McKey v. Roetter

• Decision Date: 28 October 1940
• Docket Number: No. 7206.,7206.
• Citation: 114 F.2d 129
• Parties: McKEY et al. v. ROETTER et al.
• Court: U.S. Court of Appeals — Seventh Circuit

114 F.2d 129 (1940)

McKEY et al. v. ROETTER et al.

No. 7206.

Circuit Court of Appeals, Seventh Circuit.

July 3, 1940.

Rehearing Denied August 8, 1940.

Writ of Certiorari Denied October 28, 1940.

Aiken, McCurry & Bennett, of Chicago, Ill. (Charles R. Aiken, of Chicago, Ill., of counsel), for appellant.

Leonard & Leonard, of Chicago, Ill. (Gordon McLeish Leonard, of Chicago, Ill., of counsel), for appellants Armin F. Hillmer et al.

Arthur H. Jones and Reuben Freedman, both of Chicago, Ill., for appellees.

Before SPARKS and KERNER, Circuit Judges, and LINDLEY, District Judge.

Writ of Certiorari Denied October 28, 1940. See 61 S.Ct. 72, 85 L.Ed. ___.

KERNER, Circuit Judge.

On April 24, 1939, the trustee of the estate of Burt Leopold Roetter, bankrupt, filed a plenary action against Dorothy E. Roetter to recover certain personal property alleged to have been transferred by the bankrupt to his wife in fraud of his creditors. The cause was tried by the court without a jury. At the close of the plaintiff's evidence the court dismissed the complaint for want of equity. To reverse that decree plaintiff appealed.

The complaint alleged in substance that Armin F. Hillmer and others as representatives of all creditors of Chicago Bank of Commerce recovered a decree or judgment on September 6, 1938, in the Superior Court of Cook County, Illinois, against Burt Leopold Roetter for $20,200; that before the rendition of the judgment said Roetter was the owner of certain personal property described in the complaint consisting of bonds, certificates of stock, and life insurance policies; that on May 22, 1934, said Roetter transferred said personal property to his wife, thus rendering him insolvent; that said transfer was without any good or valuable consideration and for the sole purpose of concealing his assets to hinder, delay and defraud his creditors.

The answer of Dorothy E. Roetter denied that the transfer was made to her with the intent to hinder and defraud creditors; denied that the transfer was made on May 22, 1934, and averred that shortly after her marriage to Roetter in 1928 and at a time when Roetter had no debts, she and her husband entered into a contract whereby she agreed to accept said property; that said property and the income therefrom would be used for her maintenance and for the care and education of any children that might be born to them, as well as for the support of Roetter's mother, and that in conformity with said agreement said personal property was transferred to her during 1928, 1929 and 1930; that because she did not have a suitable place to keep said securities she requested her husband to retain them for her; that said property was kept by her husband until May, 1934, and he then delivered said securities to her.

The controlling important facts proved were as follows: on June 24, 1932, the Chicago Bank of Commerce, an Illinois banking corporation, was closed by the Auditor of Public Accounts of the State of Illinois and thereafter proceedings were instituted to enforce the superadded liability of the stockholders of the bank; Roetter, a defendant in that case, was personally served with summons on July 19, 1932 and on August 2, 1932, an attorney filed his appearance in that proceeding. Roetter denied that he authorized the filing of his appearance and that he was served with summons on July 19, 1932, and testified he was not served until July, 1934. In 1934 Roetter retained Arthur H. Jones to represent him in the bank liability suit in which a decree or judgment was entered against Roetter for $20,200 on September 17, 1938. On October 18, 1938, an execution was issued on said judgment, served upon Roetter and returned nulla bona. On December 15, 1938, Roetter filed his voluntary petition in bankruptcy, scheduling among his liabilities the judgment for $20,200. He was adjudicated a bankrupt and Frank M. McKey was appointed trustee. There were no assets in the estate with which to pay the judgment.

Roetter owned the securities described in the complaint, consisting of twelve issues of negotiable bonds amounting to $113,000 and certificates of stock valued at about $35,000. On May 22, 1934, he removed these securities from his rented safety deposit vault and delivered them to his wife. Up to May 22, 1934, he received all the proceeds from these securities, depositing them in his personal checking account. After delivering these securities to his wife, his entire assets did not exceed $10,000. On October 22, 1936, in a verified statement, he claimed that his entire assets amounted to $105.

Dorothy E. Roetter testified that after her marriage in 1928 her husband stated: "Dorothy, I want you to have some bonds and stocks that are mine and I want you to have them to use for the household or children that may be born and for the purpose of taking care of my mother." She also stated that the stocks and bonds were given to her not all at one time, but over a period of years, beginning in 1928; that they were kept by her husband in his safety deposit vault; that two lists were prepared, marked "Burt" and "Dot," to indicate their respective holdings and that the physical possession of the stocks and bonds was delivered to...