Opinion ID: 2114550
Heading Depth: 1
Heading Rank: 3

Heading: Whether the Bank Gave the Defendants Proper and Timely Credit For the Two Partnership Interests.

Text: A. The Nebraska law. As mentioned, in January 1987, Greenberg assigned his interests in the 108th & Q Street Farm Partnership and the Yorkshire Manor Apartments Partnership to his daughter, Ilene Sue Bowers. The bank filed suit against the Bowers in Nebraska to set aside that assignment as fraudulent. The bank was ultimately successful. According to the defendants, Nebraska law required the bank to give the defendants credit equal to the value of the two partnership interests as of the time Greenberg assigned those interests to his daughter in 1987. These values, the defendants assert, were $200,000 and $150,000. In short, the defendants say that the district court's refusal to allow such a credit ignored Nebraska law and violated the fundamental principle requiring the courts of each state to give full faith and credit to out-of-state judgments. In support of their contention, the defendants rely on Nebraska Revised Statutes section 36-708 and section 36-709 (1989), known as the Uniform Fraudulent Transfer Act (UFTA). Nebraska Revised Statutes section 36-708 provides in relevant part: Remedies of creditors. (a) In an action for relief against a transfer or obligation under the Uniform Fraudulent Transfer Act, a creditor, subject to the limitations in section 36-709, may obtain: (1) avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim; (2) an attachment or other provisional remedy against the asset transferred or other property of the transferee. . . . (3) subject to applicable principles of equity and in accordance with applicable rules of civil procedure: (i) an injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property; (ii) appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or (iii) any other relief that circumstances may require. (b) If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds. Id. (emphasis added). The defendants point out that the remedies in this provision are the same remedies that the Nebraska trial judge applied and that the bank followed. But, the defendants claim, the Nebraska court and the bank failed to recognize or apply the limitations found in section 36-709, limitations to which the remedies in section 36-708 are subject. Section 36-709 provides in relevant part: Defenses, liability, and protection of transferee. . . . . (b) Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under subdivision (a)(1) of section 36-708 [avoidance of the transfer], the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (c) of this section, or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against: (1) The first transferee of the asset or the person for whose benefit the transfer was made; or . . . . (c) If the judgment under subsection (b) of this section is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer. . . . Id. (emphasis added). The defendants ask us to apply section 36-709 because the bank obtained from the Nebraska court a judgment avoiding and setting aside the transfers to the Bowers pursuant to section 36-708(a)(1) without the court ever applying the protections of section 36-709. The defendants, therefore, want us to give them credit on the Iowa judgment for the value of the two partnership interests as of the time Greenberg transferred those interests to his daughter, Ilene, in 1987. Because these transfers occurred in 1987 and the Iowa judgment was entered against the defendants in March 1988, the defendants contend they are entitled to the credits$200,000 and $150,000as of March 1988. The short answer to this contention is that the UFTA did not apply to the transfers in question. At the time of the transfers in 1987, Nebraska was operating under the Uniform Fraudulent Conveyance Act (UFCA), Nebraska Revised Statutes section 36-601. The Nebraska Legislature repealed the UFCA in 1989 and replaced it with the UFTA. In the Bowers' appeal, the Nebraska Supreme Court held that the UFCA was the applicable law: On March 18, 1992, Norwest Bank filed a second amended petition in a consolidated lawsuit against Ilene Sue Bowers and her husband, Bill R. Bowers, pursuant to the Uniform Fraudulent Conveyance Act (UFCA), Neb.Rev.Stat. § 36-601 et seq. (Reissue 1988). The UFCA was repealed by the Legislature in 1989 and was replaced with the Uniform Fraudulent Transfer Act, Neb.Rev.Stat. § 36-701 et seq. (Cum.Supp.1992). In this case, Norwest Bank's cause of action against the Bowers accrued in 1987. Statutes covering substantive matters in effect at the time of the transaction govern, not later enacted statutes.