*1 ISSUE FOUR Lastly, determine this Court must
[¶ 34.] This is- damages
punitive were warranted. cause of reached no
sue not be because need punitive support claim of can
action which
damages survives. judgment is affirmed.
[¶ 35.] AMUNDSON, MILLER, C.J., and GILBERTSON, JJ.,
KONENKAMP
concur. McMURCHIE, Judge, Circuit J.,
SABERS, disqualified.
PRAIRIE
SYSTEM, INC., Plaintiff
Appellee, WOOKEY,
Dwight R. Defendant Appellant, Wookey K. and Merna
Harold Wookey,
L. Defendants.
Nos. 20173.
Supreme Court of Dakota.
Argued March 1998. Aug.
Decided
407
409
allowed to live in the home rent free for the
ex-
rest of their lives.
consideration
changed
for the transfer to
included
assumption
outstanding
his
CREP
debt,
promissory
mortgage
his
note and
$58,000 payable to Harold and Merna over
twenty-five years
percent
with seven
inter-
est,
payments
his earlier
on Harold and
Green, Schulz,
Linngren of
Thomas J.
including
Merna’s farm debts
real estate tax-
Oviatt,
Linngren,
Roby,
Cummings &
Water-
es,
prior lump
payment
sum
his
town,
plaintiff
appellee.
buyout
early
parents.
as an
for his
CREP
Ewinger,
Ewinger
R.
of Rice and
Curt
Following
hospital-
Harold’s second
[¶3.]
Aberdeen,
appellants.
for defendants and
ization in the fall of
and his continued
bills,
pay
failure to
medical
his
KONENKAMP, Justice.
brought
against
suit
both Harold and Merna
bill,
hospital
incurring
large
After
couple
responded,
in March 1995. The
never
patient
deeded all their real
wife
judgment
against
and a default
was entered
*5
Hospital
adult son. The
estate to their
19,
$76,537,
May
including
them on
for
fraudulent,
sought
the transfer as
but
to void
prejudgment
Hospital
interest.
discov-
presence
“badges
despite the
of several
following
ered the transfer of the farm the
fraud,”
in favor of the
the circuit court found
summer,
attempted
when it
to collect on its
conveyance
exchange
in
patient, as the
Harold,
judgment.
It
sued
Merna and
reasonably equivalent
Although
value.
1995,
September
in
to set aside the
erroneous,
clearly
finding
not
we
this
later,
year
Hospital
A
sale.
moved to
separate
the decision because a
stat-
reverse
original complaint
amend its
to include an
court,
ute,
dealing
not considered
with
against Dwight un-
additional cause of action
insiders,
conveyance
to
makes the
transfers
(making financially
25-7-27
able
der SDCL
fraudulent as a matter of law. On
other
parents’
responsible
adult children
for their
hand,
uphold
finding that the
we
the court’s
care).
reserving
ruling
medical
While
its
on
responsible for his father’s
son
be held
amend, the
Hospital’s
motion to
court
part,
in
medical care. Thus we affirm
re-
In
heard the action to void the transfer.
part,
in
and remand.
verse
1996, the trial court issued a memo-
October
avoidance,
denying
con-
Facts
randum decision
cluding
exchanged for
that the farmland was
Wookey
2.] Harold
incurred substantial
reasonably
court
equivalent value. The
Hospi-
patient
while a
at Prairie Lakes
bills
property
worth
found the
transferred was
Watertown,
Dakota,
tal in
from No-
$332,560,
paid, both
and the consideration
vember
to December
1993. At the
sale,
$355,360.
totaled
before and after
Merna,
time,
wife,
approxi-
owned
he and his
$148,360
included
on
consideration
mately
Day
1360 acres in Clark and
coun-
debt, $149,000 for
assumption of the CREP
large portion
A
of this farmland was
ties.
debt,
$58,000 in
payments on antecedent
by mortgages in
encumbered
the Conserva-
Lastly,
promissory
of a
note.1
the form
Program
Enhancement
tion Reserve
Hospital
to amend its com-
court allowed
(CREP).
Hospital
tried to
Harold and
parental
plaint
allege
a cause of action for
terms,
payment
but to no avail.
work out
support
granted
and later
motion for sum-
Eventually,
Hospital
bring
threatened
$70,091.
mary judgment against Dwight for
counsel,
Septem-
suit.
assistance of
With
By
21,1994,
Dwight Wookey appeals.
notice
[¶ 4.]
ber
Harold and Merna deeded
son,
review,
appeals
also
contend-
acreage to their
home and all their
holding
they
ing
erred in
the trans-
Dwight Wookey,
agreed
would be
the trial court
who
however,
any way
bankruptcy
affects
Hospital attempted
liquidate
in
1. When
sale,
Harold and Merna filed
note at
sheriffs
decided in this case.
the issues to be
contends,
Chapter
Bankruptcy. No otie
Act
Fraudulent Transfer
under the Uniform
Dwight was
Merna to
fer from Harold and
(UFTA).
reviewing
54-8A.2
SDCL ch.
conclude the con-
Because we
avoidable.
trial,
give no
court
we
judge’s findings
veyance to
was a fraudulent
law;
we
to conclusions of
thus
law,
rearrange the
deference
will
matter of
we
as a
under the de novo standard.
review them
customary
and discuss
sequence
issues
¶ 8,
first,
Partnership
Gogue,
v.
