Hughey v. Lind

Citation758 P.2d 431,92 Or.App. 433
PartiesHerschel HUGHEY, Appellant, v. David W. LIND, Margaret Lind, DML, Inc., an Oregon corporation, Lind Distributing, Inc., an Oregon corporation, and David L. Lind, doing business as Nexxus of Oregon, Respondents. 85-6-269; CA A43976.
Decision Date10 August 1988
CourtCourt of Appeals of Oregon

Robert D. Herndon, West Linn, argued the cause for appellant. With him on the brief was Hutchison, Hammond, Walsh, Herndon & Darling, P.C., West Linn.

Richard H. Busby, Portland, argued the cause and filed the brief for respondents.

Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.

BUTTLER, Presiding Judge.

In this action to set aside a fraudulent conveyance, plaintiff appeals from a judgment for defendants entered after a trial to the court in which the court found that the transfer had a legitimate purpose and, therefore, was not fraudulent. On de novo review, we reverse.

Defendant DML, Inc., was established in the early 1970s by defendants David W. and Margaret Lind for the purpose of distributing supplies to hairstyling salons. They were the only shareholders. On January 28, 1984, they passed a resolution to dissolve DML, but did not execute the Articles of Dissolution until May 7, 1984. The Articles of Dissolution state that all debts and liabilities of the corporation have been "paid and discharged in full" and that "[t]here are no suits pending against [DML] in any court."

After DML was dissolved, the Linds transferred its assets to Lind Distributing, Inc., a corporation owned by their son, David L. Lind. They signed a bill of sale, a copy of which was admitted in evidence and which does not indicate that the original was dated or notarized. 1 The bill of sale states a purchase price of $100; Lind Distributing received assets valued at $131,904.22 and assumed liabilities of $143,542.65. 2 That document also states: "The seller hereby covenants * * * that seller is the owner of the above-described personal property; that the same is free from all encumbrances." The son intended to continue the business of DML of distributing supplies to hairstyling salons through Lind Distributing, Inc., doing business as Nexxus of Oregon, the same name as had been used by DML.

Prior to its dissolution, DML was the sole distributor in Oregon of Nexxus hair care products. Margaret Lind was offered a position as education director of Nexxus in December, 1982. She assumed that position and, in December, 1983, the vice president of Nexxus informed her that she must divest her interest in DML. Margaret testified that DML was dissolved because of the conflict that existed between her participation in the independent distributorship and her position with Nexxus.

In April, 1984, before DML was dissolved, plaintiff obtained a judgment against DML in the Superior Court of Lewis County, Washington. The judgment was entered after David W. Lind dismissed his attorney on the day before trial; judgment was entered against DML by default. That lawsuit was predicated on plaintiff's having loaned DML $10,000 that was not repaid. David W. Lind contends here that the $10,000 was not a loan but an investment that did not produce a return. In any event, a judgment was entered that is valid on its face.

Plaintiff's complaint asked the court to set aside both the transfer from DML to the Linds on dissolution and from the Linds to their son. The case was tried on the theory that the transfer from DML to David L. Lind through his parents was one conveyance. The Articles of Dissolution and the bill of sale appear to have been executed contemporaneously. See note 1, supra. David L. Lind does not claim that he was without knowledge of plaintiff's claim against DML; however, he testified that he thought plaintiff's claim was going to be dismissed. Because the record indicates that the dissolution was intended as the first step in transferring the corporate assets to the son, the transfer should be treated as one conveyance from DML to David L. Lind.

At the time of the alleged fraudulent conveyance, former ORS 95.070 provided:

"Every conveyance or assignment in writing or otherwise of any estate or interest in lands, goods or things in action, or of any rents or profits issuing therefrom, and every charge upon lands, goods or things in action, or upon the rents or profits thereof, made with the intent to hinder, delay or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts or demands, and every bond or other evidence of debt given, suit commenced, decree or judgment suffered with the like intent, as against the person so hindered, delayed or defrauded is void."

The issue is whether Margaret and David W. Lind caused the assets of DML to be conveyed to David L. Lind "with the intent to hinder, delay or defraud creditors." In this equitable action to set aside the conveyance, we review the record de novo.

In an action charging a fraudulent conveyance, the...

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3 cases
  • Morris v. Nance
    • United States
    • Oregon Court of Appeals
    • December 28, 1994
    ...the burden of proving that the transfer of debtor's house was not a fraudulent transfer. Plaintiff relies on Hughey v. Lind, 92 Or.App. 433, 437, 758 P.2d 431 (1988), for the proposition that, although the burden of proving fraudulent intent is normally on the plaintiff, the presence of sev......
  • Woodfield, In re
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • October 22, 1992
    ...received inadequate consideration for the transfer. See Evans v. Trude, 193 Or. 648, 240 P.2d 940, 944 (1952); Hughey v. Lind, 92 Or.App. 433, 758 P.2d 431, 433 (1988); Bivens v. Hancock, 71 Or.App. 273, 692 P.2d 153, 157 (1984); see also In re Ayala, 107 B.R. 271, 274-75 (Bankr.E.D.Cal.198......
  • Page Family Preservation Trust B v. Commissioner
    • United States
    • U.S. Tax Court
    • May 22, 1991
    ...as a transferee. In Oregon, transferee liability is determined under the State's fraudulent conveyance statutes. Hughey v. Lind, 92 Or. App. 433, 758 P.2d 431 (1988). Or. Rev. Stat. sec. 95.070 (1979) Every conveyance or assignment in writing or otherwise of any estate or interest in lands,......

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