Kopf v. Engelke , 240 Wis. 10 ( 1941 )

In the opinion in this case it was stated that the case of Allen v.Perry (1882), 56 Wis. 178, 14 N.W. 3, cited by the plaintiff to the proposition that exempt property may be the subject of a fraudulent conveyance did not so hold but held the opposite. On this motion for rehearing counsel for the plaintiff take us to task for that statement. In the interest of clarity it is considered that the position of the court should be made plain. Allen v. Perry had to do with personal property claimed to be exempt. The property had been seized upon a writ of attachment by the defendant in an action against plaintiff's husband. The error assigned was the failure of the court to instruct the jury as plaintiff requested. The trial judge had been requested to instruct the jury as to the effect which the fact that the homestead was exempt from a claim of the husband's creditors would have upon the rights of the plaintiff. Upon a sale of the homestead the wife insisted, as a condition of signing the conveyance, that she be awarded a certain part of the proceeds. The money she thus received she invested in a team of horses and harness which were attached by the defendant in an action against the husband. This court said (p. 185):

"Neither she nor her husband have at any time had any team, harness, or wagon which would not be exempt from seizure on attachment if owned by the husband. It is clear, therefore, that under the decisions of this court a sale or transfer of such team, etc., either to a stranger or to his wife, couldnot be a fraud upon his creditors. They would not be entitled to seize the same if it were owned by the husband, and why a transfer by him to his wife while the same continued to be held and used by them could be a fraud upon his creditors we are unable to see. Very clearly, in the case at bar, if the propertyhad been the property of the husband it would have beenexempt from seizure; and so if there had been a sale of theproperty which was intended to be a fraud upon the husband'screditors, still, if at the time of the seizure of them by thesheriff the husband had no other property of that kind uponwhich he could claim an exemption, the effect of holding thesale void as to his creditors would only leave the title in thehusband, and being still in him, and he having no other propertyof like kind to which the exemption could attach, it wouldstill remain exempt." (Citing.)

This disposed of the case so far as dealing with the exempt property was concerned, but the court went on to comment upon Carhart v. Harshaw (1878), 45 Wis. 340, as to which as appears from the dissenting opinion in Allen v. Perry,supra, there was some controversy between the members of the court, and it there pointed out that where there was a mere colorable sale of the exempt property either of homestead or personal property, to enable the grantor to claim a double exemption, that such a sale was fraudulent in law and would be set aside. That was also the question in Carver v. Lassallette (1883), 57 Wis. 232, 15 N.W. 162. The effect of the holding in each of these cases is that a transfer of exempt property is not subject to be set aside by a creditor. It is only when a transfer is not effective and merely colorable, that is in reality not a conveyance at all, and is made for the purpose of enabling the transferor to, claim a double exemption that the law interferes. An actual sale divests the seller of his title and the conveyance of the homestead is not subject to attack on the ground that it is fraudulent as to creditors. In the case at bar the plaintiff attacked the transfer of the entire farm which included the homestead as merely colorable. The trial court found against the plaintiff upon that question and the finding was sustained by this court. There being no colorable transfer the plaintiff was not entitled to maintain an action to set aside the deed of the farm or the homestead.

It may be that the statement made in the opinion would have been more accurate if we had said that a conveyance of exempt property is not subject to attack by creditors as fraudulent. It is only when the homestead is dealt with in connection with other property owned by the defendant for the fraudulent purpose of giving the grantor the benefit of two homesteads that the transaction is subject to scrutiny in behalf of creditors. While we do not find any decision directly upon the question it appears from the quotation that even under those circumstances if the transfer is set aside, the exemption attaches in which event it would leave the property claimed as the second homestead subject to the lien of a judgment.

We are asked to again review the evidence as to value and to pass upon the rights of the plaintiff under her judgment to the eighteen-acre tract which John W. Engelke and his wife now claim as a homestead. As we pointed out in the opinion that is a question not within the pleadings and not tried in the court below and therefore not subject to determination here. We have re-examined the evidence and discover no reason for changing our determination that the evidence sustains the findings of the trial court.

By the Court. — The motion for rehearing is denied with $25 costs.