Johnson v. Warrington

• Decision Date: 16 February 1932
• Docket Number: 40889
• Citation: 240 N.W. 668,213 Iowa 1216
• Parties: NELS P. JOHNSON, Trustee, Appellant, v. HAROLD G. WARRINGTON et al., Appellees
• Court: Iowa Supreme Court

240 N.W. 668

213 Iowa 1216

NELS P. JOHNSON, Trustee, Appellant, v. HAROLD G. WARRINGTON et al., Appellees

No. 40889

Supreme Court of Iowa, Des Moines

February 16, 1932

Appeal from Decatur District Court.--A. R. MAXWELL, Judge.

The plaintiff, as trustee in bankruptcy of the estate of Harold G. Warrington, brings this action against the bankrupt and his wife, Bertha E. Warrington, to set aside certain conveyances of real and personal property upon the ground of fraud. Decree dismissing the petition, and the plaintiff appeals.

Affirmed.

G. C Stuart, for appellant.

O. M Slaymaker, and R. E. Killmar, for appellees.

STEVENS J. WAGNER, C. J., and DE GRAFF, FAVILLE, and ALBERT, JJ., concur.

OPINION

STEVENS, J.

Appellees are husband and wife.

On September 16, 1929, the husband executed a bill of sale conveying all of his personal property, consisting of live stock, grain and farm implements, to his wife. On the same day, he conveyed his undivided one-ninth interest in a tract of 440 acres of land by warranty deed to her. More than four months after these conveyances were made, the grantor filed a petition in voluntary bankruptcy and was adjudged a bankrupt. The petition in this case charges that the said conveyances were without consideration and for the purpose of hindering, delaying and defrauding creditors, and asks that the same be cancelled and held for naught. The answer admitted several paragraphs of the petition, but denied the allegations of want of consideration and fraud.

The law is well settled that the husband may, in good faith, prefer his wife as a creditor, and a conveyance of his property to her in good faith for a valuable consideration and without fraud will not be set aside at the suit of creditors. Dickinson v. Davis, 171 Iowa 29, 153 N.W. 203; Hinkle v. Downing, 116 Iowa 693, 88 N.W. 1088; Banning v. Purinton, 105 Iowa 642, 75 N.W. 639; State Bank v. Schutt, 174 Iowa 583, 156 N.W. 762; Nicholas & Shepherd v. Higby, 35 Iowa 401; Crenshaw v. Halvorson, 183 Iowa 148, 165 N.W. 360; Harvey v. Phillips, 193 Iowa 231, 186 N.W. 910; Carlisle v. Milliman, 199 Iowa 949, 203 N.W. 268; Clark v. Clark, 209 Iowa 1179, 229 N.W. 816; First Nat. Bank v. Hartsock, 202 Iowa 603, 210 N.W. 919; Sly v. Bell, 131 Iowa 184, 108 N.W. 227.

The law is equally well settled that a voluntary conveyance by a debtor of his property to hinder, delay and defraud his creditors, or a conveyance thereof, even though for a consideration, if in fact fraudulent and the grant is accepted by the grantee with notice and participation of the grantor's fraudulent purpose, may be set aside at the suit of a creditor. Dimick v. Munsinger, 207 Iowa 354, 223 N.W. 115; Brittain D. G. Co. v. Plowman, 113 Iowa 624, 85 N.W. 810; Henny Buggy Co. v. Patt, 73 Iowa 485, 35 N.W. 587; Coldren Land Co. v. Royal, 140 Iowa 381, 118 N.W. 426; Shaw & Kuehnle v. Manchester, 84 Iowa 246, 50 N.W. 985; Sly v. Bell, supra; Crary v. Kurtz, 132 Iowa 105, 105 N.W. 590; Webber v. King, 205 Iowa 612, 218 N.W. 282; Leach v. Edgerton, 203 Iowa 512, 211 N.W. 538.

