Opinion
November 3, 1953 —
December 1, 1953.
APPEAL from a judgment of the circuit court for Racine county: ELMER D. GOODLAND, Circuit Judge. Affirmed.
For the appellants there was a brief by Harry R. Glick, attorney, and Gold McCann of counsel, all of Milwaukee, and oral argument by Mr. Ray T. McCann and Mr. Glick.
For the respondents there was a brief by Wilbershide Wilbershide of Racine, and oral argument by J. C. Wilbershide.
This is an action brought to set aside as in fraud of creditors the conveyance of certain real estate and the transfer of personal property by the defendant, Oscar Behling, to his brothers, Frank O. Behling and Glenn B. Behling.
On July 4, 1948, Oscar was involved in an automobile accident which resulted in injuries to the plaintiff, Alfred Kerbet. On September 15, 1948, an action for the recovery of damages resulting from the collision was commenced by service of a summons upon Oscar. At that time he owned a farm and farm personal property.
On February 3, 1949, Oscar executed a deed conveying the farm to his brothers, Frank and Glenn. No cash was paid to him at that time. The deed contained a provision whereby the grantees assumed and agreed to pay a certain mortgage resting upon the farm and held by the Equitable Life Assurance Society. The grantees at the same time executed to Oscar a new mortgage in the principal sum of $8,800. It is undisputed that the deed was recorded but that the mortgage was not. On the same day Oscar executed to Glenn a bill of sale transferring the personal property. The bill of sale recites a consideration of $2,700. Glenn testified that on or about February 1, 1949, he had paid Oscar $400 toward the purchase price of the personal property and that on the day of the date of the bill of sale he gave Oscar his check for $2,300. The papers were executed in the office of an attorney. It is undisputed that by the transfers Oscar divested himself of all of his property.
On March 7, 1949, according to the testimony of the two brothers they paid the amount of the new mortgage; they obtained $6,000 of this money by means of a loan made them by their sister, and the balance was paid out of cash which they had had in their possession and had carried upon their persons for some time.
In January, 1950, Oscar left the community and has not been heard from since.
The trial court found that the conveyance and transfer were made for a fair and adequate consideration with no fraudulent intent on the part of the grantees and ordered judgment dismissing the complaint.
Plaintiff s appeal and contend that the trial court overlooked the rule that circumstances as were shown in this case call for close scrutiny and clear explanation of the transaction. Fernhaber v. Cream City Cartage Co. 176 Wis. 75, 186 N.W. 175. The testimony and the circumstances upon which plaintiffs rely in support of their contention that the conveyance and transfer were made to defraud them as creditors are these: Close family relationship existed between the families; no cash was paid at the time of the delivery of the deed, no examination of the title was made; no closing statement was made; no computation of or reference was made to the amount due on the mortgage of the Equitable Life Assurance Society; neither of the grantees knew whether the existing mortgage was in default; there was no discussion about real-estate taxes and how they should be prorated; neither grantee knew whether any taxes were delinquent; nothing was said about fire insurance premiums; the $8,800 mortgage was not recorded; it does not appear that a note was executed to accompany the $8,800 mortgage.
Glenn testified that when the $8,800 mortgage was executed it was handed to him and he kept it in his possession in a safety-deposit box to which Oscar had no access; that Oscar never had the mortgage in his possession; at his adverse examination Glenn testified that he paid $2,700 for the personal property and did not know why the bill of sale recited a consideration of $2,300, and in explanation of the discrepancy he testified at the trial that he had previously paid $400 toward the purchase price of the personal property.
Plaintiffs lay particular emphasis upon the testimony regarding payment of the $8,800 mortgage. They testified that they paid it in cash, $6,000 of which had been loaned to them by a sister. There are a number of contradictions in the testimony of the sister and the brothers respecting the time, place, and manner of delivery of the money to the brothers and the amount handed to each. It may be conceded that the nature of their testimony is such as to suggest that it should not be believed. We may not, however, on that account say that none of their testimony should be believed, or that the trial court's finding should be disturbed.
Oscar's disappearance from the community about ten months after the $8,800 mortgage is claimed to have been paid and the fact that he has not been heard from since, are circumstances relied upon by plaintiffs as evidence of a purpose to defraud plaintiffs.
The defendants in answer to and in explanation of the circumstances relied upon by plaintiffs call attention to the following: That the court was compelled to accept their testimony as to the payment of the purchase price of the personal property, and Glenn took possession of the personal property at once, a regular procedure. The deed was prepared by an attorney, was properly executed, and promptly recorded. The mortgage was also drawn by an attorney and was properly executed, though not recorded. The newly created mortgage indebtedness was paid in full approximately one month after the mortgage was executed, and although it was unusual that the mortgage was left in the possession of Glenn, this does not alter the fact that it was executed and the indebtedness was paid. They admit that the abstract of title was not examined, but declare that the condition of the title was discussed with the attorney who was acquainted with the facts. Further, that the grantees were not familiar with real-estate transactions, that they had not been advised that the abstract should be examined, and in fact, did not know what "examination of abstract" meant; that it was agreed that Oscar was to pay taxes assessed during the year 1949 and that therefore it was not necessary to prorate them. The balance due on the mortgage of the Equitable Life Assurance Society was disclosed by the mortgage itself and by the mortgagee's receipts; that from the testimony it is as reasonable to conclude that a mortgage note was executed and that it is now in the possession of Oscar.
Many of the facts above recited are without substantial dispute. The controversy arises upon conclusions drawn from facts proved, and plaintiffs contend that there is but one inescapable conclusion — that the brothers, Frank and Glenn, obtained the deed and bill of sale without a fair consideration.
It is not surprising that plaintiffs' counsel suspect that the truth has not been told y t e defendants, particularly with respect to the loan of $6,000 which they claim to have received from their sister. Their testimony in that regard is replete with discrepancies. There are, as plaintiffs point out, other features of the transaction which are unusual. We have given the case the scrutiny which those circumstances call for. But it is not enough that we find justification for plaintiffs' suspicion. They had the burden to establish the alleged fraud by clear, satisfactory, and convincing evidence. Massey v. Richmond, 208 Wis. 239, 242 N.W. 507; Miller v. Lange, 234 Wis. 460, 290 N.W. 618; Zimdars v. Zimdars, 236 Wis. 484, 295 N.W. 675. The trial judge, who had before him more than the cold record, found that they had failed to meet the burden. We may not say that the evidence preponderates against his finding.
By the Court. — Judgment affirmed.