Morris v. Holland

• Decision Date: 12 November 1975
• Docket Number: No. 9700,9700
• Citation: 529 S.W.2d 948
• Parties: G. L. MORRIS, Jr., and Betty Morris, Plaintiffs-Respondents, v. Ralph W. HOLLAND, Jr., a/k/a Ralph Holland, et al., Defendants-Appellants.
• Court: Missouri Court of Appeals

Page 948

529 S.W.2d 948

G. L. MORRIS, Jr., and Betty Morris, Plaintiffs-Respondents, v. Ralph W. HOLLAND, Jr., a/k/a Ralph Holland, et al Defendants-Appellants.

No. 9700.

Missouri Court of Appeals, Springfield District.

Nov. 12, 1975.

James R. Hall, Doniphan, for defendants-appellants.

Robert C. Hyde, Hyde, Purcell, Wilhoit & Edmundson, Poplar Bluff, for plaintiffs-respondents.

Before BILLINGS, C.J., and HOGAN and FLANIGAN, JJ.

HOGAN, Judge.

Plaintiffs, judgment creditors of defendant Ralph Holland, Jr. (Ralph), brought this action to set aside a conveyance of real property by Ralph and his wife to defendant Ralph Holland, Sr. (Mr. Holland), as being in fraud of creditors. The trial court found the conveyance fraudulent within the meaning of § 428.020, ¹ and ordered it set aside. Defendants appeal.

On January 26, 1971, plaintiffs obtained an Arkansas judgment against Ralph in the amount of $6,848.47. It was stipulated that the Arkansas judgment had been properly registered in Missouri. The record indicates that the Missouri judgment was entered on November 15, 1971. On November 4, 1970, Ralph and his wife conveyed a 526-acre parcel of land located in Ripley County, Missouri, to Mr. Holland by general warranty deed. The consideration recited is 'One Dollar and other valuable consideration'. The deed was acknowledged in Arkansas and recorded in Missouri.

The land was valued at $50 to $85 per acre, and was subject to mortgages totaling $9,760 and tax liens amounting to $1,797.85. Mr. Holland testified that the consideration for the deed consisted of the cancellation of a preexisting debt in the amount of $81,000 or $8,100--he could not recall which--representing the total of a series of loans he made to Ralph in "68 and '70, '69 or '70.' In each instance, Mr. Holland testified, he withdrew cash from his bank account to accommodate Ralph's needs. Mr. Holland could not recall the name or location of the bank. The loans were, again according to Mr. Holland, evidenced by notes, actually simple slips of paper, indicating the amounts withdrawn and loaned to Ralph. Mr. Holland and Ralph both signed the slips of paper, but the loans bore no interest and Mr. Holland received no security. The slips of paper evidencing Ralph's debt to Mr. Holland were not in Mr. Holland's possession; they were, he said, at Forrest City, Arkansas.

Ralph testified that during the late summer of 1970, his outstanding obligations amounted to '(t)wenty or thirty (thousand dollars), I don't know exactly.' He was then in the construction business and owed money to 'various suppliers' including Heiman Lumber Company, and Cairo Lumber Company. Ralph also owed federal taxes, various mechanical contractors and the Arkansas and Louisiana Gas Company. Ralph was asked what assets he had in August before execution of the deed in November, and he answered that he 'didn't have any. . . . Considering what I owed'. Ralph's further testimony was that he had borrowed money from his father on two occasions. 'One time it was to pick up a check that didn't (clear) and the other time it was to make a payment to the Internal Revenue so that I could keep operating.' Ralph '(j)ust wrote out a little note' to evidence the debt. Ralph's father had returned the notes after execution of the warranty deed, but they were in Ralph's 'file at home' in Arkansas and were not produced at the trial.

Ralph further stated upon trial that the 526-acre tract in Ripley County was owned by him solely, that the land conveyed represented substantially all his assets except an 'equity' in a house in Forrest City, Arkansas, which he and his wife owned; that he was 'sure' his father was aware of his financial situation, and that his purpose in conveying the land was, 'Well, I was indebted to him among other people, and I was going to lose the farm anyway. The other creditors, the farm would have been defaulted and repossessed by the time they could have got anything out of it. And I figure(d) that he might salvage it and get some of his indebtedness off of me.' There was also evidence that in February 1971 Mr. Holland had attempted to obtain a loan from the First National Bank of Doniphan, Missouri, in order to purchase the land here involved from Ralph, but the application had been refused.

