Byrnes v. Volz

Dickinson, J.

This appeal from a judgment of the district court brings in question the correctness of the legal conclusions of that court from the facts found by it. The facts as found by the court may be thus stated: During the pendency of an action for divorce, prosecuted by a Mrs. Schacht against her husband, Adolph F. Schacht, one of the defendants in this action, the said Schacht indorsed and transferred to this defendant, Thonet, a promissory note for the sum of $500, the same being the property of Schacht. In consideration thereof Thonet agreed to pay certain debts of Schacht, and to board the latter for one year, the value of which board was fixed at $200. Schacht was also indebted to Thonet in the sum of $45, which indebtedness was agreed to be discharged by this transfer. Thonet knew of the pendency of the divorce suit, and this note was transferred by Schacht, and was received by Thonet, for the purpose and with the intent of hindering, delaying, and defrauding the wife as to any alimony which might be awarded to her, and to render ineffectual any money judgment which she might recover in such pending action. Subsequent to the rendition of judgment in favor of the wife, awarding a divorce with alimony, and after the return unsatisfied of an execution against Schacht, and the institution of proceedings supplementary to execution, in which Thonet had been required to appear and testify as to property of the judgment debtor in his hands, Thonet received payment of the amount then due on the note, $425. Thereafter he paid out for the defendant Schacht, for debts of the latter justly due, the sum of $209.50, aside from his own debt of $45. Schacht is insolvent, and has no property subject to execution. This plaintiff was appointed receiver of his property in proceedings supplementary to execution. The conclusion of the court was that the transfer of the note to Thonet was fraudulent as to the wife of Schacht, and that the proceeds of it in his hands were held by him subject to her right to enforce payment of her judgment therefrom, and that the plaintiff was entitled to recover from him (Thonet) the amount of her judgment, not exceeding the amount received by him. Judgment was entered to this effect, and Thonet appeals.

For the purposes of this decision we may assume that such a transfer of the note would not be covered by any statute having the effect to avoid the same, unless it be 1878 GL S. ch. 41, § 18, which declares void transfers of real property made, as well as bonds or other evidences of debt given, with intent to hinder, delay, or defraud “creditors or other persons of their lawful actions, damages, forfeitures, debts, or demands.” It is said that the wife of the defendant in the pending divorce suit, in whose behalf this action is prosecuted, was not a “creditor;” that she is not within the protection of the statute; and that as to her the transfer was not voidable. This statute is founded upon that of 13 Eliz. ch. 5, which included in terms “goods and chattels” with other property, transfers of which, with the specified fraudulent intent, were declared void. That statute has been held merely declaratory of a rule of the common law, and, notwithstanding the omission of the words “goods and chattels” in our enactment, the common-law rule, partially expressed therein, remains in force. The transfer of such property with the fraudulent intent specified in the statute is voidable. Piper v. Johnston, 12 Minn. 60, 66, (Gil. 27;) Blackman v. Wheaton, 13 Minn. 326, (Gil. 299;) Hicks v. Stone, 13 Minn. 434, 440, (Gil. 398;) Benton v. Snyder, 22 Minn. 247; Fox v. Hills, 1 Conn. 294.

The right to call in question the validity of such transfers on the ground of fraud extends to others than creditors in the strict sense of that term. Among the classes of “other persons” at whose instance such transfers may be avoided, because of the intent to defraud them in respect to their “lawful actions, damages, forfeitures, debts, or demands,” is that of the wife prosecuting, or about to prosecute, a suit for divorce and alimony, when the husband, with intent to render ineffectual any recovery by her, transfers his property to another not a purchaser in good faith. Twyne’s Case, 3 Coke, 80, 82a; Livermore v. Boutelle, 11 Gray, 217; Morrison v. Morrison, 49 N. H. 69; Bailey v. Bailey, 61 Me. 361; Feigley v. Feigley, 7 Md. 537; Bouslough v. Bouslough, 68 Pa. St. 495; Draper v. Draper, 68 Ill. 17; Tyler v. Tyler, 126 Ill. 525, (21 N. E. Rep. 616;) Boog v. Boog, 78 Iowa, 524, (43 N. W. Rep. 515.) But, irrespective of the fact that the statute applies to “other persons” besides “creditors,” the wife, upon the rendition of the judgment in the pending suit, became an actual creditor; and even in this view of the case .she might avoid the transfer made with intent to defraud her, for a transfer made with intent to defraud even subsequent creditors is voidable. Livermore v. Boutelle, supra; Plunkett v. Plunkett, 114 Ind. 484, (16 N. E. Rep. 612, and 17 N. E. Rep. 562.)

The appellant was an active party with the husband in the accomplishment of the fraudulent purpose. The agreement to board Schacht for a year, made with the intent to defeat or render ineffectual the claim of the wife in the pending action, was a fraud upon her, condemned alike by the common law and by the statute, and, being a substantial part of the consideration for the transfer of the note, that alone rendered the transfer voidable, notwithstanding the further consideration that Thonet should pay certain debts of Schacht, much less in amount, a,s it seems, than the value of the property transferred. Albee v. Webster, 16 N. H. 362; Morrison v. Morrison, supra; Sidensparker v. Sidensparker, 52 Me. 481, 490; Twyne’s Case, supra.

Thonet, having actively participated in the fraud, is not entitled to' protection even as to the amounts paid by him out of the proceeds of the note which he collected. The transfer to him is to be treated as void in its entirety, and he is answerable for the proceeds of the note, without deduction even on account of his own debt. Thompson v. Bickford, 19 Minn. 17, (Gil. 1.) The case will be seen to be distinguishable from one where the property of the debtor is appropriated whoily in payment of the debts of preferred creditors, there being reserved no benefit to himself from the transfer.

Judgment affirmed.

"Vanderburgh, J., took no part.

(Opinion published 5i N. W. B.ep. 913.)