Opinion
No. 70-459
Decided November 30, 1971.
Action to enforce Illinois judgment and to set aside as fraudulent certain transfers of real estate. Judgment on foreign judgment entered by stipulation and, upon trial, plaintiffs prevailed on fraud allegations. Defendants appealed.
Affirmed in Part, Reversed in Part.
1. FRAUD — Wife's Conveyance — Her Interest — Parcel of Property — To Son — — Unassailable — Creditors of Husband. Where defendant and his wife had become joint tenants in parcel of property some three years before plaintiff acquired Illinois judgment against defendant, wife's conveyance of her interest in that property to her son, a co-defendant, was unassailable as being fraudulent as to creditors of defendant-husband.
2. JURISDICTION — In Personam — Long-Arm Statute — Obtained — Service — Defendant's Title — Transfer — Colorado Property. Where claims asserted against defendants arose out of their title to Colorado real property and their transfer of that property to Wyoming corporation and where defendants were personally served with process in Illinois pursuant to provisions of long-arm statute, the trial court did obtain in personam jurisdiction over the defendants.
3. Long-Arm Statute — Available — Plaintiff — Defendants — Residents of Illinois. Although both plaintiff and certain defendants were residents of Illinois, there is nothing in the language of long-arm statute which would support argument that statute is therefore unavailable to plaintiff suing in Colorado court, and such argument is without merit.
4. PROCESS — Second Amended Complaint — Service — On Attorney — Unnecessary — Serve Defendants. Where defendants were personally served amended complaint in Illinois and their attorney of record was properly served subsequent second amended complaint, it was unnecessary to serve defendants with second amended complaint, and failure to make such service on defendants did not cause trial court's entry of default judgments against defendants to be in error.
Appeal from the District Court of Larimer County, Honorable Dale E. Shannon, Judge.
Fischer and Beatty, William H. Brown, for plaintiffs-appellees.
Harold C. Greager, Paul D. Baetz, for defendants-appellants.
The parties will be referred to by their trial court designations or by their names.
The plaintiff, McHenry F.S., Inc., had obtained a judgment in the State of Illinois against the defendant, Gilbert Clausen, in the amount of $10,325. The plaintiff then commenced the present action to enforce this foreign judgment and to set aside as fraudulent certain transfers of real estate by which, plaintiff alleged, the defendant Gilbert Clausen, had fraudulently concealed his assets. Upon stipulation of the parties, a money judgment was entered against Gilbert Clausen on the Illinois judgment and the court then tried the fraud issue.
At the close of the evidence, the court, in substance, found as follows:
Gilbert Clausen, while insolvent and indebted to the plaintiff and others, sold his farm, which was located in Illinois, and purchased real property in Colorado, referred to as the North Roosevelt property (Lots 17 and 18) and the Harvard Street property. Title to the North Roosevelt property was placed in the name of his son, the defendant Karry Clausen, and title to the Harvard Street property was placed in the names of Gilbert Clausen's daughter and son-in-law, the defendants Barbara and John Fuelberth. Gilbert Clausen also transferred other real property, referred to as the Sherwood Street property, to Karry Clausen. All of these transfers were without consideration. After these transactions, Gilbert Clausen controlled and managed the real property involved and collected the rents and proceeds therefrom.
Karry Clausen subsequently transferred the Sherwood Street property to the defendants Bruce and Margaret Grant, who executed two promissory notes to Karry Clausen in the amount of $4,899.66. This transfer was made after the plaintiff had filed notice of lis pendens.
Lot 17 of the North Roosevelt property and the Harvard Street property were subsequently conveyed by Karry Clausen and Barbara and John Fuelberth to the defendant Western States Land and Cattle Company in consideration for capital shares of the stock of such Company. These transfers were made subsequent to the filing of the original complaint in this action. Western States Land and Cattle Company is a Wyoming corporation, which was organized by Karry Clausen and Barbara and John Fuelberth at the direction of Gilbert Clausen.
Based upon these findings, the trial court concluded that the above transactions were part of a plan on the part of Gilbert Clausen to defraud his creditors by concealing his assets and that such transactions were carried out with the assistance of the defendants Karry Clausen, Barbara and John Fuelberth, and Western States Land and Cattle Company. On the basis of these findings and conclusions, the court entered judgment imposing a trust for the benefit of the plaintiff on the properties involved and on the proceeds from the sales of such properties.
