Quealy Land & Live Stock Co. v. George

• Citation: 36 Wyo. 268,254 P. 130
• Decision Date: 23 March 1927
• Docket Number: 1294,1298
• Parties: QUEALY LAND & LIVE STOCK CO. v. GEORGE et al [*]
• Court: United States State Supreme Court of Wyoming

254 P. 130

36 Wyo. 268

QUEALY LAND & LIVE STOCK CO. v. GEORGE et al ^[*]

Nos. 1294, 1298

Supreme Court of Wyoming

March 23, 1927

APPEAL from District Court, Albany County; WILLIAM A. RINER, Judge.

Suit by the Quealy Land & Live Stock Company against Henrietta George and others. From the judgment, both parties appeal.

Affirmed in part and reversed in part.

Corthell McCollough & Corthell, for appellant.

The burden of proof, that the transfers were given for a valuable consideration and in good faith, rested upon defendants. 12 R. C. L. 171; Murphy v. Pitkin, (Ala.) 67 So. 675; Weber v. Richardson, (Ore.) 147 P. 522; Bank v Dauser, (W. Va.) 74 S.E. 623; Magic Co. v. Lewis (Ky.) 175 S.W. 92; 27 C. J. 484. The trial court found that grantors gave the second chattel mortgage to defraud creditors, and that Henrietta George participated therein; we contend that the finding should have been that all conveyances were in pursuance of an intent to hinder and delay creditors; after the first mortgage was given, the mortgagor sold the mortgaged property and deposited the proceeds to the credit of the mortgagee; this constituted satisfaction of the first mortgage; 4698 C. S.; Hasbrouck v. La Febre, 23 Wyo. 380. Thereafter mortgagee filed an affidavit of renewal, claiming $ 7,612.50 due and unpaid on the mortgage; the undoubted purpose of this was to inform plaintiff that its judgment could not be enforced; the facts clearly indicate fraud with intent to defeat creditors; 27 C. J. 809; Kelliher v. Sutton, 89 N.W. 26; Shipman v. Seamore, 40 Mich. 274.

F. E. Anderson, and Donzelmann & Piggott, for respondents.

The mortgages were held to be valid by the court below; fraud is never presumed; 20 P. 481; 195 N.W. 348; 72 S.E. 121. The warranty deed and bill of sale were made because the mortgagor said he could not go any further; the mortgagee acted under advice of counsel; after the debts were paid, there was little left to pay on other indebtedness; no fraud was shown by any of these transactions.

F. E. Anderson, and Donzelmann & Piggott, for defendant appellants.

The court erred in holding that the chattel mortgage of April 10, 1922 had been paid and discharged on November 17, 1922; the court erred in holding that the chattel mortgage given September 25, 1923 was fraudulent and void and that the property covered thereby was subject to executions in satisfaction of judgments obtained by plaintiffs, for the reason that said findings are not supported by the evidence; Bump on Fraudulent Conveyances, 194. The burden of proof rested upon defendants to impeach the preference; Barr v. Hatch, 3 Ohio 527. Fraud is never presumed; 72 S.E. 121. There is no presumption that a mortgage of property is made with fraudulent intent if the mortgagor, at the time, is actually indebted to another; 156 S.W. 1154; 155 N.W. 604; Bump on Fraudulent Conveyances, 194. Relationship itself is not a badge of fraud in connection with transfers of property; 20 Cyc. 451, 472, 482; Howard v. Rynearson, (Mich.) 15 N.W. 486; 30 N.W. 334; 32 N.W. 774; 33 N.W. 606; Pependick v. Frobenius, 33 N.W. 887; Buhl v. Peck, (Mich.) 37 N.W. 876; 39 N.W. 220. A debtor in failing circumstances may prefer one creditor to another, although that creditor be his wife; 26 P. 942; 180 N.W. 58. Fraud is not presumed from the mere showing of a tie of blood or affinity between the parties to the transaction; Trust Co. v. Scheetz, 195 N.W. 348; 16 S.Ct. 225; Patterson v. Lee-Clark, 7 Wyo. 401; Johnson v. Abbott, 25 Wyo. 133. The question is whether the claim or debt is bona fide; 26 P. 942; 25 Wyo. 133.

Corthell, McCollough & Corthell, for plaintiff appellees.

