No. 80CA0378Colorado Court of Appeals.
Decided April 15, 1982.
Appeal from the District Court of Boulder County, Honorable William S. Neighbors, Judge.
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French Stone, Joseph C. French, David M. Haynes, for plaintiffs-appellees.
Robert G. Burroughs, for defendants-appellants.
Division I.
Opinion by CHIEF JUDGE ENOCH.
[1] Defendant, Mary Olson, wife of defendant Don Olson, appeals the trial court’s judgment declaring that a conveyance to her was fraudulent, and subjecting her property to execution by plaintiff, the judgment creditor. We affirm. [2] The trial court found that defendant, Don Olson (debtor), executed a $25,000 unsecured note payable to C.L. Love (creditor) and due on November 25, 1973. At the time the note was due, debtor had interests in two properties: the “Olson Farm,” which he owned individually and had inherited from his parents, and other property which he owned in joint tenancy with his wife and which was subject to a deed of trust securing two promissory notes. This deed of trust was foreclosed in 1976. [3] On January 12, 1974, debtor borrowed $150,000 from another party, and executed a note and deed of trust covering the “Olson Farm” for that amount. Ninety-thousand dollars of the $150,000 received by debtor was deposited in a savings account owned jointly by debtor and his wife. The wife withdrew $80,000 from this account, purchased a new family home in which they both lived, and took title in her name alone. The use of the remaining $60,000 for the payment of other debts of the husband is not an issue. In October of 1974, the deed of trust was foreclosed on the “Olson Farm,” and the farm was sold for $159,873. On May 20, 1975, creditor Love commenced this action to obtain judgment on his note and to set aside the transfer to the wife. [4] The trial court found that deposit of the $90,000 to the joint bank account, together with wife’s subsequent withdrawal of the money, constituted a conveyance with intent to hinder creditors under § 38-10-117, C.R.S. 1973, and declared that wife’s new residence was subject to execution by the creditor to enforce the claim against debtor. [5] I. THE CONVEYANCE ISSUE A.
[6] Wife first contends that there was no conveyance because the alleged gift from debtor was never consummated. Wife reasons that debtor, by placing the money in a joint bank account, retained control, and that she had no power to complete the gift by withdrawing the money on her own and without any further action by the debtor. We disagree.
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record, as it is in this case, is binding on review. Estate of Ramsey v. State Department of Revenue, 42 Colo. App. 163, 591 P.2d 591
(1979). A gift is complete and irrevocable when the donor loses all control over the subject matter of the gift. Estate of Barnhart v. Burkhardt, 38 Colo. App. 544, 563 P.2d 972 (1977), aff’d, 194 Colo. 505, 574 P.2d 500 (1978).
B.
[10] Wife also contends that the transfer to her should have been characterized as repayment of a loan. We disagree.
C.
[12] Finally, wife contends that the money was not given to her because she merely withdrew what belonged to her. In effect, wife argues that she liquidated her inchoate interest in marital property by withdrawing her share of the loan proceeds. We find no merit in this argument.
[14] II. THE INSOLVENCY AND FRAUD ISSUE
[15] Wife contends that, even if it is assumed arguendo there was a conveyance, the evidence failed to establish debtor was insolvent at the time of the conveyance. Creditor’s response is that, where intent to defraud is proven, it is unnecessary under § 38-10-117, C.R.S. 1973, to establish the debtor’s insolvency. It is not necessary for us to determine which view is correct because the record supports both the trial court’s findings that the debtor was insolvent at the time of the conveyance, and that debtor actually intended to hinder, delay, or defraud his creditors.
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[17] According to wife, the trial court should have applied the test incorporated in the Uniform Fraudulent Conveyance Act, which provides that a person is insolvent when “the present fair saleable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured.” Uniform Fraudulent Conveyances Act, 7A U.L.A. § 2(1) (1978). [18] The balance sheet approach implicit in the Uniform Act’s definition has not been adopted in this state. Although the meaning of the term insolvency may vary with the legal and factual context in which it is considered, Walton v. First National Bank, 13 Colo. 265, 22 P. 440(1899); see, e.g., McPherson v. Railway Savings Building Ass’n, 93 Colo. 155, 25 P.2d 388 (1933), and is normally a question for the trier of fact, our review of the caselaw on this subject reveals several factors which a trial court should consider in reaching its conclusion that a debtor is insolvent. These factors include whether a debtor is able to pay his debts, with money or by application of his other assets, in the ordinary course of his business; Rising v. Hoffman, 116 Colo. 63, 179 P.2d 430 (1947); Walton v. First National Bank, supra; see Glenn Justice Mortgage Co. v. First National Bank 592 F.2d 567 (10th Cir. 1979); whether the debtor has so little property left after the alleged fraudulent conveyance that his creditors’ ability to collect their debts through judicial process is impaired, Rose v. Dunklee, 12 Colo. App. 403, 56 P. 342 (1899); and the type of business in which the debtor is engaged. Walton v. First National Bank, supra. [19] Here, the record supports the trial court’s finding that debtor was insolvent at the time of the conveyance. Debtor was not gainfully employed near the time of the conveyance and paid his bills only by borrowing against his property. Debtor did not pay these loans in the ordinary course of his business and all his property was eventually lost through foreclosure proceedings. Finally, although debtor presented unrebutted testimony that the true value of the property exceeded the amount of his debts at the time of the conveyance, following foreclosure this debt remained unsatisfied, thus indicating that the ability of this creditor to collect his debt was impaired by the conveyance. [20] Therefore, we hold that the trial court did not err in finding debtor insolvent at the time of the conveyance. [21] Wife further contends there was insufficient evidence to support the trial court’s finding that debtor intended to delay, hinder, or defraud his creditors. We find no merit in this contention. [22] The existence of fraudulent intent is a question of fact, § 38-10-120, C.R.S. 1973, to be determined by the circumstances of each case. Helm v. Brewster, 42 Colo. 25, 93 P. 1101 (1908). See Miller v. Kaiser, 164 Colo. 206, 433 P.2d 772 (1967). Here, there was a conveyance by an insolvent husband to his wife, the husband obtained the benefit of the property conveyed by residing with the wife in the new family home, and there was no consideration for the conveyance. Under these circumstances, the trial court’s finding is supported by the record. See Chalupa v. Preston, 65 Colo. 400, 177 P. 965 (1918). [23] Judgment affirmed. [24] JUDGE PIERCE and JUDGE KELLY concur.