Reed's Estate, Matter of, 4648

• Decision Date: 27 June 1977
• Docket Number: No. 4648,4648
• Citation: 566 P.2d 587
• Parties: In the Matter of the ESTATE of Cleo B. REED, Deceased. Joe BUTCHER, Petitioner-Appellant, v. Mary BUTCHER, Respondent-Appellee.
• Court: Wyoming Supreme Court

Page 587

566 P.2d 587

In the Matter of the ESTATE of Cleo B. REED, Deceased.

Joe BUTCHER, Petitioner-Appellant, v. Mary BUTCHER, Respondent-Appellee.

No. 4648.

Supreme Court of Wyoming.

June 27, 1977.

David R. Nicholas, Corthell, King, McFadden, Nicholas & Prehoda, Laramie, signed the briefs and appeared in oral argument for petitioner-appellant.

George L. Zimmers, Zimmers, Nelson, Kirkwood & Castor, Laramie, signed the briefs and appeared in oral argument for respondent-appellee.

Before McCLINTOCK, RAPER, THOMAS and ROSE, JJ., and ARMSTRONG, District Judge, Retired.

RAPER, Justice.

John W. Butcher, legatee, renounced the bequest to him under the will of the testatrix following the filing of the executor's final account and petition for distribution. The district court declared the renunciation to be of no force and effect and ordered the executor to proceed as though no renunciation had been filed. From that order, this appeal is taken by Joe Butcher, one of the legatees who would benefit by the renunciation. The sole issue is whether a legatee, under the circumstances of this case may renounce his legacy. We will affirm.

The testatrix, by her will, named John W. Butcher as a legatee. Upon her death, her will started through the course of administration. On March 14, 1975, the final account and petition for distribution was filed showing John W. Butcher, a grandson of decedent, as a legatee to share in the estate. On March 24, 1975, a writ of execution and garnishee notice was served on the executor and John W. Butcher, indicating that Mary K. Butcher, appellee here, had in the Albany County District Court on the 21st day of March, 1975, obtained a judgment against John W. Butcher in the sum of $32,814.92. A copy of the judgment appears in the record. On the same date, the 21st day of March, 1975, John W. Butcher filed the following signed, handwritten renunciation in the estate matter:

"I, John W. Butcher, a beneficiary under the will of Cleo B. Reed, being aware that I am a legatee of a specific beneficial request under said will hereby renounce such bequest. Dated this 21st day of March, 1975."

The trial court ordered paid the bequests allowed under the will to the other legatees and the executor was directed to hold what John W. Butcher would have received. If the renunciation is valid, John W. Butcher's share will pass to others. We need not decide to whom, though Joe Butcher apparently claims an entitlement, not only as a legatee but as one of the heirs as well. There is no transcript, so we do not know what all transpired at a hearing that had been held. The trial judge called for briefs and on December 15, 1975, entered the final order appealed from. ¹ There are no findings of fact or conclusions of law. The effect of the order, if proper, will allow the executor, upon further order of the trial court, to pay John W. Butcher's share to the sheriff, pursuant to the garnishee notice, for eventual application to the judgment in favor of Mary K. Butcher.

Generally speaking, the right of a testamentary beneficiary to renounce or decline a bequest is recognized and, ordinarily, his motives are immaterial. 80 Am.Jur.2d (Wills) § 1597, pp. 653-654. We are, however, not dealing here with the ordinary situation but one in which the rights of a judgment creditor are adversely affected and badges of fraud apparent. A badge of fraud is a fact tending to throw suspicion upon the questioned transaction, excites distrust as to bona fides, raises an inference that a conveyance is fraudulent and by its presence usually requires a showing of good faith. Mohar v. McLelland Lumber Company, 1972, 95 Idaho 38, 501 P.2d 722; Ebey-McCauley Co. v. Smith, Okl.1960, 353 P.2d 23; Evans v. Trude, 1952, 193 Or. 648, 240 P.2d 940. We find little mention of badges of fraud in Wyoming jurisprudence. In Quealy Land & Live Stock Co. v. George, 1927, 36 Wyo. 268, 254 P. 130, a fraud case decided before adoption by the Wyoming legislature of the Uniform Fraudulent Conveyance Act in 1929, this court declared that badges of fraud may always be overcome by evidence of the bona fides of the transaction. That statement is consistent with cases of other jurisdictions here cited.

A case remarkably similar to the one before us is controlling in the disposition of this appeal. In re Kalt's Estate, 1940, 16 Cal.2d 807, 108 P.2d 401, 133 A.L.R. 1424. There, the probate court found that the renunciations were filed expressly to defeat the collection of judgments; the attacking creditor appearing at the regular time of hearing prior to final distribution of the estate, objecting to distribution of the renouncing legatee's share to the residuary legatee. Justice Traynor, as we do, acknowledging there is case law to the contrary, ² nevertheless, went ahead to reason that under the Uniform Fraudulent Conveyance Act in effect in California, a transfer of property to defeat a creditor can be set aside; a renunciation by a legatee is a transfer of property in that it causes title to his share of the estate to pass to another legatee; and is a fraudulent conveyance when done to defeat a creditor.

