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Garrison v. Seiber

September 10, 1973

GARRISON, APPELLANT,
v.
SEIBER ET AL, RESPONDENTS



Appeal from Circuit Court, Douglas County. Don H. Sanders, Judge.

Edwin J. Peterson, Portland, argued the cause for appellant. With him on the briefs were Stephen R. Frank, and Tooze, Kerr & Peterson, Portland; and Thomas Garrison, Roseburg.

George F. Weigum, Roseburg, argued the cause and filed a brief for respondent.

In Banc. Howell, J.

Howell

Plaintiff, a trustee in bankruptcy, filed this suit to set aside a conveyance from the defendant Seiber to the defendant Summers on the ground the conveyance

was made in fraud of creditors. The trial court entered a decree dismissing the suit, and plaintiff appeals.

In 1968 defendant Seiber and his then wife purchased a house and approximately five acres of real property in southern Oregon for $13,400. The purchase was financed by a mortgage to the Veterans' Administration for the amount of the purchase price. Subsequently Seiber's wife, who had filed a divorce suit, conveyed her interest in the property to Seiber. Seiber became indebted to a credit union for approximately $2,900 and was also obligated for attorney fees and child support resulting from the divorce. He became employed in a tavern owned by the defendant Maxine Summers. Mrs. Summers also had a home in Coos Bay, but she and Seiber lived together on the subject property. In May, 1969, Seiber conveyed the real property to Mrs. Summers. She assumed the mortgage, the balance of which amounted to approximately $13,000. Seiber was also indebted to Mrs. Summers for two payments of $100 each on the mortgage, but the payments were forgiven as part of the consideration in the sale. Approximately a year later Mrs. Summers conveyed the property to defendant Wilma Blair.

Mrs. Summers testified that she conveyed the property to Wilma Blair because she did not want it involved in a divorce suit which she was filing against her husband. We accept defendant Blair's testimony that she had no interest in the property and was merely holding the title for Mrs. Summers. Seiber filed his petition in bankruptcy in August, 1971, approximately two years after the conveyance to Mrs. Summers, and the trustee in bankruptcy filed this suit to set aside the conveyance from Seiber to Mrs. Summers on the ground the conveyance was in fraud of creditors.

The trial court found that the conveyance did not constitute a fraudulent transfer apparently for the reason that the property constituted Seiber's homestead and was therefore exempt from the claims of creditors.*fn1

There was evidence that Seiber was employed at only $200 per month at the time of the transfer from Seiber to Mrs. Summers in May, 1969. The payments on the mortgage were approximately $100 per month; he was indebted for child support and attorney fees from the prior divorce, and owed a substantial amount on the note to the credit union. On the other hand, Seiber testified that he conveyed the property because he wanted to be free of the monthly payments. Also, Seiber's equity in the property was minimal at best, as he had made only 11 monthly payments of approximately $100, which included interest and taxes. He had made no improvements on the property prior to the conveyance to Mrs. Summers, and there was evidence that the market value of the property was about equal to the balance owed on the mortgage.

Assuming, arguendo, that Seiber had the moral intent to place the property out of the reach of his creditors, particularly the credit union, as a matter of law the transfer could not be in fraud of creditors. The property qualified as his homestead and, to the extent of the statutory exemption of $7,500, the property was completely exempt from any claims of creditors. ...


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