1997 SD
problem
as it will S.B.
transaction
fraudulent
Monitor-
(citing
Central
against
562 N.W.2d
support judgment
parental
affect
Serv.,
Zakinski,
v.
1996 SD
Next,
analyze
ing
Inc.
Dwight’s ar-
we will
Dwight.
517).
¶ 17,
Conversely, we
erred,
granting
553 N.W.2d
guments that the court
def-
findings of fact under the more
complaint to
examine
motion to amend its
Hospital’s
Gogue,
clearly
standard.
erential
erroneous
pursuant
to SDCL
allege a
of action
cause
¶41, 8,
(citing
at 756
25-7-27;
timely
1997 SD
N.W.2d
upholding as
under
Lamb,
117, ¶17,
SD
Dwight nearly
given Shedd
the notice
statute
244).
pro-
will not
fact
We
overturn
years
services were
N.W.2d
three
after medical
firmly
findings
definitely
father;
we are
concluding Dwight
had
“unless
vided
his
has
a mistake
been made.” Cor-
ability
pay
father’s medi-
convinced
the financial
115, 116
Codington Cty.,
applica-
expenses
period
within the
dell
cal
(S.D.1994).
limitations;
holding
an adult
ble statute
provided to a
liable for medical services
child
sweeping
In the aftermath of
parent
the financial
parent when the
has
regulating corporations,
changes in
com
laws
part of the amount
ability
pay
at least
bankruptcy,
mercial
transactions
owed; and,
25-7-27,
relying
on SDCL
Uniform
of Commissioners on
Conference
purportedly
vague
so
and indefinite
statute
revamp
Laws
the old Uni
decided
State
in a
*6
application
results
denial
its
it
(UFCA),
Conveyance Act
form Fraudulent
Lastly,
review the Hos-
process.
due
we will
promulgated in 1918.3 See
54-8-
first
improper
pital’s
that was
the
assertion
(repealed)(South
ver
through
5
19
Dakota’s
prejudgment interest on
trial court to award
1919).
The
sion of the UFCA enacted
against
support
judgment
parental
the
UFTA,
Da
adopted in South
result was the
the
Dwight only from the time
UFCA,
purpose
kota in 1987. Like the
him with the motion to amend its
served
depletion of
is to thwart
debt
UFTA
complaint.
disadvantage
unsecured
ors’ estates to the
(2).
3,§
cmt.
Act
creditors. UFTA
The
Legitimacy
1.
of the
Under the
Transfer
sanctioned transac
invalidates “otherwise
UFTA
a
In re
tions made with
fraudulent intent.”
Fraudulent Transfer Under SDCL
A.
Giudice,
215,
Ill.App.3d
Marriage
Del
287
54-8A-4(a)
(1997).
640,
47, 49
222 Ill.Dee.
678 N.E.2d
trial,
without fraudu
a
court Even valid transfers made
[¶ After
bench
circuit
5.]
intent, however, may
susceptible to
lent
that Harold and Merna’s transfer
ruled
provi-
as fraudulent under certain
property
was not voidable
avoidance
"badges
proof by
cer-
provides
a creditor of
of law rules for
fraud”:
2. The UFTA
no choice
case,
(for example,
this
a
objective
fraudulent
example,
transfer actions.
In
transfer to
tain
facts
a
might
transfer,
applicability
relative,
what
South Dako-
a
close
secret
a transfer
original general
law
ta's
fraudulent
transfer
grossly
possession, or
title without transfer of
We
address
have? See SDCL ch 54-8.
need not
consideration)
inadequate
would
raise
rebut-
question now
both sides in this case
because
presumption
fraudulent intent.
table
of actual
exclusively
rely
on the UFTA.
Case,
80b,
Eng.
Twyne's
Rep.
76
See
3 Coke
(K.B.1601);
Rep.
Bump, Fraudulent
809
O.
proceeded
UFCA
from an earlier enact-
The
upon Conveyances
Conveyances: A Treatise
ment:
Made
Debtors to Defraud Creditors 31-60
law of fraudulent transfers had
modern
(3d
1882).
ed.
Elizabeth,
origin
in the Statute of
which
531,
Corp., 511 U.S.
