Opinion ID: 2067865
Heading Depth: 1
Heading Rank: 3

Heading: Defendants' Claims Concerning Lack of Prejudice.

Text: It is essential in an action to set aside an allegedly fraudulent conveyance that the creditor establish that it was prejudiced as a result of the transfer. Shirley, 485 N.W.2d at 474. The defendants in the present case assert that no such prejudice occurred from those transfers of assets assailed by INNK. They advance three theories as to why this is so. First, they claim that all of the property owned by Raymond and Evelyn or corporations controlled by them has been encumbered by one or more creditors since at least 1981. Second, they contend that most of the transferred property was consumed in the payment of preexisting indebtedness. Finally, they contend that gifts of stock antedating their debtor-creditor relationship with INNK, and which may not be voided on grounds of fraud, serve to substantially dilute the value of those shares that the district court did order to be canceled and reissued to INNK. Our examination of the record suggests that these claims each present factual rather than legal issues. The district court found as follows on the first two contentions: Defendants claim the funds transferred by the Kenkels were consumed in payment of preexisting indebtedness and that the stock transfers sought to be avoided were of heavily encumbered corporate assets. No credible evidence was presented that any of the transfers were consumed by preexisting indebtedness. Our review of the record convinces us that these findings were correct. With respect to the contention that the per-share value of the transferred stock had been diluted by earlier gifts, the district court found this assertion to be inconsistent with figures shown on federal gift tax returns executed by Raymond and Evelyn. Relying on the transferors' own declarations of value on those returns, the district court found that the stock was of sufficient value that INNK was prejudiced by the transfers. The record fully supports the district court's view of the evidence on this issue. We have considered all issues presented and conclude that the judgment and decree of the district court should be affirmed. AFFIRMED.