appeals,
Southern District,
Division One.
May 15, 1996.

Page 471

Ronald L. Kraft, Kansas City, for appellants.

Loyd Francis, Kimberling City, Robert E. Sharp, Springfield, for respondent.

BARNEY, Judge.

Bird Way, Inc., (Bird Way) appeals from the judgment of the Circuit Court of Stone County, Missouri, setting aside a deed of trust and a deed in lieu of foreclosure to certain tracts of land located in Stone County, Missouri. The deed of trust together with the deed in lieu of foreclosure were conveyances from William R. Danner and Gloria A. Danner (the Danners) to Bird Way. The judgment held that the deed of trust and deed in lieu of foreclosure were fraudulent as to Danners' creditor, Paul E. Behr, Jr., (Plaintiff). 1

Bird Way presents three points on appeal: that the trial court erred in (1) finding that the transfer of the Stone County property was fraudulent (as to the creditor-Plaintiff herein); (2) ruling that Bird Way was a mere instrumentality or alter ego of the Danners; and (3) excluding witness testimony under § 491.010, RSMo 1994 relating to conversations with the decedent-seller and the Danners when the purchase of the Stone County property took place in 1984.

The trial court made extensive findings of facts and conclusions of law. " 'In court-tried cases conflicts in evidence are for the trial court to resolve and we take the facts in accordance with the results there reached'." Davis v. Nelson, 880 S.W.2d 658, 665 (Mo.App.1994). On review of a court-tried case this Court will independently evaluate the trial court's conclusions of law. Unlimited Equip. Lines, Inc. v. Graphic Arts

Page 472

Centre, Inc., 889 S.W.2d 926, 932 (Mo.App.1994).

In determining the sufficiency of the evidence, an appellate court accepts as true the evidence and inferences favorable to the trial court's judgment, disregarding all contrary evidence. Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc., 868 S.W.2d 118, 120 (Mo.App.1993). We defer to the factual findings of the trial judge, who is in a superior position to assess credibility. Graphic Arts Centre, 889 S.W.2d at 932.

The review of a court-tried case is governed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). The judgment of the trial court will be upheld unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. at 32; South Side Nat'l Bank v. Winfield Fin. Servs. Corp., 783 S.W.2d 140, 141 (Mo.App.1989).

Bird Way was initially incorporated in 1970 by the Danners, who were sole shareholders until February 12, 1989, and members of the board of directors until late 1991. William R. Danner was the president and his wife, Gloria Danner, was the secretary until October 14, 1991, when Bird Way was administratively dissolved by the State of Missouri for failure to pay Missouri Franchise Tax. 2 Essentially Bird Way was a holding company for other corporations controlled by the Danners. These included Dar Mar, Inc., Air Flight Charters, Inc., North Kansas City Electric Co., AG Industrial Sales Corp., and Fabristeel, Inc. Bird Way had no employees or payroll. The Danners' children, Adrian, Daryl and Chere, worked for Bird Way as well as the subsidiary corporations.

On June 26, 1984 Joseph Leroy Schwyhart and another owner conveyed the property in question located in Stone County, Missouri, by warranty deed to the Danners and in turn, on June 29, 1984, the Danners executed a promissory note secured by a deed of trust on the property. The promissory note explicitly provided that the Danners could "transfer[ ] [the property] to immediate family of or to corporation owned by [the Danners]."

Thereafter, on April 4, 1985, the Danners executed their promissory note to Plaintiff in the amount of $210,000.00, on which note the Danners defaulted.

On February 13, 1989, the Danners gifted 18,564 shares of their stock in Bird Way to the Danners' children and their spouses, to grandchildren, and to siblings and their spouses, and 663 shares each to two other persons, followed up by conveyance of the remaining 17,238 shares of stock of the corporation to the same relatives on February 9, 1990. No consideration was received by the Danners for any of these stock transactions.

