Cartier v. Central Trust Co.

• Decision Date: 11 April 1942
• Docket Number: 35330.
• Citation: 124 P.2d 435,155 Kan. 191
• Parties: CARTIER v. CENTRAL TRUST CO.
• Court: Kansas Supreme Court

124 P.2d 435

155 Kan. 191

CARTIER v. CENTRAL TRUST CO.

No. 35330.

Supreme Court of Kansas

April 11, 1942

Rehearing Denied May 14, 1942.

Syllabus by the Court.

That debtor died five days after maturity of obligation, that he was wholly insolvent, and that fraudulent nature of conveyance of realty made prior to death was not discovered until long after time in which administration should have been forced by creditor did not relieve creditor of the necessity of first reducing her claim to judgment before maintaining creditor's bill to set aside conveyance and subject conveyed property to satisfaction of her claim. Gen.St. 1935, 22-312.

Where creditor fails to take advantage of statute authorizing appointment of deceased's creditor to administer his estate if letters of administration are not taken out by the persons entitled thereto within the time specified, the statute of limitations on creditor's claim is not suspended during the time from debtor's death to appointment of administrator, but if no administrator is appointed the claim becomes barred at the end of three years after the last date on which an administrator might have been appointed. Gen.St.1935, 22-312.

Where action to set aside conveyance of realty and subject transferred property to satisfaction of creditor's claim on note was not commenced until nearly eight years after debtor's death, which occurred five days after maturity of note, creditor's claim was barred by statute requiring that all demands against the estate of persons deceased be exhibited within one year, even though debtor was nonresident at time of death and his estate had not been administered either in Kansas or state of his residence. Gen.St. 1935 22-312, 22-702.

Where action in the nature of a creditor's bill to set aside a conveyance of realty and subject transferred property to satisfaction of creditor's claim was not commenced until almost eight years after debtor's death, action was barred by statute requiring action to set aside fraudulent conveyances to be brought within three years next after the death of the grantor. Gen.St.1935, 22-803.

In an action in the nature of a creditor's bill to set aside an alleged fraudulent conveyance, the record is examined and held, the demurrer to plaintiff's petition was properly sustained because (1) it was not alleged the plaintiff had reduced his claim to judgment, and (2) the action is barred by the provisions of G.S.1935, 22-702 and 22-803.

Appeal from District Court, Shawnee County, Division No. 2; Paul H Heinz, Judge.

Action in the nature of a creditor's bill by Florence Cartier against the Central Trust Company, as trustee under a Declaration of Trust dated March 24, 1933, to set aside an allegedly fraudulent conveyance of realty and to subject the property conveyed to the satisfaction of plaintiff's claim. From an order sustaining a demurrer to her petition plaintiff appeals.

Order affirmed.

Jacob A. Dickinson, of Topeka (Edward Rooney, of Topeka, and Samuel Friedlander, of New York City, on the brief), for appellant.

Barton E. Griffith, of Topeka (Peter F. Caldwell and Philip C Gault, both of Topeka, on the brief), for appellee.

ALLEN Justice.

This action was in the nature of a creditor's bill to set aside a certain alleged fradulent conveyance and to subject the property conveyed to the satisfaction of plaintiff's claim. The appeal is from an order of the court in sustaining a demurrer to plaintiff's petition.

The petition alleged: On September 1, 1930, at Miami, Florida, C. E. Wardin and wife executed their note to L. P. Cartier for $11,500 due September 1, 1933, with 8% interest. The note is under seal and under the laws of Florida is governed by a 20 year statute of limitations. Interest was paid to March 1, 1932, and there was $19,856.67 due upon the note April 1, 1941.

C. E. Wardin and wife were residents of Florida at the time of the execution of the note,--L. P. Cartier was a resident of New York, and since that date none of the parties to the note have ever been residents of Kansas.

On September 5, 1933, five days after the maturity of the note, C. E. Wardin died, a resident of Florida, wholly insolvent, and leaving no assets in Kansas. No administration has been had upon his estate in Florida or Kansas.

On February 28, 1934, L. P. Cartier died testate, a resident of New York. The note in question was transferred to the plaintiff by the executrix of the estate of L. P. Cartier.

On March 24, 1933, C. E. Wardin, together with his wife, then being the owner of the Central Building in Topeka, Kansas, conveyed that property to the Central Trust Company "as Trustee under Declaration of Trust dated March 24, 1933" by warranty deed subject to a $25,000 bonded indebtedness. The deed was recorded May 4, 1933, in the office of the Register of Deeds at Topeka.

The petition alleged that there was no consideration for the conveyance; that the conveyance was made for the purpose of defrauding the creditors of C. E. Wardin, and was taken by the defendant with full knowledge of the intent of C. E. Wardin; that the conveyance rendered C. E. Wardin insolvent, and that the conveyance was designed to conceal the assets of C. E. Wardin and was taken by the defendant to assist in that design; that the fraud practiced by C. E. Wardin and wife and the defendant upon L. P. Cartier and other creditors of C. E. Wardin was unknown to L. P. Cartier, his executrix, successors and assigns, until discovered by the plaintiff in February, 1940.

The plaintiff prays that the conveyance be set aside as to the plaintiff; that the property be subjected to her claim and sold to satisfy it; that a receiver be appointed for the property, and that the defendant be required to account for rents and profits and the plaintiff be awarded other proper relief.

The question presented is whether the petition states a cause of action.

In Union Nat. Bank v. Ternes, 110 Kan. 475, 204 P. 699, the condition precedent to right to maintain a creditor's bill is stated in the syllabus: "It is a prerequisite to the maintenance of a creditor's bill, in which it is asked that transfers of real estate be set aside as fraudulent and the property transferred be subjected to the payment of the plaintiff's debt, that he shall have reduced his debt to judgment, and it is ordinarily necessary for him to show that execution has been returned unsatisfied, or that the remedies afforded by law have been exhausted."

Plaintiff admits the general rule to be that equity will refuse relief against a conveyance in fraud of creditors until the creditors have recovered a judgment at law establishing the debt, but asserts the rule has been modified as to the requirement of the return of an execution unsatisfied.

Our attention is called to Farmers' State Bank v Mitchell, 143 Kan. 286, 55 P.2d 423, where it was ruled that it is...