540-
BFP v. Resolution Trust
and
trans-
invalidated "covinous
fraudulent”
41,
1757, 1763,
4H obligation B. A ferred or amount discussion Section sions. See infra incurred; transfer is fraudu- “determination from the avoid- conceptually distinct lent (9) The debtor was insolvent or became turn, transfer, is, sepa- which ance shortly insolvent after the transfer was recovery upon from a based rate and distinct incurred; obligation was made or Cohen, In re the avoidance of transfer.” shortly The transfer occurred before 1996). (9th 709, B.R. Cir. BAP shortly after a substantial debt was incurred; and fraudu UFTA subdivides The debtor transferred essential categories: actual lent into two transactions assets of business to lienor who (SDCL 54-8A-4(a)(l)) ly transfers fraudulent an transferred the assets to insider of constructively fraudulent transfers the debtor. 54-8A-5). 54-8A-4(a)(2) (SDCL In de actually ciding 54-8A-4(b). a transfer fraud whether By plain language ulent, debtor’s state of mind becomes statute, this these factors nonex- eleven are provides in point inquiry. SDCL 54-8A-4 Morgan clusive considerations. Steel Co. part: Indus., Inc., relevant Ill.App.3d Marshall ( n ) (1996). Ill.Dec. 662 N.E.2d obligation in- Any transfer made or elements, reviewing these courts should con- by a debtor fraudulent as to a curred particulars encompassing sider all relevant creditor, claim arose whether creditor’s weigh questioned factors transaction and after the was made or before or negating suggesting as well as fraud. UFTA incurred, obligation debtor (6). persuasion cmt. “The burden of incurred obli- made the transfer or plaintiff remains on the to show actual intent gation: by a Mor- preponderance of evidence.” (1)With hinder, delay, actual intent to Nance, Or.App. 888 P.2d ris any creditor of the debtor.... defraud 575-76 subjective A intent is difficult to debtor’s Hearkening to earlier statutes discern; actually proof to direct establish rulings, interpreting some courts court required. fraudulent transfer is not Courts the UFTA hold that once a creditor estab *7 following objective of the list consider lishes one or of the the existence of more deciding factors in whether transfer was 4(b) §in eleven factors or other nonlisted hinder, delay, made actual intent or with factors, then the burden shifts the debtor defraud a creditor: that to come forward with evidence (1) obligation or was an The transfer not creditor. transfer was made to defraud a insider; Baird, v. 781 Sav. & Loan Ass’n Territorial (2) possession or con- The debtor retained (Utah 452, Ct.App.1989); Er P.2d 462 n. 18 property trol transferred after of (Colo.Ct. Herrick, 615, javec 617 v. 827 P.2d transfer; by App.1992), superseded by as noted statute (3) obligation or dis- The transfer was Thomason, (Bankr. In B.R. 768 re 202 concealed; or closed D.Colo.1996). of Although an inference (4) made or obli- Before the transfer was intent can drawn from the list fraudulent incurred, gation was the debtor had 4(b) circumstances, §in other of factors or suit; been sued threatened with shifting for a provide the UFTA does no matter the number of factors (5) burdens substantially The transfer was Morris, 575. Nor are present. 888 P.2d at assets; the debtor’s “badges these of fraud” to be understood ( n ) absconded; The debtor in creating “presumption” of fraudulent as- The debtor removed or concealed 4, (5). tent. cmt. UFTA sets; court, finding The after of the received trial The value consideration insider, by reasonably was to an that equiva- the debtor transfer was home, possession that of his to the value of the asset trans- debtor retained lent 412 opportunity to deference to the circuit court’s made Harold Woo-
before the transfer was testimony suit, first witnesses and observe the key with that had been threatened Larson, 84, Englehart SD v. 1997 most Harold and hand.” encompassed 152, 156; ¶ 19, Cowan v. Mervin assets, oc- 566 N.W.2d the transfer Merna’s ¶ Inc., 40, 15, Mewes, 546 1996 SD substantial debt was shortly after a curred Elliott, 104, 109; incurred, In re 537 N.W.2d the transfer Estate concluded nonetheless (S.D.1995). 660, Wookeys acknowl The property 662 was not fraudulent because initially edged payments were not dis reasonably equivalent value. these exchanged for closed, decision, testimony at trial court took but their eventual arriving at fully findings. supports the trial court’s property trans- measure the value of ‘reasonably the transfer is ex- “Whether and the amount of consideration ferred every largely case equivalent value’ changed. fact, question of as to which considerable Wookeys Hospital Both the [¶ 10.] of facts.” must be allowed to trier latitude indepen expert witnesses to conduct hired Co., Parkway 210 v. Bank & Trust Leibowitz subject The appraisals property. dent (N.D.Ill.1997). Ultimately, B.R. courts 298 expert opinions, trial court considered in ex must examine what debtors received by independently property then valued the change they at for what surrendered. Id. property rental rate like using the normal Bundles, (citing F.2d 301 Matter 856 surrounding area. ARC Machin See (7th Cir.1988)). Dimmick, ing Plating, Inc. v. A.D.2d & Mussa, (1997)(trial 215 B.R. court In the case of In re [¶ 12.] N.Y.S.2d reject expert (Bkrtcy.N.D.I11.1997), Chapter 7 trust- enjoys testi broad discretion adversary complaint seeking to mony within the ee and to determine value filed testimony by expert supported avoid as fraudulent debtors’ transfers of range of adequately explained personal to then- other evidence and business and assets Studt, court); shortly began 443 N.W.2d son that after the debtor-hus- Studt (S.D.1989); hospitalized Filipetti Filipetti, incurred substan- Conn. band was held, App. A.2d Al under the tial medical bills. court UFTA, though Hospital argues its valuation Illinois version that the debt- conveyed accepted, should have been from our review ors their assets violation both say provisions. of