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SIEB'S HATCHERIES v. LINDLEY

April 14, 1953

SIEB'S HATCHERIES, INC.
v.
LINDLEY ET AL.



The opinion of the court was delivered by: John E. Miller, District Judge.

On June 14, 1952, plaintiff filed its complaint against defendants to recover $8,148.67, with interest thereon from September 5, 1950, at the rate of six per cent per annum, and to set aside as fraudulent certain conveyances of real property and transfers of notes and mortgages specifically described in the complaint.

On June 27, 1952, the defendants, Lester Lindley, F.M. Lindley, Willie Lindley and Sherman Madden, filed their answer denying the allegations of the complaint. On July 16, 1952, the plaintiff filed and served a demand for admission of facts. On July 23, 1952, the defendants, Lester Lindley, F.M. Lindley, Willie Lindley and Sherman Madden, filed their response to the demand for admission of facts. The response was not verified as required by Rule 36, Federal Rules of Civil Procedure, 28 U.S.C.A.

On July 24, 1952, the defendants, Jack Sharpensteen and Lucille Sharpensteen, filed their response to the demand for admission of facts. Likewise, their response was not verified. Also, on the same date, they filed a motion to require plaintiff to make its complaint more definite and certain.

On July 26, 1952, the plaintiff filed a motion for summary judgment against the defendants, Lester Lindley, F.M. Lindley and Sherman Madden.

A pre-trial conference was held on July 28, 1952, and on that date an order was entered requiring the plaintiff to make its complaint more definite and certain and directing it to more fully describe the property it claims was transferred illegally and to which defendant it was transferred.

Also, on the same date, the court ordered the parties to brief the question of liability of the defendants, Lester Lindley, F.M. Lindley and Sherman Madden, on the response filed by said defendants to the request for admission of facts.

On August 6, 1952, the plaintiff filed an amendment to its complaint in conformity with the order of the court of July 28, 1952.

On August 9, 1952, the plaintiff filed its brief in support of the motion for summary judgment against the defendants, Lester Lindley, F.M. Lindley and Sherman Madden. After plaintiff had served and filed its brief, the said defendants filed a motion to amend their response to demand for admission of facts.

On August 23, 1952, the defendants, Jack Sharpensteen and Lucille Sharpensteen, filed their answer to the amended complaint.

On September 4, 1952, the defendants, Lester Lindley, F.M. Lindley, Willie Lindley and Sherman Madden, filed an amendment to their motion to amend their response to the demand for admission of facts and on September 9, 1952, the plaintiff filed its response to the amendment of the motion of said defendants and asked that their motion to amend the response be denied. The question of whether the defendants should be allowed to amend their response to the request for admission of facts and the proposed amendment thereto was considered by the court and on September 30, 1952, the court rendered its opinion thereon and in accordance therewith the motion and the amended motion of defendants, Lester Lindley, F.M. Lindley and Sherman Madden, were denied, and the defendants were directed to file and serve briefs in opposition to the motion of plaintiff for summary judgment. See, Sieb's Hatcheries, Inc., v. Lindley, D.C.W.D.Ark., 13 F.R.D. 113.

Following the filing of the opinion and the entry of the order in accordance therewith, the defendants filed their brief in opposition to the plaintiff's motion for summary judgment, and the court then considered the motion and briefs filed by the respective parties and, on November 25, 1952, filed its opinion sustaining the motion for summary judgment against defendants, Lester Lindley and F.M. Lindley, and directed that the plaintiff make proof of the amount due it on a judgment obtained in this court against Ozark Poultry & Egg, Inc., on January 16, 1952. See, Sieb's Hatcheries, Inc., v. Lindley, D.C.W.D.Ark., 108 F. Supp. 415. The plaintiff made such proof and, on December 8, 1952, judgment was rendered herein against the defendants, Lester Lindley and F.M. Lindley, for the sum of $8,415.70, with interest thereon at the rate of six per cent per annum.

On the same date, the complaint of plaintiff against defendants, Jack Sharpensteen and Lucille Sharpensteen, was dismissed.

