Bill Nay & Sons Excavating v. Neeley Const. Co.

• Decision Date: 01 February 1984
• Docket Number: No. 18658,18658
• Citation: 677 P.2d 1120
• Court: Utah Supreme Court
• Parties: BILL NAY & SONS EXCAVATING, a Utah corporation, Plaintiff and Respondent, v. NEELEY CONSTRUCTION COMPANY, a Utah corporation; Dennis Neeley, individually; Interwest Service & Supply; and Robert Neeley, individually, Defendants and Appellants.

Page 1120

677 P.2d 1120

BILL NAY & SONS EXCAVATING, a Utah corporation, Plaintiff and Respondent, v. NEELEY CONSTRUCTION COMPANY, a Utah corporation; Dennis Neeley, individually; Interwest Service & Supply and Robert Neeley, individually Defendants and Appellants.

No. 18658.

Supreme Court of Utah.

Feb. 1, 1984.

Tex R. Olsen, Richfield, for defendants and appellants.

Paul R. Frischknecht, Manti, for plaintiff and respondent.

OAKS, Justice.

This is an appeal from a decree giving relief from a fraudulent conveyance. The decree set aside a deed to appellant Interwest Service & Supply Co. and allowed plaintiff, a judgment creditor, to levy execution on the property. Appellant Interwest Service and its sole stockholder, Robert Neeley, seek reversal on the basis that the judgment debtor, Neeley Construction Co., had no interest in the property.

Appellants do not challenge the sufficiency of evidence for the findings, which establish the following facts. On November 20, 1979, Neeley Construction (by Dennis Neeley, officer and stockholder) signed a contract to purchase 4.6 acres from Manti City and the Manti Improvement of Business Association (MIBA), paying $1,000 down and promising to pay the balance of $5,900 by December 1, 1979. A deed was placed in escrow. On June 10, 1981, plaintiff obtained a $9,000 judgment against Neeley Construction. Thereafter, Dennis Neeley and Robert Neeley negotiated with the vendor, MIBA, after which, on December 16, 1981, MIBA conveyed the 4.6-acre property to Interwest Service.

Where the written findings are incomplete, inadequate, or ambiguous, as in this case, they may be elaborated or interpreted (in respects not inconsistent therewith) by reference to the trial court's written memorandum or its oral explanation of the decision. Sprague v. Boyles Brothers Drilling Co., 4 Utah 2d 344, 351 and n. 5, 294 P.2d 689, 693 (1956); Earhart v. William Low Co., 25 Cal.3d 503, 158 Cal.Rptr. 887, 600 P.2d 1344 (1979); Nevins v. Nevins, 75 N.M. 249, 403 P.2d 690 (1965); Schoonover v. Carpet World, Inc., 91 Wash.2d 173, 588 P.2d 729 (1978). Here, the court announced a finding from the bench at the conclusion of trial that there was clear and convincing evidence that Dennis Neeley, Robert Neeley, Neeley Construction Co., Neeley, Inc., and Interwest Service all combined to work a fraud upon the plaintiffs. The court concluded that the MIBA conveyance to Interwest Service should be set aside and that plaintiff should be able to levy against the property to satisfy its judgment against Neeley Construction.

The issue for our decision is whether there was sufficient legal and evidentiary basis for the district court's conclusion.

The legal basis is clear. The interest of a purchaser under a real estate contract is an interest in real property that can be mortgaged. Lockhart Co. v. Anderson, Utah, 646 P.2d 678 (1982). Upon the same reasoning, this equitable interest is also subject to the judgment lien prescribed by U.C.A., 1953, § 78-22-1. Utah Cooperative Association v. White Distributing & Supply Co., 120 Utah 603, 237 P.2d 262 (1951). Appellants argue that when an executory contract has been abandoned or forfeited because of a default in performance, this extinguishes or prevents any lien on the purchaser's rights. Whether or not this is true in all circumstances, that rule is inapplicable here. The district court obviously concluded that there was no abandonment or forfeiture on the facts of this case, and the evidence supports that conclusion.

The judgment debtor, Neeley Construction, retained an interest in the property since it admittedly paid at least $1,000 as purchaser under the November 1979 contract. The only question is the extent of that interest. It is evident from the relief granted in this case that the court concluded that Neeley Construction, pursuant to the contract, had provided the entire consideration for the property conveyed to Interwest Service. If so, the Utah enactment of the Uniform Fraudulent Conveyances Act provides an appropriate basis to set aside a transfer made without consideration by the transferee or to levy execution to the extent necessary to satisfy a plaintiff creditor's claim. U.C.A., 1953, § 25-1-15. This relief is appropriate where the transfer is fraudulent as to the creditor because the transferor was insolvent at the time of the transfer, § 25-1-4, where the transferor was a business person who was then left with "unreasonably small capital," § 25-1-5, or where the transferor acted with intent "to hinder, delay or defraud" creditors. §§ 25-1-7, 25-1-8.

Even if the findings or evidence would not support one of the foregoing bases for a fraudulent conveyance, if Neeley Construction provided the entire consideration for a conveyance of real property to Interwest Service, then Interwest Service held the property on a purchase money resulting trust for Neeley Construction. In re Estate of Hock, Utah, 655 P.2d 1111 (1982). In that event, Neeley Construction could compel a conveyance from Interwest Service, and, in the meantime, Neeley Construction's creditors could levy upon its equitable interest in the property.

We view the evidence in the light most favorable to the court's decree. The testimony and documentary exhibits provide ample evidentiary support for the conclusion that Neeley Construction provided the entire consideration for the conveyance to Interwest Service.

Neeley Construction signed a contract to purchase the property and paid $1,000 down on November 20, 1979. Ten days later, on the date designated for the payment of the balance, Neeley Construction was "on the verge of bankruptcy," according to its principal...