Court Opinion

ID: 9520562
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:43:45.774274+00
Date Added: 2024-06-11T12:46:27.494107
License: Public Domain

CHIEF JUSTICE RYAN concurring in part and dissenting in part: I do not agree with the majority opinion’s holding as to the Sackville farm. I think this opinion does violence to the holding of this court in Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342, and to the settled law in this State. Although one may suspicion fraud on the facts of this case, there is no clear and convincing proof to support such a finding. The decisions Roger made to prefer payments on the combine, bins and the McManus farm over the Sackville farm proved to be sound business judgment because it permitted him to continue to farm the same acreage and to keep the equipment necessary with which to farm it. Had he made the payments on the Sackville farm and not on the equipment and the McManus farm, his acreage would have been reduced and he would have lost the equipment which he needed to continue farming. After the forfeiture, Roger farmed the Sackville acreage on a sharecrop arrangement with his parents as he had done prior to entering into the contract for deed. Later, he leased the farm from his parents on a cash-rent basis. From his point of view, Roger’s decision to make payments on farm equipment and the McManus farm, while allowing his contract for deed on the Sackville farm to be forfeited, was a reasonable business decision which allowed him to continue as a farmer. The evidence presented to the trial court supports this position. A farmer must operate a certain amount of acreage in order to be able to farm profitably. In order to farm, one must make a substantial investment in machinery and equipment. One cannot afford to make this investment if the acreage farmed is small. As the acreage farmed increases, generally speaking, the cost of farming, per acre, decreases. The 771/2-acre McManus farm was not, by itself, large enough to achieve this economy of size. Furthermore, Roger had unsuccessfully sought to rent additional farmland. Roger’s sacrifice of his “equity” in the Sackville farm, while retaining the right to operate that farm and retaining the McManus farm and his equipment as well, gave Roger the opportunity to continue as a farmer, which he could not have done if he had only the McManus acreage to farm. The standard for judging whether a transaction is fraudulent is stated in Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342, 358. In that case the court held that a transaction is a sham and tantamount to fraud when it is colorable or illusory. (Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342, 358.) An illusory transfer is one which takes back all that it gives, and a colorable transfer is one which appears to be absolute on its face but which, because of a secret or tacit understanding between the transferor and transferee, is not an actual transfer because the parties intended ownership to be retained by the transferor. (Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342, 359.) A transfer is a fraud on marital rights when the transferor in reality has no intent to convey any present interest in the property, but, in fact, intends to retain complete ownership. Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342, 359. See also Payne v. River Forest State Bank & Trust Co. (1980), 81 Ill. App. 3d 1128; In re Estate of Nemecek (1980), 85 Ill. App. 3d 881. While Johnson dealt with an inter vivos transfer of property in relation to the rights of a surviving spouse, the same test for validity of the transaction may be properly applied with respect to dissolution as well. (O’Neill v. DeLaney (1980), 92 Ill. App. 3d 292.) Additionally, the transaction must be shown to be fraudulent, i.e., no actual transfer of ownership, by clear and convincing evidence. Ray v. Winter (1977), 67 Ill. 2d 296, 303; Racine Fuel Co. v. Rawlins (1941), 377 Ill. 375, 380. In the instant case, while Roger may, in fact, have been happy to keep the Sackville property out of Sandra’s reach, that is not the test. In Johnson v. La Grange State Bank (1978), 73 Ill. 2d 342, 357-58, this court stated: “In Illinois, however, and by the weight of authority in other jurisdictions, the owner of property has an absolute right to dispose of his property during his lifetime in any manner he sees fit, and he may do so even though the transfer is for the precise purpose of minimizing or defeating the statutory marital interests of the spouse in the property conveyed. [Citations.] Such a gift or transfer is not vulnerable or subject to attack by the surviving spouse unless the transaction is a sham and is ‘colorable’ or ‘illusory’ and is tantamount to a fraud. [Citation.]” In Johnson v. La Grange State Bank this court also stated: “The intent to defraud is found in the nature of the transfer, whether it be illusory or colorable. In either event the transfer is a fraud on the marital rights because the transferor in reality had no intent to convey any present interest in the property but, in fact, intended to retain complete ownership. Although the spouse’s marital rights can be defeated by an actual transfer, a purported transfer whereby the owner does not intend to convey a present interest, but intends to retain ownership, is evidence of an intent to defraud.” (73 Ill. 2d 342, 359-60.) The question to be decided is whether Roger, by virtue of an illusory or colorable transfer, retained an interest in the Sackville farm. There is no evidence in the record that establishes that Roger has any more than a leasehold interest in the Sack-ville farm. Furthermore, there is no evidence that the forfeiture was a mere afterthought created solely to defraud Sandra. The written contract for deed contained the forfeiture clause when it was drawn up. It was not a surprise to anyone. Sandra herself testified that she knew they were having financial difficulties and that Roger could not make the $5,000 payment on the Sackville farm before she filed her petition for dissolution. The facts of the instant case contrast with those of Draper v. Draper (1873), 68 Ill. 17, which Sandra relies on for support and which the majority opinion likens to this case. In Draper, after the wife had filed suit for divorce, the husband threatened to dispose of the property so that the wife would get nothing. His threat was followed by a sale of property to his brother for grossly inadequate consideration. There had been no previous offer to sell before the filing for divorce. The evidence in this case also clearly differs from that of Sax v. Sax (5th Cir. 1961), 294 F.2d 133, another case upon which Sandra relies. In that case the husband concealed from the wife the fact that he was receiving a substantial income from a trust. After the wife had filed for separate maintenance but before a support settlement decree was completed, the husband secretly had a supplemental trust agreement executed which placed the property beyond the wife’s reach. The husband, however, still received the benefit of the trust. Finally, the facts of the instant case also contrast with those of Fong Hong May v. Fong Wan (1959), 166 Cal. App. 2d 706, 333 P.2d 797, also relied on by Sandra. In that case, the husband was in partnership with his sons. The partnership was dissolved while the divorce was pending, and the husband transferred substantial property to the sons. However, the transfer was made pursuant to an oral agreement that, after the divorce was over, the property would be returned to the husband or to the partnership. In that case, the court found the transfer to be fraudulent. In the instant case, there is no evidence that after the forfeiture Roger Hofmann had any interest other than a leasehold interest in the Sackville farm. The facts of this case do not clearly and convincingly support the conclusion that the transfer was illusory or colorable. I believe that the appellate court was correct in holding that a valid forfeiture of the Sackville farm had taken place prior to the dissolution of the marriage. I, therefore, dissent as to the majority opinion’s holding as to the Sackville farm. I concur in the remainder of the majority opinion. However, I wish to state my understanding of the last paragraph. In making the new computations, the court should take into consideration the value of the farmland at the time of the hearing on remand and not the value of the farmland as found in the original decree. The price of farmland, generally, now is from one-third to one-half less than it was at the time of the original decree.