Ebel v. Rock Island Implement Co.

• Citation: 186 P. 719,67 Colo. 135
• Decision Date: 05 January 1920
• Docket Number: 9398.
• Parties: EBEL v. ROCK ISLAND IMPLEMENT CO. et al.
• Court: Colorado Supreme Court

186 P. 719

67 Colo. 135

EBEL v. ROCK ISLAND IMPLEMENT CO. et al.

No. 9398.

Supreme Court of Colorado, En Banc.

January 5, 1920

Error to District Court, Rio Grande County; Jesse C. Wiley Presiding Judge.

Action by the Rock Island Implement Company against Katie Ebel and another. Judgment for plaintiff, and defendant named brings error.

Reversed with instructions.

Teller and Denison, JJ., dissenting.

James P. Veerkamp, of Monte Vista, for plaintiff in error.

H. M Howard, of Monte Vista, Wm. B. Vates, of Pueblo, and E. C Ellis, of Kansas City, Mo., for defendants in error.

SCOTT J.

The complaint in this case by the Rock Island Implement Company against the defendants below, Christ Ebel and Katie Ebel, his wife, alleged in substance that Christ Ebel on August 17, 1911, executed and delivered to the plaintiff two promissory notes in the aggregate sum of $2,210, and upon which plaintiff secured a judgment against Ebel in the district court of Russell county, Kan., on January 5, 1915, in the sum of $2,502 and costs; further, that judgment was rendered in the district court of Rio Grande county, Colo., based on the Kansas judgment, on September 25, 1915, against Ebel in the sum of $2,848.55; that Ebel had been the owner of a tract of land containing 720 acres in Russell county, Kan.; that he exchanged this tract of land for one in Rio Grande county, Colo., during the month of December, 1913, consisting of 240 acres, with certain water rights; that he caused the deed to the Colorado land to be executed to Katie Ebel, his wife, with intent to cheat and defraud his creditors, and particularly the plaintiff, and that Katie Ebel knowingly joined in the fraud; that Christ Ebel, except for the Colorado land, was insolvent.

The prayer was for a decree adjudging the title to the Colorado lands to be held in trust by Katie Ebel, and that the premises be sold upon execution as the property of Christ Ebel, free from any claim by Katie Ebel, and that the proceeds from such sale, after payment of costs, be applied to the payment of the plaintiff's said judgment.

Katie Ebel filed her separate answer, in which the judgment against Christ Ebel was admitted and as unpaid, admitted the ownership of the Kansas land to have been in Christ Ebel, and the exchange for the Colorado lands, and that the same were conveyed to her, alleged that there was at the time of the exchange a mortgage on the Colorado lands in the sum of $15,000 and a mortgage on the Kansas lands of $16,000, denied any fraud or fraudulent intent in the conveyance to her, and alleged that the conveyance was made to her in payment of a valid and existing debt due at the time from Christ Ebel to her.

It seems that Christ Ebel in 1916 filed his petition in voluntary bankruptcy in the federal District Court for Colorado, and the trustee in bankruptcy was made a party to this suit.

The decree of the court was that the plaintiff have a valid and subsisting lien upon the premises to the extent of its judgment, that Katie Ebel was a trustee for the creditors, and ordered the premises to be sold at execution sale and the proceeds applied as follows: (1) To the payment of costs; (2) to the payment of the sum of $1,200 to Katie Ebel, with interest from December 20, 1913; (3) to the payment of the costs of the prior suit in Rio Grande county of the plaintiff against Christ Ebel; (4) to the payment to the trustee in bankruptcy of the sum of $2,848.55, with interest from September 29, 1915, the remainder, if any, to abide the further order of the court. It is this judgment that is before us for review.

The testimony shows without dispute that the defendants, as husband and wife, emigrated from Russia and located in Russell county, Kan., in 1885, and that Katie Ebel brought with her as part of her father's estate 1,500 rubles Russian money, for which she received about $750, that shortly after their arrival she loaned the sum to the father of Christ Ebel, who repaid it to her at the expiration of about two years, and that she then loaned it all to Christ Ebel under his promise to repay her, and that this sum nor any of it had been repaid at the date of the exchange of properties. It was this sum so borrowed from his wife and about $250 which Ebel had saved from his labor as a section hand with which Ebel started in the business of farming and later as a dealer in live stock, until he had acquired the 720 acres so traded for the Colorado land, together with some live stock and a residence in the town of Russell.