The trial court found as facts that the tract conveyed constituted substantially all Ralph's property; that before and after the property was conveyed, Ralph was insolvent; that Mr. Holland knew of Ralph's insolvency and accepted the deed with knowledge of Ralph's intention to place his property beyond the reach of his creditors, and that the conveyance was therefore in fraud of creditors and void.

In their brief, the defendants argue that since the cause was tried to the court, it is this court's duty to reach its own conclusions upon a review of both the law and the evidence without regard to the trial court's findings and give such judgment as the trial court should have given. In this connection, defendants cite Rule 73.01, para. 1(b), and Harrison v. Harrison, 339 S.W.2d 509, 514(5) (Mo.App.1960).

We are well aware that Rule 73.01, as amended March 29, 1974, requires us to review the case upon both the law and the evidence, and that the words '(t)he judgment shall not be set aside unless clearly erroneous' were eliminated when the rule was revised. Nevertheless, our understanding of present Rule 73.01 is that when the decision depends upon the credibility of the witnesses and the weight of the evidence, an appellate court should generally defer to the findings of the trial court unless it is satisfied they should have been otherwise, In re Petersen's Estate, 295 S.W.2d 144, 148(3) (Mo.1956); Pfotenhauer v. Ridgway, 307 Mo. 529, 536, 271 S.W. 50, 52(8) (1925); Venie v. South Central Enterprises, Inc., 401 S.W.2d 495, 498(2) (Mo.App.1966), even though the deference due those findings is precisely that and not a matter of statutory or constitutional inhibition. Cross v. Gimlin, 256 S.W.2d 812, 813(2, 3) (Mo.1953); Venie v. South Central Enterprises, Inc., supra, 401 S.W.2d at 498(1). The degree of deference due the factual findings of a trial court is not readily susceptible of precise articulation. See United States v. Aluminum Co. of America, 148 F.2d 416, 433(19--21) (2d Cir. 1945); 9 C. Wright and A. Miller, Federal Practice and Procedure § 2585 (1971). Some older precedents require deference unless the finding is 'clearly erroneous or against the weight of the evidence', Long v. Von Erdmannsdorff, 111 S.W.2d 37, 40 (Mo.1937), others speak of deference to the trial court's findings of fact 'unless satisfied that they are against the weight of the evidence', Manahan v. Manahan, 52 S.W.2d 825, 827(2) (Mo.1932), still others speak of deference to factual conclusions 'unless the evidence is palpably insufficient to sustain (them).' Held v. Reis, 193 S.W.2d 17, 20(1) (Mo.1946). Whatever may be the appropriate phrase, we reject out of hand the suggestion that we should case the trial court's findings aside. We do not believe Rule 73.01 was amended in order to convert the appellate courts into judicial second-guessers. See Lundgren v. Freeman,307 F.2d 104, 114(18) (9th Cir. 1962).

In our opinion this is peculiarly a controversy for resolution upon the weight of the evidence and the credibility of the witnesses. The defendants contend, and the tenor of their evidence was that Ralph Holland simply transferred the property to his father in order to prefer his father as a creditor and save the property from foreclosure. The trial court might have accepted this evidence as true, and could have found the transfer perfectly lawful. Certainly Mr. Holland could have assumed the outstanding mortgages, as defendants claim, either by express of 'implied' covenant in the deed, Hafford v. Smith, 369 S.W.2d 290, 295(7) and authorities cited at 296, n. 8 (Mo.App.1963), and Ralph could have lawfully preferred his father to other creditors. Owens v. Owens, 347 Mo. 80, 91, 146 S.W.2d 569, 576(2) (1940). The trial court was not, however, bound to accept the defendant's evidence. The deed does not expressly recite that Mr. Holland assumed outstanding indebtedness on the property; it merely recites that the land is conveyed '(s) ubject to all indebtedness on said property'. The...