Doty v. Wheeler

• Decision Date: 08 January 1936
• Citation: 182 A. 468,120 Conn. 672
• Court: Connecticut Supreme Court
• Parties: DOTY et al. v. WHEELER et al.

182 A. 468

120 Conn. 672

DOTY et al. v. WHEELER et al.

Supreme Court of Errors of Connecticut.

January 8, 1936

Appeal from Superior Court, Fairfield County; Alfred C. Baldwin Judge.

Suit by Archibald C. Doty and others against O. F. Ozley &amp Company, Incorporated, Arthur N. Wheeler, and another, as maker and indorsers of a promissory note, and against George O. Hauslaib and Hazel M. Cavanagh, to set aside conveyances made by defendant Wheeler as fraudulent against creditors which was tried to the court. Judgment for plaintiffs, and defendants appeal.

Error as to defendant Cavanagh; error in form of judgment only as to defendant Hauslaib, and the cause remanded, with directions.

Lorin W. Willis, of Bridgeport (William E. Allen, Jr., of Bridgeport, on the brief), for appellant Arthur N. Wheeler.

David Goldstein, of Bridgeport (George A. Saden, of Bridgeport, on the brief), for defendant George O. Hauslaib.

Philip Pond, of New Haven (Joseph B. Morse, of New Haven, on the brief), for defendant Hazel M. Cavanagh.

Sydney P. Simons, of Bridgeport (Henry Greenstein, of Bridgeport, on the brief), for appellees.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY, JJ.

AVERY Judge.

The plaintiff brought this action to recover upon a promissory note executed by the defendant O. F. Ozley & Co., Inc., as maker and indorsed by the defendants Arthur N. Wheeler and O. F. Ozley. The plaintiff asked for judgment for the amount due on the note and also to set aside conveyances of real estate made by the defendant Wheeler to the defendants Cavanagh and Hauslaib, on the ground that the conveyances were fraudulent as against creditors.

At the trial, it was not controverted that the defendants O. F. Ozley & Co., Inc., and Arthur N. Wheeler were liable as maker and indorser, and judgment was rendered against them for $4,294.62, being the amount of the note with interest. No question is raised upon this appeal as to the propriety of this judgment and the liability of those defendants on the note. The court, however, in its judgment found that conveyances made by Wheeler to the defendants Cavanagh and Hauslaib were fraudulent as against creditors, and gave judgment setting aside the conveyances of real estate by Wheeler to those defendants and revesting in Wheeler the title to the property conveyed. The questions raised upon this appeal are whether, upon the facts found with such corrections as the appellants are entitled to, the deeds from Wheeler to the defendants Cavanagh and Hauslaib were fraudulent as against the plaintiff. A further question arises that even if the deeds were fraudulent, whether or not the judgment should have gone beyond setting aside the conveyances so far as might be necessary to satisfy the plaintiff's claim.

The essential facts appearing in the finding, with such corrections as the appellants are entitled to, are as follows: The note in question was dated August 19, 1932. It was indorsed by Arthur N. Wheeler and O. F. Ozley. Wheeler had been associated with the company from the time of its incorporation, and the debt upon which the note was given had existed some time prior to the date of the note. Previously, on October 9, 1928, Wheeler conveyed to the defendant Hauslaib nine parcels of real estate situated in the towns of Newtown and Trumbull with the buildings thereon; the assessed value of the real estate conveyed being $36,000. One of the properties in Trumbull was the Wheeler homestead, which had been in that family for two hundred years. The conveyances were absolute in form by quitclaim deed, but at the time there was an oral agreement with Hauslaib that Wheeler and his wife were to have the right to live in the homestead during their lives. The only consideration for these conveyances was love and affection. After the conveyance, Wheeler continued to occupy the homestead and used it in the same manner as he had previously. He has paid taxes on the properties and made substantial repairs and improvements including painting of the homestead, reroofing the house, repairing fences, buying fertilizer and ashes, and planting shrubbery; the repairs and improvements amounting to about $4,000 in value. Mrs. Wheeler with another person conducts a chicken farm upon the property, paying no rent therefor and without agreement with Hauslaib in relation thereto, and has erected numerous buildings, also without any agreement with Hauslaib. Since these conveyances, Wheeler had an engineer lay and stake out building lots for the purpose of sale. On August 13, 1931, Hauslaib executed a mortgage for $12,000 on the Trumbull property, arrangements for which were made by Wheeler, who received from the proceeds the sum of $5,439.02, for which he gave Hauslaib no note or evidence. The balance of the amount realized was expended by Wheeler for the purchase of stock of the United Illuminating Company, which was taken in the name of Hauslaib and afterwards sold, and the proceeds expended to pay notes of Hauslaib at various banks. Hauslaib did not know to whom Wheeler sold the stock nor the banks at which he owed the notes nor the amounts thereof, nor did Wheeler ever account to him for the use of the money.

Wheeler had been in the finance business for over thirty years, but until January 1, 1930, kept no books of account, canceled checks, or income tax papers by which his assets could be determined. However, in the books kept by him subsequent to January 1, 1930, there appears an account which purports to evidence eighteen loans from Hauslaib beginning March 25 1930, and extending to August 6, 1932, aggregating a total of $5,839.02, varying in amounts from $20 to $1,600. The books did not contain all of his transactions since January 1, 1930. In October, 1928, he owed the First National Bank of Bridgeport $35,449.91 on a note, upon which there was due at the time of the trial $1,510.55. In 1927, the City National Bank of Bridgeport recovered a judgment against him for $21,704.66, which judgment was obtained by default although Wheeler appeared by counsel, having been personally served. The execution was returned wholly unsatisfied upon this judgment, although it was subsequently paid by Wheeler. In November, 1933, Wheeler was adjudicated a bankrupt with total liabilities of $85,695.61 and total assets of $71. At the time of the execution of the deeds to Hauslaib, Wheeler was indebted to various banks in an amount not less than $250,000. From the facts appearing as to the manner in which Wheeler continued to...