Sieg v. Greene

• Decision Date: 24 July 1915
• Docket Number: 4348.
• Citation: 225 F. 955
• Parties: SIEG v. GREENE.
• Court: U.S. Court of Appeals — Eighth Circuit

225 F. 955

SIEG v. GREENE.

No. 4348.

United States Court of Appeals, Eighth Circuit. ^[1]

July 24, 1915

Rehearing Denied October 5, 1915.

For many years prior to 1903, John A. Sieg and William A. Size manufactured and sold brick at Marshalltown, Iowa, as co-partners in the name of Sieg & Size. Each of them owned an undivided half interest in a tract of land adjoining the town, ten acres of which was within the corporate limits, but had not been platted as town lots. The manufacturing plant was on the tract, from which material for making brick was obtained. There were also two residences, one of which was occupied by Size and his family as their home; and Sieg, who was a bachelor, lived with them, although he was away much of the time. They farmed the land, except some two acres occupied by the brick plant. Formerly the plant was in the northeast part of the tract, but was later moved south, near a railroad which crosses it.

In the latter part of 1902, Sieg withdrew from the firm and made an agreement with Charles E. Carpenter, who was the son-in-law of William A. Size, by which he agreed to sell and Carpenter agreed to buy Sieg's undivided half interest in all of the tools, machinery and appliances on and used with the yard in the manufacture of brick for the sum of $4,000, to be paid in stipulated installments; and also leased to Carpenter his undivided half interest in the brickyard and the house on the tract not occupied by the family of William A. Size for a term expiring January 1, 1908, at a yearly rental of $300 and also gave to Carpenter an option to buy the premises leased, and the right to extend the lease for five years after January 1, 1908, at the same rental. Carpenter did not keep his contract to purchase, nor pay the rentals under the lease. There is no evidence to show an extension of the lease. Soon after the making of the contract and lease the copartnership of Size & Carpenter was formed for the purpose of continuing the manufacture and sale of brick, which the new firm proceeded to carry on. The record here leads to the conclusion that the new firm was composed of George S. Size a son of William A., and Charles E. Carpenter, though the District Court on petition of creditors in bankruptcy adjudged that the firm was composed of William A. and George S. Size and Carpenter; however, that is immaterial in this proceeding.

About August 1, 1911, creditors filed their petition against the firm of Size & Carpenter and obtained an adjudication that the firm and its individual members, including William A. Size, were bankrupts as charged, and the appellee was duly appointed trustee of their estates.

On July 15, 1910, William A. Size and wife conveyed by warranty deed all of their undivided half interest in the tract of land to John A. Sieg, in consideration of his surrendering to the wife of Size the notes of William A. Size payable to Sieg, which with interest then amounted to something over $5,000. Sieg did not place this deed of record until June 29, 1911. On that day Carpenter turned over to Sieg and he took possession of the brickyard. The new firm ceased operations at that time.

In the summer of 1910, the firm of Size & Carpenter was without funds to continue the brick business. They were then insolvent and applied to Sieg for assistance to continue operation of the plant, and on July 22, 1910, he let the firm have $1,000 (by check), and a little later $2,000 more. He knew the firm was in a failing condition and was not willing to put up the money as a simple loan. So when he turned over the check he had an agreement with the firm by which he was to furnish the $3,000 for the manufacture of 600,000 brick which the firm was to make for him at that price ($5.00 per 1,000), and he was to take them on the yard as soon as they were burned. Size & Carpenter had no funds to meet the necessary expenses in the manufacture and Sieg knew it and for that reason he made the advancement under the agreement that the brick were to be his. The brick were manufactured as agreed, but Sieg got only about 550,000, some 200,000 of which were still green in the kilns when he took possession on June 29, 1911, and which were later burned at his additional expense. He got all of them within four months prior to the day bankruptcy petition was filed.

Sieg's money paid the laborers on the yard. They understood the brick were being made for him. He testified that the machinery and all the property at the plant had been his since 1908, when he bought out the half interest of W. A. Size in the brick plant. Carpenter had never kept up his payments, either under the lease or contract to purchase Sieg's half of the plant.

This suit, brought by the trustee against Sieg, was double in purpose, that is, to recover (1) the undivided half interest of William A. Size in the land which he conveyed to Sieg by deed of date July 15, 1910, and (2) the value of the brick received by Sieg from the bankrupts; and the bill charged that both transfers were voidable preferences and also fraudulent (Bankruptcy Act July 1, 1898, c. 541, Secs. 60 and 67, 30 Stat. 562, 564 (Comp. St. 1913, Secs. 9644, 9651)).

