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No. 97-542 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

2000 MT 87 

299 Mont. 206

999 P. 2d 315

FARMERS PLANT AID, INC., a 

Montana corporation, and CASEY SMITH, 

Plaintiffs and Respondents, 

v. 

CONNIE L. FEDDER,

Defendant and Appellant.

APPEAL FROM: District Court of the Twenty-First Judicial District, 

In and for the County of Ravalli,

The Honorable Jeffrey H. Langton, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Steven T. Potts, Thompson, Jacobsen & Potts, Great Falls, Montana

For Respondent:

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John E. Bohyer, Fred Simpson, Philips & Bohyer, Missoula, Montana

Submitted on Briefs: February 3, 2000 

Decided: April 11, 2000

Filed:

__________________________________________

Clerk

Justice William E. Hunt, Sr. delivered the Opinion of the Court.

¶1.Connie Fedder appeals a judgment of the Twenty-First Judicial District Court, Ravalli County, which 

set aside as fraudulent a property transfer to her. We affirm. 

¶2.We restate the issues raised and discussed in Fedder's briefs as follows:

¶3.I Did the District Court err by permitting Farmers Plant Aid, Inc., and Casey Smith to prosecute this 

fraudulent conveyance action after transferor John Foss filed a bankruptcy petition?

¶4.II Was it necessary that the plaintiffs establish that they had a lien or security interest in the property 

before they brought this action for fraudulent conveyance?

¶5.III Did the court err in finding that Fedder knew Foss was indebted to Farmers Plant Aid, Inc., and 

Smith on November 29, 1989, when Foss transferred his interest in their joint property to her?

¶6.IV Are certain other findings of fact supported by substantial evidence?

¶7.V Did the court err by concluding that a fraudulent conveyance had occurred as opposed to a 

preference?

¶8.VI Did the court err by concluding that a fraudulent conveyance had occurred even though there was 

no proof of the value of the property transferred?

¶9.VII Did the court err in entering certain other conclusions of law?

¶10.Casey Smith and Farmers Plant Aid, Inc., lease mineral rights to real property in Ravalli County, 

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Montana, for purposes of extracting peat from that land. They have an outstanding October 1993 default 

judgment against John Foss for $118,343.59 plus interest and costs for Foss's intentional interference 

with their access to the peat resources and his assault upon Smith with a rifle on September 25, 1989. 

¶11.Smith and Plant Aid brought this action pursuant to the Uniform Fraudulent Conveyance Act, §§ 31-

2-301 through -325, MCA (1989), to collect on their judgment against Foss. They allege that Foss 

fraudulently conveyed his forty-four percent interest in certain Ravalli County real property to his thenwife Connie Fedder in November of 1989, for consideration of $1. Following the conveyance, Fedder 

held an eighty-eight percent interest in the property and Foss's children from a previous marriage held a 

twelve percent interest. The marriage of Foss and Fedder was dissolved in 1990. 

¶12.Smith and Plant Aid originally named both Foss and Fedder as defendants in this action. However, 

Foss filed for bankruptcy in September 1994, listing numerous creditors and no assets. He was 

eventually dropped as a defendant in this action. By stipulation, the parties submitted the case to the 

District Court based upon their briefs and the deposition testimony and exhibits filed. The court entered 

judgment in favor of Plant Aid and Smith, voiding the conveyance from Foss to Fedder and granting 

Plant Aid and Smith the right to levy execution upon the property. 

Issue 1 

¶13.Did the District Court err by permitting Farmers Plant Aid, Inc., and Casey Smith to prosecute this 

fraudulent conveyance action after transferor John Foss filed a bankruptcy petition?

¶14.Fedder asserts that upon Foss's filing of a bankruptcy petition in September 1994, Foss's bankruptcy 

trustee acquired the right to avoid his pre-petition fraudulent conveyances. She asserts that fraudulent 

conveyance claims thus passed from individual creditors such as Smith and Plant Aid to Foss's 

bankruptcy trustee, and that Smith and Plant Aid thus lost their standing and right to pursue a fraudulent 

conveyance claim. Fedder cites cases to support her argument, but all of those cases deal with the loss of 

creditors' rights to pursue such proceedings during the pendency of the bankruptcy. That is not the 

situation presented in the present case. Here, the judgment was obtained after the completion of Foss's 

bankruptcy. 