Several years before the exchange of lands Katie Ebel received about $350 additional from her mother's estate, which she also loaned to Christ Ebel at the time, under like agreement to repay, and which had not been repaid.

Some time before the exchange of lands Christ Ebel had extended his credit to his son-in-law, who was engaged in the agricultural implement business, and who appears to have failed, and Christ Ebel was called upon to make good his losses. To do this he mortgaged the 720 acres of land in the sum of $16,500, which he paid on his debts. This not being sufficient, he later executed the two notes to plaintiff out of which the present judgment grew. In the exchange of lands each party assumed the respective incumbrances as above stated, and Christ Ebel received $1,600 in cash, which he applied on his said indebtedness.

It appears that after the transaction the husband and wife sold their home, and that this money went to Katie Ebel, but the court found that there was at least $1,200 due her at the time of the conveyance, which was the consideration in the deed to her.

The court held that the deed was in trust; that the lands held by her were simply as trustee, and apparently for the purpose of securing the payment of claims of creditors.

There is not a scintilla of evidence in the case to support the theory of a trust. Under the pleadings and evidence there was not a trust created by operation of law.

The complaint alleged that the conveyance was made in fraud and for the sole purpose of cheating and defrauding the creditors of Christ Ebel. Both Katie Ebel and Christ Ebel testify positively that the deed was made in consideration of an indebtedness due, and was in satisfaction of such indebtedness, and was absolute in fact. There is not a suggestion of anything to the contrary in the evidence. Then, under the facts of this case, the deed was either in fraud of creditors, and for such reason void in toto, or it was made in reasonable consideration for a valid existing debt and is valid and binding as against creditors.

The court specifically found in its summing up at the time of rendering judgment that no fraud appeared on the part of Katie Ebel. He did not find that there was any fraud on the part of Christ Ebel. His conclusions, delivered orally, were in the exact language as follows:

'I presume it is not necessary to recount all the matters that grew out of this litigation from the time of its inception. What is more important is from the time that Christ Ebel became involved while he was in Kansas. It appears in evidence that he traded some land in Kansas for some land here in Colorado, that is, traded equities, and in taking title to the Colorado land the title were taken in the name of Katie Ebel, wife of Christ Ebel, one of the defendants here also. It appears from the evidence here also that while they lived in Kansas, prior to coming to Colorado, the defendant Katie Ebel inherited some money, and this she turned over to her husband, the defendant Christ Ebel, which was used in and about the business investments; the defendant Christ Ebel having control and management of all of their property. There has been some evidence as to the two defendants having a house and lot in Russell, Kan. This was sold, and the proceeds were taken by the defendant Katie Ebel, which, as the court remembers the testimony of the defendant Christ Ebel, was to apply on what he owed at the time the title was taken to the Colorado lands. He contended that there was a balance of $1,300 still owing on this patrimony; the title having been taken by the defendant Katie Ebel to the land here in exchange for equities held by the defendant Christ Ebel in Kansas would form a trust if there was any equity there above the amount of the mortgage on the land here. The court can only take the defendant's testimony as to that. Defendant Christ Ebel testified that he considered he had an equity of $10,000 in excess. If this trust was once created, it still remains, but he also has a right to prefer the defendant Katie Ebel as a creditor. There being no fraud appearing on her part, the conclusion would be then that she was a preferred creditor for $1,300, and the balance of the property in Colorado would be subject to this creditor's claim.'

It was hardly fair to say that Christ Ebel testified 'that he considered he had an equity of $10,000 in excess.' The court seems to have overlooked the exact testimony on this point, rather seeming to rely on recollection. This testimony was upon cross-examination, and was exactly as follows:

'Q. You came out and looked [the land] over? A. Yes, sir.

'Q. And you went back and reported to her what you had found out here? A. Yes, sir.

'Q. And tried to describe it to her, did you, and told her about it as nearly as you could? A. Yes, sir.

'Q. And how far from town it was? A. Yes, sir.

'Q. And what kind of land? A. Yes.

'Q. And the irrigation and all those matters? A. Yes, sir; just the way I found it.

'Q. You told her what you thought it was worth? A. I couldn't tell her what it was worth at that time. I told her what people told me.'

And again:

'Q. Now, sir, you traded equities worth from $10,000 to $12,000 out...