the record we cannot the court’s value the actual constructive fraud clearly argued purpose The debtors had that their erroneous. “carry was to out an Albanian tradition that asserts that family property the eldest son receive so as disregarded cer the trial court should have parents.” Id. 170. That to care for tain “additional” consideration disclosed distinguishable Wookeys’ case from the Wookeys’ supplemental responses to the *8 There, respect. in at one transfer least the Hospital’s interrogatories, this as consider reasonably equivalent court no value in found initially the ation was not mentioned when consideration for the transfers. Value ine- Wookeys explain first were asked the sale. quivalence, though by not determinative it- trial, Dwight Both Harold and at testified self, major certainly discerning is factor in however, Hospital payments ca that a fraudulent transfer. consideration, tegorizes as had “additional” by Dwight Hospital made The [¶ 13.] been the benefit also contends Mema, property payments and and that these that the trial conclusion the Harold court’s someday reasonably equivalent were considered debt that would be was transferred for by through extinguished outweighed land transfer value is six of the seven rele 54-8A-4(b) testimony that Dwight. Whether this vant factors fit the should (The rejected accepted Wookeys’ have been turned on transaction. sub 3, 6, are credibility. evaluation of “The mits that 7 and 11 court’s circuit factors case.) position best court is to assess relevant this No factor set credibility weight given signifi be factors need talismanic witnesses’ be indicia, they only by given testimony, give great their which them- we are cance— UFTA, pro- may Prefatory Note. This insiders.” others or in combination with selves the unfair attempts intent. to diminish advan- fraudulent vision give rise an inference of they possess when tage insiders sometimes Kennedy, R. Fraudulent Frank The Uniform (1986). Act, financial sub- are familiar with debtor’s 18 UCC LJ Transfer bankruptcy counterpart, course, trans- Unlike its alleged fraudulent stance. cases Of 5(b) however, permits § family most avoidance not members invite the fers between creditors, En- but Horizon the benefit of unsecured inspection.4 See New careful ter., Design, plaintiff of a Contemporary only for the benefit creditor.5 Inc. Closet v. Inc., transferring (Minn.Ct.App.1997); A debtor’s intent assets Beckwith, constructively 439 S.E.2d immaterial to a fraudulent 263 Ga. Merrell 5(b). (1994)(transactions § rela- Proof of its between transfer under elements conclusively i.e., fraud without closely for evidence “establishes tives scrutinized — Yet, regard par- actual intent of the conveyance). we conclude fraudulent (5). 4,§ might trial ...” Some Hospital has not shown that ties. UFTA emt. yet as clearly placing great presumption; this an irrebuttable was erroneous call court instructs, true finding Dwight paid rea- Larson it is not a weight on its Professor sonably property. presumption, but a substantive rule. John equivalent value for 301.1, Larson, § inquiry, Dakota Evidence This does not end however. W. at 86 54- B. Insider Transfer Under SDCL correctly The trial court [¶ 15.] 8A-5(b) time of transfer found that at the of the innovations [¶ 14.] One in SDCL 54-8A- was an insider defined bankruptcy adoption of a the UFTA is l(7)(i)(A), import but overlooked category concept of fraudu to create novel 54-8A-5(b). To a transfer under void transaction, preferential It transfer.
lent following section the elements must this fraud has been characterized as constructive (1) The claim arose established: creditor’s 54-8A-5(b) states: or fraud in law. SDCL (2) transfer; the transfer was before A transfer made a debtor fraudulent insider; (3) was made to an the transfer claim before as to creditor whose arose (4) debt; for an antecedent the debtor was made if the transfer was transfer (5) time; the insider insolvent at was debt, an made to an insider for antecedent cause the debtor had reasonable to believe time, the debtor was insolvent Prods, v. Bldg. insolvent. See Alcan was had cause to believe the insider reasonable P.2d 376-77 Peoples, 124 Idaho was that the debtor insolvent. test in four (Ct.App.l993)(stating the same though it has held that debtors Even been factors). prefer an-
may generally one creditor over firmly estab evidence discharge applying other assets 5(b) Hospital’s claim each element: obligations, privilege this lishes curtails Dwight. and the arose before transfer the debtor is insolvent at the time (3) The an insider. Textron preference is to insider. See (in (Iowa of an debt in consideration antecedent Corp. Kruger, N.W.2d 880 Fin. Merna obligation Harold and prefer large part the Ct.App.l996)(generally debtors *9 another). paid to repay Dwight the amounts he rationale had to over The one creditor 5(b) farm mortgage the other § is retire CREP “is that an insolvent debtor behind debts). Dwight’s pre-conveyance payments related obliged pay to debts to creditors not parties behalf of Harold are certain third on paying who debtor] before those [the 5(b) § of long declined to enact skepticism 5. Some states have has examined with 4. This Court because, reasons, allegedly among trans- mere- when the other fraudulent transactions the UFTA are First Nat’l Bank preference fers between relatives. the ly of the from shifts the benefit of Anderson, 444, (S.D. 446 N.W.2d v. 291 plaintiff the creditor. insider creditor to Beresford 607, 1980); Kary, 297 N.W. v. 67 S.D. Counts Starr, 107, (1941); 1 S.D. 45 N.W. 442 Lane v. (1890); 212 see 54-8-1. 414 taxes, a delinquent Dwight paid had Harold’s be- antecedent debt
