Case Title: JESSEN v. JESSEN

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2002-02-26T00:00:00Z

Document:
JESSEN v. JESSEN2002 WY 3341 P.3d 543Case Number: 00-204Decided: 02/26/2002

October Term, A.D. 2001

 

 

DANIEL 
L. JESSEN, 

Appellant 
(Plaintiff),

 

v.

 

DENNIS 
L. JESSEN and RAYMOND

JESSEN, 
jointly and severally, 

Appellees 
(Defendants).

 

 

 

Appeal 
from the District Court of Laramie County:

The 
Honorable D. Terry Rogers, Judge

 

Representing 
Appellant:

Alexander 
K. Davison and Wendy Curtis of Patton & Davison, Cheyenne, WY.  Argument by Ms. 
Curtis.

 Representing 
Appellees:

Larry 
B. Kehl of Buchhammer and Kehl, P.C., Cheyenne, WY.  Argument by Mr. 
Kehl.

 

Before 
LEHMAN, C.J., and GOLDEN, HILL and KITE, JJ, and SPANGLER, D.J. 
Ret.

 

  

LEHMAN, 
Chief Justice. 

[¶1]      Appellant 
Daniel L. Jessen (son) appeals from the trial court's order, which quieted title 
in or, in the alternative, granted an equitable lien in favor of appellee 
Raymond Jessen (uncle).  

 

[¶2]      We reverse in 
part and affirm in part.

 

 

ISSUES

 

[¶3]      The son presents 
the following issues for our analysis:

 

            
1.  When a conveyance of real 
property is adjudicated as fraudulent and is set aside to satisfy the Grantor's 
obligation to a creditor, under what circumstances, if any, is the Grantor of 
the fraudulent conveyance entitled to reclaim the property from the Grantee, if 
the debt to the creditor is later satisfied?
 

            
2.  Was Daniel Jessen's 
previous interest of record extin­guished when redemption 
occurred?

 

            
3.  Did the trial court err 
in granting to Raymond Jessen an equitable lien as alternative relief in the 
event this court finds Daniel Jessen's interest in the property is superior to 
that of Raymond Jessen?

 

 

FACTS

 

[¶4]      In 1984, Dennis 
Jessen (father) conveyed certain real property to his son by way of a quitclaim 
deed.  The son was three years old 
at the time of this conveyance.  The 
quitclaim deed was recorded in October of 1984.  Since that time, the father has 
continued to farm and manage the property.  
He has also resided on the property rent-free and has used earnings made 
from the property operations to pay his own personal expenses.  

 

[¶5]      The father failed 
to pay income taxes on the property for the years 1984, 1986, 1988 and 1990, 
resulting in a tax liability of $139,248.31.  In 1992, the property was placed in the 
hands of a public conservator who managed the property for the son, a minor at 
the time.  The Internal Revenue 
Service (IRS) issued a Notice of Levy and Notice of Seizure on the 
property.  The public conservator 
filed a complaint and request for a temporary restraining order and asked the 
court to declare the liens and levies wrongful.  The IRS counterclaimed, alleging that 
the father had fraudulently transferred the property to the son.  The Federal District Court found the 
transfer to be fraudulent and set it aside.  The IRS seized and sold the property at 
a foreclosure sale.  Shortly before 
the expiration of the redemption period, the father approached his uncle for 
assistance in redeeming the property.  
The uncle loaned him $80,960.00 to redeem the property in exchange for a 
quitclaim deed, which granted the father the option to buy back the 
property.  This deed was recorded in 
February of 1999.  

 

[¶6]      A dispute between 
the son and the father arose in 1999 over ownership of the prop­erty.  The uncle was subsequently joined.  Prior to trial, the father and son 
reached a settlement, and the father was dismissed from the case.  The issues between the son and the uncle 
were not settled, and the case went to trial.  The trial court quieted title in the 
uncle and also imposed an equitable lien on the property in favor of the uncle 
as alternative relief in the event this court held the son's rights to the 
property to be superior to the uncle's.  
The son appeals from this decision.  

 

 

STANDARD OF 
REVIEW

 

[¶7]      This case was 
tried before the trial court, which made findings of fact and conclusions of 
law.  