¶15.Section 524 (e) of the Bankruptcy Code provides that discharge of a debt of a debtor does not affect 

the liability of any other entity for such debt. Numerous cases have held that after the close of a 

bankruptcy, creditors are free to resume or commence a fraudulent conveyance action against the 

transferee. E.g., Federal Deposit Ins. Corp. v. Davis (4th Cir. 1984), 733 F.2d 1083, 1085 ("Once a 

bankruptcy case has been closed, creditors having unavoided liens on fraudulently conveyed property 

can pursue their state law remedies independently of the trustee in bankruptcy"); Kathy B. Enterprises, 

Inc. v. United States (9th Cir. 1986), 779 F.2d 1413, 1415. Even where collection efforts may have 

occurred during the pendency of a bankruptcy, that is not a sufficient reason to set aside a subsequent 

judgment in favor of the creditor. Kathy B., 779 F.2d at 1415.

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¶16.The record of Foss's bankruptcy case, a copy of which was filed with the District Court following 

this Court's remand for that purpose, establishes that Foss's bankruptcy trustee was appointed after this 

action was filed, on September 6, 1994. Fedder removed this action to federal court on grounds that it 

was related to the bankruptcy case. Upon motion of Smith and Plant Aid, however, the federal court 

remanded the case to state district court. The bankruptcy court and the trustee clearly had notice of this 

action during its pendency. An order releasing Foss from all dischargeable debts was entered on January 

31, 1995, and the trustee was discharged and the bankruptcy case finally closed on November 27, 1996. 

Judgment was not entered in the present case until several months later. 

¶17.We hold that the District Court did not err by granting judgment in this action after Foss's 

bankruptcy proceeding had been concluded.

Issue 2 

¶18.Was it necessary that the plaintiffs establish that they had a lien or security interest in the property 

before they brought this action for fraudulent conveyance?

¶19.Fedder states that in order for a person to recover in a fraudulent conveyance action, that person 

must be a creditor. She asserts that neither Smith nor Plant Aid were creditors when they obtained the 

underlying judgment in this action. They were not creditors of Foss, who had received a bankruptcy 

discharge; they were not creditors of the bankrupt estate, with which they did not file a claim; and they 

were not her creditors. 

¶20.Fedder's argument is based upon the faulty premise that this action is in essence a claim against 

Foss's bankruptcy estate. This is simply incorrect. There is no requirement in either state fraudulent 

conveyance law or the bankruptcy code which mandates that plaintiffs file a proof of claim in 

bankruptcy court to preserve their right to pursue a fraudulent conveyance action against a third-party 

transferee like Fedder. Fedder was not the bankrupt party and the plaintiffs are not attempting to share in 

a distribution of Foss's bankruptcy estate. 

¶21.This Court's holding in Cahill-Mooney Const. Co. v. Ayres (1962), 140 Mont. 464, 373 P.2d 703, 

compels the conclusion that a party need not obtain a lien or security interest prior to filing a claim for 

fraudulent conveyance under the Uniform Fraudulent Conveyance Act. In Ayres, the plaintiff creditor 

brought suit for collection on a debt and joined with it a claim to set aside fraudulent conveyances made 

by the debtor defendant to other co-defendants. The Court quoted with approval Chief Justice Cardozo 

of the New York Supreme Court, "We think the effect of these provisions [of the Uniform Fraudulent 

Conveyance Act] is to abrogate the ancient rule whereby a judgment and a lien were essential 

preliminaries to equitable relief against a fraudulent conveyance," and held that a creditor could join his 

action on a debt with an action to set aside a conveyance under the Uniform Fraudulent Conveyance 

Act. Ayres, 140 Mont. at 468 and 475, 373 P.2d at 705 and 709. 

¶22.Thus, the holding of Ayres specifically relieved creditors of the burden of obtaining a lien prior to 

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bringing a Fraudulent Conveyance Act claim. In the present case, the plaintiffs had obtained their 

judgment against Foss in October 1993. We hold that they were under no obligation to take any further 

steps prior to the filing of this suit. 

Issue 3 

¶23.Did the court err in finding that Connie Fedder knew Foss was indebted to Farmers Plant Aid, Inc., 

and Smith on November 29, 1989, when Foss transferred his interest in their joint property to her?