and Merna created an made, spraying, aerial judgment against Harold and Merna Harold for they as cause were eventually testified, plan combining bill part of their as and Harold’s overdue custom Moms, 888 convey Dwight. the farm being with suit. threatened for which he was Bank, 573; N.A v. Inv. P.2d at American (5) paying these debts Because N.A, Bank, A.D.2d 191 Marine Midland parents he had reasonable cause (1993) (antecedent 690, 537, N.Y.S.2d they Consequently, were insolvent. believe under UFCA can fair consideration debt 54-8A-5(b) transfer of the under SDCL convey- determining purposes of whether a of as matter farm to was fraudulent fraudulent). (4) Using the UFTA’s ance was any question The whether of law. next is Mer- approach, Harold “balance sheet” S4-8A-8(f) apply will defenses assets both before na’s debts exceeded their of the transaction. defeat avoidance therefore, transfer; they were and after the 54-8A-2(a) “[a] declares insolvent. SDCL of Insider Defenses to Avoidance C. of the sum the debtor’s debtor is insolvent 54-8A-8(f) Transfer —SDCL as- than all of the debtor’s greater debts is elements of SDCL [¶ 17.] Once the at fair valuation.” burden sets 54-8A-5(b) shown, a fraudulent upon party have been proving insolvency rests such Enter, Sportsco conclusively regard conveyance. established challenging the Morris, parties. 112 Nev. 917 P.2d actual intent of v. less Ill, Inc., (5). (1996); Nonetheless, Dearing 4,§ 266 Ga. A.R. cmt. UFTA (1996); American possible 466 S.E.2d defens then authorizes three UFTA N.A, Bank, at Insol- Inv. N.Y.S.2d The burden es to forestall avoidance. vency at the time of must be determined asserting one qualifying for these falls to the Nat’l alleged fraudulent transfer. First them.7 Ltd., Farms, N.W.2d Bank Frescoln (f) not under A transfer is voidable subdi- 1988)(debts (Iowa 432, 437 exceeded debtor’s 54-8A-5(b): vision transfer). Harold testified assets after gave new To extent the insider net negative had a trial that he Merna value to or for benefit the debtor $200,000 and a before the transfer worth made unless the after the transfer was $75,000 negative afterwards. net worth of lien; by a new was secured valid value Furthermore, as and Merna were Harold ordinary If in the course due, they they paying debts came financial affairs of the debtor business or presumed 54-8A- insolvent. SDCL were insider; 2(b).6 $40,000 They in credit card debt. had states, insolvency. presumed presumption “The credible evidence” to rebut 6. The comment UFTA’s case, however, imposes party against presump- Wookeys effectively whom the on In this proving that the tion is the burden of directed insolvency. admitted insolvency probable ... is more nonexistence § cmt. But see than its existence.” UFTA defenses, 547(c)(2) adopted § 7. These from (substantial, re- SDCL quired). credible evidence 19-11-1 Act, Bankruptcy place on trans- the burden also East River Elec. Power See Bell v. prove by preponderance the evi- feree to Inc., Coop., required See USC dence the elements. Larson, (S.D.1995)(quoting W. Dako- John South 547(g). Although § comments do not UFTA (1991)(discussing § difficulties ta 301.1 Evidence directly question, we con- address burden statute)). presumption with Dakota's South upon and the bank- clude based our own laws "bursting rejected bub- the UFTA drafters of asserting person ruptcy these de- laws that theory presumption of when a is overcome. ble” Thus, persuasion. fenses bears the burden of Larson, discussing § the criticisms See 301.1 plaintiff a fraudulent transfer once establishes particularly Dakota’s rule and federal 5(b), person § to the Although under the burden shifts com- the UFTA variation of rule. 8(f) asserting prove suggest approach § defense nonavoidabili- ments a more sound overcome, 8(a) Legislature (1), respect § presumption ty. how a our cmt. See UFTA 8 with comments, view we . person did not enact UFTA so good invokes this de- faith: "The who *10 instance, merely advisory. this the them In as establishing good carries the burden of fense 19-11-1; thus our comments conflict with SDCL equivalence con- and reasonable of the faith the prevail own of evidence and therefore rules must exchanged.” sideration "substantial, bringing a has the burden of debtor 8(f)(2) only § par good-faith [120.] ef- Under the pursuant to a If made prior dealings are the ties’ examined to decide the debtor and fort rehabilitate ordinary a in the transfer made given for whether present value transfer secured parties’ course of the business affairs. In as as an antecedent purpose that well examined, cases have this means look we the debtor. debt of history if a ing payment decide 54-8A-8(f). brief, appellate In his preferential transfer was made the ordi pre- that all three defenses asserts Here, history nary course. there is no of clude avoidance. Dwight. payments from Harold and Merna (1) New Value—SDCL [118.] transaction, This transfer all their 54-8A-8(f)(l). adaptation This is defense assets, only payment was their one and 547(c)(4) § Bankruptcy from the Code Nonetheless, may conveyance him. this be availability limited to provision that is like merely ordinary closing as a in the viewed make unsecured advances. creditors who Wookey plan? course of the estate (6). 547(c)(4); 8,§ § UFTA cmt. U.S.C. Dakota, In families tradition [¶21.] Moreover, made the “new value” must be ally pass farming chil businesses with, after, contemporaneously rather than dren, bequest, by or but sometimes contract Dwight gave was at note transfer. by arrangements. structured often less transfer, thus the the same time as land may invariably Many plans such include do- defense is unavailable. aspects long-term buy-outs. native as well as (2) Ordinary Course [119.] To decide if this transfer comes within 54-8A-8(f)(2). Like the 54-8A-8(f)(2), Business —SDCL we purview need 8(f)(2) defense, § is derived new value also understanding “ordinary greater of the term Bankruptcy Code. 11 U.S.C. from .the or It course of business financial affairs.” 