Opinion
No. C2-99-1194.
Filed January 25, 2000.
Appeal from the District Court, Dakota County, File No. C6-98-8325.
Daniel W. Fram, Esther E. McGinnis, Jeffrey J. Cohen, Peterson, Fram, Bergman, P.A., (for respondent)
John G. Westrick, Westrick McDowall-Nix, P.L.L.P., (for appellants)
Considered and decided by Klaphake, Presiding Judge, Randall, Judge, and Peterson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Respondent brought suit under Minnesota's Uniform Fraudulent Transfer Act to recover funds fraudulently obtained by a third party and conveyed to appellants. The matter was tried on stipulated facts. Appellants argue that the parties' stipulation does not support the district court's findings or conclusion that the transfer violated the Uniform Fraudulent Transfer Act. Appellants also contend they were not unjustly enriched by the transfer and that the district court lacked the authority to place a lien on the property that they allegedly purchased with the funds in question. We affirm.
FACTS
Respondent Honeywell/Alliant Techsystems Federal Credit Union (Honeywell) commenced suit in Dakota County District Court against appellants Warren Buckhalton and True Deliverance Ministries (True Deliverance) under Minnesota's Uniform Fraudulent Transfer Act, Minn. Stat. § 513.41-.51 (1998). Honeywell sought to recover $7,000 given to appellants by Darrell Colbert, the uncle of Buckhalton's wife, alleging the amount was a voidable, fraudulent conveyance. Honeywell also sought to impose a constructive trust against the amount, claiming appellants had been unjustly enriched.
The parties stipulated to the facts alleged in Honeywell's complaint, which alleged that: (1) through trick, artifice, and fraud, Darrell Colbert wrongfully withdrew funds from Honeywell in the amount of $90,000; (2) through a fraudulent scheme, Colbert caused Honeywell to issue a check in the amount of $7,000 to appellant Buckhalton; (3) by virtue of the fraudulent scheme, Honeywell became a creditor of Colbert; (4) Colbert transferred and delivered the $7,000 to True Deliverance with an intent to hinder, delay, and defraud Honeywell and did not receive a reasonable equivalent value in exchange for the transfer; (5) the transfer was done while Colbert was insolvent or it rendered Colbert insolvent; and (6) Buckhalton transferred the $7,000 to True Deliverance without the exchange of reasonable equivalent value or knowing it was delivered with either the actual intent to hinder, delay, or defraud Honeywell, or without adequate consideration.
During the parties' telephone conference with the district court, they stipulated that: (1) there was no consideration for the transfer "other than it was a gift to the church"; (2) aside from one previous meeting at Buckhalton's wedding, there was no prior contact between Colbert and Buckhalton before the transfer; (3) Colbert was not a member of True Deliverance at the time of the transfer; (4) and there were no further ministering, pastoring, or other church services given to Colbert in exchange for the $7,000. True Deliverance apparently used the money to purchase real property.
The matter was submitted to the district court on the stipulated facts, pleadings, and the parties' briefs. The district court found that the $7,000 transfer constituted a voidable, fraudulent conveyance, and that appellants had been unjustly enriched. The court imposed a constructive trust on the real property purchased by True Deliverance with the money. The court ordered the judgment to work as a specific lien on the property and directed the sheriff to sell the property if the judgment was not satisfied within 60 days of the entry of judgment. This appeal follows.
DECISION
Appellants do not challenge the district court's finding that Colbert obtained the $90,000, including the $7,000 transferred to True Deliverance, through a fraudulent scheme perpetrated against Honeywell. Rather, appellants insist that the stipulated facts do not support the district court's findings that: (1) Colbert transferred the money with the intent to hinder, delay, and defraud Honeywell; (2) Colbert was insolvent at the time of the transfer or was rendered insolvent by the transfer; or (3) Colbert did not receive a reasonable equivalent value in exchange for the transfer.
Parties can stipulate as to the facts. Stipulations are binding not only on the parties, but also on district and appellate courts, so long as they remain in effect. Abendroth v. National Farmers Union Property Cas. Co. , 363 N.W.2d 785, 788 (Minn.App. 1985). When reviewing a case submitted on stipulated facts, the only issue for this court is whether the district court properly applied the law to the facts of the case. Miller v. Centennial State Bank , 472 N.W.2d 349, 351 (Minn.App. 1991).
We reject Honeywell's claim that the district court's findings of fact are entitled to more deference because the district court judge was privy to facts discussed in chamber, but not memorialized in the transcript. A reviewing court "may not base its decision on matters outside the record on appeal, and may not consider matters not produced and received in evidence below." Thiele v. Stich , 425 N.W.2d 580, 582-83 (Minn. 1988) (citations omitted). These facts were not received in evidence below. They will not be considered as part of the record on appeal.
