Van Steenberg v. Nelson

22 N.W.2d 414, 147 Neb. 88, 1946 Neb. LEXIS 44
CourtNebraska Supreme Court
DecidedMarch 29, 1946
DocketNo. 32017
StatusPublished
Cited by7 cases

This text of 22 N.W.2d 414 (Van Steenberg v. Nelson) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Van Steenberg v. Nelson, 22 N.W.2d 414, 147 Neb. 88, 1946 Neb. LEXIS 44 (Neb. 1946).

Opinion

Chappell, J.

This is an equity action in the nature of a creditor’s bill. It was instituted by the guardian on behalf of his ward, Peter M. Nelson, incompetent because of age and disability. Defendants are the ward’s son, Joseph W. Nelson, an ex[90]*90tensive farmer and rancher in western Nebraska, his wife, Nellie L. Nelson, and their son, Billie Nelson. Hereafter for brevity they will be designated by their first names. On November 16, 1931, Joseph and his wife, Nellie, who then had no separate property of her own, made, executed, and delivered to the father their promissory note, due two years from date. Its consideration was a preexisting bona fide indebtedness owing by Joseph to his father. The note was unpaid except in small part, and on November 23, 1943, the guardian recovered judgment thereon against the makers in the sum of $6,657.35, with interest at eight percent. The judgment was wholly unpaid and execution was returned unsatisfied.

The petition in the present controversy contains two causes of action. The first cause of action sought to have two bills of sale of personal property and a warranty deed to a quarter section of land declared fraudulent and void as to plaintiff’s ward, and to have all the property involved therein, together with certain wheat and barley crops allegedly'produced by defendant, Joseph, but claimed by defendants, Nellie and Billie, respectively, subjected to the payment of plaintiff’s judgment. The bills of sale were dated May 8, 1934, and July 16, 1938, respectively, whereby Joseph conveyed all of his personal property, consisting of livestock, machinery, tools, farm equipment, tractors, trucks, cars, combines, etc., to his wife, Nellie. The warranty deed was dated March 18, 1941, whereby Joseph conveyed all of the real property then in his name to his wife, Nellie.

The second cause of action sought an adjudication that Joseph had an equitable interest in two other quarter sections of land, the fee title to all of which was taken in the name of Nellie, and that such equitable interest should be subjected to payment of the judgment. A one-tenth interest and a one-fifth interest in the latter two parcels of real property came to Nellie by inheritance in 1937, but the remainder of the fee was alleged to have been obtained by purchase thereafter. Both causes of action also contained [91]*91a prayer for such other and further relief as justice and equity might require.

Plaintiffs' petition was traversed by defendant’s answer to which plaintiff filed reply. Upon trial of the issues the trial court found generally for plaintiff. The decree found and adjudged in substance as follows: That the bills of sale were fraudulent and void as to plaintiff’s ward; that the property involved in the warranty deed from Joseph to his wife was their homestead, the value of which at date of conveyance was less than $2,000' above encumbrances, therefore, the deed was not void as to creditors, although given to hinder, delay, and defraud them; that at all times involved after the conveyances Joseph, for his own benefit and with the intent to defraud creditors, of which the wife had knowledge, conducted farming operations upon that land in connection with and upon other lands without any change of possession of property or manner of operation. That defendant, Billie, had no interest in $676.38, money in the hands of the clerk of the district court resulting from the sale of certain barley which belonged to Joseph. Therefore, that sum was ordered paid to the plaintiff to apply on the principal of the judgment. That between 1935 and 1941, defendant Nellie, partly by inheritance and the remainder by purchase, acquired the fee to the two other quarter sections of land, which at all times thereafter her husband had farmed, with the machinery and farm equipment conveyed to his wife, raising large crop yields at great profit. That to hinder, delay, and defraud creditors Joseph and his wife used a large portion of such earnings and profits therefrom, the exact amount of which could not be determined, to pay off encumbrances on all the lands and erect valuable improvements upon the homestead then in the name of the wife. That they also used a portion of such profits, the extent of which could not be determined, to pay a part of the purchase price of the two other farms. That almost all the personal property conveyed by the bills of sale had been traded in upon the purchase price of other machinery and equipment, the balance whereof was paid [92]*92from Joseph’s profits. That the exact items still held by-Nellie and whether they may be claimed to be exempt from execution cannot be ascertained. That the separate estate of Nellie L. Nelson had by their confederation to defraud been enhanced in value from the earnings and profits of Joseph in an amount far in excess of the amount due the plaintiff from Joseph, and that she still owns and retains such enhanced value in her estate. Therefore, the court found, as a matter of law, that plaintiff should be given a personal judgment against defendant, Nellie L. Nelson, for the sum of $6,637.35, with interest at six percent from November 23, 1943, and costs, but the sum of $676.38, heretofore referred to, should be first applied upon the principal only. The court ordered that no property should be sold directly under the decree but that execution should be awarded and that Nellie should be given such homestead and personal property exemptions as are provided by law upon sales under execution.

The' decree directed that any personal property still remaining but which was conveyed to Nellie by her husband in the bills of sale, and not claimed by law to be exempt, should be taken under execution and applied on the judgment before the sale of any other property. The second •cause of action was dismissed without prejudice only as to such rights as were given plaintiff in the first cause of action. Costs were taxed to defendants jointly and severally.

Motion for new trial was overruled and defendants appealed assigning as error substantially that the judgment of the trial court was contrary to law and not sustained by the evidence. We find that these contentions cannot be sustained as to defendants, Joseph W. Nelson and Nellie L. Nelson.

In weighing the question whether the evidence is sufficient to sustain the decree, this court is governed by rules of law well established and binding upon equity courts. In Filley v. Mancuso, 146 Neb. 493, 20 N. W. 2d 318, this court approved the statement that “A conveyance is declared to be fraudulent when its object or effect is to defraud an[93]*93other, or the intent with which it is made is to avoid some duty or debt due by or incumbent upon the party making the transfer.” 27 C. J., Fraudulent Conveyances, § 11, p. 415. See, also, 37 C. J. S., Fraudulent Conveyances, § 7, ,p. 854.

At the outset in such cases it must be recognized that a •conveyance between relatives which has the effect of hindering or delaying a creditor in the collection of his claim is presumptively fraudulent and, in litigation between the creditor and the parties to the conveyance over its alleged invalidity, the burden is on the parties to the conveyance to establish the good faith of the transaction. In that connection when it is charged that a conveyance between relatives was made to hinder, delay, and defraud creditors the question of good faith is ordinarily a question of fact and not of law and good faith may be established by proof of facts from which such inferences may reasonably be drawn.

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Bluebook (online)
22 N.W.2d 414, 147 Neb. 88, 1946 Neb. LEXIS 44, Counsel Stack Legal Research, https://law.counselstack.com/opinion/van-steenberg-v-nelson-neb-1946.