Malone v. Bell

Goss, C. J. This is an appeal from a decree setting aside a conveyance of lands by a husband to a wife as made without consideration and for the purpose of hindering, delaying and defrauding plaintiff, a creditor of the husband. Defendants William Bell and Anna C. Bell are husband and wife, who live on a farm about two and one-half miles northeast of Waverly. It is described as the west-half of the northwest quarter and of the southwest quarter and that part of the east-half of the northwest quarter lying south of Salt creek, totaling about 196 acres, all in section 2, township 11, range 8, Lancaster county. The title was in William Bell and for 30 years it had been the family home. Less than two miles west thereof in section four defendants owned jointly the southwest quarter, being a fractional quarter containing about 147 acres. August 9, 1932, William Bell conveyed by quitclaim deed to Anna C. Bell all his interest in the above described lands for a stated consideration of one dollar. These two farms, of which Anna C. Bell previously owned a half-interest in the 147 acres, were encumbered by mortgages totaling $13,000 and interest and taxes amounting to an additional sum of about $1,900. The testimony of defendants and their two witnesses fixes the value of the land at not more than $50 an acre at the time of the conveyance. Plaintiff offered no testimony as to values. Defendants pleaded that the deed to Mrs. Bell was for a good and valuable consideration. The evidence of defendants in that behalf shows that in 1918 Mrs. Bell received from her father a gift of $5,000 in cash; that she deposited it in the Lancaster County Bank and kept it there for two years, receiving interest on it; that in the fall of 1919 or early part of 1920 her husband bought some Kansas land [480] and she drew the money out of the bank and loaned it to him; that a $5,000 note in evidence, written by an officer of the bank, in favor of Anna C. Bell, dated February 26, 1920, executed by William Bell, for the loan, and which has never been paid, was the real consideration for the deed aforesaid; that Mr. Bell used the money to buy the quarter-section of Kansas land which he still owns, and that in 1919 he had bought another quarter-section of land in Coffey county, Kansas, which in 1929 he traded for the southwest quarter of section 4, township 11, range 8, in Lancaster county, being the 147 acres referred to, taking title thereto jointly in the names of himself and wife. Plaintiff became a creditor of William Bell by the purchase from the Lancaster County Bank on August 30, 1929, for $1,700, of Bell’s note to the bank. Bell renewed the note four times after Malone became the owner. Finally, being unable to get the money on the note or to obtain further security, plaintiff sued and obtained a judgment against William Bell in the district court for Lancaster county for $2,030.56 and costs. After going through the necessary formalities he brought this suit to set aside the deed from Bell to his wife and to subject the land in suit to payment of his judgment. The testimony of defendants also shows that Mrs. Bell had owned 105 other acres in Lancaster county for 24 years. It was purchased with money she had accumulated from savings on the home farm. About 1928 she borrowed $4,000 on the security of this 105-acre farm and lent it to her husband who used it to pay certain debts he then owed; They testified that this sum had never been repaid. Mrs. Bell testified that, when she received the conveyance sought to be set aside, she knew that it conveyed the greater part of her husband’s assets, that he was in straitened circumstances and that he owed the note to Malone and owed a note to the Lancaster County Bank. When Malone purchased the note from the bank there was exhibited to him certain property statements Bell had furnished the bank on January 4, 1927, and May 3, 1929, [481] showing large assets, but no indebtedness to Mrs. Bell and indeed stating that Bell owed no money to relatives. These statements were made out in the handwriting of the banker. Mr. Bell testified, in substance, that he signed them without reading them, which does little to exonerate him from notice of their contents. But Mrs. Bell testifies that she had no knowledge of the statements or of their contents. Her testimony on the subject was not rebutted. The decree found that plaintiff's judgment was a lien upon the 196-acre home of Bell in section two, subject to mortgages, and subject to a $2,000 homestead right, and a lien upon the 147 acres in section four, although Mrs. Bell had long owned a half-interest in that tract and was not personally liable on the note which was the basis of the judgment. “The question of fraudulent intent is a question of fact and not of law, when considered in the matter of a conveyance charged to be made to hinder and delay creditors.” State Bank of Beaver Crossing v. Mackley, 121 Neb. 28, 236 N. W. 165. See Comp. St. 1929, sec. 36-405. (1) “Where husband transfers property to wife, which prevents his creditors from enforcing payment of their claims, it is presumptively fraudulent as to them, and the burden is upon wife to prove otherwise.” (2) “A bona fide debt due from husband to wife is a good and sufficient consideration to support conveyance of property as security for such debt.” (3) “An insolvent debtor may in good faith pay or secure valid debt of one creditor to exclusion of others.” Luikart v. Tidrick, 126 Neb. 398, 253 N. W. 414, and cases cited. A debtor in failing or insolvent circumstances may prefer a creditor, including his wife, to the exclusion of others. Nebraska Wheat Growers Ass’n v. Johnson, 130 Neb. 99, 264 N. W. 165. The evidence of fraud on which plaintiff, and evidently the trial court also, relied consists in the circumstances surrounding the parties and their dealings rather than in any direct testimony offered in the case. Defendants [482] deny any fraud. The property conveyed to Mrs. Bell by her husband was encumbered to substantially its full value at the time of the conveyance, as indicated by the evidence. There was the circumstance that the note was made on February 26, 1920, and Bell’s deed to his wife was executed August 9, 1932. The note was a demand note. It was kept in a box in the home where both parties had access to it. It was in evidence and shows that it has never been actually canceled. We do not think, however, that these things prove any fraud on the part of either Mr. or Mrs. Bell. Even if fraud could be attributed to him alone, it would not be sufficient. To set aside a conveyance for a valuable consideration from one member of a family to another as a fraudulent transfer, fraudulent intent must be participated in by both parties to the transaction. Farmers State Bank of Smithfield v. Renken, 129 Neb. 416, 261 N. W. 851; Comp. St. 1929, sec. 36-406; Farmers & Merchants Nat. Bank v. Mosher, 63 Neb. 130, 88 N. W. 552; State Bank of Beaver Crossing v. Mackley, 121 Neb. 28, 236 N. W. 165. Some value is sought by plaintiff from the fact that Mrs. Bell borrowed $4,000 on the 105 acres, purchased by her out of savings about 24 years before the trial, and turned it over to her husband in 1928 to pay his debts, without any accounting to her in this suit or otherwise for the sum so advanced to him. It may be said that the 105-acre tract and the $4,000 borrowed on it by Mrs. Bell and turned over to her husband is, as stated by plaintiff’s brief, “only important to show the course of dealing between the parties” and to show that this particular farm and this fund were “considered community property.” However, Mrs. Bell testified that the farm was still hers. And it is not sought in the action to subject the farm to plaintiff’s judgment. It does not seem to us that this incident has much, if any, bearing on the issues of the case. While we try the case de novo, we are authorized by the rules to take into consideration that the trial judge saw- and heard the witnesses and that their appearance and manner of testifying is disclosed to him as it cannot be [483] fully disclosed to us through the printed record. The record of the evidence does not appear to us to warrant the adoption of any such rule in this case. It indicates that defendants are not skilled in dissimulation as are some who are well used to testifying. The record of their testimony does not disclose to us any shiftiness or evasiveness which is sometimes quite apparent from the words in which testimony is recorded. We are of the opinion defendants overcame any presumption that the deed of the husband to his wife was fraudulent as to the plaintiff-creditor, and that plaintiff has failed to establish his cause of action by a preponderance of the evidence. The judgment of the district court is reversed and the action is dismissed. Reversed and dismissed.