Under Minnesota's Uniform Fraudulent Transfer Act (UFTA), a transfer made by a debtor is fraudulent as to a creditor, if the debtor made the transfer "with actual intent to hinder, delay, or defraud any creditor of the debtor." Minn. Stat. § 513.44(a)(1) (1998). A creditor may obtain "avoidance of the transfer * * * to the extent necessary to satisfy the creditor's claim." Minn. Stat. § 513.47(a)(1) (1998). The creditor is entitled to recover judgment for the value of the asset transferred against "the first transferee of the asset or the person for whose benefit the transfer was made." Minn. Stat. § 513.48(b)(1) (1998).
In determining actual intent under Minn. Stat. § 513.44(a)(1), a nonexclusive list of eleven factors is to be considered. Minn. Stat. § 513.44(b) (1998). These factors include whether: (1) the transfer was made to an insider; (2) the debtor retained possession or control of the property after the transfer; (3) the transfer was disclosed or concealed; (4) the debtor had been sued or threatened with suit before the transfer was made; (5) all of the debtor's assets were transferred; (6) the debtor absconded; (7) the assets were removed or concealed by the debtor; (8) the value of the consideration the debtor received was reasonably equivalent to the value of the asset transferred; (9) the debtor was insolvent or became insolvent shortly after the transfer; (10) a substantial debt was incurred shortly before or after the transfer; and (11) "the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor." Minn. Stat. § 513.44(b)(1)-(11).
Here, appellants stipulated that Colbert transferred the money with the intent to hinder, delay, or defraud Honeywell. Like the district court we are bound by this stipulation on appeal. See Abendroth , 363 N.W.2d at 787 (holding district and appellate court bound by parties' factual stipulations). Because appellants stipulated that Colbert transferred the money with the intent to hinder, delay, or defraud Honeywell, the district court properly concluded that the transfer was voidable as a fraudulent conveyance under UFTA. Despite appellants' characterization of the transfer as a "gift," the actions of Colbert satisfy us that it was made with the intent to defraud Honeywell. It is undisputed that Colbert obtained the money through fraudulent means and then transferred it to appellants. By doing so, Colbert "removed or concealed assets" as that term is used in Minn. Stat. § 513.44(b)(7). This evinces an intent to defraud Honeywell and supports the district court's conclusion that the transfer was fraudulent under Minn. Stat. § 513.44(a)(1).
Next, appellants argue the stipulated facts do not support recovery under the theory of unjust enrichment. An action for unjust enrichment may be based on the failure of consideration, fraud, or mistake, or in "situations where it would be morally wrong for one party to enrich himself at the expense of another." Anderson v. DeLisle , 352 N.W.2d 794, 796 (Minn.App. 1984) (citations omitted), review denied (Minn. Nov. 8, 1984).
Honeywell contends it has established its claim for unjust enrichment because the evidence shows that Colbert received nothing from appellants in return for the transfer and appellants received the transfer, or benefit, by virtue of Colbert's fraudulent and criminal behavior. Honeywell insists it would be morally wrong for appellants to retain the money given the manner by it was obtained by Colbert.
Although Colbert obtained the money illegally, there is neither evidence nor assertion that appellants participated in the fraud or had any knowledge of how Colbert obtained the money. The stipulated facts do not show that appellants engaged in any unlawful or illegal conduct, inducing Honeywell to pay over the money. However, we conclude that despite the absence of proof of fraud or illegal conduct on the part of appellants, because of equity, they are not entitled to the money. The money came to them as a direct result of the fraudulent nature by which it was obtained and transferred.
Finally, appellants argue the district court erred when it ordered that the judgment constitute a lien on the property and that the sheriff's department sell the property if the lien was not satisfied within 60 days after entry of judgment. Appellants contend that execution of the judgment must conform with the requirements of Minn. Stat. § 550.04 (1998), and that the judgment in this case could not act as a lien on the property until the judgment was docketed in the county in which the property is located.
It has been long held that the statute providing for the docketing of money judgments and making them a lien on the road estate of a debtor from the time the judgment is docketed "merely provides the procedure by which such judgments, usually not otherwise a lien on such real estate, may be made a lien thereon." Pye v. Magnuson , 178 Minn. 531, 533, 227 N.W. 895, 894 (1929). When the district court orders a lien upon a specified parcel of land, "the lien so declared exists wholly independent of the statute which provides for the docketing of ordinary money judgments." Id. We conclude the district court properly ordered that the money judgment act as a lien on the property.