 

The factual 
findings of a judge are not entitled to the limited review afforded a jury 
verdict.  While the findings are 
presump­tively correct, the appellate court may examine all of the properly 
admissible evidence in the record.  
Due regard is given to the opportunity of the trial judge to assess the 
credibility of the witnesses, and our review does not entail re-weighing 
dis­puted evidence.  Findings of 
fact will not be set aside unless they are clearly erroneous.  A finding is clearly erroneous when, 
although there is evidence to support it, the reviewing court on the entire 
evidence is left with the definite and firm conviction that a mistake has been 
committed.  
 

Hammond 
v. Hammond, 14 P.3d 199, 203 (Wyo. 2000) (quoting Fremont Homes, Inc., v. Elmer, 974 P.2d 952, 958 (Wyo. 1999) (citations omitted)).  This court reviews the trial court's 
conclusions of law de novo.  
Hammond, 14 P.3d  at 201.   This court can affirm the judgment 
on any legal ground appearing in the record.  City of Laramie v. Hysong, 808 P.2d 199, 202 (Wyo. 1991).

 

 

DISCUSSION

 

[¶8]      The son insists 
that when the conveyance of the property to him was declared fraudu­lent, 
the conveyance was set aside only to the extent necessary to satisfy defrauded 
creditors and not as between the parties.  
He also claims that the redemption of the property merely returned the 
property to its presale status, meaning title returned to him.  The son finally contends that the trial 
court erred by granting the uncle an equitable lien as alternative relief in the 
event this court found the son's interest in the property to be superior to the 
uncle's.   

 

[¶9]      Although the son 
and his father have settled the issues with regard to the property between 
themselves, the son requests this court to determine who has superior rights in 
an attempt to show that because his father did not have any rights to the 
property, he did not have any rights to quitclaim to the uncle in exchange for 
the redemption money. 

 

[¶10]   In order to analyze these issues, 
this court must begin by deciding what effect the federal court's finding that 
the conveyance from the father to the son was fraudulent had on each parties' 
ownership rights.  Courts have 
generally held that a fraudulent conveyance is valid as between the parties and 
that the conveyance is voidable only at the option of credi­tors or others 
within the protection of the statutes to the extent that is necessary to satisfy 
any debts.  37 Am.Jur.2d Fraudulent Conveyances and 
Transfers § 89 (2001).   
Therefore, a con­veyance that is fraudulent as to creditors, remains 
valid as between the parties to the transaction.  37 Am.Jur.2d Fraudulent Conveyances and 
Transfers § 95.  "[T]he 
transferee becomes vested with such ownership and title as the transferor 
possessed and purported to convey."  
Id.  The rationale 
behind this position is that a fraudulent transferor should not be allowed to 
benefit from his own misdeed.  
See Smith, Keller & Associates v. Dorr & 
Associates, 875 P.2d 1258, 1269 (Wyo. 1994) (where this court said that the 
purpose of the Uniform Fraudulent Conveyance Act is to prevent insolvent debtors 
from placing property outside the reach of creditors while still enjoying the 
benefits of the property).  See 
also Wantulok v. Wantulok, 67 Wyo. 22, 214 P.2d 477, 480 (1950) 
(where this court recited the general rule that "courts will not aid a 
fraudulent grantor to recover from his transferee, property transferred in fraud 
of creditors").  

 

[¶11]   Given these legal principles, we 
conclude that the conveyance between the father and son was merely voidable at 
the option of the father's creditors, here the IRS, rather than completely void 
as between father and son.  We also 
point out, however, that the IRS did void the transaction at least as far as it 
was concerned when it foreclosed on the property to satisfy the father's debt. 

 

[¶12]   Although neither party contested 
the father's right to redeem the property, we consid­ered this issue given 
our conclusion that the conveyance remained valid as between the father and the 
son.  The right to redeem is purely 
statutory; therefore, redemption may only occur in strict compliance with the 
statutes that govern it.  55 
Am.Jur.2d  Mortgages § 895 (1996).  Wyo. Stat. Ann. § 1-18-103 (LexisNexis 
2001) describes who may redeem a piece of prop­erty as, "any person, his 
heirs, executors, administrators, assigns or guarantors whose real property has 
been sold by virtue of an execution, decree of foreclosure, or foreclosure by 
advertisement and sale[.]"  Because 
the transfer had been voided as far as the IRS was con­cerned, in this 
limited circumstance, the father did possess the right to redeem the property 
from the foreclosure sale purchaser under this statute.

