First Nat. Bank of Ashley v. Mensing

• Decision Date: 06 December 1920
• Citation: 46 N.D. 184,180 N.W. 58
• Parties: FIRST NAT. BANK OF ASHLEY v. MENSING et al. (three cases).
• Court: North Dakota Supreme Court

46 N.D. 184

180 N.W. 58

FIRST NAT. BANK OF ASHLEY

v.MENSING et al. (three cases).

Supreme Court of North Dakota.

Nov. 16, 1920.

Rehearing Denied Dec. 6, 1920.

Syllabus by the Court.

In three actions brought by a judgment creditor to subject to the lien of the judgment three parcels of land purchased subsequent to the judgment, each in the name of a different child of the judgment debtor, the evidence showed that the children in whose names the lands had been purchased had advanced to their father and mother from time to time moneys in excess of the amounts paid by the father upon the purchase price at the time of purchase; also that the children in whose names the lands were purchased worked away from home, earning money, part of which was turned over to the father, with an understanding that he would repay it at a subsequent time, whenever they might desire to invest it. It is held:

(1) The evidence fails to show that the lands were purchased in the names of the various grantees in circumstances indicating that they held the title in trust for their father as the beneficial owner.

(2) Where a conveyance is attacked by a judgment creditor as fraudulent, the burden of proving the fraud rests upon the one asserting it.

(3) The relationship of parent and child existing between parties to an alleged fraudulent conveyance does not remove from the creditor the burden of proving fraud.

(4) Relationship of parent and child between the parties to an alleged fraudulent conveyance is a circumstance calling for a close scrutiny of the transaction, but is not itself a badge of fraud; nor does it give rise to a presumption supplanting proof.

(5) Suspicious circumstances alone are not equivalent to proof of fraud, and do not warrant a judgment in the face of satisfactory evidence of bona fide debtor and creditor relations between parent and child.

(6) An insolvent debtor's preference of his child is not fraudulent as a matter of law.

Appeal from District Court, McIntosh County; Graham, Judge.

Actions by the First National Bank of Ashley, N. D., against Wm. H. Mensing, his wife, and Elizabeth Mensing, against the husband and wife and Harold Mensing, and against the husband and wife and R. G. Mensing. Cases consolidated and tried as one, and judgment in each case for plaintiff, and defendants in each case appeal and ask a trial de novo in the Supreme Court, and plaintiff appeals in the case against defendant Elizabeth Mensing. Judgments reversed, and judgment entered for defendants in each case dismissing the action.

Cameron & Wattam, of Bismarck, for appellants.

Curtis & Remington, of Lisbon, George & Rohwedder, of Fargo, and E. T. Burke, of Bismarck, for respondent.

BIRDZELL, J.

In December, 1911, the Union State Bank of Ashley, N. D., obtained a judgment against William H. Mensing and Prudie W. Mensing, his wife, for $2,115.45. Execution was promptly levied upon property of the judgment debtors, and it was sold for $1,340.35, which amount was credited on the judgment, leaving a balance of $775.10. The plaintiff herein, the First National Bank of Ashley, is the successor of the judgment creditor and owner of the judgment. This action was brought against the judgment debtors and Elizabeth Mensing, a daughter, for the purpose of subjecting to the lien of the judgment the northwest quarter of section 17, township 130, range 69, in McIntosh county. The legal title to this property stands in the name of Elizabeth L. Mensing. It is claimed by the plaintiff that the defendants William H. and Prudie Mensing are the equitable owners; that the land was bought with their money and placed in the name of the other defendant to hinder the plaintiff in the collection of its judgment.

A similar action was brought against William, Prudence, and Harold Mensing (a son), involving the northeast quarter of section 18, township 130, range 69, standing in the name of Harold Mensing, and one against William, Prudence, and R. G. Mensing (another son), involving the northeast quarter of section 7, township 130, range 69, standing in the name of the latter. The three cases were consolidated and tried as one. At the conclusion of the trial, judgment was entered in each case favorable to the plaintiff, except in one particular to be noted. The defendants appeal and ask for a trial de novo in this court.

In this action, the one in which Elizabeth Mensing is a defendant, the judgment, however, further provided that the northwest quarter of section 17, township 130, range 69, was the homestead of William and Prudence Mensing, and dismissed the plaintiff's action as to that quarter, awarding costs to the defendants. Both the plaintiff and the defendants appeal from this judgment.

Since the evidence bearing upon each transaction in which the land was purchased in the name of a defendant other than William and Prudence Mensing has more or less of a circumstantial bearing upon the other transactions, it is not practicable to treat each transaction separately. One opinion will therefore suffice for the three cases.

Elizabeth Mensing, who was 27 years of age at the time of the trial of this action, testified that she purchased the northwest quarter of section 17, township 130, range 69, in December, 1916, for $2,500, $1,000 being paid in cash and the balance embraced in a mortgage assumed by her. The cash payment was advanced by her father, William Mensing, who has also paid the interest on the mortgage. She further testified that since the year 1906 she had worked away from home in various employments, and had paid to her father from $10 to $15 per month, as a consequence of which payments he was indebted to her at the time of purchase to the extent of about $1,500. The money was to be repaid to her at any time she wanted it for investment. William Mensing testified that he owed his daughter Elizabeth more than the $1,000 which he advanced, and that he acted as her agent in the purchase of the land. There was no accurate record kept of the amount advanced by Elizabeth to her father.

The Mensing family lived upon the land, which stood in the name of Elizabeth, and the son, Harold, who was 20 years of age at the time of the trial, farmed it. Most of the machinery belonged to the father, and he received a share of the crop for its use.

The northeast quarter of section 18, which stands in the name of Harold, was deeded to him by his sister, Lina Hite, before her marriage in consideration of $1,201, $1,200 of this consideration representing a mortgage which was assumed by Harold. Lina Hite is not a party defendant in the action involving this quarter section. The material facts with reference to its original acquisition by her, however, according to the testimony, are as follows:

In July, 1917, she took title by warranty deed from C. A. Wenzel and wife. The consideration paid was $1,000. Five hundred dollars she obtained from her father, $300 was taken from the proceeds of a loan of $1,200, secured by a mortgage on the land, and $200 she obtained on her mother's note in the Security State Bank of Wishek. This note was later paid by her father. The $900 remaining of the $1,200 loan was turned over to her father. William Mensing testified that he advanced $500 on the purchase price of this Lina-Harold Mensing quarter, and that it represented money that he owed his daughter on account of money she had previously turned over to him while teaching school. There is some discrepancy between the testimony of the two Mensings and the testimony of the bank cashier with reference to the net amount of the proceeds of the loan that was deposited to the credit of William after the purchase price of the land was paid. But the amount was either $900 or $700. From all of the testimony, however, it clearly appears that William received back from this loan all of the money which he had advanced. If this quarter, then, is considered at the time of the purchase as Lina's, so far as this record shows none of her father's money is invested in it, and he would still owe her any money she might have advanced to him while teaching school.

The R. G. Mensing quarter, the northeast quarter of section 7, township 130, range 69, was purchased in October, 1917, from one J. F. Frazier for the consideration of $2,000. Of this $2,000, $1,000 was paid in cash, $500 being obtained from William Mensing, the other $500 being paid by a check...