Houska v. Lake

• Decision Date: 09 July 1938
• Docket Number: 33821.
• Citation: 80 P.2d 1102,148 Kan. 229
• Parties: HOUSKA et al. v. LAKE et al.
• Court: Kansas Supreme Court

80 P.2d 1102

148 Kan. 229

HOUSKA et al. v. LAKE et al.

No. 33821.

Supreme Court of Kansas

July 9, 1938

Syllabus by the Court.

Where a wife is a bona fide creditor of her husband, she occupies the same position as any other creditor and is entitled to repayment out of her husband's property without the conveyance being deemed fraudulent as to creditors.

Where husband, in good faith, prefers his wife to the exclusion of other creditors by transferring realty to her at a fair price, and in satisfaction of the debt, or a part thereof other creditors may not complain that the transaction is fraudulent as to them.

Where evidence tended to show that wife paid off mortgage on their homestead with her own money and thereupon husband conveyed adjoining property to her which was of less value than the mortgage debt which she had paid, other creditors of the husband could not complain that the transaction was fraudulent as to them.

Where it is shown that a wife is a bona fide creditor of her husband, she occupies the same position as any other creditor and is entitled to repayment out of her husband's property. And where, in good faith, he prefers her to the exclusion of other creditors by transferring real estate to her at a fair price and in satisfaction of the debt or a part thereof, other creditors may not complain the transaction is fraudulent as to them.

Appeal from District Court, Atchison County; Lawrence F. Day, Judge.

Action by Louise Houska and others against Ed. W. H. Lake and Esther Lake to set aside a deed as being in fraud of creditors. From a judgment in favor of the defendants, the plaintiffs appeal.

Judgment affirmed.

Steadman Ball, of Atchison, for appellants.

Hugo Orlopp, of Atchison, for appellees.

THIELE Justice.

This was an action to set aside a deed as being in fraud of creditors, and from a judgment for defendants the plaintiffs appeal.

Briefly stated, the petition alleged that plaintiffs had filed their action against the defendant Ed. W. H. Lake on January 7 1937, seeking recovery of money, and later had recovered judgment against him, and that execution on the judgment had been returned nulla bona; that on January 8, 1937, defendant Ed. W. H. Lake, without consideration and with intent to hinder, delay and defraud his creditors, particularly plaintiffs, and for the purpose of putting his property beyond the reach of his creditors, and particularly any judgment in the action above mentioned, conveyed to his wife certain described real estate in the city of Atchison, and that his wife accepted the conveyance with full knowledge of the intent and purpose of the husband.

By their answer, the defendants admitted the judgment against Ed. W. H. Lake, and that execution had been returned nulla bona. They alleged further that on September 19, 1913, Ed. W H. Lake was engaged in the mercantile business and borrowed $5,000 from an Atchison bank, securing his note by a mortgage on their homestead and other adjoining real estate; that the debt was not paid and a new note and mortgage was made in 1924; that defendant, Esther Lake, at the request of the lender of the money and without valuable consideration to her, joined in both notes and mortgages; that Esther Lake owned other real estate in her own right which she sold in 1928; that she had part of an inheritance from her father that the homestead of the parties was incumbered by the aforesaid mortgage, and foreclosure was due and on March 7, 1930 Esther Lake paid the mortgage debt in the sum of $5,000 and accrued interest with her own money; that on January 5, 1937, Ed. W. H. Lake, in consideration and part satisfaction of his indebtedness to his wife on account of her payment of the above mentioned mortgage debt, conveyed to her the real property in question, being the property adjoining the homestead of the parties, the value thereof being about $1,500, and that the conveyance was not made in fraud of creditors nor with intent to defraud, but to discharge his financial obligation to his wife. We need not notice the reply.

The two defendants testified as witnesses for plaintiffs and also in their own behalf. Without going into detail, Ed. W. H. Lake testified to the effect that in 1913 he borrowed $5,000 with real estate mortgage security, the note and mortgage being renewed and finally paid by Mrs. Lake in 1930. He did not know she had paid the note and mortgage until after the payment was made, and until after the payment there was no agreement she should be reimbursed; that he conveyed the involved real estate with no intention of hindering plaintiffs, but to pay his wife part of the moneys she spent in paying off the $5,000 mortgage. The banker testified that with one exception, Mrs. Lake had always paid the mortgage interest, and that Mr. Lake was not present when she paid the principal. He estimated the value of the property covered by the mortgage thus: Value of the homestead $2,500--"I doubt if the little house (one in controversy herein) would bring...