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Neal v. Clark

Supreme Court of Arizona

December 31, 1952

NEAL et al.
v.
CLARK.

Page 904

[75 Ariz. 92] Tom Fulbright, of Florence, Allan K. Perry and Elmer C. Coker, of Phoenix, for appellant H. E. Neal.

Warren McCarthy, Maricopa County Atty. and F. Haze Burch, Deputy County Atty. of Phoenix, for appellant Cal Boies.

Bob Barber and Franklin E. Vaughan, of Tucson, for appellee.

LA PRADE, Justice.

This is an appeal from a judgment of the Superior Court of Maricopa County, permanently enjoining its sheriff from proceeding with a sale, after a levy and execution, of certain lands held under State of Arizona grazing leases, the sale being had at the instance of the appellant Neal (defendant below), who was a judgment creditor of one John Rhodes, lessee under the state leases. The date of the sheriff's levy was February 5, 1951, and the sale under execution was noticed for March 20, 1951. In seeking to enjoin the sale appellee Tom Clark, plaintiff below, claimed that he was the owner of the leases, by purchase from Rhodes on September 21, 1950, and had gone into possession of the lands described and embraced therein under assignment of the leases to him by Rhodes and by his execution of assumptions filed in the office of the State Land Department on November 10, 1950.

Defendant Neal challenged the right of plaintiff to enjoin the sale and disputed defendant's ownership, claiming (1) that the purported assignment of the leases by Rhodes to Clark had not been consented to in writing, or at all, in compliance with provisions of Section 11-305, A.C.A.1939, and as a consequence Rhodes was still the owner of the leases and that the sheriff's sale should proceed. The material portion of Section 11-305, supra, as it relates to this case, is:

'* * * A lessee of state lands not in default in rent, and who has kept and performed all the conditions of his lease, may, only with the written consent of the commissioner, assign such lease.'

[75 Ariz. 93] and, (2) that the purported sale and assignments of the leases left Rhodes insolvent

Page 905

and was therefore fraudulent as to creditors, of which he was one at the time of the sale, and in violation of subsection 1 of Section 58-402, A.C.A.1939, which reads:

'* * * Every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration.'

Two issues are presented to the court for determination:

1. Was the assignment made by Rhodes to Clark contrary to the provisions of subsection 1 of Section 58-402, supra, and thereby void?

2. Was there a valid assignment from Rhodes to Clark of the State of Arizona leases under Section 11-305, supra?

Was the Conveyance Fraudulent?

Defendant claims that the conveyance by deed and assignments to Rhodes was fraudulent in that it rendered him insolvent and was made without a fair consideration. It was admitted that the conveyance and assignments left Rhodes insolvent. There was no claim and the record does not suggest any actual fraud on the part of either of the parties. As to whether a fair consideration was given was and is very much in dispute.

The leases, together with other holdings, were sold by Rhodes to Clark on September 21, 1950, for $48,000. The consideration was for cash, including the payment and discharge of three notes, secured by mortgages on the premises and leases, totalling approximately $40,000. The defendants claim that the ranch, deeded lands and leases were reasonably worth at the time of the sale, between $90,000 and $100,000. Defendant's witnesses placed a value of $1500 to $2000 a section on the patented and state leased lands, and a value of $8000 on the Federal leased lands. Calculated at $1500 per section a total value of ...


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