Evans v. Trude

Decision Date30 January 1952
Citation193 Or. 648,240 P.2d 940
PartiesEVANS v. TRUDE et al.
CourtOregon Supreme Court

Lynn Moore, of Springfield, for defendants-appellants.

George Rhoten, of Salem (Rhoten & Rhoten, Salem, on the brief), for plaintiff-respondent.

No appearance for defendants-respondents.

Before BRAND, C. J., and HAY, LUSK, LATOURETTE and WARNER, JJ.

WARNER, Justice.

Jack L. Evans, the plaintiff, is a judgment creditor of Dale W. Trude. He brings this suit to set aside as fraudulent the debtor's deed to the defendant, Pearl Trude, his mother. He also seeks a declaration that Dale W. Trude is the owner of an undivided one-half interest in the premises described therein subject to the lien of plaintiff's judgment. The property is situated in Salem, Oregon. From a decree in favor of plaintiff and preserving the respective rights and interests of the defendants, Fred J. Champlin and Popira M. Champlin, his wife, and May Gibson, the defendants, Pearl Trude and James A. Trude, her husband, alone appeal.

A rather full and chronological statement of events, both antecedent and subsequent to the giving of the disputed conveyance, with emphasis on significant dates, is essential to a correct understanding of the grantor's and grantee's relationship to the challenged deal and our conclusions.

Prior to August, 1945, the appellants Trude resided in the state of Minnesota. They came to Oregon that year and established a home in Springfield, where they presently reside. Their son, Dale Trude, followed them to this state in September, 1947, settling in the city of Salem where he obtained employment as a field auditor with the State Tax Commission. Shortly thereafter, Dale learned that some houses in Salem were to be sold as salvage and, believing that their purchase offered an opportunity for making a profit on resale, interested his father in the speculation. The defendant, James Trude, had experience as a builder and at various times acted as a contractor on his own account and was, indeed, then engaged in the building of houses for resale in the Springfield area where he operated under the name of Progress Construction Company. The proposition presented by Dale to his father contemplated the buying of one or more of the salvaged Salem houses, moving them to new premises, and there remodeling them for resale. Dale represented that he would be willing to put in what spare time he had from his job and handle all the business incident to the transactions, if his father would put up the required capital.

These negotisations between the father and son resulted in the purchase of three units on October 4, 1947, for a price of $500. James Trude advanced the necessary money for that purpose. Dale was entrusted with the responsibility of finding a lot upon which to move one of the houses for remodeling. He found the property, which is the subject of this litigation. It was he who made all the arrangements for its purchase. It was acquired on October 23, 1947, from Mr. and Mrs. James Linn through Salem real estate brokers, and again James Trude laid out the $900 required as the sale price. The deed for this property, which we will hereafter refer to as the 'Linn deed,' ran to Dale W. Trude and James A. Trude 'as joint tenants.' Dale and his father thereafter spent all their spare time remodeling the house which was subsequently moved to it.

Although the Linn deed bespeaks the ownership of an undivided one-half interest in both the father and son, it is claimed by the appellants that under the true arrangement between them, Dale should only be paid for his trouble in handling the transaction and for the labor expended by him on the house by receiving credit for one half of any net profit made on resale; but the profit, if any, was to be applied as credit on a debt which appellants claim Dale owed them by reason of loans which they had made to him while he yet lived in Minnesota and a further loan of $750 which they say they had made to him shortly after he came to Oregon.

On January 15, 1948, the plaintiff, Jack L. Evans, sustained severe personal injuries as the result of a collision with an automobile driven by Dale Trude. The severity of Evans' injuries required, among other things, the amputation of his left leg. Prior to March 19, 1948, Dale was relying on an insurance company to protect him against claims arising out of the injuries sustained by Evans. Notwithstanding that he had at one time been an agent in the east for this very insurance company and was familiar with all the terms and conditions of its liability coverages, he made certain false and fraudulent representations to it concerning the automobile involved in the accident. This he confessed while on the witness stand in the trial of the instant case. The insurance company, after an extended investigation, formally advised Dale Trude, about March 19, 1948, that it would not protect him against the claims of Evans arising out of the accident referred to.

Dale, from his negotiations with the insurance company, had reason to anticipate its final refusal to accept any responsibility and grew apprehensive, for on March 17, 1948, he and his wife executed a quitclaim deed conveying all their right, title and interest in the subject property to Pearl Trude, Dale's mother, for a recited consideration of $10. This, so Dale tells us, was done at his father's direction. He retained the deed, however, and did not deliver it until after he was certain that Evans would sue him.

