Opinion ID: 1834309
Heading Depth: 1
Heading Rank: 2

Heading: Claim of Improper Transfer of Assets.

Text: The feed store has asserted that the transfer of assets to the bank by the Beuthiens on October 25, 1991, was improper on two grounds: it was made in violation of Iowa Code section 681.1 (1991), and it was a fraudulent transfer. Both the district court and the court of appeals found that chapter 681 in no way aids the feed store. We agree. The feed store urges that, because less than all of the Beuthiens' assets were transferred to the bank, the transfer is void as an improper assignment for the benefit of creditors under section 681.1. We believe that any invalidity of the transfer for purposes of chapter 681 is of no consequence in this litigation. If a transfer does not satisfy the requirements of chapter 681, that would only render the transaction invalid for purposes of invoking the protection afforded under those statutes. [1] No party to the present transaction is seeking to invoke the protections of chapter 681 in any manner. With respect to the feed store's claim that the transfer of assets to the bank was fraudulent, the court of appeals held that summary judgment was improperly granted on this claim because of a genuine issue of material fact appearing in the motion papers. We disagree. Although the transfer may have been preferential as to one creditor over another, that is not a basis for voiding it if a fair consideration was received. Rouse v. Rouse, 174 N.W.2d 660, 669 (Iowa 1970); Steffy v. Schultz, 215 Iowa 831, 842-43, 246 N.W. 907, 910 (1933). The relinquishment of an indebtedness may be a fair consideration and, in the present case, the indebtedness relinquished exceeded the market value of the assets that were transferred. The district court properly granted summary judgment on this portion of the case. [2]