The trial court granted all that was asked. It entered a decree (1) canceling the deed from Size and wife to Sieg, (2) ordering that Sieg account to the trustee for rents after July 22, 1910 (date deed was acknowledged), and (3) that the trustee recover of Sieg $2,500, the reasonable value of 500,000 brick turned over to him by the bankrupts, and that Sieg pay the costs.

C. H. Van Law, of Marshalltown, Iowa, for appellant.

C. H. E. Boardman, of Marshalltown, Iowa, for appellee.

Before SANBORN and CARLAND, Circuit Judges, and LEWIS, District Judge.

LEWIS District Judge (after stating the facts as above).

1. One of the defenses was that the deed from Size to Sieg could not be avoided on either ground stated in the bill or for any other reason, because the property conveyed was at the time of its conveyance the homestead of Size and his family who at that time and for many years theretofore had continuously resided on it.

The Iowa statute on the subject may be epitomized: Exemption of the homestead from judicial sale; requirement that husband and wife join in the conveyance to render it valid; embraces the house used as a home by the owner, and if he has two or more houses thus used he may select which he will retain, and if not within a city or town plat it must not contain in the aggregate more than forty acres, and must not embrace more than one dwelling house. Code of Iowa 1897 and Supplement thereto 1907, Secs. 2972-2978. Under this statute the homestead claim attaches to the undivided interest of a tenant in common. Thorn v. Thorn, 14 Iowa, 49, 81 Am.Dec. 451; Bolton v. Oberne, 79 Iowa, 278, 44 N.W. 547. A voluntary conveyance of the homestead is not fraudulent as to creditors. Delashmut v. Trau, 44 Iowa, 613; Officer v. Evans, 48 Iowa, 557-560; Foreman v. Bank, 128 Iowa, 661, 105 N.W. 164; Bank v. Glick, 134 Iowa, 323, 111 N.W. 970; Dettmer v. Behrens, 106 Iowa, 585, 76 N.W. 853, 68 Am.St.Rep. 326; Wheeler, etc., Co. v. Bjelland, 97 Iowa, 637, 66 N.W. 885; Green v. Root (D.C.) 62 F. 191. The grantor in such a case need not receive full value. His creditors cannot take it, and have no concern about what he gets. Griffin v. Sheley, 55 Iowa, 513, 8 N.W. 343; Aultman v. Heiney, 59 Iowa, 654, 13 N.W. 856. The state statute and decisions control here. Bank v. Glass, 79 F. 706, 25 C.C.A. 151; Bankruptcy Act, Sec. 6; Vitzthum v. Large (D.C.) 162 F. 685. The trustee cannot recover it. It was not an asset of the bankrupt estate, was beyond the reach of creditors and likewise of the trustee who represents them. But the right did not attach to that part of the tract used as a brickyard and its appurtenances. That was not a part of the farm, nor appurtenant thereto, and was not used as a part of the home. Mouriquand v. Hart, 22 Kan. 594, 31 Am.Rep. 200. At the time of the conveyance the entire tract contained 97.68 acres. The claim to the homestead right was confined to the undivided half interest in eighty acres. The other dwelling house and its appurtenant grounds occupied by Carpenter and family could not be included in the homestead of Size. The homestead exemption as claimed should have been sustained, and set off in eighty acres of the farm lands including the dwelling occupied by Size and family, and excluding the brick plant and yard, together with needed appurtenant ground, also the Carpenter dwelling and appurtenances, and also such additional acreage, if necessary, to bring the exemption within the limited area.

Registration and record of the deed was required and this was not done until within the prohibited four months period; it was therefore voidable as to the excess over the homestead right. It follows that Sieg's liability for rent would also be confined to what he received on one-half of the excess.

2. The issue as to Sieg's claimed liability for the value of the brick turned over to him within the four months period by the bankrupts, is more difficult. In its consideration we confine the inquiry to whether that transaction operated to effect a preference rendered voidable by section 60a and b of the Act; and this, because the evidence entirely fails as a sufficient basis on which any claim that the transaction was in fact fraudulent, as charged in the bill, could be rested, and additionally there is no finding of fact that way by the trial court which might relieve us in part from a wholly independent consideration and conclusion in the matter. Thus...