On March 25, 1953, the cause came on for hearing on the complaint of the plaintiff seeking to set aside certain conveyances of real property and transfers of notes and mortgages alleged to have been fraudulently made by the defendant, F.M. Lindley, to the defendant, Willie Lindley, and also certain conveyances to the defendant, Sherman Madden. At the conclusion of the trial, the court orally stated its tentative findings of fact on certain issues and directed the respective parties to file briefs on the questions of law raised by the testimony introduced at the hearing. The briefs of the parties have been received and considered along with the ore tenus and documentary testimony, and the court now makes and files herein its findings of fact and conclusions of law, separately stated.

Findings of Fact

No. 1

The plaintiff is a corporation organized and existing under the laws of the State of Illinois with its principal place of business at Lincoln, Illinois. The defendants, Lester Lindley, F.M. Lindley, Willie Lindley and Sherman Madden, are citizens of Arkansas and reside within the Western District thereof. The amount involved herein exceeds $3,000 exclusive of interest and costs.

No. 2

On January 16, 1952, the plaintiff obtained a judgment in this court in Civil Action No. 991 against Ozark Poultry & Egg, Inc., for the sum of $8,148.67, with interest thereon from September 5, 1950. (Plaintiff's Exhibit No. 8.)

No. 3

On December 8, 1952, plaintiff obtained judgment in the instant case against the defendants, Lester Lindley and F.M. Lindley, for the sum of $8,415.70, with interest thereon at the rate of six per cent per annum. (Plaintiff's Exhibit No. 9.)

No. 4

On August 10, 1935, Emma P. Cowper conveyed to the defendant, F.M. Lindley, for a stated consideration of $450 certain real property in the City of Springdale, Arkansas, being a part of the east half of Block 5 in the Railroad Addition to the said city, and more particularly described as "beginning at a point 87 feet south of the northeast corner of said block and running thence west 94 1/2 feet to an alley; thence south 87 feet; thence east 94 1/2 feet to the east line of said block, and thence north 87 feet to the place of beginning." This deed was duly recorded on September 13, 1935, and this property has been occupied by the defendant, F.M. Lindley, and Mrs. Willie Lindley, who is his wife, since the date of the deed or for approximately twenty-eight years and is now so occupied. (Plaintiff's Exhibit No. 2.)

No. 5

On February 21, 1928, J.W. Arnold and wife conveyed to the defendants, F.M. Lindley and Willie Lindley, "husband and wife," a part of the east half of Block 5 in the Railroad Addition to the City of Springdale, Arkansas, specifically described as follows:

    "Beginning at the northeast corner of said block
  and running thence south 87 feet; thence west 94 1/2
  feet to the east line of a 20-foot alley; thence
  north 87 feet to the north line of said block; thence
  east 94 1/2 feet to the place of beginning, being 87
  feet squarely off of the north end of Lot 1 in Block
  5 in said addition."

This deed was duly recorded on March 5, 1928, and discloses a consideration of $2,900.

This particular property is rental property and is occupied by the Ozark Motor Company, which pays a rental to Mrs. Willie Lindley of approximately $145 per month. (Plaintiff's Exhibit No. 3.)

No. 6

On February 2, 1952, the defendant, F.M. Lindley, conveyed the property described in Findings of Fact Nos. 4 and 5 to the defendant, Willie Lindley, by warranty deed which was duly recorded on April 23, 1952. The conveyance was made subject to a certain real estate mortgage held by the First State Bank of Springdale, Arkansas, for the principal sum of $6,500 on the north 87 feet of Lot 1 in Block 5 or the part now occupied by the Ozark Motor Company. (Plaintiff's Exhibit No. 1.)

No. 7

On March 1, 1951, the Ozark Poultry & Egg, Inc., executed and delivered to the defendant, F.M. Lindley, a mortgage on the real property owned by said corporation, being described as follows:

    "Part of the SE 1/4 of the NE 1/4 of Section 35,
  Township 18 North, Range 30 West, described as
  beginning 60 rods North of the SW corner of the said
  40-acre tract and running thence east 300 feet,
  thence north 140 feet, thence west 300 feet, thence
  south 140 feet to the place of beginning."