¶24.Our standard of review of findings of fact, as discussed under this issue and under Issue 4 below, is 

whether the District Court's findings are clearly erroneous. A district court's findings are clearly 

erroneous if they are not supported by substantial credible evidence, if the trial court has 

misapprehended the effect of the evidence, or if a review of the record leaves this Court with the definite 

and firm conviction that a mistake has been committed. Whalen v. Taylor (1996), 278 Mont. 293, 299, 

925 P.2d 462, 465. 

¶25.The above statement of this issue represents Fedder's restatement of portions of several of the court's 

findings; the court did not actually find that Fedder knew that Foss was indebted to Plant Aid and Smith 

when he transferred his property right to her. The relevant findings, which Fedder also challenges as not 

supported by substantial evidence, were: 

a.On or about September 25, 1989, John D. Foss committed an assault against Si Smith's successor in 

interest, Plaintiff Casey Smith herein, by pointing a rifle at him and threatening to shoot and kill him 

when Smith tried to enter the property under the mining rights of Plaintiff Farmers Plant Aid. At or near 

the same time, John D. Foss destroyed an access road and flooded the peat resource on the property in 

which Plaintiff Farmers Plant Aid had an interest in the mineral resource, thereby depriving Plaintiff 

Farmers Plant Aid of its right to mine peat and causing Farmers Plant Aid damages.

b.Despite her protestations otherwise, this Court also finds that Connie Fedder had actual knowledge 

that John Foss had engaged in tortious conduct against Farmers Plant Aid. At her deposition in this 

matter, she testified that John's sister, Millicent Huggans, had hired John Foss to plow up the road used 

by Farmers Plant Aid to mine peat moss. . . . Moreover, it is evident that she was well aware of the 

continuing hostilities between members of the Foss family and Farmers Plant Aid and its agents 

spanning several decades and generations, as well as among the Foss family members themselves. In 

point of fact, and as found by this Court herein at Finding of Fact No. 12, Connie and John were at the 

time of the 1989 conveyance involved in a suit filed by other members of the Foss family claiming that 

Connie and John Foss had fraudulently obtained ownership of his elderly mother's 53% interest in the 

Foss family property, which also renders Connie's claims of ignorance regarding the on-going feuds 

highly suspect.

c.Fedder's chief contention of error as to finding number 6 is that the finding is improperly based upon 

the contents of prior court actions. She asserts that this constitutes impermissible use of hearsay and does 

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not comport with the purpose for which judicial notice exists. Fedder points out that none of the 

witnesses in the present case testified that Foss had destroyed an access road and flooded the peat 

resources on the property.

¶26.The plaintiffs filed as an exhibit a copy of the earlier default judgment against Foss in the intentional 

interference and assault action, along with the court's accompanying memorandum. The plaintiffs also 

filed as exhibits copies of 1985 District Court findings, conclusions, and an order prohibiting the Fosses, 

and specifically John Foss, from "interfering or impeding in any manner the peat operations of Smith, 

his successors and assigns;" and a 1990 order of the District Court finding Foss in contempt of court for 

deliberately interfering with the plaintiffs' access to the peat resource on the Foss property. 

¶27.Our Rules of Evidence provide that a court may take judicial notice of "[r]ecords of any court of this 

state or of any court of record of the United States or any court of record of any state of the United 

States." Rule 202(b)(6), M.R.Evid. Therefore, we conclude that the District Court acted properly in 

taking judicial notice of earlier court orders and findings. 

¶28.We next consider the court's finding number 25, regarding Fedder's knowledge of Foss's tortious 

conduct. Fedder's deposition testimony unquestionably establishes that she knew Foss had plowed up 

property on which the plaintiffs were conducting their peat mining activities and that Smith had 

threatened to sue Foss over the assault with the rifle. In that deposition, she also described the continuing 

hostilities between the Smith and Foss families as akin to the "Martins and the McCoys." 

¶29.We hold that the above two findings are supported by substantial evidence and are not otherwise 

clearly erroneous. 

Issue 4 

¶30.Are certain other findings of fact clearly erroneous?

¶31.Fedder also challenges as unsupported the following finding made by the District Court concerning 

Fedder and Foss's actions after Foss conveyed his property interest to her:

a.However, they [Fedder and Foss] continued to represent to others that they both owned the property in 

question. Indeed, John and Connie continued to utilize the professional services of attorney Joseph 

Massman who approximately one year after entry of the Final Decree advised the public that he 

presently represented both Connie and John and that they were interested in selling "their" property.

b.This finding, says Fedder, is based "purely upon an unauthenticated hearsay letter."

¶32.Our Rule on authentication states that "the requirement of authentication or identification as a 

condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the 

matter in question is what its proponent claims." Rule 901(a), M.R.Evid. The letter here in question, 

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which was printed on attorney Massman's letterhead paper, was attached to Massman's deposition as 

part of his file on Fedder and Foss's dissolution of marriage, which he produced for his deposition. We 

hold that the exhibit was properly authenticated and supported the District Court's finding number 21, 

which was not otherwise clearly erroneous.

