First Nat. Bank of Mendota v. Sullivan, 5827.

• Decision Date: 03 February 1931
• Docket Number: No. 5827.,5827.
• Citation: 60 N.D. 391,234 N.W. 658
• Parties: FIRST NAT. BANK of MENDOTA, ILL, v. SULLIVAN et ux.
• Court: North Dakota Supreme Court

60 N.D. 391

234 N.W. 658

FIRST NAT. BANK of MENDOTA, ILL,

v.SULLIVAN et ux.

No. 5827.

Supreme Court of North Dakota.

Feb. 3, 1931.

Syllabus by the Court.

In an action by a judgment creditor to set aside a transfer of property made by the judgment debtor to his wife on the ground that the transfer was made with intent to defraud creditors, the plaintiff has the burden of showing that the transfer was fraudulent.

Syllabus by the Court.

The relationship of husband and wife, between a grantor and grantee in a conveyance alleged to be fraudulent as against creditors, is a circumstance calling for a close scrutiny of the transaction; but such relationship does not, of itself, establish a prima facie case for the plaintiff in an action brought by a creditor to have such conveyance set aside as fraudulent.

Syllabus by the Court.

In the instant case, it is held that the evidence is not sufficient to show that the conveyances of certain real and personal property by the husband to his wife were made for the purpose of defrauding either the plaintiff or other creditors of the husband.

Appeal from District Court, Ransom County; Hutchinson, Judge.

Action by the First National Bank of Mendota, Ill., against Jesse Sullivan and another. Judgment for plaintiff, and defendants appeal.

Reversed, and plaintiff's action dismissed.

Kvello & Adams, of Lisbon, for appellants.

C. G. Mead, of Lisbon, for respondent.

CHRISTIANSON, C. J.

This is an action to set aside certain conveyances of real and personal property by the defendant Jesse Sullivan to his wife, Ida Sullivan. In their answers, the defendants admitted that the conveyances had been made as alleged in the complaint, but denied that they were fraudulent, and alleged that they were made in compliance with, and consummation of, a contract entered into before their marriage. The answers further allege that one of the tracts of land conveyed constituted the homestead of the defendants, and that consequently the conveyance thereof in no event was fraudulent. The case was tried to the court without a jury. The court found that the tract claimed to be a homestead was in fact occupied by the parties as such at the time of the conveyance, and that hence the conveyance thereof did not constitute fraud. The trial court found further, however, that the conveyance of the real property other than the homestead, and of the personal property, was fraudulent, and that the deed and bill of sale should be set aside. The defendants have appealed from the judgment and demand a trial anew in this court.

The material facts are substantially as follows: In 1916 the defendant, Jesse Sullivan, and one Dunbar, entered into an oral contract to farm certain land belonging to the defendant Sullivan on a crop-share plan. Dunbar purchased a half interest in certain live stock, seed, and farm machinery. After the partnership had been in existence for some two or three years, an attempt was made to arrange a dissolution, but the parties were unable to agree. Dunbar left North Dakota in 1918 or the early part of 1919, and turned the matters in dispute then pending between him and the defendant Sullivan over to an attorney at Lisbon for adjustment. In June and July, 1918, such attorney wrote to the defendant Sullivan, and asked him to call at such attorney's office. Nothing further developed until in December, 1923, when Dunbar instituted an action against Sullivan. The action came on for trial in 1924. A reference was ordered. Sullivan was found to be indebted to Dunbar in the sum of approximately $2,900. Judgment was entered in favor of Dunbar in September, 1928.

Dunbar was indebted to the plaintiff bank on a promissory note in the sum of $5,000, and on November 19, 1923, the plaintiff bank commenced an action against Dunbar upon such note. At the time the main action against Dunbar was instituted, the plaintiff also instituted a garnishment action wherein the defendant Jesse Sullivan was named as garnishee. Dunbar defaulted, and the plaintiff was awarded judgment against him by default. Some time after the termination of the action brought by Dunbar against the defendant Sullivan, to wit, on April 1, 1929, judgment was rendered in the garnishment action in favor of the plaintiff, First National Bank of Mendota, and against the said Jesse Sullivan, as garnishee, in said action for the sum of $3,023.22.

On February 27, 1924, the defendant Jesse Sullivan executed and delivered to his wife, Ida Sullivan, a warranty deed conveying to her certain real property, including the property then occupied by them as a homestead. At the same time he also executed and delivered to her a bill of sale of certain personal property. This action was instituted to set aside these conveyances and to subject both the real and personal property so conveyed to execution issued upon plaintiff's judgment against Jesse Sullivan. Upon the trial of this action, the plaintiff called the two defendants for cross-examination. Aside from the documentary evidence, plaintiff adduced no evidence other than that adduced upon the cross-examination of the defendants. There is no dispute as to the facts stated above. The only question is whether the conveyances were or were not executed for the purpose of defrauding the plaintiff. The evidence shows that, at the time Sullivan and Dunbar entered into the partnership arrangement, Sullivan owned the land in controversy here free and clear of all incumbrances; also that he owned certain personal property such as horses, cattle, and necessary farm machinery. The evidence also shows that he had disposed of a considerable portion of such property before Dunbar instituted the action in 1923, although, at that time, he still had in his possession certain horses, cattle, and machinery. At the time Dunbar and Sullivan entered into the partnership, and during the continuance thereof, the defendant Ida Sullivan was the wife of one James Schenum, a neighbor of Sullivan. Schenum died February 23, 1920. At the time the partnership arrangement was entered into, the defendant Jesse Sullivan was living upon his farm with his then wife, who was and had been an invalid for some time. After the death of Schenum, the then Mrs. Schenum (the present defendant Ida Sullivan) came to the Sullivan home and nursed Mrs. Sullivan until her death, which occurred in October, 1920. After Mrs. Sullivan's death, Mrs. Schenum continued in Sullivan's employ as housekeeper. Jesse Sullivan and Mrs. Schenum were married January 11, 1921. Sullivan had proposed marriage some...