State Bank of Beaver County v. Mortensen

• Decision Date: 14 December 1925
• Docket Number: 4282
• Citation: 66 Utah 290,241 P. 1055
• Court: Utah Supreme Court
• Parties: STATE BANK OF BEAVER COUNTY v. MORTENSEN et al

241 P. 1055

66 Utah 290

STATE BANK OF BEAVER COUNTY v. MORTENSEN et al

No. 4282

Supreme Court of Utah

December 14, 1925

Appeal from District Court, Fifth District, Iron County; T. H Burton, Judge.

Action by the State Bank of Beaver County against H. J. Mortensen H. C. Rowley, and others. From a judgment dismissing the action as to all defendants, except the two named, plaintiff appeals.

AFFIRMED.

O. A Murdock and Abe Murdock, both of Beaver, for appellant.

George B. Hancock, of Cedar City, and C. E. Norton, of Salt Lake City, for respondents.

GIDEON, C. J. THURMAN, FRICK, CHERRY, and STRAUP, JJ., concur.

OPINION

GIDEON, C. J.

On December 11, 1919, the defendants H. J. Mortensen and H. C. Rowley made and delivered to plaintiff, State Bank of Beaver County, their certain five promissory notes, for $ 590 each. The notes were payable in one, two, three, four, and five years, respectively, after date. None of the notes was paid. On January 24, 1922, after maturity of two of the notes, this action was instituted. Five separate causes of action are stated in the complaint. The five notes made by Mortensen and Rowley are the basis of the several causes of action. Personal judgment is sought on the notes against the makers. The prayer of the complaint asks that a conveyance of certain real estate made by Mortensen to his wife, Cora L. Mortensen, also a defendant, be "declared null and void and of no effect; that the judgment of the said plaintiff be decreed to be and made a lien upon the said real estate." The complaint further asks that Cora L. Mortensen, Joseph F. Burton, his wife, Ida Burton, and R. H. Benson "be required to come in and show what right, if any, they have in and to said premises; that said right be declared to be and made subject to the lien of the said plaintiff; that the plaintiff have an order of sale for the sale of said real estate for the full satisfaction of its said judgment in accordance with the laws of this state and the practice of the court." General relief is sought.

In the complaint the execution and delivery of the notes are alleged. It is further alleged that on January 26, 1921, H. J. Mortensen was the owner of certain real estate located in Iron county, of the value of $ 6,000, and that at that time Mortensen was the owner of no other real estate in the state of Utah, and had no other property out of which his creditors could collect debts owing by him; that notwithstanding such fact, and that he was then indebted to plaintiff and others, he, the said Mortensen, with intent to defraud his creditors, and especially the plaintiff, did on said day fraudulently execute and deliver to his wife, Cora L. Mortensen, a warranty deed for said real estate without consideration, although it is recited in the deed that the consideration was $ 1 and other valuable consideration; that at the time said deed was so made and delivered the other maker of the notes, H. C. Rowley, had no property, either real or personal, not exempt from execution, and this fact was fully known to H. J. Mortensen; that Cora L. Mortensen knew the purpose of the execution and delivery of the deed, and that the same was fraudulent as against plaintiff, and that it was made for the purpose of defrauding plaintiff; that Mortensen and wife, in furtherance of the design to defraud plaintiff, on June 20, 1921, caused said deed to be recorded in the county recorder's office. It is then alleged that during the year 1921 Mortensen and his wife left the state of Utah, and were then absent from the state. It is further alleged that on June 18, 1921, Cora L. Mortensen, in furtherance of said fraudulent design, and for the purpose of hindering, delaying, and defrauding the creditors of said H. J. Mortensen, pretended to and did make her warranty deed for said real property to the defendant Joseph F. Burton, for the stated consideration of $ 1 and other valuable consideration. But it is alleged upon information and belief that there was no consideration; that Burton knew the purpose of the parties, knew that the grantee, Cora L. Mortensen, was not the real owner of the property, and that the lands were the property of H. J. Mortensen, and that Burton thereby became a party to the scheme to defraud plaintiff, and that in furtherance of said design Burton caused said deed to be recorded in the county recorder's office on June 28, 1921; that Cora L. Mortensen, in furtherance of said fraud, took a mortgage to herself on said property, dated June 20, 1921, executed by Burton and wife, for the sum of $ 3,000; that Burton at that time had notice of the fact that Cora L. Mortensen was not the owner of said real estate, and that H. J. Mortensen was in fact the owner in fee thereof; that said mortgage was recorded on June 20, 1921; that on July 9, 1921, Burton and wife made and delivered to R. H. Benson a mortgage on said real estate to secure the payment to said Benson of the sum of $ 2,000, which plaintiff alleges was an indebtedness theretofore owing by H. J. Mortensen to Benson, evidenced by a note made and secured by a mortgage executed by H. J. Mortensen and wife of January 9, 1920, and thereafter recorded, and that said mortgage was released on July 15, 1921, the indebtedness having been paid and discharged.

H. C. Rowley was personally served with summons. He did not appear in the action, and his default was thereafter regularly entered. Service was had upon H. J. Mortensen by publication. He did not appear, and his default was thereafter entered. Benson appeared in his own behalf, and in his answer alleged that the mortgage held by him was to secure an indebtedness owing to him by H. J. Mortensen, and that the mortgage executed by Burton and wife was a renewal of a former mortgage existing against the property at the date Cora L. Mortensen conveyed the legal title to Burton; that it was recited in the mortgage that the same was made in renewal of a former existing indebtedness, and that in the deed of conveyance from Cora L. Mortensen to Burton, the grantee therein, Burton assumed as a part of the consideration the payment of such mortgage and such mortgage indebtedness; also this defendant denied that any act of his was an attempt on his part to hinder or defraud any one, and that the original debt from Mortensen to him was for money used by Mortensen in the erection of a brick building located upon said premises.

Burton and his wife appeared personally and filed an answer to the complaint. In this answer these defendants deny any knowledge of the indebtedness owing by Mortensen to plaintiff, and allege that they bought the property from Cora L. Mortensen for a valuable consideration, and upon the representation of the said Cora L. Mortensen that she had good title to said property and premises, and relying upon said representations paid valuable consideration for the property and purchased the same for a home; that the consideration was the assuming of the mortgage indebtedness of $ 2,000 to Benson and executing and delivering to Cora L. Mortensen their note and mortgage in the sum of $ 3,000, and the payment of an additional sum of money to Cora L. Mortensen. They further allege that the entire transaction, as far as they were concerned, was bona fide and without any attempt on their part to hinder, delay, or defraud any one.

Cora L Mortensen in her answer alleges that on the date the conveyance was made to her by her husband, to wit, January 26, 1921, she was residing with her husband, and that she and her husband, with four minor children, resided upon said premises as a homestead, and had so resided for many years prior thereto; that said conveyance was not made to defraud the creditors of H. J. Mortensen, but was based upon a valid consideration, and that under the homestead laws of the state of Utah said property was exempt from execution; that at the time of said conveyance said premises were exempt from the lien of any indebtedness or any judgment against said H. J. Mortensen, and any proceeds received from the sale of said premises were likewise exempt from any lien by reason of any indebtedness on the part of said H. J. Mortensen or any judgment...