Plaintiff filed suit against the Danners upon default of the promissory note for $210,000.00, on November 16, 1990, in Case No. CV590-151CC. On January 8, 1991, less than two months after Plaintiff had filed his suit against the Danners, the Danners executed a deed of trust in favor of Bird Way in the amount of $1,200,000.00, together with other security instruments on the Danner's property in Stone County. Significantly, no promissory note was issued evidencing this indebtedness. Further, the trial court found that no money or separate consideration was received by the Danners for the deed of trust.

The trial court further noted that the corporate minutes of Bird Way failed to reflect the amount of money owed Bird Way by the Danners. Neither were there any statements of any accounting of any amount or what actions Bird Way intended to take to collect any amount due from the Danners.

Additionally, the trial court found that the Danners executed "... Deeds of Trust and Assignments of Rents ... to Bird Way, Inc., [sic] on real estate in Johnson County, Kansas and Maricopa County, Arizona, dated October 2, 1991 and December 2, 1991, respectively...."

Page 473

On July 29, 1991, Cause No. CV590-151CC was tried and the case was taken under advisement.

On October 17, 1991, before the decision on the foregoing case was rendered, the Danners executed their deed in lieu of foreclosure conveying the Stone County property to Bird Way. Chere Danner, Treasurer of Bird Way testified that no consideration was paid by Bird Way to the Danners for the deed in lieu of foreclosure.

On July 27, 1992, the Plaintiff obtained judgment against the Danners in Case No. CV590-151CC in the amount of $291,529.16.

Two days after entry of the judgment in favor of Plaintiff in Case No. CV590-151CC, on July 29, 1992, the Danners filed their voluntary Chapter 11 Bankruptcy in the United States Bankruptcy Court for the District of Kansas in Case No. 92-21634. A stay order issued by the bankruptcy court prevented Plaintiff from executing on the aforesaid judgment. The court then, on September 16, 1992, dismissed the Chapter 11 Bankruptcy action for failure to appear for the first meeting of creditors, failure to file schedules, and willful failure to abide by orders of the court as required by the Bankruptcy Code.

On September 16, 1992, a creditor of the Danners filed an involuntary bankruptcy action against the Danners but this action was dismissed by the bankruptcy court for improper filing on October 13, 1992, upon motion by Bank America Arizona.

It can be gleaned from the "Findings of Fact" of the United States Bankruptcy Court for the District of Kansas in Case No. 92-21954-7 that the Danners and a "Sneed Trust" had owned property in Maricopa County, Arizona. The bank had made the initial acquisition loan for the property and a subsequent loan to avoid foreclosure by a junior lienholder. There were prolonged efforts to prevent the bank from foreclosing on the property, including the filing of a bankruptcy action by the partnership in Arizona. The Bankruptcy Court in Kansas dismissed the involuntary petition because the Bankruptcy Court did not authorize the filing of a joint involuntary petition nor could a petition in bankruptcy, involuntary or voluntarily, be initiated against the Danners within 180 days of the original dismissal of their voluntary bankruptcy petition.

In its first point, Bird Way asserts that the trial court erred in finding that the transfer of the Stone County property was fraudulent. A party seeking to have a transaction declared void as fraudulent must prove its case by clear and convincing evidence. Winfield, 783 S.W.2d at 143.

The essential elements of a fraudulent conveyance include (1) a conveyance or assignment (2) of goods, chattels, things in action or interest in land (3) with the intent to hinder, delay or defraud creditors. 3 Cohoon v. Cohoon, 627 S.W.2d 304, 307 (Mo.App.1981). Because intent is a difficult element to prove, "Missouri courts have recognized that there are certain circumstances referred to as badges of fraud which so frequently attend conveyances to hinder, delay or defraud creditors that they may be employed to determine the presence of fraud." Id. at 307; Aviation Supply, 868 S.W.2d at 121. The badges of fraud include the following: (1) a conveyance to a spouse or near relative; (2) inadequacy of consideration; (3) transactions different from the usual method of transacting business; (4) transfers in...