¶33.Fedder also specifically challenges the following finding:

a.Despite Connie's representation that John no longer works for her, John Foss continues to exert control 

over equipment located on the above-described real property. . . . Thus, this Court concludes that 

Connie's representations that the 1989 conveyance was intended as her settlement in the dissolution 

proceedings, and that John Foss had no justifiable interest in the property following the conveyance, are 

suspect.

b.Fedder asserts that the record does not support this finding concerning Foss's continued control over 

equipment on the property. 

¶34.This finding is supported by Fedder's deposition. In that deposition, Fedder replied, "I don't know" 

when asked whether Foss still lived with her. She then elaborated:

a.The last he told me he was going over to Hamilton, take the equipment that he wanted to take, beat the 

shit out of what he wanted to beat the shit out of. And he didn't give a--we can't print that-what went on. 

He could not be arrested. He was a Foss.

b.That Foss continued to take and destroy equipment located on the property indicates his continued 

control over the equipment. We hold that the record supports the court's finding that Foss continued to 

exercise control over equipment, which finding was not otherwise clearly erroneous. 

Issue 5 

¶35.Did the court err by concluding that a fraudulent conveyance had occurred as opposed to a 

preference?

Our standard of review of a District Court's conclusions of law is whether those conclusions are correct. 

Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603. We apply that 

standard in considering this and the remaining issues discussed in relation to this appeal.

¶36.A debtor may pay one creditor in preference to another or may give one creditor security for the 

payment of his demand in preference to another. Section 31-2-104, MCA. Fedder argues that Foss's 

transfer of title to her was in effect, a preference in recognition that she would be entitled to maintenance 

or support from him when they dissolved their marriage.

¶37.At the time of the November 1989 conveyance, however, Fedder and Foss were still married and 

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their dissolution action was not yet pending. The property transfer was not part of the dissolution, but 

preceded it. Additionally, Fedder has produced no evidence that Foss owed her any other obligation at 

the time of the conveyance. Thus, we conclude that Fedder has not established that she was a creditor of 

Foss at the time of his property conveyance to her for purposes of preferences to creditors as allowed 

under § 31-2-104, MCA. 

¶38.More importantly, Fedder did not raise this argument as an affirmative defense to the complaint, nor 

did she raise it in her proposed findings of fact and conclusions of law. We will not hold the District 

Court in error based on an argument not raised before it. Unified Industries, Inc. v. Easley, 1998 MT 

145, ¶ 15, 289 Mont. 255, ¶ 15, 961 P.2d 100, ¶ 15.

Issue 6 

¶39.Did the court err by concluding that a fraudulent conveyance had occurred even though there was no 

proof of the value of the property transferred?

¶40.Fedder points out that the essence of a fraudulent conveyance is that property is transferred to 

another without fair consideration. See § 31-2-311, MCA (1989). She states that the District Court erred 

in making no findings on whether the transfer from Foss to her was supported by fair consideration. She 

also asserts that the court's conclusion that Foss was rendered insolvent by the conveyance of his interest 

in the property was not supported by sufficient evidence, in that there was no evidence of Foss's existing 

debts and that Foss had no existing debt to the plaintiffs at the time he conveyed his property to her. 

¶41.Lack of evidence of fair market value of Foss's interest is irrelevant under well-established Montana 

authority. In Montana Ass'n of Credit Mgmt. v. Hergert (1979), 181 Mont. 442, 452, 593 P.2d 1059, 

1064, this Court set forth the standard for determining whether fair consideration was given for purposes 

of determining whether a conveyance was fraudulent: "a consideration that is merely good and valuable 

will not support a conveyance which will render the grantor insolvent." 

¶42.The District Court found, and Fedder does not contest, that Foss was rendered insolvent by his 

transfer to her of his interest in the real property:

a.[F]ollowing the conveyance of his interest in the subject real property to Connie, John D. Foss did not 

have assets with a present fair salable value sufficient to pay his probable liability on his existing debts 

as they became absolute and matured. Connie testified that John rarely, if ever, worked and that at the 

time of the November 29, 1989 conveyance, John Foss had no other assets to his name other than the 

subject property. . . . Connie also testified that John Foss had no money or clothes following the 

transfer. . . . She testified that other than his interest in the ranch, John Foss had no other property 

including personal property. . . . Connie further testified that John Foss had bad debts at the time of the 

conveyance. . . . Thus, by Connie's own admission, this Court finds that the November 29, 1989 

conveyance to Connie rendered John Foss insolvent.

