Dolan v. Newberry
| Decision Date | 10 March 1925 |
| Docket Number | 36371 |
| Citation | 202 N.W. 545,200 Iowa 511 |
| Parties | B. A. DOLAN, Appellant, v. ORSON O. NEWBERRY et al., Appellees |
| Court | Iowa Supreme Court |
Appeal from Lee District Court.--W. S. HAMILTON, Judge.
SUPPLEMENTAL OPINION SEPTEMBER 29, 1925.
ACTION in equity by a judgment creditor to set aside certain conveyances by the judgment debtor as in fraud of creditors and to subject the property to the judgment. The facts are stated in the opinion. Upon a trial, the petition was dismissed, and judgment rendered against plaintiff for costs. The plaintiff appeals.--Reversed and remanded.
Reversed and remanded.
Hughes & Dolan, for appellant.
Herminghausen & Herminghausen and John J. Seerley, for appellees.
The appellant, as judgment creditor of O. O. Newberry, brought this action against Newberry and his daughter Rosalie, to set aside certain conveyances by Newberry and his wife, as being voluntary and in fraud of creditors. At the close of plaintiff's evidence, the court dismissed the petition and rendered judgment against appellant for costs.
It appears from the evidence that, on October 3, 1911, Newberry, by warranty deed, conveyed to his wife, Helen V. Newberry, for an expressed consideration of "one dollar and other consideration," the land in controversy, with other land, in all some 1,237 acres. On October 11, 1913, Helen V. Newberry and her husband conveyed the land in controversy, with 40 acres additional, all being a part of that previously so conveyed by him to her, to their daughter, the appellee Rosalie Newberry, for an expressed consideration of $ 1.00. It is not disputed but that these conveyances were voluntary. Helen V. Newberry died before the commencement of this action.
Prior to these conveyances, Newberry and his wife had conveyed the 1,237 acres to J. C. Jordan, and had begun an action against Jordan to have the deed declared to be a mortgage, Jordan's contention being that it was an absolute conveyance, with an agreement to reconvey on certain terms within a stipulated time. That case was decided, and Jordan's contention sustained, on July 28, 1911. On September 30, 1911, Jordan reconveyed the property to Newberry, on payment of the amount required in the decree in that case. This amount Newberry raised by mortgages on the land. Appellant's judgment is for services rendered to Newberry as his attorney in that action.
On April 24, 1913, the equity in the land, except that conveyed to the daughter, was traded to Walter I. Manny, for a stock of goods taken at $ 20,000. Who received the stock or what became of it, the record does not disclose. The land was at all times heavily incumbered. There is uncontradicted testimony that Newberry was insolvent in 1911, and indebted to many people. A judgment against him in an action commenced in May, 1913, remains unsatisfied.
While it appears that appellant rendered some services to Newberry after the date of the latter's deed to his wife, the action against Jordan, in which appellant had been employed as attorney, had been tried and decided, and Newberry had apparently accepted the result by paying to Jordan the amount required to repurchase the land and taking a reconveyance from Jordan before that date.
B. F. Jones, an attorney, was associated with appellant in his employment. The action in which appellant's judgment was obtained, was begun by Jones in 1916, on behalf of himself, and as assignee of appellant. Subsequently, Jones dismissed his individual claim, and re-assigned the cause of action to appellant; and the judgment is for the services of appellant alone.
The deed from Newberry to his wife was prepared by a stenographer employed by Jones, at the dictation of the latter. The appellant was not present at the time, but knew of the deed about the time it was made.
Upon the trial of the instant case, appellant offered the testimony of Jones and his stenographer as to certain declarations by Newberry at the time the deed to his wife was executed. Objection was made to these witnesses and their testimony, on the ground that the witnesses were incompetent, and the testimony incompetent, under Section 4608 of the Code of 1897. Proper objection was also made to permitting appellant and Jones to testify to transactions with Mrs. Newberry, based upon Section 4604, Code of 1897. In some instances, these objections were probably good; but we do not find it necessary to determine the questions so raised.
Without the testimony so objected to, the appellant's evidence tended to show, and, in the absence of proof to the contrary, may be taken as establishing, that, at the times the deeds in question were executed, appellant was a creditor of Newberry's; that he subsequently reduced his claim to judgment, and the judgment was unpaid; that the conveyance from Newberry to his wife covered all of his real estate, and was without consideration and voluntary; that the wife's deed to the daughter of the property in controversy was also voluntary and without consideration; and that the daughter still holds the title to a portion of the property so conveyed. In this situation, the appellees introduced no evidence, but moved for the dismissal of the petition; and the motion was sustained, and judgment rendered against appellant for costs.
It is a firmly established doctrine that, where a voluntary conveyance is made by a husband to his wife, it is presumptively fraudulent as to existing creditors, and the grantee is under the burden of showing that the grantor had sufficient property remaining to pay his debts. Tyler v. Budd, 96 Iowa 29, 64 N.W. 679; Seekel v. Winch, 108 Iowa 102, 78 N.W. 821; Carr v. Way, 141 Iowa 245, 119 N.W. 700; Woods v. Allen, 109 Iowa 484, 80 N.W. 540; Kolb v. Mall, 187 Iowa 193, 174 N.W. 226. The same rule applies to a voluntary conveyance made to a child. Strong v. Lawrence, 58 Iowa 55, 12 N.W. 74; Campbell v. Campbell, 129 Iowa 317, 105 N.W. 583; Long v. Garey Inv. Co., 135 Iowa 398, 112 N.W. 550. It is equally well settled that one who takes title from a fraudulent grantee has the burden of establishing that he purchased in good faith and for a valuable consideration. Rush v. Mitchell, 71 Iowa 333, 32 N.W. 367; Long v. Garey Inv. Co., supra.
Appellees introduced no evidence, and, therefore, made no effort to show affirmatively either that, at the time of the conveyance by Newberry to his wife, he had sufficient property remaining to pay his debts, or that the daughter Rosalie was a good-faith purchaser for value. They seek to meet the situation by contending: (1) That the record as made shows that Newberry had, after the conveyance to his wife, sufficient property remaining to pay appellant's claim. (2) That appellant, as attorney for Newberry, advised the making of the deed to the wife, and participated in its making, and that he was thereby estopped to claim that the conveyance was fraudulent as to him. (3) That the property in question was the homestead of Newberry or his wife, and that Rosalie therefore took it free from the claim of the creditors of Newberry.
The first of these contentions is predicated on the fact that the record discloses that the land, aside from that conveyed to Rosalie, was sold or traded to Manny for a stock of goods taken at $ 20,000. The difficulty with this is that the title to the land was then in Mrs. Newberry, and the proceeds of its sale would belong to her, and not to Newberry; and any effort to subject the stock of goods to the payment of Newberry's debts would have encountered the same situation which appellant is meeting here. The fact that a fraudulent grantee has the property so conveyed to him, or the money for which he sold it, or other property for which he traded it, does not, obviously, establish that the grantor has property remaining with which to pay his debts. The creditor is still confronted by the fraudulent conveyance of the debtor's property. And, if real estate conveyed in fraud of creditors is still in the hands of a fraudulent grantee, a creditor is not deprived of his right to proceed against that by reason of the fact that the same or another fraudulent grantee may have the...
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