547(c)(2). § This defense seeks to reaffirm specific definition in the UFTA and has no by as parties’ practice continued shown interpreting cases it are available for few past dealings. baseline of Yeager Group guidance. In v. Summit (Fla.Dist. Fla., Inc., 189, 191 654 So.2d Cent. “ordinary a transfer was Whether Ct.App.1995), the court reversed decision pat- requires a consideration of the course” to an transfers the debtor made insider payments secured transaction tern of or repayment of an antecedent debt were engaged and the insider debtor ordinary course business because challenged under prior the transfer business, dissolved, company was out 5(b). omitted). (citation § defense anybody anything for paying “not available, ir- provided by paragraph In ordinary course of business.” United respective or the of whether debtor N.J.Super. Jersey Vajda, 299 Bank v. business, engaged in insider or both are 1997), (App.Div. the court 690 A.2d prior practice of both but the conduct “patently under fraudulent” characterized and the insider-transferee is. debtor 5(b) § Jersey’s version of the UFTA New relevant. to his asset transfers sister debtor’s Bankruptcy § cmt. UFTA Unlike $50,000,” “maybe owed money,” he “some 8(f)(2) Code, however, § require' does not They promissory no note to docu had her. payment be made in a; ment the debt. = ordinary in the of busi- debt incurred course reported few ness, there are so according to ordi- Because that it 8(f)(2) § de- interpreting the UFTA nary See 11 U.S.C. cases business terms. (C). 547(c)(2)(A) this precise legal provision derived § No fense because Bankruptcy exception to governs payments when a debtor’s from Code’s standard 547(c)(2), ex- ordinary 11 U.S.C. we made in the avoidance in be considered as interpreting the engage “peculiarly plore bankruptcy in a decisions course: must Courts meaning Johnsbury provision insight into analysis. v. St. latter _ factual” Lovett n (8th Cir.1991) ordinary course business concept F.2d Trucking, 931 omitted). (citations bankruptcy con- or financial affairs. *11 part purported as of a text, exception [¶24.] in Whether “ordinary course” otherwise, case, 547(e)(2) find undis- we can no designed plan to “leave estate or § was relations, us, single financial because turbed normal nor has a one been cited policy of general being “ordinary not detract from a upholds does as in the course” preference discourage unusual section in of entire business preferential transfer an or by either the debtor his creditors action debt. What we payment of an antecedent bankruptcy.” during slide into the debtor’s however, decisions, is that glean from these 95-595, reprinted at in H.R.Rep. No. unusual, belated, or precipitous, inordinate 6329, quoted in Bank Union 1978 USCCAN usually con- haphazard transfers will not be 151, 160, Wolas, S.Ct. U.S. ordinary In course transactions. sidered (1991) (emphasis 116 L.Ed.2d truth, exchange equivalent of except added). exception The is available whether 5(b) (not § or relevant factor under a value a long-term or payment transfer was 8(f)), exemplifies § this case defense under past As it examines the short-term debt. Id. virtually archetypal fraudulent transfer — dealings and creditor between the debtor property all an insolvent debtor’s transferred a only, has characterized as this test been family defeating a credi- member thus a Inc., subjective Org., In re Hawes one. Fred judgment tor’s while the debtor imminent Cir.1992). (6th 239, 244 957 F.2d property. If there continues to reside on the “ordinary dealing In course” with [¶23.] any preference, the UFTA’s avowed bankruptcy examined questions, courts have 5(b) § premise under favors those creditors (1) parties engaged type in the the time the are not insiders. who (2) issue, subject dealing at whether the reasons, following con- we [¶ 25.] For more than transfer was for an amount usual- “ordinary course” defense is clude (3) payment in a ly paid, was tendered (1) inapplicable. This transaction more previous payments, manner different from corresponds closely to the consummation a (4) there action ei- whether was unusual sale, customary repay- rather than delineates or or ther the debtor the creditor to collect payment obligation. on an ment of loan (5) debt, pay and whether creditor of the farmland extraordi- was (such gain advantage as anything to an did nary, effectively ending pay- a business in security) light gain additional debt- Despite Dwight’s of a earlier ment debt. deteriorating financial condition. See or’s payments years, portion no over the Inc., Chevrolet,, 728, 732 re Grand 25 F.3d conveyed farm had ever been to him. The (9th Hawes, Cir.1994); 957 F.2d Fred at Dwight farm than what was worth more Typically encompass these circumstances owed; hence, mort- promissory note and preferential payments on business loans parents. gage arrangement to his This back loans, mortgage “ordinary course” home but get enabled more than he would complicated transfers can include more simply have he one of received had been Flight re transactions. In the case of In Harold and Merna’s unsecured creditors. Inc., Management, (Bkrtcy. 99 B.R. timing of the transfer was unusual M.D.Fla.1989), the held that a debtor’s court by any course that it was not fixed historical constituting repayment of certain advances dealings reaching nor set to occur after keep emergency an bailout to the business occurred pre-agreed some benchmark. It at ordinary running not in the course when a imminent. Harold 547(c)(2) time lawsuit was under because it was of business farming, and Merna were in business transaction, extraordinary was no an there credit, extending not in the note, business college promissory the defendant was taking they mortgage from did note ordinarily professor in the business sale, complete arrangement lending money, was no of a there evidence they engaged in had never before with him. dealing parties to prior course of between the Inc., Flight Management, deciding See In re 99 B.R. pay- whether the aid the court 547(c)(2) (interpreting of the Bank- ordinary ment was made course Code). convey- business, ruptcy repayment At the time of there was no fixed ance, Dwight paying Merna were not schedule.
