Olson v. Larson
| Decision Date | 06 April 1943 |
| Docket Number | 46119. |
| Citation | 8 N.W.2d 697,233 Iowa 1032 |
| Parties | OLSON v. LARSON et al. |
| Court | Iowa Supreme Court |
O N. Refsell, of Estherville, for appellant.
Lee & Anderson, of Estherville, for appellee.
The appeal involves the sufficiency of plaintiff's original petition and his amended and substituted petition as against the attack that his cause of action was barred by laches.
The original petition, filed February 13, 1939, alleged that: On February 7, 1939, plaintiff procured a judgment against Anna L. and Samuel Larson for $6,548 on a debt owing since long before 1932; on March 24, 1932, the Larsons deeded to one Knudson the undivided half interest of Anna L. Larson in a certain 160 acre farm in Emmet county; on the same day Knudson deeded said interest to Helen Burtness, the owner of the remaining half interest; both deeds were without valuable consideration and left the Larsons without sufficient property to pay their debts, were voluntary and made for the purpose of defrauding creditors of the Larsons including plaintiff. The prayer was that the deeds be set aside as in fraud of creditors, that plaintiff's judgment be decreed a lien upon the land and for such other relief as appeared equitable.
In the third amendment to the petition, it was alleged that the indebtedness arose in 1921 by a loan to Samuel Larson and two of his sons; that renewal notes due in 1932 were made in 1931, when Anna L. Larson became a signer. It was also alleged, in substance, that since the time of said conveyances, defendant Anna L. Larson has continued to retain control of said premises, received rents therefrom, and participated in arranging for and making repairs upon the premises; that in 1937 defendants Anna L. Larson and Helen Burtness together purchased a dwelling house and caused it to be moved upon the land, each paying half the cost; that they have also continued to negotiate together for the renting of said premises and Anna L. Larson has continued to exercise the same degree of control and management as before the time of said conveyances, all with the approval of Helen Burtness. Later on, we will refer to allegations of this amendment which it is claimed give rise to an estoppel.
Defendant Helen Burtness filed a motion to dismiss, contending that the petition showed on its face that the action was barred by laches. The parties stipulated that the deeds in question were duly filed and recorded on the date of their execution, March 24, 1932. Judge Hudson sustained the motion. Plaintiff assigns error in the ruling.
We think the ruling was correct. The deeds were made and recorded on March 24, 1932. This suit was started on February 13, 1939. Plaintiff's note matured in 1932. His judgment was procured February 7, 1939. It is settled in this state that due filing and recording of a fraudulent conveyance constitutes notice not only of the conveyance but of its fraudulent character. The creditor is deemed to have discovered the fraud at that time. Some of our decisions to that effect are: Laird v. Kilbourne, 70 Iowa 83, 86, 30 N.W 9; Mickel v. Walraven, 92 Iowa 423, 428, 60 N.W. 633; Bristow v. Lange, 221 Iowa 904, 912, 266 N.W. 808; Somers v Spaulding, 229 Iowa 432, 435, 294 N.W. 610, 133 A.L.R. 1300. See also Anno. 76 A.L.R. 864, 870; Wait on Fraud.Convs., 3d Ed., p. 515, § 292. We may observe, however, that it appears here from an amendment to the petition that plaintiff had actual knowledge of these deeds and their alleged fraudulent character long before his right to bring this suit could have been barred by laches.
Where, as here, relief is sought on the ground of fraud, the action must be brought within five years from the time the cause of action accrued. Sec. 11007(5), Code 1939. If plaintiff's demand had been reduced to judgment on March 24, 1932, when these deeds were made and recorded, the statute of limitations would have then commenced to run. We have said that, strictly speaking, such a cause of action as is here asserted does not accrue nor the statute commence to run until the creditor has procured a lien by judgment or attachment.
This is because ordinarily, subject to certain exceptions, such a lien must be procured before action can be brought to set aside the debtor's fraudulent conveyance. Mickel v Walraven, 92 Iowa 423, 428, 60 N.W. 633; Stubblefield v. Gadd, 112 Iowa 681, 687, 84 N.W. 917; Bristow v. Lange, 221 Iowa 904, 914, 266 N.W. 808. See also Anno. 76 A.L.R. 864, 872; 24 Am. Jur. p. 306, § 175; Bump on Fraud.Convs., 4th Ed., p. 528, § 535.
However, an existing creditor cannot by inaction in the reducing of his claim to judgment postpone indefinitely the running of the statute. And where he fails to secure his judgment or other lien within the statutory period from the time he has knowledge or notice of a fraudulent conveyance, ordinarily he will be denied the right because of laches, in the absence of special circumstances, thereafter to set aside the conveyance. Somers v. Spaulding, 229 Iowa 432, 436, 294 N.W. 610, 133 A.L.R. 1300, and cases cited; 24 Am.Jur. p. 323, § 202. Since, therefore plaintiff waited to obtain judgment for nearly seven years from the recording of these deeds, his action is barred unless special circumstances are pleaded.
Plaintiff contends he pleaded facts which estop the grantee from asserting laches. He alleged in his third amendment that he had long been acquainted with the Larsons and the grantee, Helen Burtness, and had confidence in them; plaintiff told the grantee that Mrs. Larson was indebted to him; the grantee told plaintiff that Anna L. Larson had put the land in her name only so that it could not be reached by holders of several mortgages which Mrs. Larson had signed; plaintiff understood and believed that said conveyance was made only for the purpose of preventing holders of such mortgages from reaching the land, and not to prevent plaintiff from collecting his indebtedness; plaintiff relied upon said statements by Helen Burtness, and upon the long acquaintance and friendly relations with the parties and the confidence he had in them, and did not take steps to reduce the indebtedness to judgment; Helen Burtness is therefore estopped to assert that plaintiff has been guilty of laches.
We think such allegations are insufficient basis for an estoppel against the grantee from asserting laches. The claim of friendship and confidence is clearly of no avail. Every person who lends money has confidence in the borrower. There is no claim of a fiduciary relation nor, as in Ream v. Ream, Iowa, 158 N.W. 468, that plaintiff and defendants were members of the same family.
Nor would plaintiff's reliance upon the statement by the grantee that the conveyances were made only so that the land could not be reached by other creditors form the basis of an estoppel. Knowledge by plaintiff that the deed was made to defraud certain of Mrs. Larson's creditors naturally should have caused plaintiff to act more promptly rather than to delay. In Kallem v. Kallem, 229 Iowa 985, 997, 295 N.W. 826, we held such a suit as this was barred by limitations and laches even though the creditor had confidence in the debtors and was told that the transaction was to keep certain other creditors "from getting ahold of the estate."
Plaintiff does not allege that Helen Burtness requested or induced him to delay action, nor that she prevented his bringing...
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