This mortgage was executed to secure the payment of an indebtedness that the corporation owed F.M. Lindley in the sum of $3,400, evidenced by a promissory note, with interest thereon at six per cent per annum, and was duly recorded March 2, 1951. (Plaintiff's Exhibit No. 4.)

No. 8

On and prior to February 20, 1952, the defendants, F.M. Lindley and wife, Willie Lindley, were the owners as tenants by the entirety of a certain large farm in Washington County, Arkansas, and on that date sold the farm to Carroll L. Talbot and wife for a consideration of approximately $32,500, subject, however, to a mortgage in the sum of $4,678.09 in favor of the National Equity Life Insurance Company of Little Rock, Arkansas. The net consideration for this conveyance was paid to the defendants, F.M. Lindley and wife, Willie Lindley, as tenants by the entirety. (Plaintiff's Exhibit No. 5.)

No. 9

On August 8, 1951, Southwest Lime Company filed a suit in the United States District Court, Western District of Arkansas, Fayetteville Division, against the defendants herein, Lester Lindley and F.M. Lindley, and Ozark Poultry & Egg, Inc., and Claudine Lindley, the divorced wife of the defendant, Lester Lindley. The plaintiff sought to recover in that action the sum of $10,000, evidenced by a promissory note executed by Ozark Poultry & Egg, Inc., on May 26, 1950, and to foreclose a mortgage securing the payment of said note, which mortgage was executed by said corporation and covered the real property of the corporation which is described in Finding of Fact No. 7.

Also, plaintiff sought to recover on a promissory note in the sum of $3,000 executed by the defendant herein, Lester Lindley, and his divorced wife, Claudine Lindley.

The plaintiff further sought judgment against the incorporators of Ozark Poultry & Egg, Inc., Lester Lindley, Claudine Lindley and F.M. Lindley, on the ground that they organized the corporation and proceeded to engage in business prior to paying in the said corporation the certified capital of $50,000.

The trial of this cause began in the Fayetteville Division on June 2, 1952, and during the trial the plaintiff and the defendants reached an agreement of settlement, by the terms of which the defendants were to pay the plaintiff the principal and interest on the $10,000 note and, in accordance with the settlement, it was provided in the judgment, inter alia:

    "And it appearing that the said sum of money
  hereinabove mentioned has been paid by the defendant,
  F.M. Lindley, this judgment is satisfied in full.
    "It is directed that a certified copy of this
  decree shall be evidence of the transfer of the notes
  and mortgage and the accounts and claims hereinbefore
  mentioned to F.M. Lindley without recourse."

In other words, the defendant, F.M. Lindley, settled the claim of the Southwest Lime Company for $10,000 and interest thereon according to the terms of the note and took an assignment from the Southwest Lime Company of all of its claims against the Ozark Poultry & Egg, Inc., on the $10,000 note, a $3,000 note and an open account. (Plaintiff's Exhibit No. 6.)

No. 10

On July 9, 1951, the Illinois Central Railroad Company, a corporation, obtained a judgment in the Circuit Court of Washington County, Arkansas, against Ozark Poultry & Egg, Inc., for $795.22, and in the same suit the Ozark Poultry & Egg, Inc., obtained a judgment against the Mutual Fire & Automobile Insurance Company of Dallas, Texas, for said sum. (Plaintiff's Exhibit No. 7.)

No. 11

On July 28, 1952, the plaintiff herein filed its notice lis pendens in the office of the Circuit Clerk and Recorder of Washington County, Arkansas. (Plaintiff's Exhibit No. 10.)

Also, the plaintiff, on February 9, 1953, filed a notice lis pendens in the same office reciting that it had obtained a judgment against defendants, Lester Lindley and F.M. Lindley, for the sum of $8,415.70 on December 8, 1952, and that it was seeking to subject all property formerly owned by the defendant, F.M. Lindley, to the payment of said judgment. (Plaintiff's Exhibits Nos. 10 and 11.)

No. 12

On August 1, 1952, plaintiff filed a notice lis pendens in the office of the Circuit Clerk and Ex-Officio Recorder of Deeds of McDonald County, Missouri, giving notice of the filing of this suit for judgment against F.M. Lindley and to subject to the judgment when and if obtained certain real ...


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