The decisive question in this case is one of fact. Appellant called both of the defendants and examined them as witnesses in his own behalf. Substantially, their testimony was all the appellant introduced. Before reviewing the testimony in detail, it may be well to consider the probative effect which may be given to the testimony of these witnesses.

It is suggested at this point that, having called his adversaries as witnesses in his own behalf, the appellant is bound by their testimony. This is not an accurate conception of the rule. It is true that by offering testimony of these witnesses, appellant vouched for their credibility, and may not impeach their testimony by any of the common and usual methods of impeachment. Lawton Sav. Bank v. Bremer, 205 Iowa 334, 218 N.W. 49; Bihlmeier v. Budzine, 201 Iowa 398, 205 N.W. 763. That is, the party calling his adversary as a witness may not introduce testimony for the purpose of showing that he has a bad reputation for moral character or for truth and veracity. Thorn & Stein v. Moore, 21 Iowa 285. Nor is it permissible for him to introduce testimony of prior contradictory statements for the purpose of impeachment. Smith v. Dawley, 92 Iowa 312, 60 N.W. 625, State v. Cummins, 76 Iowa 133, 40 N.W. 124. None of the rules thus stated bar the party calling his adversary as a witness from introducing the testimony of other witnesses for the purpose of proving other facts, notwithstanding they may directly conflict with the testimony given by the adversary. Benton Co. Sav. Bank v. Strand, 106 Iowa 606, 76 N.W. 1001; Thorn & Stein v. Moore, supra; Clapp Bros. & Co. v. Peck, 55 Iowa 270, 7 N.W. 587; McDonald v. Smith, 139 Mich. 211, 102 N.W. 668; Ingersoll v. English, 66 N.J.L. 463, 49 A. 737.

The testimony elicited from other witnesses in contradiction of the testimony of an adversary is not offered or received for the purpose of impeachment, but is admissible by virtue of the substantive law which secures to every litigant the right to prove the charges of his petition if he can. 5 Chamberlayne on Evidence, Sec. 3745.

The party calling his adversary as a witness is not strictly bound either by his affirmative statements or by denial or negation of assumed facts. The credibility and probative value of the testimony of an adversary are subject to proper analysis, comparison with other testimony, with the physical facts, the circumstances shown in evidence and in the light of common experience and with due regard to the nature of the transaction or facts sought to be proven. The evidence must be analyzed, interpreted and considered as a whole. Every proper inference may be drawn therefrom. Fraud is not ordinarily easily proven. Frequently, there are shown in such cases relationships, motives, indirect facts and circumstances commonly known as badges of fraud. Badges of fraud, so-called, are, however, evidential only, are of varying probative value, subject to explanation, and, therefore, not necessarily conclusive. Hassell v. Bunge, 167 Cal. 365, 139 P. 800; Thompson v. Williams, 100 Md. 195, 60 A. 26; Norris v. Clark, 72 N.H. 442, 57 A. 334.

Lord Coke in Twyne's Case, 2 Coke's Reports, 80, referring to an alleged fraudulent transaction, said:

"That this gift has the signs and marks of fraud:

"1. Because the gift is general, without exception of his apparel or anything of necessity; * * *

"2. The donor continued in possession and used them as his own; and by reason thereof he traded and trafficked with others, and defrauded and deceived them.

"3. It was made in secret, * * *

"5. Here was a trust between the parties for the donor possessed all, and used them as his proper goods; and fraud is always apparelled and clad with a trust, and a trust is the cover of fraud.

"6. The deed contains, that the gift was made honestly, truly, and bona fide * * *."

In discussing a case involving an alleged fraudulent conveyance, Justice Daniels, in referring to the rule stated by Lord Coke, said:

"Here are the very clausulae inconsuetae pointed to in Twyne's case, as the sure badges of that which they are intended to hide." Taylor v. Taylor, 49 U.S. 183, 12 L.Ed. 1040.

We come now to the consideration of the evidence before us in this case. The execution of the instruments of conveyance is admitted. The indebtedness scheduled by the bankrupt consisted of two items: one to his brother of something over $ 4000, and the other to his mother of $ 2000. The...