Hill v. Harritt

• Decision Date: 08 July 1932
• Parties: HILL v. HARRITT et ux.
• Court: Oregon Supreme Court

12 P.2d 1021

140 Or. 86

HILL v. HARRITT et ux.

Supreme Court of Oregon

July 8, 1932

Department 1.

Appeal from Circuit Court, Polk County; Arlie G. Walker, Judge.

Suit by J. E. Hill, trustee of the estate of K. W. Harritt, bankrupt against K. W. Harritt and wife. Decree for plaintiff, and defendants appeal.

Affirmed.

The plaintiff, who is the trustee of the estate of K. W. Harritt a bankrupt, brought this suit to set aside two deeds which Harritt, one of the two defendants, executed and delivered to his wife, Alves Harritt, the other defendant, May 19, 1930. Plaintiff charges that the deeds were not supported by any consideration, and that Harritt executed them for the purpose of defrauding his creditors. The answer denied lack of consideration and all averments of fraud. It alleged that prior to May 19, 1930, the defendants were the owners by the entireties of the two parcels of real property described in the complaint, and also of a third one; that on that day Harritt executed the two deeds, and his wife executed another which conveyed to him title to the aforementioned third property; that the purpose of these three deeds was to perform an agreement which the two had effected some months prior thereto for the purpose of terminating the estates by the entireties in the three pieces of property, and reducing them to individual ownership. The reply denied all of the new matter alleged in the answer. The trial resulted in a decree for the plaintiff for the relief sought by the complaint. The defendants appealed.

W. C Winslow, of Salem (James G. Heltzel, of Salem, on the brief) for appellants.

Walter L. Tooze, Jr., of Portland (Vinton & Marsh, of McMinnville, on the brief), for respondent.

ROSSMAN, J.

The parties are in accord upon the principles of substantive law governing this cause. The only serious problem which awaits solution concerns the inferences to be drawn from the evidence, a brief statement of which we shall now undertake to make.

Subsequent to their marriage, and prior to 1926, the two defendants, K W. and Alves Harritt, had lived upon a 33-acre farm in Polk county. The ownership of this farm, and of another in the same county, came to Harritt by inheritance from his parents. Subsequent to the death of the parents, Harritt's brothers and sisters executed a deed conveying title to both of these properties to K. W. and Alves Harritt. It is agreed that husband and wife held title by the entireties. Although the Harritts lived upon the 33-acre farm at that time, Harritt did not operate it, but was employed in the city of Salem at a salary of $155 per month. The two farms were operated by tenants. Mr. and Mrs. Harritt were the parents of two children who, by 1926, had progressed sufficiently in school that their parents believed it advisable to move to the city the better to educate the children. Accordingly, in that year the Harritts purchased a home in Salem, costing $3.800. They paid $1,000 upon the purchase price, and assumed two mortgages aggregating $2,800, secured by the home. At the same time they borrowed $1,700 upon the security of the 33-acre farm, using $1,000 of that sum to make the first payment upon the Salem property. The 14-acre tract was free from all indebtedness and was valued at $1,000. As witnesses, they estimated the value of the 33-acre farm at $3,800, subject, of course, to the $1,700 mortgage.

In the fall of 1928 Harritt purchased a secondhand Hudson automobile at the price of $675. According to both him and his wife, this purchase resulted in marital discord. Harritt testified, "She didn't like it because I didn't get a small car." Mrs. Harritt testified, "I was just opposed to it because I had more or less the responsibility of the home and I was opposed to him buying a car that took so much to operate. *** His car wasn't paid for and he wasn't paying it, and he just couldn't out of his wages that he got; he was determined to keep it, so he put a mortgage on his place. I was required to sign that mortgage, and I didn't want to do that, but to keep his car he put that mortgage on his place. ***" The court: "This trouble between you and your husband never reached the proportion where there was any contemplation of a separation or a divorce or anything like that? A. Very nearly, yes. I was really opposed, we never took any steps for that, but I surely was upset about it." According to the testimony, a short separation occurred about this time. But we notice that when Harritt was asked concerning this separation he fixed the time of it as in 1926. We quote from his testimony thus:

"Q. She never left you, did she? A. About a week once.