 

[¶13]   We turn our attention next to what 
effect the redemption had on the father and son's property rights.  A redemption voids the foreclosure sale 
and returns the property to its pre­sale status except for the obligation 
that has been paid.  Wyo. Stat. Ann. 
§ 1-18-103(a); First Southwestern Fin. Servs. v. Laird, 882 P.2d 1211, 
1216 (Wyo. 1994).  So in this case, 
owner­ship in the property after the redemption reverted to the son.  The father, therefore, did not retain 
any rights to deed to the uncle.  
The trial court's conclusion that title to the property was vested in the 
uncle is accordingly reversed.

 

[¶14]   Because the father did not possess 
any rights in the property to deed to his uncle, we must decide whether the 
uncle is entitled to an equitable lien.  
As we analyze this issue, we  
remain mindful of the fact that at the time the uncle loaned the father 
the money to redeem the property, the father and the uncle believed that the 
conveyance to the son had been declared void by the federal court and that the 
property would revert to the father once it had been redeemed.  

 

[¶15]   An equitable lien is generally 
defined as

 

a right, not 
recognized at law, which a court of equity recog­nizes and enforces as 
distinct from strictly legal rights, to have a fund or specific property, or the 
proceeds, applied in full or in part to the payment of a particular debt or 
demand.
 

Rolfe v. 
Varley, 860 P.2d 1152, 1157 (Wyo. 1993) (quoting 53 C.J.S. Liens § 2 at 457 
(1987)).   Equitable liens 
arise either by contract or by implication.  Rolfe, 860 P.2d  at 1157.  When a contract does not exist, the 
court may imply an equitable lien to avoid unjust enrichment.  Id.  The lien is generally effective as 
against all persons except for bona fide purchasers for value.  Herbert Thorndike Tiffany, The Law of 
Real Property § 1568 
(3rd ed. 1939).

 

[¶16]   Before an equitable lien can be 
imposed, four requirements must be present:

 

(1) a duty or 
obligation from one person to another; (2) a res to which that obligation 
attaches; (3) which can be identified with reasonable certainty; and, (4) an 
intent that the property serve as security for that purpose.
 

Rolfe, 860 P.2d  at 1157.  Generally, an 
equitable lien will be implied when one party has paid another party's 
liabilities or debts that are owed on certain, identifiable property.  Id.  Additionally, when a party advances 
money to another "under an agreement or circum­stances showing that it was 
the intention of the parties to pledge [certain] property as security for the 
advancements," equitable liens have been imposed.  Rolfe, 860 P.2d  at 1158 (quoting 
53 C.J.S. Liens § 8(c) at 469 (1987)).  These theories hold true even when the 
parties are mistaken as to who possessed title to the property:  "Where a person lends money to another 
who contracts to use the money for the discharge of a lien upon property which 
the other represents as belonging to him and where the money so lent is used for 
the discharge of such lien, the lender is entitled to have the lien reinstated 
for his benefit if, unknown to him, the property was not owned by the other or 
was subject to a junior lien."  
Restatement of the Law of Restitution §§ 43(3) and 54(3) 
(1937).  

 

[¶17]   Following these equitable 
principles of law, we hold that the trial court did not err when it imposed an 
equitable lien on the property in favor of the uncle.  The father requested aid from his uncle, 
and, on the last day of the redemption period, the uncle provided the money that 
allowed him to redeem this property.  
When the father and the uncle entered into the agreement wherein the 
father agreed to quitclaim the property to the uncle in exchange for his 
assistance, they demonstrated their intent to create an obligation on the part 
of the father to repay his uncle as well as their intent for the property to 
serve as security for their agreement even though in making this agreement, the 
father and the uncle were under the reasonable but mistaken impression that the 
father would hold title to the property after the redemption.  Given the circumstances in this 
particular case, we are compelled to affirm that portion of the trial court's 
order that granted the uncle an equitable lien in the property in the amount 
that he put up for its redemption.

 

[¶18]   Reversed in part and affirmed in 
part.