Morris v. Flenner

• Decision Date: 09 April 1928
• Docket Number: No. 93-D.,93-D.
• Citation: 25 F.2d 211
• Parties: MORRIS v. FLENNER et al.
• Court: U.S. District Court — Eastern District of Illinois

25 F.2d 211 (1928)

MORRIS v. FLENNER et al.

No. 93-D.

District Court, E. D. Illinois.

April 9, 1928.

Craig & Craig, of Mattoon, Ill., for plaintiff.

A. C. Anderson, of Charleston, Ill., and Hays & Hays, of Sullivan, Ind., for defendants.

LINDLEY, District Judge.

Plaintiff, as trustee in bankruptcy for Martin Flenner, bankrupt, brings this suit against the bankrupt and his wife, the bankrupt's son, Tolbert A. Flenner, and his wife, and Harry G. Behler, to recover 187½ acres of land in Coles county, Ill., which the bankrupt, shortly before his adjudication in bankruptcy, conveyed to Behler, a plumber of Sullivan, Ind., brother-in-law of Tolbert A. Flenner, on the ground that the same was conveyed in fraud of creditors. The theory of the plaintiff is that the consideration paid by Behler to Flenner was so grossly inadequate and so out of proportion to the real value of the equity in the land as, in view of the surrounding circumstances, to constitute fraud.

Defendant Behler had resided in Sullivan, Ind., for more than twenty years. He and Tolbert A. Flenner married sisters. Tolbert A. Flenner lived upon the farm of his father, exercised complete dominion over the same, and handled the transfer to Behler. He went to Sullivan; there saw his brother-in-law; told him that his father, the bankrupt, needed money to pay his debts, that there was a mortgage upon the farm, that the interest was delinquent for the year, and that the taxes were due. Behler had been upon the land at rare intervals, but had never farmed in Indiana or Illinois, and apparently had never made a critical examination of the land or of the other conditions bearing upon the value of the premises. He owned no other farm land, and had no property in the state of Illinois. Tolbert A. Flenner and Behler both testified that the trade was made before Behler renewed his acquaintance with the land. There was no discussion of the farm's value. Behler borrowed the money from his bank, and took the land subject to a mortgage of $23,500, delinquent interest thereon of $1,127.33, and taxes of $301.56, or a total incumbrance of $24,928.89. For the equity he paid the sum of $300. The testimony of himself and his brother-in-law is that Behler did not remove to the farm, but employed Flenner to operate it, as his agent, at a salary of $50 per month and pasture rights until October 1, 1927, and upon a salary of $100 per month after that date. The possession of Tolbert A. Flenner, to all outward appearances, was the same after the transfer as previously. At the time of the conveyance, the bankrupt owed something in excess of $20,000 to other creditors, and had no other property other than personal property, upon which he placed a mortgage of $2,200, representing a loan of that amount by Behler, and constituting the full value thereof.

In this situation the material question is as to the value of this equity which the defendant Behler purchased for $300. Eleven witnesses for plaintiff, including some of the creditors, and six witnesses for the defendant, including defendants Tolbert A. Flenner and Behler, testified as to the value of this land. All of them were acquainted with the premises, the improvements thereon, location, character of the soil, drainage, and the values of similar lands in the same locality similarly situated. The average value put upon the tract by the witnesses for the plaintiff was $192 per acre; the average value put upon the land by the witnesses for the defendant was $142 per acre. The average value put upon the land by all of the witnesses, including some interested creditors, and the two most interested defendants, was in excess of $170 per acre. Other sales of other lands in the community were shown by plaintiff, running from $175 to $250 per acre; and one or two sales of other lands was shown by the defendants at less than $125 per acre. The land produced in the year 1927 approximately $3,400 worth of crops. Deducting from said income the interest upon the mortgage of $1,292.50 and the taxes of $300, there was left over $1,800 as net income, less the amount necessary for repairs and depreciation. Behler declined an offer of $175 per acre, saying that he held the land at a higher price. The farm is located upon a paved state road within two miles of a market. In this situation the court believes the fair cash market value of the land in question at the time the defendant Behler received the deed for it was at lease $170 per acre, or $31,875. It was then subject to incumbrances aggregating $24,928.89. The fair cash market value of the equity, therefore, was $6,946.11. For this equity the defendant Behler paid the sum of $300, or about one twenty-third of its value. True it is he has reduced the incumbrance upon the land by the sum of $1,428.89, but what he bought was the equity in the land over and above the incumbrances. If we treat his reduction of incumbrances — that is to say, delinquent interest of $1,127.33 and taxes of $301.56 — as part payment of the purchase price, then he purchased an equity worth $8,375 for a total of $1,728.89, but little more than one-fifth of its fair market value.

Considering the circumstances, the relationship of the parties, the distance of the purchaser from the land; his failure to occupy the same, the continued possession of his brother-in-law who made the sale to him for the bankrupt, the vocation of the purchaser, the income from the land, the...