Willamette Grocery Co. v. Skiff

• Decision Date: 20 July 1926
• Parties: WILLAMETTE GROCERY CO. v. SKIFF ET AL.
• Court: Oregon Supreme Court

248 P. 143

118 Or. 685

WILLAMETTE GROCERY CO. v. SKIFF ET AL.

Supreme Court of Oregon

July 20, 1926

Department No. 2.

Appeal from Circuit Court, Marion County; George G. Bingham, Judge.

Suit by the Willamette Grocery Company against Mark S. Skiff and others. From the judgment, plaintiff and defendant First State & Savings Bank appeal. Reversed, and decree entered.

This is a creditors' suit to set aside a deed executed by defendants Mark S. Skiff and Ada V. Skiff, his wife, to their son Mark S. Skiff, Jr., as in fraud of the rights of the creditors. A decree was rendered in favor of defendants from which plaintiff and defendant First State & Savings Bank appealed.

The First State & Savings Bank, a corporation, was made a party defendant for the reason it claimed some right to the real estate by virtue of an attachment levied thereon. The bank answered, claiming the same relief as claimed by the plaintiff. The defendants Skiff answered, denying the material allegations of the complaint and the answer of the bank, except the corporate capacity of the plaintiff and the defendant bank, and the relationship of the defendants Skiff and alleged that the defendant bank held other security for the claim referred to in its answer.

Guy O Smith and Walter E. Keyes, both of Salem (Smith & Shields and McNary, McNary & Keyes, all of Salem, on the brief), for appellants.

Walter Winslow, of Salem, for respondents.

BEAN J. (after stating the facts as above).

On April 17, 1922, defendant Mark S. Skiff, for a valuable consideration, executed to Edna Ross his promissory note for the sum of $800, payable 90 days after date. On May 1, 1922 Edna Ross indorsed and delivered the note to the defendant bank as collateral security to secure a loan theretofore made by the bank to Edna Ross and her husband, Wilburt J. Ross upon which there was then due $604. After the maturity of the Skiff note, the bank being unable to collect, instituted an action in the circuit court for Marion county, Or., and thereafter on March 31, 1923, recovered judgment by default against Mark S. Skiff in the sum of $800 and accruing interest, costs, and attorneys' fees. On June 16, 1923, the bank caused to be issued an execution upon the judgment directed to the sheriff of Marion county, the county in which said defendant resided, but the sheriff was unable to find any property in the county subject to execution, and returned the same to the court with the certificate to that effect. At the time the note was given, upon which the bank procured its judgment, Mark S. Skiff owned a certain interest in valuable business property in the city of Salem, Or., for which he and his wife executed a deed to his son Mark S. Skiff, Jr., as a gift. The deed was executed a few days before the note matured. There was given to the bank as collateral to secure the Ross note an automobile note, but it was found the car covered therein was not worth repossessing. There was also assigned to the bank as collateral to secure the Ross note a judgment against Kuffner-Crahane Lumber Company, the unpaid portion of which was found to be uncollectable before this suit was instituted.

The plaintiff, Willamette Grocery Company, was a judgment creditor of the defendant Mark S. Skiff in the sum of $614.96. The judgment was rendered in favor of plaintiff and against Mark S. Skiff on January 4, 1923. April 5, 1923, plaintiff issued an execution on the judgment directed to the sheriff of Marion county, Or., where the defendants resided, but the sheriff was unable to find any property subject to the execution, and returned the same nulla bona. The property involved is described as follows:

"The south three-fourths of lot two (2) in block thirty-three (33) in the city of Salem, in Marion county, Or., as said lot is shown and designated on the plat of said city of Salem, now on file and of record in the office of the recorder of conveyances for said Marion county, Or."

On June 20, 1922, while the above-mentioned indebtedness and other large amounts of indebtedness of the defendant Mark S. Skiff existed, the defendant Mark S. Skiff and his wife executed and placed of record a deed purporting to convey the real premises above described to the defendant Mark S. Skiff, Jr. The deed was executed without consideration therefor as a gift to the defendant Mark S. Skiff, Jr. In July, 1922, the defendant Mark S. Skiff executed a trust deed of several tracts of real estate to the Ladd & Bush Bank of Salem, being all of the real estate owned by him except the real estate involved in this suit, to secure an indebtedness to that bank of $18,000.

The trial court found, among other things, that on June 20, 1922, the defendant Mark S. Skiff was the owner of a leviable interest in the lands described, and on that day, without any consideration therefor, except a prior promise to carry out an unforceable request of his father to convey such lands to his son Mark S. Skiff, Jr., executed the deed in question to his son; that the grantee, Mark S. Skiff, Jr., had no notice or knowledge of any indebtedness due or owing from the grantor to the plaintiff or the defendant bank, or any knowledge concerning his father's financial affairs, "and the said Mark S. Skiff, Jr., did not accept such deed with the purpose or intention of hindering, delaying, or defrauding the creditors of his father. The conveyance from the father to the son was voluntary." For that reason the circuit court rendered a decree in favor of defendants Skiff.

Section 10170, Or. L., provides that every conveyance of any estate or interest in lands made with the intent to hinder, delay, or defraud creditors, or other persons of their lawful suits, damages, debts, or demands, as against the person so hindered, delayed, or defrauded, shall be void.

Section 10174, Or. L., directs as follows:

"The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor."

It is clearly shown by the testimony that the defendant Mark S. Skiff, at the time of the execution of the deed in question, was heavily involved financially, and that the execution of the deed would at least hinder and delay plaintiff and the defendant bank in the collection of their demands against defendant Skiff.

Where a deed is made by a father to his son, when the deed is placed in evidence and the creditor's indebtedness is established as existing at the time, a prima facie case is made out, and the burden of proof is on the defendant grantee to show the bona fides of the transaction and that the conveyance was made for a valuable, adequate consideration. It is not enough for such a grantee to show that he had no previous notice of the fraudulent intent of his immediate grantor, but he must also show that he was a purchaser for a valuable...