If there is evidence to support the judgment, it should be affirmed; Edwards v. Wilson, 30 Wyo. 282; McFadden v. French, 29 Wyo. 409; Lellman v. Mills, 15 Wyo. 180; Conway v. Smith Co., 6 Wyo. 468; James v. Lederer Co., (Wyo.) 233 P. 141. We are concerned only with that part of the judgment adverse to the defendants and affecting the two chattel mortgages, and the bill of sale, or the transactions by which the defendants, Herman George and Amy C. George, transferred the sheep and wool to the defendant, Henrietta George; if the indebtedness recited in the consideration did not exist, or if the statement of consideration be false, the transfer is void; Murphy v. Pitkin, (Ala.) 67 So. 675; Weber v. Richardson, (Ore.) 147 P. 522; Ridenour v. Roach, (W. Va.) 87 S.E. 881; Henry v. Yost, (Wash.) 152 P. 714; Lawrence Bros. v. Heyleman, (N. Y.) 82 N.E. 1128. The mortgage did not permit a sale of mortgaged property without written consent of the mortgagee; the terms of the mortgage required all money received from a sale of the property to be paid to the mortgagee; 4698 C. S.; Hasbrouck v. La Febre, 23 Wyo. 380. The provision for renewal affidavits is found at Section 4697 C. S. and was repealed by Chapter 163, Laws 1921, more than two years before the affidavit of renewal was filed; the recital in the consideration for the bill of sale was a badge of fraud, not overcome by evidence; 27 C. J. 483; Ward v. Stutzman, (Mo.) 212 S.W. 67; Clark v. Philomath College, (Ore.) 193 P. 475; Co. v. Lewis, (Ky.) 175 S.W. 992; Bump, 4th Ed. p. 43, 44, 47, 199, 201. The court below was justified upon the evidence in declaring the bill of sale fraudulent and void, and the judgment should, therefore, be affirmed.

BROWN, District Judge. BLUME, C. J. and BURGESS, District Judge, concur.

OPINION

BROWN, District Judge.

The defendant below, Herman George, is the son of Henrietta George. Amy C. George is his wife. As early as 1914, Herman George made arrangements with his mother to finance him in the taking and developing of a tract of government land. Under this arrangement she furnished him with the necessary money for buildings, fencing, ditching, plowing, and doing everything necessary to develop raw government land into a farm. In all she furnished $ 11,000. that went into improving the land. Then she furnished money to buy horses, harness and farm machinery, and to stock the place with cattle and sheep.

Henrietta George for a number of years owned and operated a dairy near Laramie, and was in the habit of keeping large sums of money concealed about her house. In making these loans to Herman George, she usually gave him the money in cash. November 23, 1917, he gave his mother a note and mortgage on the land for $ 11,000. During the years of 1920, and 1921, he had borrowed an additional $ 7,000 from his mother, which money was used in buying sheep and for running expenses. This sum was evidenced by a note secured by a mortgage on his sheep. On April 10, 1922, he gave his mother a new mortgage for $ 11,000 on his land and a note and mortgage on his sheep and wool for $ 7,000. On April 12, 1922, he borrowed an additional $ 3,000 from his mother. This money, after paying an $ 800 debt at the First State Bank of Laramie, was used largely in defraying the expenses connected with the defense of a criminal charge against him. On August 8th of the same year, he borrowed $ 3873.57, which was used in paying his ordinary running expenses in connection with the sheep and farm. In November of the same year he sold his lamb and wool crop for the sum of $ 10,411.49, and deposited this money to his mother's credit. At this time he made arrangements with his mother to use some of this money for running expenses, and later he checked out all but $ 3350 of it.

To secure the payment of the last two loans, on September 25, 1923, he gave his note and a second mortgage on his sheep and wool for the sum of $ 6873.57.

Plaintiff obtained a judgment against defendants Herman George and Amy C. George on October 5, 1923, for the sum of $ 3100.34, and costs. On November 5, 1923, execution was issued on said judgment. Some hay belonging to defendant Herman George was levied upon, together with some hay belonging to third parties, but none of this property seems to have been sold under the execution, and the execution was finally returned unsatisfied.

On December 12, 1925, defendants Herman George and Amy C. George gave a deed to the land in question here and a bill of sale of the sheep and wool, being all or practically all of the property owned by them subject to execution. This deed and bill of sale were filed for record in the office of the County Clerk and ex-officio Register of Deeds of Albany County, on the 26th day of December, 1923. The defendant Henrietta George took possession of the property covered by the above deed and bill of sale at the time of, or just before the execution of these documents.

The deed recited a consideration of $ 12,103.66, the amount due on the $ 11,000 promissory note of April 10, 1922. The bill of sale recited a consideration of $ 6961.78, being the amount due on the note and mortgage of September 25, 1923; and also recited as consideration the chattel mortgage of April 10, 1922, originally for $ 7,000, but without giving the amount then claimed to be due. It also recited the inability of the maker to pay the principal and interest on these mortgages, and that the bill of sale was given to save the expense of foreclosure.

This action was brought December 29, 1923, for the purpose of having the above mentioned deed, mortgages and bill of sale set aside and declared fraudulent and void because given with intent to hinder, delay and defraud the plaintiff herein and other creditors. The defendants severally answered, admitting the execution and delivery of the several instruments, but denied that they were given for the purpose of hindering, delaying or defrauding plaintiff and other creditors, but alleged that each was given in good faith and for a bona fide debt from defendant Herman George to his mother Henrietta George, larger than the...