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Barr v. Petzhold

Supreme Court of Arizona

July 12, 1954

BARR et al.
v.
PETZHOLD et al.

Page 162

[77 Ariz. 402] Jerman & Jerman, and R. R. Woodford, Phoenix, for appellants and cross-appellees.

Evans, Hull, Kitchel & Jenckes, by Jos. S. Jenckes, Jr., Phoenix, for appellee and cross-appellant.

Page 163

STANFORD, Justice.

This is an appeal by John H. Barr and Ida Barr, defendants below and appellants herein, from that certain portion of a judgment rendered by the Maricopa County Superior Court on November 12, 1952, in favor of John B. Petzhold, Jr., plaintiff below and cross-appellant herein, by which plaintiff was awarded an equitable lien in the sum of $14,400 upon Lots 58 and 85 of Pyle Estates in Maricopa County, and also a cross-appeal by plaintiff against these defendants and their son, Thomas B. Barr, and his wife, Edith D. Barr, cross-appellees, from that portion of said judgment which [77 Ariz. 403] failed to impose an equitable lien upon Lots 5 and 7 and the east half of Lot 9, Block 5, Windsor Square, Phoenix, in the amount of $13,624.56.

The material facts were these. In 1929 defendant John H. Barr, then a large stockholder and secretary-treasurer of the S. A. Gerrard Company, Cincinnati, Ohio, as an inducement for plaintiff, then assistant secretary-treasurer and now president of said company, to accept employment in said company, gave plaintiff an option to purchase 25,000 shares of capital stock of said company for $25 a share. By the agreement plaintiff expressly reserved the right to cancel the option at any time and demand return of the amounts theretofore paid to defendant for the stock. Pursuant to such agreement, between September 4, 1929, and December 31, 1931, plaintiff made payments to defendant in the sum of $18,404.10. In 1930, defendant Ida H. Barr acquired twelve acres of land in Fort Thomas, Kentucky, and a residence was constructed thereon at a cost of approximately $125,000. Defendants attempted to show that the house was paid for entirely out of proceeds from the sale of stock belonging solely to defendant, Ida H. Barr. Plaintiff's evidence, on the other hand, indicates that $50,000 of this sum was contributed by defendant John H. Barr, being money borrowed from one Albert Diem.

In 1930 and 1931 the affairs of the S. A. Gerrard Company began to deteriorate and defendants personally suffered a series of financial reverses. In January, 1932, plaintiff exercised his right to cancel the option contract and demanded that defendant John H. Barr return the sums paid thereunder. The latter then gave plaintiff a promissory note for the amount due. Subsequent thereto, in January, 1950, plaintiff obtained a Missouri judgment against defendant upon said promissory note in the sum of $36,323.77, which included interest and costs. About thirty days later an Arizona judgment was obtained, based on the Missouri judgment. The present action was brought by plaintiff to collect said Arizona judgment.

In 1942 defendant John H. Barr came west and entered the vegetable brokerage business in an effort to regain his financial standing. The effort proved successful, at least through 1945. In December, 1945, he made a gift to cross-appellees, his son, Thomas B. Barr, and daughter-in-law, Edith D. Barr, of $13,624.26 as a down payment upon a residence situated in Windsor Square, Phoenix.

Between 1948 and 1950 portions of the Fort Thomas estate were sold for $77,500 by defendants, who thereafter purchased Lots 85 and 58 of Pyle Estates in Maricopa County. Title to the latter property was taken in the names of defendant Ida Barr and cross-appellee Thomas B. Barr. The $14,400 down payment therefor was obtained from the proceeds of the sale of property in Kansas City, which was purchased[77 Ariz. 404] with funds derived from the sale of the Fort Thomas estate.

Plaintiff instituted this action on August 23, 1951. The first claim was based upon the Missouri judgment. The second claim set forth, among other things, that the $50,000 payment by defendant John H. Barr towards the construction of the Fort Thomas residence and the gift to cross-appellees of the Windsor Square property were in fraud of creditors. Plaintiff prayed that defendant John H. Barr be declared to be the owner of the Pyle Estates property and the Windsor Square property, and that the same be subjected to satisfaction of plaintiff's judgment. Defendants did not dispute the first claim and, hence, did not resist the entry of judgment in favor of plaintiff and against defendant John H. Barr in the amount of $36,323.77, with costs in the sum

Page 164

of $99.90. Defendants, however, denied the allegations in the second claim as to conveyances in fraud of creditors.

Defendants, in asking for a reversal in part of the superior court judgment, assert that plaintiff's action is barred by the statute of limitations of the state of Kentucky and of the state of Arizona, by laches, and by the doctrine of clean hands. Plaintiff, in support of his cross-appeal, asserts as error the superior court's failure to impose an equitable lien in his favor on the Windsor Square property in view of what he claims to be a showing of a conveyance in fraud of creditors. We shall consider these assignments separately.

I.

Is plaintiff's action barred by a statute of limitations of the State of Kentucky?

Plaintiff claims that he is entitled to an equitable lien upon the proceeds from the Fort Thomas property, which went into the Pyle Estates property, to the extent of the sums ($17,604.10) he had paid defendant John H. Barr under the revocable option contract by the date the latter contributed $50,000 in borrowed money towards the construction of his wife's house at Fort Thomas, by reason of Section 1907 of Carroll's Kentucky Statutes, 1930, which reads:

'Every gift, conveyance, assignment, transfer or charge made by a debtor, of or upon any of his estate, without valuable consideration therefor, shall be void as to all his then existing liabilities * * *.'

Defendants in this appeal have not argued that plaintiff was not a creditor of theirs in 1930, within the meaning of Section 1907, supra, but contend that said statute cannot now be asserted by plaintiff as a basis for relief for the reason that no action was brought thereunder to perfect the lien within ten years after the conveyance. Defendants' position is supported by Section 2519, Carroll's Kentucky Statutes, 1930, which reads:

'In actions for relief for fraud or mistake, or damages for either, the cause of action shall not be deemed to [77 Ariz. 405] have accrued until the discovery of the fraud or mistake; but no such action shall be brought ten years after the ...


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