State Bank of Pender v. Frey

• Decision Date: 04 June 1902
• Citation: 91 N.W. 239,3 Neb. [Unof.] 83
• Parties: STATE BANK OF PENDER ET AL. v. FREY ET AL.
• Court: Nebraska Supreme Court

3 Neb. [Unof.] 83

91 N.W. 239

STATE BANK OF PENDER ET AL.

v.FREY ET AL.

Supreme Court of Nebraska.

June 4, 1902.

Commissioners' opinion. Department No. 1. Appeal from district court, Thurston county; Evans, Judge.

“Not to be officially reported.”

Action by the State Bank of Pender and others against Mary Ann Frey and others. Judgment for plaintiffs, and defendants appeal. Reversed.Jay & Welty, Guy T. Graves, and Uriah Bruner, for appellants.

T. M. Franse, J. H. Macomber, P. M. Moodie, and Anderson & Keefe, for appellees.

HASTINGS, C.

This is a suit by creditors' bill to set aside two conveyances of land and subject the premises to the payment of a judgment of the plaintiff bank against Charles H. Frey for $4,009.76 and costs, dated May 27, 1895; and a judgment in favor of plaintiff Pollock against the same defendant for $541.30 and costs, dated April 17, 1895, a transcript of which was filed December 10, 1895; and one in favor of plaintiff Rupp against the same defendant for $448.77, dated May 8, 1894, and filed by transcript May 16, 1894; and one in favor of plaintiff Bauman against the same defendant, dated May 8, 1894, and filed by transcript May 16, 1894. The first conveyance assailed is a deed of Charles H. and Mary Ann Frey, made December 12, 1886, to D. W. Britton, covering the S. W. 1/4 of section 20, township 25 N., range 6 E., which was on the same day conveyed by Britton to Mary Ann Frey. These deeds were recorded in Wayne county July 12, 1887. The land had been conveyed to Frey 13 days before the making of these deeds by Bauman, who held it from one Cummings, who had entered it. It is called by the parties, and will be called here, the “Cummings Land.” The other conveyance assailed is a deed from Florence Miller, dated March 22, 1890, to Mary Ann Frey, covering the W. 1/2 of the S. E. 1/4, and the N. W. 1/4 of the N. E. 1/4, of section 8, township 25 N., of range 6 E. This deed was recorded April 26, 1892, in Thurston county. The premises are called by the parties, and will be here referred to, as the “Miller Land.” This last deed seems to have been made when dated. Possession was given of the premises to Mrs. Frey, or to her and her husband, on a contract of purchase on which payments were made; and the deed remained in escrow till payment in full was completed, when it was delivered and recorded. The contract of purchase was recorded in Thurston county March 22, 1890. The trial court found that this was notice to plaintiff, and that any cause of action for fraud in the transaction was barred when this suit was commenced in June, 1895. The trial court also found that Charles H. Frey was insolvent in 1886, at the time of making the deed to Britton. It found Rupp's and Bauman's judgments both void for lack of sufficient service of summons. It found that there was no actual knowledge of the fraud in the deed to Britton on the part of the bank and of Pollock, and that the recording in Wayne county was not constructive notice of anything. The judgments of the bank and of Pollock were decreed to be liens upon the Cummings land. The court finds that the indebtedness on these judgments was incurred prior to May 5, 1893.

