Case Name: DIRKS, Appellant, v. UNION SAVINGS ASSOCIATION et al, Respondents
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1918-07-22
Citations: 40 S.D. 529
Docket Number: File No. 4330
Parties: DIRKS, Appellant, v. UNION SAVINGS ASSOCIATION et al, Respondents.
Judges: 
Reporter: South Dakota Reports
Volume: 40
Pages: 529–532

Head Matter:
DIRKS, Appellant, v. UNION SAVINGS ASSOCIATION et al, Respondents.
(168 N. W. 578).
(File No. 4330.
Opinion filed July 22, 1918.)
1. Gifts — Stock Certificates, Voluntary Transfer of — No Endoi’sement, Or Book Transfer, Effect.
Where a corporate stock certificate was voluntarily and without consideration delivered 'by the' husband to his wife as a gift, hut was never endorsed by him, nor transferred to her on corporate! books, held, that title and ownership thereby passed to tbe wife, but the title so passed was qualified and subject to he set aside for constructive fraud upon assignor’s creditors.
Where an insolvent delivered a corporate stock certificate to his wife without consideration, and the wife, after husband’s death, turned same over to the administrator of his estate without intending to part with any right or interest therein, held, that the administrator could sue in equity to avoid the alleged gift, title thereto .having passed subject to he set aside for actual constructive fraud upon decedent’s creditors. So held, construing Prob. Code, Sec. 250, authorizing an administrator when there is deficiency of assets in his hands, and when de* cedent in- his lifetime conveyed personalty with intent to defraud his creditors, etc., to sue for recovery of same for benefit of creditors of tbe estate.
2. Fraudulent Conveyances — Stock Certificate, Insolvent Husband’s Assignment to Wife Without Consideration — Suit By Assignor’s Administrator to Avoid Transfer, Whether Maintain* able — Statute.
3. Same — Insolvent Husband’s Voluntary Transfer to Wife By Gift— Affection as Consideration — Effect re Fraud — Setting Aside.
As between husband and wife, a voluntary transfer of property by gift in consideration of love and affection only is a good consideration, but is not a sufficient consideration as against donor’s creditors; since such transfer operates as a constructive and actual fraud upon creditors, and may be set aside at their suit, although the parties to the transfer may not have intended to commit such fraud. So held, where donor knew at the time, of his insolvency; the law imputed to him constructive intent to hinder and delay creditors.
Appeal ir-om CifcuEit Court, 'Brule County. Hon.- Frank B. Smith. Judge. ■ , .
Action by Suzanne C. Dirks, against Union Savings ■- Association, a corporation and Guy Kelley; as> administrator -of tbe ■ estate of Peter-B; Dirk-si, deceased, to establish ownership in plaintiff of a savings- 'association certificate. From- -a judgment for defendants, and from an order denying a -new trial, plaintiff appeals.
Affirmed.
B. E. Wagmr, anfd G. I. Danforth, for Appellant.
E. R. Slifer, for Respondents.
(i') To point one of the opinion, Appellant cited:
Glendhill -v. McCombs (Me.) 86 Atl. 247; 45 L,. R. A. (NS) 26; Bond1 v. Bean (N. H.) 57 Atl. 340.
Respondents cited:
19 R. (C. L. 943. ■
(2) To point two of the opinion, Appellant cited:
11 R. C. L. -S-ec. 309,. page 271; Siffbrd v. Cutler, 91 N. E. 438; 18 Am. & Eng. Ann. Cases 36 and, note; Sec. 250, Prob. Code. • • - . .
Respondents cited:
S-eybold v. Grand Forks Nat. Bank, 67 N. W. 683; Borneman v. Lidlinger, 33 Ami. Dec. 626.
■ (3) To point three -of the opinion, Respondents cited:
Hall v. Feeney, 22 S. D-. 541.

Opinion:
McCOY, J.
