First National Bank in Sioux Falls v. Dunham

• Decision Date: 08 January 1973
• Docket Number: No. 72-1310,72-1311.,72-1310
• Citation: First National Bank in Sioux Falls v. Dunham, 471 F.2d 712 (8th Cir. 1973)
• Parties: The FIRST NATIONAL BANK IN SIOUX FALLS, Appellee, v. L. T. DUNHAM, Appellant, et al. The FIRST NATIONAL BANK IN SIOUX FALLS, Appellee, v. L. T. DUNHAM et al., Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

471 F.2d 712 (1973)

The FIRST NATIONAL BANK IN SIOUX FALLS, Appellee, v. L. T. DUNHAM, Appellant, et al.

The FIRST NATIONAL BANK IN SIOUX FALLS, Appellee, v. L. T. DUNHAM et al., Appellants.

Nos. 72-1310, 72-1311.

United States Court of Appeals, Eighth Circuit.

Submitted October 20, 1972.

Decided January 8, 1973.

David L. Grannis, Jr., Grannis & Grannis, South St. Paul, Minn., and James J. O'Connor, West St. Paul, Minn., for appellant.

Norman R. Carpenter, Faegre & Benson, Minneapolis, Minn., for appellee.

Before HEANEY and STEPHENSON, Circuit Judges, and BOGUE, District Judge.^*

BOGUE, District Judge.

Plaintiff (appellee) obtained a judgment against defendant L. T. Dunham (appellant) from the Second Judicial Circuit Court for the State of South Dakota. Plaintiff was unable to satisfy the South Dakota Judgment and therefore brought this diversity action in the United States District Court for the District of Minnesota. Plaintiff asked Judge Lord to set aside certain alleged fraudulent conveyances of property, to pierce the corporate veil of Dunham, Inc., and Dunham Appraisal, Inc., and to apply these assets to the unsatisfied judgment. In addition, plaintiff sought to recover attorneys' fees from defendant, L.T. Dunham. Judge Lord found for the plaintiff on all material issues and judgment was entered on April 20, 1972.

Defendants now appeal from this judgment and present four issues for review by this Court. They are as follows:

1. Were the transfers by L. T. Dunham of 24 shares of Dunham, Inc. stock in 1967 and 15 shares of Dunham, Inc. in 1968 made to defraud his creditors, and therefore fraudulent conveyances?

2. Was the transfer by Dunham, Inc. of property at 922 South Robert Street a fraudulent conveyance?

3. Did L. T. Dunham use Dunham, Inc. as a means to defraud his creditors?

The trial court answered each of the above questions in the affirmative and made specific findings of fact on each issue. The findings of fact are not "clearly erroneous" and for this reason we affirm the judgment of the trial court on the three issues listed above.

The fourth issue defendants present on appeal concerns the trial court's award of $7,500.00 to the plaintiff for attorneys' fees.

Rule 54(d) of the Federal Rules of Civil Procedure provides that the taxation and allowance of costs is subject to the discretion of the court. Ordinarily attorney's fees are not taxable as costs except where there are "dominating reasons of fairness and justice." See Mercantile-Commerce B. & T. Co. v. Southeast Ark. Levee Dist., 106 F.2d 966, 971 (8th Cir. 1939) and Bradley v. School Board, 53 F.R.D. 28 (E.D.Va.1971). In addition, several courts have allowed attorneys' fees to be awarded where the fraudulent conduct of a debtor places the creditor in a position where he is required to litigate with third parties in order to enforce his judgment. See Tarnowski v. Resop, 236 Minn. 33, 51 N.W.2d 801, 804 (1954); Prior Lake State Bank v. Groth, 259 Minn. 495, 108 N.W.2d 619 (1961); and Dworksy v. Vermes Credit Jewelry, Inc., 244 Minn. 62, 69 N.W.2d 118, 124 (1955). See also Peter Kiewit Sons Co. v. Summit Construction Co., 422 F.2d 242, 274-275 (8th Cir. 1969) and Wilshire Oil Co. of Texas v. Riffe, 409 F.2d 1277, 1285 (10th Cir. 1969).

Judge Lord states in his opinion that the award...