Crowley v. Brower

• Decision Date: 09 February 1926
• Docket Number: 37145
• Citation: 207 N.W. 230,201 Iowa 257
• Parties: D. A. CROWLEY, Trustee, Appellant, v. VIOLETTE B. BROWER et al., Appellees
• Court: Iowa Supreme Court

207 N.W. 230

201 Iowa 257

D. A. CROWLEY, Trustee, Appellant, v. VIOLETTE B. BROWER et al., Appellees

No. 37145

Supreme Court of Iowa, Des Moines

February 9, 1926

Appeal from Adair District Court.--J. H. APPLEGATE, Judge.

ACTION in equity, to subject property to execution.The court granted only partial relief, and both parties appeal.-- Affirmed on plaintiff's appeal; modified and affirmed on defendants' appeal.

Affirmed on plaintiff's appeal; modified and affirmed on defendant's appeal.

Wilson & Kellam, for appellant.

Musmaker & Musmaker, for appellees.

STEVENS J. DE GRAFF, C. J., and FAVILLE and VERMILION, JJ., concur.

OPINION

STEVENS, J.

This is an action in the nature of a creditor's bill, to set aside a conveyance of certain real property upon the ground that such conveyance was in fraud of creditors, and to subject the same to the payment thereof.

The appellees Ella M. and H. W. Brower executed two promissory notes to J. F. Van Horn: one for $ 2,930.13, on March 3 1922, and one for $ 1,265.63, on March 27, 1923.Prior to and on January 23, 1922, Ella M. Brower was the owner of several tracts of real estate in Adair County, which, on that date, her husband, H. W. Brower, joining, she conveyed to the appelleeViolette B. Brower, her daughter, for an expressed consideration of $ 1.00 and love and affection.The deed was not, however, placed of record until April 3, 1924.On or about April 18, 1924, Ella M. Brower filed a petition in voluntary bankruptcy, and was duly adjudged a bankrupt.The plaintiff and appellant herein is the trustee in bankruptcy.

It is alleged in the petition that unsecured claims aggregating about $ 5,000 were allowed by the bankruptcy court, and that no assets ever came into the hands of the trustee for the payment of these claims.The total aggregate indebtedness of the bankrupt, as shown by the schedule filed by her, was approximately $ 88,000, all of which, except the amount stated in the petition, was secured by mortgages given by her husband, in which she joined, upon real property.Appellant further alleged that the conveyance sought to be set aside was executed without consideration, and for the specific purpose of hindering, delaying, and defrauding the creditors of Ella M. Brower.The court below found that the conveyance was voluntary and without consideration, but that it was in good faith, and not for the purpose of defrauding creditors.Appellant also alleged that the deed was fraudulently withheld from the record, and for the purpose of deceiving and misleading the creditors of the grantor.The court found that $ 1,026 of the consideration of the $ 2,930.13 note represented an antecedent indebtedness and a present indebtedness of $ 100 incurred March 3, 1922, and held that as to those items the deed was void, and established a lien on the real property therefor, and ordered special execution against the same, if not paid within thirty days from the date of the decree.The amount of the lien established by the court was $ 1,369.22.Both parties have appealed.The plaintiff is denominated appellant in the abstract and argument, and he will be so treated in this court.The appeal of appellees is from an alleged error in the computation of interest by the court, and the establishment of the $ 100 item as a lien against the property.We will first dispose of appellant's appeal.

I.The principal proposition urged by appellant is that the conveyance was without consideration, and for the purpose of hindering, delaying, and defrauding creditors, and that, instead of establishing a lien upon the property in his favor, the decree should have set the deed aside absolutely, and vested title to the property in him as trustee for all of the creditors of Ella M. Brower.The evidence is practically without dispute, and in our opinion fully sustains the finding of the court that the conveyance was without consideration, but without actual fraud.Practically the only evidence tending in any way to prove actual fraud is that of Van Horn, the creditor, to whom the notes above referred to were executed, to the effect that Ella M. Brower represented to him that she still held the title to the property, and the failure by Violette M. Brower to have the deed recorded.No evidence whatever was offered from which it may be inferred that the deed was withheld from the record for a fraudulent purpose; and it is the law of this state that the mere withholding thereof is not in itself evidence of a fraudulent intent, and a creditor who has not been misled to his damage thereby cannot complain.Brown v. Bradford, 103 Iowa 378, 72 N.W. 648;First Nat. Bank v. Reid, 122 Iowa 280, 98 N.W. 107.

The value of the property considerably exceeds $ 5,000, the amount of unsecured indebtedness alleged in the petition.A trustee in bankruptcy who seeks by an action in equity in the nature of a creditor's bill to set aside a conveyance of real property, and to subject the same to the payment of claims allowed in a bankruptcy court against the grantor, which he may maintain under the Federal law without reducing his claim to judgment, is entitled to the same relief as the creditor would have been, if the action was prosecuted in his own name.In re Williams(D. C.), 123 F. 321;Hull v. Burr, 83 C.C.A. 61(153 F. 945);In re Downing(D. C.), 192 F. 683;In re Downing, 119 C.C.A. 431(201 F. 93);Kentucky Bank & Tr. Co. v. Pritchett, 44 Okla. 87(143 P. 338);Cartwright v. West, 185 Ala. 41(64 So. 293);Seager v. Armstrong, 95 Minn. 414(104 N.W. 479).

The law is well settled in this state that:

"(1) A conveyance which is merely voluntary, and when the grantor had no fraudulent view or intent, cannot be impeached by a subsequent creditor.(2) A conveyance actually and intentionally fraudulent as to existing creditors, as a general rule, cannot be impeached by subsequent creditors.(3) If a conveyance is actually fraudulent as to existing creditors, and merely colorable, and the property is held in secret trust for the grantor, who is permitted to use it as his own, it will be set aside at the instance of subsequent creditors."Brundage v. Cheneworth, 101 Iowa 256, 70 N.W. 211;Farmers & Merch. Bank v. Daiker, 166 Iowa 728, 148 N.W. 1020.

The...