417 court; ordinary trial gage the sound discretion the in the their other bills many of grant Yeager, deny to will not be See thus decisions or otherwise. of business course (interpreting ver- a clear abuse of discretion Florida’s disturbed absent 654 191 So.2d UFTA). Dwight’s Despite resulting prejudice to nonmovant. the in the sion of ¶ Wold, 68, 11, agree- years, Ripple no written 549 payments over the 1996 SD N.W.2d note, ment, (citing Kjerstad memoranda promissory or other 676 v. Ravellette Publi- (S.D. cations, Inc., understandings re- parties’ documented the N.W.2d 1994)). farm, until the actual garding may permit the sale of the “A trial court the time, before, pleadings during, Before that sale was consummated. amendment of understanding between party’s existed con- whatever after trial without adverse Tesch, eventual con- parents and his on the sent.” Tesch N.W.2d entirely (S.D.1987). 15-6-15(a) veyance property provides unstruc- Thus, any “or- they part [to amend] never established that “[l]eave tured. relevant shall or financial freely given justice requires.” their business dinary course” to be when so affairs.8 allowing pleadings 29.] Before [¶ amended, Faith Effort to Good decide if the [¶26.] to be court should 54-8A-8(f)(3). prejudiced. “The will in opposing party Rehabilitate —SDCL be given, the size of present quiry of the value center the nonmov- amount should on whether secured, likeli party opportunity litigate and the a ing the antecedent debt has fair effort of success for rehabilitative new and to offer additional evidence hood issue determining point. are considerations on a relevant if the case will tried different Randall, good faith.” whether the transfer was Americana Healthcare Ctr. v. (S.D.1994). typ defense plaintiff cmt. We deem this “A UFTA ically precluded amending the transfer was obvi a inapplicable because will not be from Harold and a claim ously complaint not made to rehabilitate ... order to state on Merna, dispose entire real granted adding but to of their can be or from a which relief holdings ownership proper complaint and thus end their sim estate claim an otherwise farming that increase ply business. became amendment liability.” Wright potential C. defendant’s grant [¶ Harold Merna’s 27.] Miller, Procedure A. Federal Practice and & as their real estate was fraudulent transfer added). (1990)(emphasis § 1487 54-8A-5(b) and of law under SDCL matter they under prejudice the defenses assert 30.] none of has not shown [¶ 54-8A-8(f) applicable. Hospital complaint are The circuit allowing to amend its Hospital’s judgment denying the court’s 25-7-27. At a claim under SDCL to include claim to set the transfer aside reversed.9 Hospital’s request, the trial court bifur- with proceeded first cated claims and 2. Motion Amend originally sched- fraudulent transfer case of the information obtained uled. Much trial court allowed on the parties preparing for trial complaint its include Hospital amend as well for fraudulent transfer claim served against Dwight for father’s new count Dwight Woo- responsibility filial count. expenses year it commenced medical after unpre- that he was key has not demonstrated against Wookeys on the fraudu its action supporting facts pared en- to meet claim. Motions amend lent transfer boundaries, DeSimone, 547(c)(2) then the transfers ascertainable 8. Section See Bank- ordinary. should not be considered ruptcy Ordinary Business Code: The Course of Rule, Day Exception the 45 20 Akron Without Although transfer was we determine (1986): L.Rev. 54-8A-5(b), under SDCL fraudulent problem parties' may only is to determine if the to the The real avoidance of the transfer obtain outstanding judg- necessary satisfy past practice and ascertainable its had reasonable extent so, ques- also SDCL 54— If and the transfers in SDCL 54-8A-7. See boundaries. ment. See 8A-8(d), them, protect- good extent faith transferee entitled fell within then it should be tion However, given circum- past value to debtor under certain conduct so random ed. reasonable, haphazard yields no stances. discovery Therefore, opportunity to had an conduct complaint. we find no amended contest, could, claim, he and to as best abuse of discretion. *13 have validity. Dwight asserts he should 25-7-27 to SDCL 3. Notice Pursuant process re- sooner. Due given been notice oppor- and an quires only notice reasonable he next asserts that Dwight “meaningful time and tunity to be heard at timely notice of the provided with was not Gogue, meaningful manner.” 1997 SD in a claim, Hospital’s required SDCL 25-7- ¶41, 16, (citing at 758 Mathews 562 N.W.2d 27: 319, 893, 333, 96 Eldridge, 424 S.Ct. v. U.S. child, having financial abil- Every adult 902, 18, quoting Arm- 32 47 L.Ed.2d food, necessary ity provide to do shall so 552, Manzo, 545, U.S. 85 S.Ct. strong v. 380 for clothing, medical attendance shelter or (1965)). 