Plaintiff brought this action to he adjudged) the owner of a certain savings certificate. 'Findings and judgment were in fatvor of defendants, from- which -plaintiff appeals on -the ground that tire findings do- not support the' judgment. The facts ae stated in the complaint and ais found by the court are, in substance, that ablout a .week prior to- 'his death the late Peter B. Dirks, plaintiff's 'hu'sba-nd, voluntarily -and without consideration gave her a certificate representing ten -shares of the stock of the Union Savings Association, by delivering said1 certificate to1 her and promising to indorse the s-ame sio that it would he transferred on the hooks of said association; that the plaintiff took and' retained said certificate until after her husband's defit'h, and, without intending to pant with 'any right or interest therein, she turned it over to tíre administrator of the estate, together with oltiher papers; tíiaJü -s-aid certificate of stock had a book value of $977.57; that said -certificate was never indorsed by said Peter B. Dirks, -and! the Said stock was never transferred to the iplaiinfiff on the books of said association; that at the time salid certificate was so given and delivered to plaintiff, the said Peter B. Dirks' was indebted to various creditors in th'e sum lof -about $150,000-, and) that the [assets of hi-s estate did mot exceed in value the sum of $60,000; and that the estate of said Peter B. Dirks is and was insolvent at the time when' he -gave said certificate to plaintiff. From the facts so found the trial court 'Concluded that tire said 'Certificate of stock was given to plaintiff by her husband1 without any consideration therefor a,t a time when he was insolvent, and that therefore itlhé said gift was a fraud upon his creditors, and1 that the same should be held to belong to the estate of said decedent, 'as assets, and- not to the 'plaintiff.
By this appeal the appellant presents the questions, Did the ownership of the certificate pass to the plaintiff, ¡and are the findings of fact sufficient to sustain the judgment giving the certificate to the defendant administrator for the benefit iotf the estate of the decedent, in that the -complaint did not allege nor the findings state that said gift was made with intent to defraud creditors. As to the first proposition, we are of the view- 'and so hold, that title- to the said certificate did pass to the plaintiff, but that the title so passing was qualified and sub-j ect to be set aside, under the circumstances iotf this case, ia.s an actual constructive fraud upon the -creditors of -said decedent. ¡Some contention is rrfade, and authorities cited, to the effect that the administrator Coul-cl not -sue in equity to avoid the gift where title had passed by conveyance made, by deceased in (his lifetime, to defraud creditors. This seem-s to be the general rule, in ,the absence of statute, prevailing in many jurisdictions ; but it certainly is not the rule in this jurisdietiloln. Under the statute of this state (section 250, Probate Code) an administrator is expressly authorized to maintain this land of action, when there is a deficiency of assets to pay the credlitors- of a decedent. Section. 250 of -our Code is the same as section 1589, Code Civ. Pr. of California. This section of the California- Code has been frequently construed by -the courts of that state. Ohm v Su.pr. Ct., 85 Cal. 545, 26 Pat. 244, 20 Am. St. Rep . 245; Field v. Andrada, 106 Cal. 107, 39 Pac. 323; Shields v. Nathan, 12 Cal. App. 604, 108 Pac. 34; Smith v. Ins. Co. (C. C.) 57 Fed. 133; Sifford v. Cutler, 244 Ill. 234, 91 N. E. 428, 135 Am. St. Rep. 326, 18 Ann. Cas. 36, and note.
As between husband and wife a voluntary transfer of property hv gift in consideration, -of love and1 affection- only is a good consideration as between them, but it is not a sufficient -consideration as against •creditors of the do-n-or. Siu-ch a transfer operates as a constructive -and; actual fraud upon -creditors, and may -be set aside at the suit of creditors, Although the -parties feoi the transfer may not have had1 in mind any actual present intent to commit such a fraud. The effect is 'the same in- either case, whether fraud was intended Or Hot; when the'donor is insolvent. In' the-eye erf the law- every one is presumed to intend1 the natural consequences of -his own acts. At the time the gift in question, Peter B. Dirks must 'have known of his insolvency,' and' the law will1 impute to him' a constructive intent to hinder and delay bis: creditors in the eclllectiom of their debts -by the making of the -gift in question. 20 Cyc. 522; Moore on Fraudulent Conveyances, 263 Whitehouse v. Bolster, 95 Me. 438, 50 Atl. 240; Gardiner Sav. Inst. v. Emerson, 91 Me. 535, 40 Atl. 551; Baker v. Hollis, 84 Iowa, 682, 51 N. W. 78; Shaw v. Manchester, 84 Iowa, 246, 50 N. W. 985; Milholland v. Tiffany, 64 Md. 453, 2 Atl. 831; Knight v. Kidder (Me.) 1 Atl. 142, and note; Houston v. Blackman, 66 Ala. 539, 41 Am. Rep. 756; Woodruff v. Bowles, 104 N. C. 197, 10 S. E. 482; Smith v. Ins. Co. (C. C.) 57 Fed. 133. Intent to' defraud on the part of the donor alone is sufficient to avoid the gift.- Bump on Fraudulent Conveyances, p. 268 .
'Finding-no error in the record, the judgment appealed from is affirmed.