Blake v. Hansen

I am unable to agree with the majority opinion in this case; nor do I think the statement of facts in the opinion sufficient to give a fair view of the issues involved. The acton was brought for the purpose of having two warranty deeds executed by defendant Ferdinand Hansen, conveying to the defendant Mary C. Hansen 160 acres of land in Clay county, canceled and set aside.

Said defendants were married in 1889, and from that time down to and including the time of the trial of this action lived together as husband and wife. During the month of June, 1930, defendant Ferdinand Hansen, together with five other parties, executed an executor's bond for one Sam Jacobson, in the sum of $150,000. Upon the execution of said bond said defendant made an affidavit that he was worth $25,000 over and above all his debts and liabilities and exclusive of all property exempt from levy and sale on execution.

At the time of making said affidavit said defendant owned real property in the town of Wakonda that was used and occupied by said defendants as their homestead; some personal property, but not equal in value to his exemptions, and 160 acres of farm land some 5 or 6 miles from Wakonda, which land was subject to an existing mortgage for $2,500.

At the time said defendant qualified on said bond, the said farm land was all the property of any kind that he owned that was not exempt from levy and sale on execution, and it was not worth at that time, nor at any other time, as much as $25,000, and at the time of the trial he testified that said land was not worth more than $50 an acre. The effect of said affidavit at the time it was made was that said land was worth $25,000 in excess of the $2,500 mortgage and that he did not owe a dollar to anyone except the said $2,500.

Sam Jacobson, the principal on the said bond, failed to properly account for the property that came into his hands as such executor, and the sureties on said bond were called upon to pay such shortage. This they failed to do, and suit was brought on the bond to recover the same. Thereupon, and on the 19th day of October, 1932, defendant Ferdinand Hansen executed a warranty deed, whereby he conveyed to his wife title to 80 acres of the above-mentioned farm land, and on the 21st day of December, 1932, he executed a second warranty deed whereby he conveyed to his Wife the remaining 80 acres of said land. The consideration named in each of said deeds is $1 and other valuable consideration, but no money or anything else of value passed from the said grantee to the grantor in said deeds in consideration for the said conveyances.

The above-mentioned suit on said bond was prosecuted to the end that on the 17th day of March, 1932, judgment was entered against the defendants, including the said Ferdinand Hansen, in the sum of $11,645.06. Execution was issued on said judgment, but was returned unsatisfied, and plaintiff in the said action thereupon brought this action to cancel and set aside the said conveyances upon the grounds that they were made without consideration, and for the purpose of hindering and delaying their creditors, especially said plaintiffs, in the collection of the said judgment.

By these conveyances Ferdinand Hansen disposed of all the property he had, other than what was exempt, and rendered himself totally insolvent. These facts were known to his wife when the conveyances were made. She knew, too, that suit had already been, or was about to be, commenced against the sureties, including her husband, on the said executor's bond, and that the said conveyances were being made at that particular time for the purpose of putting said property beyond the reach of the judgment creditors.

As a justification for making said conveyances, defendants claim that at the time the conveyances were made Ferdinand Hansen was indebted to his wife in the sum of more than $16,000, including interest, and that the said conveyances were made in payment of said indebtedness. In support of the existence of this indebtedness, defendants claim that back in 1891 the wife sold to Ferdinand Hansen 4 head of horses, 20 head of cattle, some 30 hogs, and around 300 chickens; that such livestock was worth $1,800, which sum of money he was to pay some time in the future; that in 1905 she advanced him $1,200 in cash. This sum he was also to pay some time in the future. Then in 1910 she deeded to him 40 acres of land of the claimed value of $3,340, which sum he was to pay when he had the money, or, in lieu of such payments, he was to deed her some land; but no note or other evidence of indebtedness was taken by her. He was to pay interest on all these sums of money, but no rate of interest was ever agreed upon. No one but themselves ever heard of these transactions, or that any indebtedness existed between them, and Mary C. Hansen testified that she did not remember ever having talked with her husband about the matter until the question of liability on the bond came up. She also testified that she never asked her husband for any money until after this trouble came up, and, when asked why she took the deeds, she testified, not that she took them in payment of a debt her husband owed her, but that "I thought that by taking these deeds I could keep this property." The trial court found, as a matter of fact, that the defendants, in the making of said conveyances, acted in the utmost good faith without any intention to hinder or defraud his creditors, and for a full and adequate consideration. As between themselves this finding may find support in the evidence, but all the surrounding circumstances must be taken into consideration. The husband was heavily in debt; he was being pressed for payment. He deeded away to his wife all the property he had with which he could pay his debts. All the indebtedness to his wife was based on the three above-mentioned claims, the most recent of which was more than 20 years old, and the oldest more than 40 years old. The question is, May she, after having waited all these years, and permitting her husband to obtain credit on the strength of his apparent ownership of the land, use such claim to defeat the claims of the judgment creditors?

In Churchill Alden Co. v. Ramsey, 45 S.D. 454, 188 N.W. 742, 744, we approved the following rule: "In a contest between the creditors of the husband and the wife there is, and there should be, a presumption against her which she must overcome by affirmative proof" (citing numerous cases), and such proof must be clear and convincing. I do not think the proof as above set out satisfies the requirements of this rule. The testimony of Ferdinand Hansen is entitled to but little, if any, consideration. The most charitable view that can be taken of it is that, if he ever considered himself indebted to his wife, he had not heard it mentioned for so long a time that he had forgotten it ever existed. But, after having sworn that he was the owner of the farm, free and clear of all incumbrances except the said $2,500 mortgage, and that he did not owe a dollar to any one, he ought not now to be heard to say that when he made such affidavit he owed his wife more than enough to absorb the entire value of the farm. The testimony of the wife is also most unsatisfactory. Practically all of her testimony was elicited by the use of leading questions that suggested the answer she was to give. This, taken in connection with her testimony, "I thought that by taking these deeds I could keep this property," renders her testimony very unsatisfactory.

Still another rule that is generally recognized is to the effect that, where a wife permits her property to remain in her husband's name, and he obtains credit on the strength of such apparent ownership, she is precluded from denying his title as against one who has extended credit in reliance upon the strength of such apparent ownership. The right of the creditor arises from the act of the owner, and does not depend upon the actual title but upon the apparent title. And in such cases she is estopped from maintaining her ownership. Otherwise injustice would be done to the creditor. Between the innocent owner and the innocent creditor the owner, whose act led to the wrong to the creditor, must suffer the loss. Goldberg v. Parker, 87 Conn. 99, 87 A. 555, Ann. Cas. 1914C, 1059, 46 L.R.A. (N.S.) 1097; Sears v. Davis et al, 40 Or. 236, 66 P. 913; Culver v. Graham, 3 Wyo. 211, 21 P. 694; Chaney v. Gauld Co. et al, 28 Idaho, 76, 152 P. 468; Hopkins v. Joyce, 78 Wis. 443, 47 N.W. 722; Besson v. Eveland, 26 N.J. Eq. 468; Anderson v. Armstead, 69 Ill. 452; Roy v. McPherson et al, 11 Neb. 197, 7 N.W. 873; Taylor Commission Co. v. Bell,62 Ark. 26, 34 S.W. 80; Minnich v. Shaffer et al, 135 Ind. 634, 34 N.E. 987; Zimmer v. Dansby, 56 Ga. 80; Warner v. Watson, 35 Fla. 402, 17 So. 654.

I believe that, under the facts and circumstances shown by the evidence in this case, the conclusions of law and judgment should have been for the plaintiff, and that the judgment ought to be reversed.