Goodale v. Wheeler

• Decision Date: 28 April 1902
• Citation: 68 P. 753,41 Or. 190
• Parties: GOODALE v. WHEELER et al.
• Court: Oregon Supreme Court

68 P. 753

41 Or. 190

GOODALE v. WHEELER et al.

Supreme Court of Oregon

April 28, 1902

Appeal from circuit court, Lane county; J.W. Hamilton, Judge.

Bill by J.C. Goodale against A. Wheeler and others to set aside alleged fraudulent conveyances. From a decree for plaintiff defendants appeal. Affirmed.

Geo. E. Chamberlain, for appellants.

John M Williams and L. Bilyen, for respondent.

WOLVERTON J.

This is a creditors' suit instituted June 12, 1899, to have A Wheeler declared to be the owner of lots 1 and 2, block 6, in Fairmount, Lane county, Or., to set aside certain conveyances of said lots and subject them to the payment of plaintiff's demand. On October 22, 1892, plaintiff and others became sureties for Wheeler upon a promissory note, which remaining unpaid, a judgment was, on June 12, 1896, obtained against all the makers. Plaintiff subsequently paid the judgment, amounting to $1,874.35, and on May 13, 1899, filed his notice of such payment and claim for contribution against the co-sureties for their pro rata share thereof, and against Wheeler for the whole amount. Subsequently execution was issued and returned nulla bona. That Wheeler is indebted to the plaintiff in this amount with accumulated interest is satisfactorily established. The defendant Mary B. Wheeler is the wife of A. Wheeler, and O.A. Wheeler, T.C. Wheeler, and A.C. Wheeler are his sons and the step-sons of Mary B. Wheeler. The defendant the Lane Lumber League was incorporated and organized about July 28, 1892, with a capital stock of $50,000, divided into 500 shares of $100 each. A. Wheeler subscribed for 250 shares, O.A. Wheeler for 18, T.C. Wheeler for 9, and W.N. Cheesman and B.A. Washburne for 1 each. Cheesman and Washburne paid nothing on their stock, and were conceded to be only nominally stockholders. On the day of the organization of the company by the election of directors, A. Wheeler and T.C. Wheeler made a proposition, which was accepted, to sell to the company certain property at values placed opposite the description thereof, namely: A sawmill, planning mill, water rights under lease for 99 years, stable, sheds, yards, etc., $21,000; timber land, section 16, township 18 S., range 1 E., $3,500; lumber to be invoiced, $3,500; merchandise, safe, teams, wagons, camp equipments, etc., $1,700; logs, 2,224,254 feet at 4 1/2, $10,009.14; interest in lumber and accounts of the U.W.L.M. Association, at Eugene, $3,200; lumber on the yard at Albany, $2,000; total, $44,909.14, payable in capital stock of the company for $27,700, and its notes for the balance. On August 29, 1892, A. Wheeler and Mary B., his wife, by deed then delivered, of date July 29, 1892, and by other transfers, conveyed to the company all the real property noted in the above schedule, except one-half of the school section, which purports to have been transferred by O.A. Wheeler, whereupon the company executed and delivered to A. Wheeler 11 notes, aggregating $16,683.44, due and payable at dates ranging from September 5, 1892, to July 5, 1893. There was due the state, upon the school section transferred, the sum of $400, which the company assumed, but to reimburse it therefor Wheeler agreed to indorse the amount upon the last of its notes to fall due. The stock books were made to show that 279 shares of the capital stock of the company were fully paid up, and it was ordered that the stock be issued. On November 25, 1892, the directors of the company were authorized to issue $10,000 in bonds, and to execute a mortgage on the real property of the concern to secure the payment of the same, the proceeds to be applied towards the payment of its existing indebtedness. These matters are shown by the minutes of the director's meetings. On October 7, 1895, at a directors' meeting called for the purpose, the company was authorized to convey to H.C. Humphrey certain real property valued at $1,200, to be sold by him and the proceeds applied in satisfaction of certain interest due on its bonds. This was the last meeting attempted to be held by the board of directors, and none were held between November 25, 1892, and that time. Nor does there appear to have been any meeting of the stockholders, except the first, held on June 28, 1892. H.C. Hunter conveyed to O.A. Wheeler, trustee, the property in question, June 5, 1894. On May 15, 1895, he conveyed to T.C. and A.C. Wheeler, and on the same day they conveyed to Mary B. It is alleged, in effect, that at the time of the organization of the Lane Lumber League the defendant A. Wheeler was insolvent; that the company was organized by and at his instigation, as a scheme to enable him to cover up his property and defraud his creditors, and to that end he transferred to it all of his property; that O.A. Wheeler took and received said deed nominally as trustee for the company, but in reality for A. Wheeler, who was the real beneficiary; that O.A. conveyed to T.C. and A.C., and they to the wife, Mary B., without consideration, and that such conveyances were fraudulent as to the plaintiff, and a hindrance to the enforcement of his judgment against the defendant A. Wheeler. It is admitted that Mary B. gave nothing for the property, and the father and sons all say that it was a gift to her by the sons. Wheeler asserts that he was not insolvent at the time, and denies any purpose of defrauding his creditors, through the instrumentality of the corporation or otherwise. His indebtedness, he states, was about $25,000, and that his assets consisted of the property turned into the company and some $11,100 in stocks, notes, and accounts, which he retained in his own right; or, to put it in another way, he asserts that his assets, after the organization and transfer to the company, consisted of $25,000 in stock of the company, its notes for $16,683.44, and stocks, notes, and accounts retained, $11,100; total, $52,783.44.

The evidence discloses that the mill property, including the...