We have, in the first place, the appeal of the defendant Charles H. Frey and wife from so much of the decree as subjects the Cummings land to the lien of the judgments of the State Bank of Pender and of John W. Pollock; second, there is the appeal of the bank and of Pollock from the portion of the decree that finds their cause of action as to the Miller land barred by the statute of limitations; finally, there is the appeal of plaintiffs Rupp and Bauman from the finding that their judgments were without jurisdiction of Frey's person, and that they have no right. The appeal of the defendants is upon two contentions: First, that the evidence is insufficient to establish fraud as to the first-mentioned premises; and, second, that the action is barred by the statute of limitations. The first branch itself divides into two, or rather three, viz., that Charles H. Frey never had an interest in the land, and only held title to it as trustee for the purpose of procuring a loan, and that only for 13 days; that at the time he made the conveyance for a nominal consideration of $1,900, he owed his wife more than $3,000; and that plaintiffs held no indebtedness against him when the conveyance was made, and no proof was submitted of actual fraud, except that the conveyance was voluntary. This, as to subsequent creditors, is claimed to be insufficient. Perhaps the claim that the sheriff made no search for property on which to levy execution before this action was instituted should be also mentioned. It is not deemed necessary to refer to it further than to say that his return, while somewhat informal, and not reciting any search for property, seems sufficient to indicate a complete lack of property on which to levy. There is nothing in the record to indicate any specific property of defendant on which he could levy, and for the purposes of this action his return will be held sufficient. While the evidence hardly seems to warrant a finding that Charles H. Frey put any money into the purchase of the Cummings land, it does warrant the conclusion that he made the arrangement with Cummings under which the latter entered the land, and that he borrowed the money to pay for it; the first installment of $525 of Bauman; and then enough to pay this and the other two by a loan from Skeen & Riley. It appears clearly that the proceeds of this loan, except about $90, went to clear up the title to the land embraced, a part of which was this Cummings land. This first defense of a prior gift to Mrs. Frey by Cummings is not aided by the second one of money loaned to her husband. Whatever money the husband got was not at the time charged against him. There seems to have been no well-defined distinction between the property of the wife and that of her husband, in those earlier years at all events, and there seems no good reason to doubt the correctness of the trial court's conclusions that this was essentially a voluntary conveyance, though Mr. Frey seems to have obtained from his wife valuable property and money.

Two serious difficulties are in the way of the trial court's conclusions as to this Cummings land: First, as to the Bank of Pender, the indebtedness nowhere appears to have been contracted until long after this deed was made. Of course, a deed may be set aside as fraudulent by subsequent creditors, but not merely on the ground that it was voluntary. This conveyance to the wife in 1886 is not fraudulent as to the bank's subsequently accrued claim merely because it was voluntary. Graham v. Railroad Co., 102 U. S. 148, 26 L. Ed. 106. The cases from the several states will be found in the Century Digest. 24 Cent. Dig. p. 977, § 631. There is no claim that there is any evidence of an actual intention to defraud in this conveyance, and no fraud except that it was voluntary is alleged, except in general terms. It appears, however, that the judgment of John W. Pollock is based upon a note given in 1885,--the year before this Cummings land was conveyed to Mrs. Frey. As to that claim, therefore, a deed voluntary must be held fraudulent, unless it shall appear that the action is barred by the statute of limitations. This latter is the second difficulty. The title to this land was first in Cummings, who entered it with money borrowed apparently by Frey from Bauman, to whom Cummings conveyed the land as security. Bauman held it until within a few days of its conveyance by Frey to Britton and by the latter to Mrs. Frey. These last conveyances were on July 12, 1886, placed of record in Wayne county. The defendants claim that Mrs. Frey had then been in possession of the land for a year. As a matter of fact, the land seems to have been farmed by “the boys,” as Mrs. Frey testifies, and from the family home on the same section. If we assume that the land is Frey's, as the court finds, of course, there was no such change of possession as to put a creditor on inquiry; but the placing of the title at the commencement in Bauman, and from him so quickly in Mrs. Frey, by conveyance promptly recorded, of lands immediately in the possession of defendants nearly nine years before the commencement of this action, must be held a bar to its prosecution. If the record in Wayne county was constructive notice of the existence of the deeds, and if the fact that plaintiffs' claims had not been reduced to judgment prior to 1894, is not to be regarded. The only allegation in the petition of plaintiffs as to lack of knowledge of the fraud is that they “had no knowledge, actual or constructive, of the deed.” This allegation is repeated as to the second conveyance. The evidence is entirely wanting as to when the actual knowledge was obtained. There is no explanation of the failure to learn of these conveyances, except a statement as to plaintiff Pollock that he is a nonresident. The doctrine seems well established in this state that, where more than four years have elapsed since the alleged fraud, the plaintiff must allege and prove the facts as to failure to discover it, which entitle him to proceed notwithstanding the lapse of time, and must show diligence. Parker v. Kuhn, 21 Neb. 413, 32 N. W. 74, 59 Am. Rep. 838;Hellman v. Davis, 24 Neb. 793, 40 N. W. 309;Wright v. Davis, 28 Neb. 479, 44 N. W. 490, 26 Am. St. Rep. 347;Gillespie v. Cooper, 36 Neb. 775, 55 N. W. 302;Horbach v. Marsh, 37 Neb. 22, 55 N. W. 286; Forsyth...