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12 practice notes
  • United States v. Arthur, Case No. 4:10CV01561 AGF
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • September 19, 2011
    ...WL 1463018 at *5 (E.D. Mo. April 13, 2010); Fisher v. Brancato, 147 S.W.3d 794, 799 (Mo. Ct. App 2004) (citing Behr v. Bird Way, Inc., 923 S.W.2d 470, 473 (Mo. Ct. App. 1996)). In addition to these elements under the Missouri UFTA, there are eleven factors,4 or "badges ofPage 7fraud&qu......
  • Lau v. Pugh, No. SD 29289.
    • United States
    • Court of Appeal of Missouri (US)
    • December 1, 2009
    ...to the trial court's judgment, disregarding all contrary evidence.'" Kleeman, 167 S.W.3d at 202 (quoting Behr v. Bird Way, Inc., 923 S.W.2d 470, 472 In his first point relied on, Appellant maintains the trial court erred in finding his statement of mechanic's lien "was null, void ......
  • Lau v. Pugh, No. SD 29289 (Mo. App. 11/4/2009), No. SD 29289.
    • United States
    • Missouri Court of Appeals
    • November 4, 2009
    ...to the trial court's judgment, disregarding all contrary evidence.'" Kleeman, 167 S.W.3d at 202 (quoting Behr v. Bird Way, Inc., 923 S.W.2d 470, 472 (Mo.App. In his first point relied on, Appellant maintains the trial court erred in finding his statement of mechanic's lien "was nu......
  • Bueneman v. Zykan
    • United States
    • Missouri Court of Appeals
    • July 10, 2001
    ...seeking to have a transaction declared void as fraudulent must prove his case by clear and convincing evidence. Behr v. Bird Way, Inc., 923 S.W.2d 470, 473 (Mo. App. S.D. 1996). However, fraudulent intent is difficult to establish by direct proof, and consequently, it must be demonstrated b......
  • Request a trial to view additional results
12 cases
  • United States v. Arthur, Case No. 4:10CV01561 AGF
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • September 19, 2011
    ...WL 1463018 at *5 (E.D. Mo. April 13, 2010); Fisher v. Brancato, 147 S.W.3d 794, 799 (Mo. Ct. App 2004) (citing Behr v. Bird Way, Inc., 923 S.W.2d 470, 473 (Mo. Ct. App. 1996)). In addition to these elements under the Missouri UFTA, there are eleven factors,4 or "badges ofPage 7fraud&qu......
  • Lau v. Pugh, No. SD 29289.
    • United States
    • Court of Appeal of Missouri (US)
    • December 1, 2009
    ...to the trial court's judgment, disregarding all contrary evidence.'" Kleeman, 167 S.W.3d at 202 (quoting Behr v. Bird Way, Inc., 923 S.W.2d 470, 472 In his first point relied on, Appellant maintains the trial court erred in finding his statement of mechanic's lien "was null, void ......
  • Lau v. Pugh, No. SD 29289 (Mo. App. 11/4/2009), No. SD 29289.
    • United States
    • Missouri Court of Appeals
    • November 4, 2009
    ...to the trial court's judgment, disregarding all contrary evidence.'" Kleeman, 167 S.W.3d at 202 (quoting Behr v. Bird Way, Inc., 923 S.W.2d 470, 472 (Mo.App. In his first point relied on, Appellant maintains the trial court erred in finding his statement of mechanic's lien "was nu......
  • Bueneman v. Zykan
    • United States
    • Missouri Court of Appeals
    • July 10, 2001
    ...seeking to have a transaction declared void as fraudulent must prove his case by clear and convincing evidence. Behr v. Bird Way, Inc., 923 S.W.2d 470, 473 (Mo. App. S.D. 1996). However, fraudulent intent is difficult to establish by direct proof, and consequently, it must be demonstrated b......
  • Request a trial to view additional results

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