Cathcart v. Grieve

• Decision Date: 19 January 1898
• Citation: 104 Iowa 330,73 N.W. 835
• Parties: CATHCART v. GRIEVE ET AL.
• Court: Iowa Supreme Court

104 Iowa 330

73 N.W. 835

CATHCART

v.GRIEVE ET AL.

Supreme Court of Iowa.

Jan. 19, 1898.

Appeal from district court, Clay county; W. B. Quarton, Judge.

Creditors' bill to subject certain real estate, the legal title to which is in defendant John Pollock, to the payment of a judgment held by plaintiff against James G. Grieve. Defendants pleaded that the conveyance of the land from Grieve and wife to Pollock was intended as a mortgage to secure Pollock for money loaned, and denied all fraud in the transaction. The trial court dismissed the petition, and plaintiff appeals. Reversed in part.Kinkead & Kinkead and Dale, Kinkead & Bissel, for appellant.

F. H. Helsell, for appellees.

DEEMER, C. J.

Plaintiff obtained his judgment against James G. Grieve on March 6, 1895, upon a debt contracted in the year 1894. On the 25th day of February, 1895, Grieve (his wife, Janet, joining) conveyed, by warranty deed, 439 acres of land in Clay county to defendant John Pollock, for the expressed consideration of $2,600. The deed recites that it is subject to two mortgages, amounting, in the aggregate, to $7,400. This deed was recorded March 2, 1895. At the same time, and evidently as a part of the same transaction, Pollock executed a lease to Grieve of all the land described in the deed, for the term of one year, at the agreed rental of $800. This lease was also recorded on March 2, 1895. The defendants pleaded that this transaction was in fact a mortgage to secure a debt due from Grieve to Pollock. At or about the same time, Grieve gave Pollock a chattel mortgage upon some personal property, to secure the sum of $1,030. Grieve also mortgaged his property, of every kind or nature, to other of his creditors, on or about the same date. Appellant claims that the conveyanceand mortgage to Pollock are fraudulent and void, because made with intent to hinder, delay, and defraud creditors. On account of the loose manner in which the case was tried in the court below, it is difficult to get at the real facts. Plaintiff proved the indebtedness of Grieve; the recovery of judgment against him; the execution of the deed, lease, and chattel mortgage to which we have referred; that Pollock is a resident of Scott county, and an uncle of Grieve; that Grieve is insolvent, and has been since the execution of the conveyances in question; and that, about the time of these conveyances, Grieve executed two other chattel mortgages to residents of Clay county, to secure debts purporting to amount to over $1,700. Plaintiff also proved that the deed to Pollock, and probably the lease, were executed at Davenport, in Scott county, and the land was worth $25 per acre. This is substantially all the evidence that was adduced, save that Grieve was in possession and occupancy of the land during the year 1895. At the conclusion of plaintiff's evidence, defendants moved for judgment dismissing the petition, because there was no evidence of fraud, and no showing that the deed was anything other than an absolute conveyance. Thereupon plaintiff offered in evidence the admission in defendants' pleadings that the deed was a mortgage. This was objected to, because offered after plaintiff had rested, and after the motion for judgment had been made. At this stage of the proceedings, court adjourned. We find the following record made the next morning: “Mr. Kinkead: This now is the incoming of court, nine o'clock this morning, and the motion having been made last night, on its coming on now for hearing and announcement of the decision of the court, before that announcement is made, the plaintiff in this case desires to place upon record the following: ‘Motion No. 2. Comes now the plaintiff, pending the defendants' motion for decree and judgment as hereinbefore stated, and withdraws from the evidence in this case the answer and amended and substituted answer of the defendants, and the offer in evidence heretofore made of the same in this case by the plaintiff. Plaintiff also further withdraws from the evidence the deed, and his offers hereinbefore made of the same, and all the record thereof in the evidence, and which deed is mentioned in the plaintiff's petition in this case, as Exhibit A. And plaintiff now moves the court, upon the record in this case, to render judgment and decree for the plaintiff against the said James G. Grieve, Janet Grieve, and John Pollock, as demanded in the prayer of plaintiff's petition filed herein March 16th, 1895.’ ” Following this were some more motions and objections on behalf of defendants, and the court finally made this ruling: “The motion to withdraw the deeds from the record, and the answers from the record, as indicated in motion number two, is overruled, because the said motion is made after the cause is fully submitted to the court, and argued by the counsel to the court; and the court has indicated to both counsel what its opinion would be in this case, and directed a decree, declaring that the deed was in fact a mortgage, establishing Pollock's lien to the amount claimed in the answer, declaring that plaintiff's judgment was a lien junior to the claim of Pollock, and directing foreclosure and sale of the premises.” There are no assignments of error, and we must try the case anew on this record, assuming, of course, that the rulings on the motions, except in so far as they involve the merits, are correct.

The burden is upon the plaintiff to establish the fraud pleaded by him, and evidence which merely raises a suspicion is not sufficient. Certain badges of fraud are relied upon; but appellant conceded that the rule in this state is that none of the many badges of fraud usually relied on are regarded as conclusive, citing a number of our cases. Among the badges so relied upon are: First, the relationship of the parties; second, the fact that there was a secret trust created by the lease; third, such inadequacy of consideration as indicates fraud or renders the conveyance voluntary; fourth, the making of an absolute conveyance when security only was intended; fifth, execution of a series of instruments covering all the grantee's property at a time when he was insolvent, and shortly before the recovery of plaintiff's judgment.

It has been frequently held that mere relationship alone is not a badge of fraud which calls for explanation. Oberholtzer v. Hazen (Iowa) 61 N. W. 367;Allen v. Kirk, 81 Iowa, 668, 47 N. W. 906. Here the relationship was somewhat distant, and the...