"Q. What? A. About a week once.

"Q. How long ago was that? A. 1926.

"Q. Away back in 1926? A. Yes.

"Q. Outside of that week that is about the only what you what you might call serious difficulty you ever had, you might have your family tiffs? A. The only one to any extent."

Mrs. Harritt did not mention the year when the separation occurred, but testified that it did not last more than several days, and that it was followed by marital harmony.

Mr. and Mrs. Harritt swore that the purchase of the Hudson and the resulting household friction caused the two to feel that that a settlement of their property rights would be desirable, and that in April of 1929 the two, after much discussion, agreed that Mr. Harritt should execute deeds to Mrs. Harritt for the 14-acre tract and the Salem home, and that she should convey to him the 33-acre farm. They testified that they believed such a division of their properties would be fair, and that they were somewhat influenced to that specific division by the fact that the home had originally been purchased for the wife. However, the parties executed no deeds at that time. Harritt testified, "We just let the thing drift along." His wife, in explanation of the failure to exchange deeds, testified, "I was engineering everything and I could do a little bit better, and we let things kind of run along that way, because he had turned his money over to me and I was making the payments on our house in town." It seems that, beginning with April of 1929, Harritt gave his wife $120 every month out of his $155 per month wages.

December 31, 1929, while the son of the Harritts was driving the Hudson automobile he collided with two other cars. Shortly thereafter Harritt sued one Seth Fawk, the operator of one of the other cars which had participated in the collision, but was defeated in the action. Later, four of the occupants of the third car brought actions against Harritt. The latter testified that his Hudson (the one which had caused the discord) was badly wrecked in the collision, and that on April 1, 1930, he purchased another secondhand Hudson at the price of $325. May 19, 1930, while the aforementioned actions were pending, the two Harritts called upon Mr. James Heltzel, an attorney, who prepared the three deeds under consideration, which they thereupon executed. Harritt explained the reasons which caused them to execute the deeds at that time, as follows:

"Well, after this accident, my wife says it has just got to be done, not to put it off any longer, she didn't want her property tied up in litigation.

"Q. What precipitated the execution of it and the manner in which it was carried out, what made you execute the deeds when you did? A. I got the car smashed up and I got another and she demanded that I get things straightened up right then."

Mrs. Harritt gave the following explanation of why the deeds were executed at that particular time:

"A. The same old story, my husband was going to buy another expensive car to keep up, he couldn't pay for the car he had before so I opposed it again, I was opposed to him buying another expensive car, it wasn't so much the cost of the car as the running expenses, and I objected to it again, it cost so much and I wasn't agreeable to it.

"Q. State whether or not you made a demand at that time that the agreement be carried out that you divide up the property. A. Yes, that was my demand."

Early in 1930 the Harritts had instituted negotiations with a Mr and Mrs. Working, looking forward to a lease for five years of the 33-acre farm to the Workings. After some discussion, the minds of the parties met, and on April 14, 1930, the Harritts informed the Workings that they could have the farm for the requested term. The Workings went into possession about a month later. The Harritts somewhat hurriedly decided to occupy this farm themselves, and, after urging the Workings, without results, to vacate, moved into another structure upon the farm. In the fall of the year the Workings vacated, although they were compelled to abandon their crops. The testimony indicates that the Harritts returned to the farm on account of their alarm about the possible outcome of the aforementioned four actions. May 31, 1930, Linnie Hill, plaintiff in one of the aforementioned actions, recovered a judgment against Harritt for $2,461. June 5, 1930, Wilma Hill, plaintiff in another of the four actions, recovered judgment for $800. On the same day, in the third action, a judgment for $75 was recovered, and in the fourth, a $1 judgment. September 20, 1930, being four months and one day after the execution of the aforementioned three deeds, Harritt filed a petition in bankruptcy in the federal courts, and on September 27th was adjudged a bankrupt. In his petition he averred that the only item of property which he possessed was the aforementioned 33-acre farm which he classified as exempt. It is agreed that writs of execution have been returned upon the above judgments unsatisfied. Evidence from witnesses, other than the defendants, indicates that the home and the 14-acre tract exceed in value by several...