On April 6, 1948, the plaintiff herein filed a damage action in the circuit court for Marion county, Oregon, praying for general and special damages against Dale Trude in amounts aggregating $40,234.80. The very next day the quitclaim deed from Dale and his wife to Pearl Trude was delivered to the defendant, James Trude, and by him recorded on April 8, 1948.

Pursuant to arrangements made by Dale Trude, the defendants, James Trude and his wife, on May 17 obtained a mortgage loan of $1,800 on the property. This mortgage was later assigned by the mortgagee to May Gibson, who at the time of trial was its owner and holder, together with the note secured thereby. It is by reason of her ownership of this lien that she was made a party defendant.

On June 26, 1948, the appellants sold the property here involved under a land sale contract to the defendants-respondents, Fred J. Champlin an Popira M. Champlin, his wife, for a price of $5,750. This, too, was the result of negotiations carried on by Dale in the names of his father and mother. At the time of trial, the Champlins were in possession of the property under this contract, and for that reason they were properly made parties defendant herein.

Through his attorneys, Dale filed an answer to the complaint in the damage suit. That case was tried before a jury on October 19, 1948, without, however, the presence of Dale for the reason that earlier in October of that year he had absconded from the state, fleeing to the state of Arizona in an automobile owned and supplied by his father. There he remained for some time. The trial in the damage case resulted in a verdict in favor of the plaintiff Evans for the full sum of $40,238.80 and costs. The entry of judgment was followed by the issuance of an execution on the judgment, which was returned by the sheriff unsatisfied. Nothing has ever been paid thereon.

The decree entered by the lower court in this matter cancelled and set aside Dale's deed of March 17, 1948, declared that Pearl Trude acquired no right, title or interest in the premises by reason of the deed, and found that Dale Trude's interest in the premises as a joint tenant was subject to the lien of the judgment obtained by Evans in October, 1948, but held that the interest of the defendant, May Gibson, under the mortgage executed by the parents of Dale Trude, was superior to all other liens or claims against the property. The court further decreed that the interest of the defendants Champlin as of the date of the commencement of this suit was unaffected and unimpaired by the invalidity of Dale's deed to his mother, and any balance due on the contract with the Champlins as of December 13, 1948, was declared to be subject to the lien of the judgment of the plaintiff Evans. The decree further directed that payments accruing from the defendants Champlin on the contract should thereafter be made to the clerk of the circuit court, subject to such orders as that court might thereafter make with reference thereto.

It is the contention of the plaintiff that the conveyance made by Dale Trude to his mother was fraudulent and made solely for the purpose of placing the property beyond the reach of execution upon the judgment previously obtained by Evans against Dale Trude.

A conveyance is declared to be fraudulent when its object or effect is to defraud another, or its intent is to avoid some duty or debt due by or incumbent upon the person making the transfer. First Nat. Bank v. Buckland, 128 Or. 242, 247, 273 P. 393; Clarke v. Philomath College, 99 Or. 366, 377, 193 P. 470, 195 P. 822.

The law furnishes no test for determining the fraudulent character of a conveyance other than adjudging what constitutes badges of fraud. Clarke v. Philomath College, supra, 99 Or. at page 377, 193 P. 470; Weaver v. Owens, 16 Or. 301, 304, 18 P. 579. Badges of fraud or, as they are sometimes called, the indicia of fraud are accompanying circumstances tending to excite suspicion and distrust as to the bona fides of the challenged conveyance and which, standing unexplained, may warrant an inference of fraud. Orsen v. Siegle, 170 Or. 153, 163, 132 P.2d 409; 37 C.J.S., Fraudulent Conveyances, § 79 p. 922. The burden of proof to establish fraud is on the party who has the affirmative of the issue; yet when, as here, numerous badges of fraud exist, the burden of explaining the transaction will be shifted to the transferee, who in this...

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    ...Payne v. Gilmore, 382 P.2d 140 (Okl.1963); Royal Indemnity Company v. McClendon, 64 N.M. 46, 323 P.2d 1090 (1958); Evans v. Trude, 193 Or. 648, 240 P.2d 940 (1952); Territorial Savings & Loan Ass'n v. Baird, 781 P.2d 452 (Ut.App.1989); Cashion Gin Company v. Kulikov, 1 Ariz.App. 90, 399 P.2......
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