Wyoming has an affinity to California in this case, making the decision in Kalt particularly applicable in two particulars. First, this court has held that since Wyoming's probate code was taken from that state, we are inclined to follow its decisions on the subject, if appropriate to do so. Merrill v. District Court of Fifth Judicial Dist., 1954, 73 Wyo. 58, 272 P.2d 597. Second, Wyoming has the Uniform Fraudulent Conveyance Act, §§ 34-137, et seq., W.S.1957, as does California. Both the probate code and the Uniform Fraudulent Conveyance Act were the bases used by the California court in its disposition.

Joe Butcher attempts to distinguish the case before us from Kalt on the ground that in the latter case, the renunciating legatee admitted the renunciation was for the purpose of defeating creditors. We have no idea whether John W. Butcher admitted or denied anything because we have no transcript of any testimony. All that appears in the record is what we have related. We cannot consider any matter upon which the record is silent. McCarthy v. Croker, Wyo.1976, 549 P.2d 323; Mulhern v. Mahs, 1930, 41 Wyo. 214, 284 P. 123. We can only decide a case upon what appears in the record before us. Thomas v. Gonzelas, 1958, 79 Wyo. 111, 331 P.2d 832. In the absence of findings of fact, a judgment will be affirmed on any legal ground appearing in the record. Peters Grazing Association v. Legerski, Wyo.1976, 544 P.2d 449, reh. den. 546 P.2d 189.

Section 34-144, W.S.1957, of the Uniform Fraudulent Conveyance Act, provides:

"Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors."

Note the alternative language of § 34-144, "actual intent, * * * to hinder, delay, or defraud either present or future creditors, is fraudulent." (Emphasis added.) Hofmann v. LaFontaine, U.S.D.C.Wyo.1936, 16 F.Supp. 748, is the nearest we can come to a Wyoming case construing that section. There, it was held that proof of intent to hinder or delay creditors is actual fraud, citing Lovett v. Faircloth, 5 Cir. 1925, 10 F.2d 301, cert. den. Faircloth v. Lovett, 270 U.S. 659, 46 S.Ct. 355, 70 L.Ed. 785. Such intent becomes real fraud by operation of the statute. The rule of Hofmann does represent the law. An intent to "hinder or delay" is sufficient to void a transfer even though there is no actual fraud as contemplated following the disjunctive "or." Rose v. Rose, 1934, 241 App.Div. 3, 271 N.Y.S. 5. Proof of actual fraud, as provided in the alternative, was therefore not necessary.

There exists here a strong indicia or badge of fraud in the fact that on the same date Mary K. Butcher obtained a judgment against John W. Butcher, he filed a renunciation in the estate matter. A transfer of property, without consideration, in the face of a threat or pendency of litigation, is a badge of fraud. Royal Indemnity Company v. McClendon, 1958,64 N.M. 46, 323 P.2d 1090. Joe Butcher presented no evidence that the transfer was for a consideration. A hurried transaction not in the usual mode of doing business is considered a badge of fraud. United States v. Leggett, 6 Cir. 1961, 292 F.2d 423, cert. den. 368 U.S. 914, 82 S.Ct. 194, 7 L.Ed.2d 131, reh. den. 368 U.S. 979, 82 S.Ct. 476, 7 L.Ed.2d 441. Another badge of fraud is that the will was admitted to probate on October 23, 1974, following actual notice to John W. Butcher that such action would be taken; it was not until on March 21, 1975, after the final account and petition for distribution had been filed, that he filed his renunciation. In re Kalt's Estate, supra, lists long delay before renouncing as a consideration. "Long delay" is relative, of course, but here the renunciation was not filed until four days prior to the date fixed for final settlement; and, when coupled with the date of the judgment against him, it is reasonable to infer that it was filed with intent to defeat his judgment creditor. The relationship between the parties to an alleged fraudulent conveyance is a circumstance to consider with the rest of the evidence to determine intent. Godina v. Oswald, 1965, 206 Pa.Super. 51, 211 A.2d 91. Here, the legatees, who are also the only surviving heirs to benefit by the renunciation, were all grandchildren, as was John W. Butcher, or great-grandchildren of the same grandparents or great-grandparents, as the case may be. In any event, the renounced legacy would pass to relatives. We need not decide, however, just exactly how the renounced share would have gone because the judgment creditor in this case will be the recipient. A single badge of fraud may stamp a transaction as fraudulent. Payne v. Gilmore, Okl.1963, 382 P.2d 140. See 7 ULA, Master Edition, ...