Miller v. Kaiser

• Decision Date: 20 November 1967
• Docket Number: No. 21196,21196
• Citation: 433 P.2d 772,164 Colo. 206
• Parties: A. D. MILLER and Genevieve H. Miller, Plaintiffs in Error, v. A. E. KAISER, Defendant in Error.
• Court: Colorado Supreme Court

Page 772

433 P.2d 772

164 Colo. 206

A. D. MILLER and Genevieve H. Miller, Plaintiffs in Error, v. A. E. KAISER, Defendant in Error.

No. 21196.

Supreme Court of Colorado, In Department.

Nov. 20, 1967.

Edward S. Barlock, Denver, for plaintiffs in error.

Francis S. Mancini, Sidney Biderman, Denver, for defendant in error.

HODGES, Justice.

The defendant in error, Kaiser, as a judgment creditor of A. D. Miller, filed two actions in fraudulent conveyance against the Millers, who are husband and wife. These actions were consolidated for trial, and resulted in findings and judgments adverse to the Millers, who seek reversal by this writ of error.

Previous to filing these actions, Kaiser had obtained on April 8, 1960 a $30,393 judgment against one of the plaintiffs in error, A. D. Miller. This judgment was affirmed on a writ of error to this court in Miller v. Kaiser, 148 Colo. 510, 366 P.2d 659.

In the first action, No. 16098, Kaiser states that on April 15, 1960, the Millers conveyed without adequate consideration their family home from joint ownership to sole ownership in Mrs. Miller and that shortly thereafter the indebtedness on this property was increased. This conveyance and the increase of indebtedness, Kaiser alleged, was done with the intent to hinder, delay and defraud him in the collection of his $30,393 judgment. In his complaint, Kaiser seeks an order nullifying and cancelling the conveyance, an accounting for the amount of the increase of the home loan, a money judgment, and any other relief deemed proper by the court.

In the later filed action No. 16378, Kaiser alleged that about one month after his $30,393 judgment, A. D. Miller, caused his sole ownership business, A. D. Miller Auction Company, to be incorporated; that no stock was issued to A. D. Miller; that 10,000 shares were issued to Mrs. Miller and 10,000 shares on two other persons. It was alleged that this conveyance by A. D. Miller of his business to the corporation was done with the intent to hinder, delay and defraud Kaiser in the collection of his judgment. 'Claim II' of this complaint alleges a conspiracy on the part of the Millers and others to knowingly and maliciously, connive and arrange the transfer of the auction business with the intent to defraud Kaiser and prevent him from collecting his lawful judgment. There is no allegation that Kaiser suffered any special damages because of this alleged conspiracy nor does the transcript of the evidence reveal any proof whatsoever of such damages. Furthermore, the court's findings do not specify any such damages. 'Claim II' is being disregarded, and this complaint is considered solely as a complaint in equity by a judgment creditor seeking to set aside a fraudulent conveyance.

Kaiser asks that this conveyance of the auction business be declared null and void; that the sheriff be ordered to sell the business and deposit the proceeds in the registry of the court; that a receiver be appointed to operate this business and account for the income; that actual and exemplary damages be awarded; and that other and further relief as the court may deem proper be ordered.

These actions were consolidated for trial to the court and upon conclusion of all the evidence, the court made extensive findings, the pertinent substance of which is as follows:

(1) That the transfer of title to the family home from joint ownership to sole ownership in Mrs. Miller, and the increase in indebtedness on the home in the sum of $9,050, were done with the intent to hinder, delay and defraud Kaiser in the collection of his lawful judgment; and

(2) That the incorporation of A. D. Miller's sole ownership business was a cloak used by the Millers for the purpose of placing the assets of this business beyond the reach of Kaiser; that it was without adequate consideration; that the corporate assumption of the business was done with the full knowledge of both the Millers and with the intent of hindering, delaying and defrauding Kaiser in the collection of his lawful judgment.

The trial court entered judgments declaring the conveyances of the family home and the auction business void and ordered that both be sold at public auction by the sheriff with the proceeds to be deposited in the registry of the court for distribution as specified by the court.

Also, in Case No. 16098 involving the family home, the court entered judgment for Kaiser against the Millers for $4,525. This amount is one-half of the amount of the increase of indebtedness on the family home. In the same case, the judgment for $1,000 as exemplary damages was awarded Kaiser against both the Millers.

In Case No. 16378 involving the auction business, the court awarded judgment for damages in the amount of $1,296 and exemplary damages in the sum of $500 against the Millers.

In support of reversal, the Millers contend that the trial court erred in finding that the conveyance of the auction business was fraudulent. The record amply supports the court's finding in this regard and its judgment. We therefore uphold these findings, the judgment voiding this conveyance as to Kaiser, and the supporting orders directing the sale by the sheriff.

The contention of the Millers, that the court erred in ordering the sale of the family home because no judgment lien had been placed against this property, is totally without merit. The record clearly shows the recording in Arapahoe County on June 28, 1960 of a transcript of the docket entry of Kaiser's judgment against A. D. Miller.

In their remaining assignments of error, the Millers aver that the court erred in awarding judgments for money damages and exemplary damages in both cases. Because of the nature of a fraudulent conveyance action, these assignments of error bring into focus certain equitable concepts which must be applied to the facts of the case before us in making a determination of whether money damages, either actual or punitive, may be properly awarded.

I.

The primary remedy in an action for fraudulent conveyance is a declaration that the fraudulent conveyance is void as to the judgment creditor. In other words, the remedy sought is to return the property fraudulently conveyed to its prior status of ownership thereby bringing it within reach of the judgment creditor of the fraudulent transferor. In Colorado, this equitable remedy is defined in C.R.S.1963, 59--1--17. As is true of such statutes in most states, our statutory provision does little more, if anything, than to restate the common law. The exigencies of any particular case may vary the form of the relief but it always must be limited to the substance of the remedy itself which is to place the judgment creditor in the same or similar position he held with respect to the fraudulent transferor prior to the fraudulent conveyance.

For obvious reasons, where a single action is brought to establish a claim, upon which no prior judgment has been entered, and to seek also the equitable relief of subjecting fraudulently conveyed property to the claim, a personal judgment would be proper, because it would be then in aid of that judgment that the court would set aside a fraudulent conveyance. This, however, is clearly not applicable to the facts of the case at bar which involves a judgment creditor seeking and securing The equitable remedy alone of voiding two fraudulent conveyances.

In both cases before us, the equitable remedy was ordered by the trial court in aif of the collection of the judgment debt against the fraudulent transferor. Implicit in this remedy is a bar to any money judgment against the fraudulent transferor. This general rule is well expressed in Wright v. Salzberger, 121 Cal.App. 639, 9 P.2d 860. Also see 37 C.J.S. Fraudulent Conveyances...