Thereafter, the defendants Gilbert Clausen, Karry Clausen, Barbara Fuelberth, John Fuelberth, and Western States Land and Cattle Company filed this appeal. The other defendants were not adversely affected by the judgment, and they have not appeared on this appeal. McHenry F.S., Inc., and James Horton, who intervened in the lower court action as trustee in bankruptcy of Gilbert Clausen, appear her as appellees.
I.
The defendants contend that the trial court's findings are not supported by the evidence and that its conclusions of law and judgment are in error. To resolve this issue, we have reviewed the evidence in the record and have concluded that the record supports the findings and orders of the trial court as they relate to the North Roosevelt and Harvard Street properties. However, we have concluded that the court was in error in its findings and orders relating to the Sherwood Street property.
The court's finding that Gilbert Clausen entered into the Harvard Street and North Roosevelt Street transactions to conceal his assets and defraud the plaintiff and that his son, Karry Clausen, his daughter, Barbara Fuelberth, and his son-in-law, John Fuelberth, aided and abetted Gilbert Clausen in these fraudulent transactions is supported by the evidence. Such being the case, the orders of the trial court relating to these two properties must be sustained. Cook v. Hargis, 164 Colo. 368, 435 P.2d 385.
[1] The evidence with respect to the Sherwood Street property presents an entirely different situation. Plaintiff obtained the Illinois judgment against Gilbert Clausen in October 1967. Title to the Sherwood Street property was acquired by Gilbert Clausen and his wife, Vivian Clausen, as joint tenants, in 1964. The Clausens acquired their joint interest in the property from third parties, and there is nothing in the record to indicate that the acquisition was irregular or fraudulent in any way. Vivian Clausen was a bona fide owner of a one-half interest in the Sherwood Street property, and her conveyance of this one-half interest to her son, Karry Clausen, vested in Karry Clausen a title which is unassailable as fraudulent as to creditors of Gilbert Clausen. The court was in error in subjecting the one-half interest which Karry Clausen acquired from his mother to the claims of the plaintiff.
II.
The defendants further contend that the trial court did not have in personam jurisdiction over the defendants John Fuelberth and Barbara Fuelberth.
[2] The claims asserted against the Fuelberths in this action arose out of their title to the Harvard Street property and their transfer of that property to Western States Land and Cattle Company. 1965 Perm. Supp., C.R.S. 1963, 37-1-26, commonly referred to as the long-arm statute, specifically provides that a person who transacts business in the State of Colorado or owns real property in the State of Colorado submits himself to the jurisdiction of the courts of Colorado in any action arising from the transaction of such business or the ownership of such property. The Fuelberths were personally served with process in the State of Illinois pursuant to the provisions of 1965 Perm. Supp., C.R.S. 1963, 37-1-26, and, consequently, the trial court did obtain in personam jurisdiction over the Fuelberths.
[3] The defendants argue that since the plaintiff and the Fuelberths were residents of Illinois the long-arm statute was not available. There is nothing in the language of the statute itself which supports this argument and it is without merit.
III.
[4] The original complaint in this action named only Gilbert Clausen and Karry Clausen as defendants. The amended complaint named additional defendants, including Barbara Fuelberth and John Fuelberth. The Fuelberths were personally served with a copy of this amended complaint in the State of Illinois. They subsequently filed a motion to quash service of process, and such motion was denied. Plaintiff then filed a second amended complaint which added Western States Land and Cattle Company as a party defendant. The second amended complaint did not assert any claims for relief against the Fuelberths which were not included in the first amended complaint. The second amended complaint was served upon the Fuelberth's attorney of record, who had appeared for them on their motion to quash service of process. The Fuelberths contend that since they were not personally served with copies of the second amended complaint, the trial court erred in entering default judgments against them. It was unnecessary to serve the second amended complaint personally since R.C.P. Colo. 5(b)(1) provides that service upon a party represented by an attorney shall be made upon the attorney.
The defendants remaining assignments of error are without merit.
The judgment is affirmed in part, reversed in part, and remanded with directions that the trial court modify its orders concerning the Sherwood Street property to exclude from the operation thereof the one-half interest which Karry Clausen acquired in such property from Vivian Clausen.
JUDGE DUFFORD and JUDGE PIERCE concur.