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b.The District Court noted that the consideration listed in the agreement by which Foss conveyed his 

interest in the property to Fedder was $1. The court also noted the copies of Realtor listing agreements 

appended to Fedder's deposition in which Fedder listed the property for sale in 1994 for $1,260,000 and 

in 1995 for $700,000. 

¶43.In light of the facts established in this case and the rule of law set forth in Hergert, we conclude that 

it was not necessary that the plaintiffs establish the present value of the property interest which Foss 

conveyed to Fedder, or that Foss had an existing debt to them at the time he conveyed his property 

interest to Fedder. We hold that the District Court did not err in concluding that a fraudulent conveyance 

had occurred even though there was no proof of the present value of the property transferred.

Issue 7 

¶44.Did the court err in entering certain other conclusions of law?

¶45.Fedder argues that the conclusion that "John and Connie's retention and use of the same lawyer, one 

year after their divorce, for the purpose of marketing 'their' property, contributes to the conclusion that 

John's transfer was illusory and occurred in name only" is improperly based solely upon an 

unauthenticated letter from Massman and that the court improperly took judicial notice, in reaching its 

conclusions, of court orders and judgments in other cases. We have ruled above that the letter from 

Massman was properly considered as part of the record upon which it was stipulated that the court 

should enter its judgment. We now hold that the court's conclusion based upon that letter was correct. 

Similarly, we have ruled above that the court did not err in taking judicial notice of court orders and 

judgments in this case and in others previously before it. 

¶46.Fedder asserts that the court erred in concluding that at the time of the conveyance to Fedder, Foss 

was involved in protracted pending litigation and was under the threat of litigation by Smith and Plant 

Aid; that on the day of the conveyance, Foss attended a hearing on an order to show cause why he 

should not be held in contempt of court for violating an earlier restraining order; and that he was aware 

or should have been aware that litigation might ensue from his tortious assault of Smith and his other 

acts interfering with the peat mining operation over the years. Again, all of these conclusions are correct 

based upon the record provided to the District Court and upon which it based its decision.

¶47.Fedder argues that there was no evidence to support the conclusion that she had knowledge of the 

fraud at the time of the conveyance; and that even if the plaintiffs are entitled to disregard the 

conveyance, they cannot do so without compensating her for the support she gave up by entering into 

the transaction with Foss in the first place. 

¶48.The conclusion that Fedder had knowledge of the fraud at the time of the conveyance is based upon 

the court's conclusions that Fedder knew that Foss had committed or been accused of committing 

tortious conduct against Plant Aid; upon the court's unchallenged finding that Foss continued to live on 

the property following the conveyance; and on the finding which we have affirmed above that Fedder 

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knew that Foss had bad debts and no other assets following the conveyance. 

¶49.We find completely without merit the argument that even if the plaintiffs are entitled to disregard 

the conveyance, they cannot do so without compensating Fedder for the support she gave up by entering 

into the transaction with Foss. Her claim for maintenance was never litigated, let alone reduced to 

judgment. Further, that after-the-fact claim did not constitute consideration for Foss's interest in the 

property. We note that absent other events, Fedder will retain her pre-fraudulent conveyance interest in 

forty-four percent of the property.

¶50.Fedder summarily argues that the court erred in failing to rule on her objections to exhibits offered 

by the plaintiffs. The exhibits as to which she raised specific objection in her briefs have been discussed 

above. Absent any argument to the contrary, we conclude that any error in the court's failure to rule on 

the remaining objections is harmless. 

¶51.Finally, in her supplemental brief, Fedder argues that she was entitled to a jury trial. She did not 

raise this issue in her initial brief on appeal. The supplemental briefs were allowed following this Court's 

remand of this case to the District Court for the limited purpose of allowing that court to develop the 

record and to enter written findings, conclusions, and an order as to whether the plaintiffs were entitled 

to bring this action, as discussed under Issues 1 and 2. Because the jury trial issue was not timely raised 

on appeal, we decline to consider it. See EBI/Orion Group v. Blythe (1997), 281 Mont. 50, 56, 931 P.2d 

38, 42. 

¶52.We affirm the judgment of the District Court. 

/S/ WILLIAM E. HUNT, SR.

We Concur:

/S/ J. A. TURNAGE

/S/ KARLA M. GRAY

/S/ JAMES C. NELSON

/S/ JIM REGNIER 

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