62, Here, 1191, 1187, 14 L.Ed.2d 66 for him- parent provide is to who unable although opportunity, had that self; claim be made provided that no shall that he afforded earlier he insists had been notice has against child until such adult notice, might sought care he have alternative parent child that given been such adult father, remedy presents with no for his he us himself, provide and such is for unable actually Hospital’s delayed he lost from provide shall have refused adult child Accordingly, we conclude he received claim. parent. for his constitutionally adequate notice. Dwight had no Hospital concedes notice Liability for 4. for Medical Care Parent 1996, 3, September until it moved to date Pay Unable to original complaint. Dwight amend its be- contemplated by SDCL 25- lieves the notice granted 33.] The circuit court period given a short 7-27 must be within summary judgment against Dwight on provided. on time after the care Based is Hospital’s pursuant claim to SDCL 25-7-27. Randall, reasoning supra, we our dis- determining summary The framework for agree. questions set 15- judgment is forth SDCL 56(e): judgment sought “The shall be ren any par [¶ 32.] In the absence 6— pleadings, depositions, forthwith if the dered required in giving ticular method of notice interrogatories, and admissions 25-7-27, answers is we think reasonable notice affidavits, file, together any, on with the Randall, at 574. sufficient. 513 N.W.2d We genuine that there is no issue of mate show required constitutionally discussed what was moving party rial fact that entitled notice in First Nat’l Bank reasonable judgment to a as a matter of law.” Id. (S.D. 267, Meyer, 269 Eden v. 476 N.W.2d Lange, (reproduced part); v. 1996 1991): Ward ¶ 10, 246, 113, 249. re SD 553 N.W.2d On v. Bank Mullane Central Hanover & view, only legal will affirm when the “[w]e Co., 306, 652, 339 70 S.Ct. 94 Trust U.S. questions correctly have been decided and (1950), L.Ed. 865 the United States Su- genuine is no issue of material fact.” there preme determining Court what notice is Eckrich, 600, Koeniguer v. 422 601 N.W.2d constitutionally satisfy adequate to due (S.D.1988); Gordon, 801, Bego v. 407 N.W.2d process stated: (S.D.1987). course, 804 the construction Of require- elementary An and fundamental application particular a statute and its any process proceeding due ment of law, present question reviewable de facts finality which is be accorded notice 8, Quam, Bosse N.W.2d 10 novo. v. 537 calculated, reasonably under the cir- (S.D.1995)(citing Tappe, v. 419 Schoenrock cumstances, parties apprise interested 197, (S.D.1988); Rap 201 Johnson v. pendency of the action and afford Ass’n, 693, City id 514 N.W.2d 695 Softball present opportunity them an (S.D.1994)). objections. Meyer, requirements requires Based notice an [¶ 34.] SDCL 25-7-27 Hospital provide support indigent SDCL 25-7-27 were met here. The an adult child to provided Dwight parent only notice of its claim well be- has financial when child Randall, summary judgment ability. (empha at 571 fore filed its motion for 513 N.W.2d added). interim, requirement May During sis This is consistent 1997.
419
reasons,
the matter is remanded for
interpretations given by
courts
these
other
with
country.
proceedings.
further
Landmark Medical Ctr.
across
Gauthier,
1145,
(R.I.1994);
A.2d
v.
Prejudgment
Award
Interest
Gaines,
Cal.App.2d
Gluckman
(1968);
v. Stein
Cal.Rptr.
Britton
respect
any judg
[¶ With
Cal.App.2d
Cal.Rptr.
berg, 208
25-7-27,
against Dwight under
ment
Goldman,
(1962);
Commonwealth
pre
award
asserts
(1956);
Pa.Super.
119 A.2d
accruing
judgment
from the time
interest
Thomsberry
Dep’t
Health &
v. State
Pub.
*14
received
services would be
of
Harold
medical
372,
1217,
Welfare, 365 Mo.
295 S.W.2d
376 appropriate.
Bldg.
See South Dakota
Auth.
Smith,
490,
(1956);
Cty.
Iowa
v.
219
Cherokee
P.C.,
15,
Geiger-Berger
v.
Assoc.
414 N.W.2d
182,185
See also Terrance
258 N.W.
(S.D.1987).
general
19
rule under
Kline,
Respon
A
A.
Rational Role
Filial
pre
provides
21-1-11
for an award of
SDCL
Society?, 26 Fam
sibility
in Modem
Laws
payable
judgment interest when
amount
1992)(“A11
(Fall
LQ 195,
filial
197
states with
by
readily
can
ascertained
calculation.
be
require
de
responsibility statutes
courts
Here,
parties
dispute
Id.
not
do
termine that children have sufficient assets
Dwight
of
amount
the medical services.
con
liability.”). The finan
impose
it will
before
prejudgment
that
interest would be
tends
ability
may
cial
adult child
be deter
of an
only
Hospital
from
time the
proper
outstanding
any
is an
mined at
time there
complaint.
its
served
motion
amend its
by
limitations.'
not barred
the statute of
debt
agree
affirm
circuit court on this
We
and
Randall,
was not looking pay- him for
form the home was son, he guardian, trustee as as her
ment He over all his mother’s assets.
had control options pay not to bill and
had and chose as a until her her in that home resident
leave
death. Meaningful depends on the notice [¶47.] However, it case. facts individual reasonable, to opportunity, mean
must your parent hospitalized appraised that
be you looking to as the hospital may present and past, future bills
child It mean more than receiv-'
treatment. must If counties
ing years notice after fact. being notice that
are entitled reasonable admission, days can notice after how
fifteen years reasonable three
to an adult child be
after the fact? *16 SD 104 HOOGESTRAAT, Applicant
Craig L. Appellee,
and BARNETT, Attorney Dakota
Mark South Hazeltine,
General, Joyce Da- South Secretary State, Respondents
kota Appellants, Redlin, Pork Pro- South Dakota
Thomas Council, Inc., Dakota Cat-
ducers South Association, Dakota
tlemen’s South Federation, Dakota
Farm Bureau South Association,
Soybean Dakota Association,
Corngrowers South Dakota
Wheat, Inc., E No on Commit- Vote
tee, Appellants. Intervenors and
Nos. 20672.
Supreme Dakota. Court of South Sept. on Briefs 1998.
Considered Sept.
Decided