Ellis v. Musselman

Sullivan, J. The purpose of this action, which was brought by the defendants in error in the district court for Gage county, was to have the real estate described in the petition sold for the satisfaction of certain judgments recovered by them against Joseph Ellis. A trial of the issues formed by the pleadings resulted in a finding that Ellis, the former owner of the property, transferred it to his sons, the plaintiffs in error, on April 8, 1895, and that the deeds of conveyance were made and received for the purpose, and with the intention, of hindering, delaying and defrauding the grantor’s creditors. A decree was rendered awarding the relief for which the creditors prayed. The only question discussed by counsel is the sufficiency of the evidence to sustain the conclusion of the trial court. As the result of a careful reading of the record our con [263] viction is that the judgment rendered does complete justice between the parties and should not be disturbed. It is true that Joseph Ellis was indebted to his sons at the time he conveyed to them the land in question; but that fact did not necessarily make the conveyance valid, nor shield them from the assaults of creditors. The plaintiffs in error might lawfully accept security from their father, but it was not permissible for them to do so with the intention of defrauding other creditors. If a conveyance is the product of two motives, one innocent and the other corrupt, it is, according to all the authorities, within the proscription of the statute of frauds. Hedrick v. Strauss, 42 Nebr., 485; Landauer v. Mack, 43 Nebr., 430. The rule upon this subject is thus perspicuously stated in the American and English Encyclopedia of Law: “Although a creditor who obtains from an insolvent debtor an assignment of property in payment of, or as security for his debt, may know that his debtor is acting with the design of delaying and defrauding other creditors, he will not lose his preference by reason of such knowledge, if he takes the assignment in good faith, and without any view of aiding in the consummation of the purpose, further than necessarily results from securing a preference to himself. If, however, it appears from the circumstances attending the transaction that the preferred creditor was not acting with the sole purpose of securing the payment of his own debt, but also from a desire to aid the debtor in defeating other creditors, or in covering up his property, or in giving him a secret interest therein, or in locking it up in any way for the debtor’s own use and benefit, the creditor will not be protected, but the transaction will be declared fraudulent.” Vol. 14, 2d ed., pp. 295, 296. Although the Ellis boys knew that their father’s affairs were involved and that he was liable to be sued at any time, they took from him warranty deeds which they withheld from record for about nine months. Those deeds when recorded were calculated to deceive creditors. They concealed the in [264] terest of the father and proclaimed to the world that the absolute ownership of the property conveyed was in the sons. Neither of the deeds truly expressed the consideration for which it was given. Truth was not even approximated. The transaction, as the record reveals it, is flecked with the indicia of fraud. It was evidently designed by all the parties as a protection to the father as well as to the sons. The judgment is Affirmed.