Case Name: WILLIAM JONES v. THERON R. BEERS et al.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1926-06-08
Citations: 118 Or. 317
Docket Number: 
Parties: WILLIAM JONES v. THERON R. BEERS et al.
Judges: 
Reporter: Oregon Reports
Volume: 118
Pages: 317–324

Head Matter:
Argued at Pendleton May 4,
affirmed June 8, 1926.
WILLIAM JONES v. THERON R. BEERS et al.
(246 Pac. 711.)
For appellant there was a brief and oral argument by Mr. Ed. B. Coulter.
For respondent there was a brief over the names of Mr. J. W. McCulloch and Mr. Bruce Kester, with an oral argument by Mr. McCulloch.
For respondents (and defendants) Theron E. Beers and Lizzie T. Beers, there was a brief over the name of Mr. C. M. Crandall.

Opinion:
BEOWN, J.
It is alleged and admitted that on April 1, 1914, the defendants Theron E. Beers and his wife, Lizzie T. Beers, made and delivered to the plaintiff their promissory note for $1,350, bearing-interest at the rate of 10 per cent per annum; that no payments have been made thereon, except the sum of $185.14, paid July 14, 1917; that on July 1, 1915, the same defendants made and delivered to the First Bank of Juntura, at Juntura, Oregon, their promissory note for the sum of $4,071.88, bearing interest at the rate of 10 per cent per annum; that no payments have been made thereon, except the sum of $814.36, paid on the fourteenth day of July, 1917, and that the plaintiff is the owner and holder of each of these notes." It is further admitted that plaintiff commenced an action as alleged for the collection of the notes above described, and attached the lands covered by the mortgage involved herein; and that the defendants Theron E. Beers and Lizzie T. Beers have no other property from which the plaintiff can satisfy his judgment or collect from them the amounts due him. It is also admitted that the defendant Eli I. Beers is a brother of his co-defendant, Theron E. Beers.
The only question to be determined by this court relates to the validity of the mortgage given to secure a promissory note for the sum of $13,500, by Theron E. Beers and his wife, Lizzie T. Beers, to Eli I. Beers. The plaintiff contends that this mortgage was made by Theron E. Beers and his wife, Lizzie T. Beers, to their brother Eli I. Beers, with the intention of hindering, delaying and defrauding the creditors of Theron E. Beers.
"Every conveyance or assignment in writing or otherwise- of any estate or interest in lands made with the intent to hinder, delay, or defraud creditors as against the persons so hindered, delayed or defrauded, shall be void." 2 Or. L., §10170.
Before the plaintiff instituted this suit he acquired a lien upon the real property involved herein by attachment: Dawson v. Coffey, 12 Or. 513 (8 Pac. 838); Bennett v. Minott, 28 Or. 346 (39 Pac. 997, 44 Pac. 288). The circumstances surrounding, a transfer of lands by a grantor to a brother will be carefully searched when the good faith of such transaction is attacked by the grantor's creditors: Marks v. Crow, 14 Or. 382 (13 Pac. 55); Garnier v. Wheeler, 40 Or. 198 (66 Pac. 812). This court has announced that:
"Conveyances from one relative to another, when attacked by the creditors of the grantor, will always be closely scrutinized, for from the very relation of the parties it is scarcely to be supposed that the circumstances and intention of the grantor were not known to the grantee. Castro v. Illies, 22 Tex. 479 (73 Am. Dec. 277)." Jolly v. Kyle, 27 Or. 95 (39 Pac 999).
It is a presumption in such cases that the grantor's fraudulent intention is known and participated in by the grantee: Garnier v. Wheeler, supra, and local citations.
Here we have a mortgage for $13,500, given by a brother to another brother at a time when the grantor's creditors were pressing him for settlement for several thousand dollars due them.
The transaction relating to the making and delivering of the mortgage having been assailed as fraudulent, the burden of proof to establish that the mortgage was taken by the mortgagee without notice of the fraud and for a valuable consideration is cast upon him: Weber v. Rothchild, 15 Or. 385 (15 Pac. 650, 3 Am. St. Rep. 162); Stubling v. Wilson, 50 Or. 282 (90 Pac. 1101, 92 Pac. 810); United States Nat. Bank v. Thebaud, 65 Or. 317 (132 Pac. 1168). Before Eli I. Beers can establish that he has a valid mortgage lien it inust be alleged and proved that he took the mortgage in good faith and for value, and without notice: Bailey v. Hickey, 99 Or. 251 (195 Pac. 372).
The record discloses that a short time before the execution and recordation of the mortgage in question, the cashier of the Juntura Bank wrote the defendant Theron E. Beers a letter, and requested him to come in and secure the note that he owed the bank, as well as the note made to plaintiff, William Jones, by a mortgage for the amount due them. Mr. Beers replied and informed the cashier that the roads were so bad he was unable to bring his wife to the bank at that time, but made no reference as to whether he was willing to give security. A short time thereafter the defendants Theron ft. Beers and wife, Lizzie T. Beers, went to Vale, the county seat of Malheur County, and executed a note and mortgage for $13,500, to their codefendant, Eli I. Beers, a resident of Battle Creek, Iowa. They likewise executed to that brother a chattel mortgage for $5,330, that embraced all of their personal property, including livestock and farming implements. After covering his property with the protection of a lien, Theron R. Beers then advised the bank of the mortgage given upon his farm for $13,500.
Theron was indebted to a number of other persons in Malheur County to the amount of $11,000 or $12,000, and he made application to a loan company for the purpose of securing sufficient money to satisfy all of these claims- and for about $2,500, for making improvements upon his farm. At that time he represented in effect that the sums he owed to the several parties in Malheur County constituted his entire indebtedness. No allusion was ever made to any indebtedness that he owed his brother until after the time the bank sought to collect the amount due it. Thereupon, he went to Vale, and executed mortgages to his brother upon all real and personal property possessed by him.
In our reference hereinafter to loans made by Eli to Theron R. Beers, we do not include the sums forwarded to Theron that were due him from certain estates or for the rents or the purchase price of certain lands.
We have made a careful study of the evidence disclosed by the record and are convinced that Theron E. Beers furnished the data to his brother, Eli I. Beers, from which an important letter adduced as evidence was prepared. This letter bears date, Battle Creek, Iowa, January 15, 1916, and recites numerous loans from Eli to Theron Beers, running through many years. The circumstances surrounding the composition of this communication from Eli to Theron leads us to the belief that it was prepared in view of a probable lawsuit. According to the testimony, Theron seemed to have had unlimited credit with Eli until the bank wanted the money due it. The taking of the mortgage in the instant case by Eli from Theron does not comport with their former method of doing business, when Eli says he loaned Theron large sums of money without security, and without a scratch of a pen as evidence of such loans. It is strange that the unlimited confidence that Eli had in Theron disappeared at the moment the bank wanted its pay, as he then sought to protect all of his previous loans. In view of so many alleged loans which the defendants say involved written correspondence, it is peculiar that no writing evidencing any loan has been preserved prior to the "prepared" letter hereinbefore referred to. From a careful persual of the record we are impelled to conclude that the defendants failed to establish the burden cast upon them to prove that the execution and acceptance of the mortgage was in good faith and founded upon a valuable consideration.
It follows that the decree of the lower court is affirmed.
Affirmed.