Manuma v. Continental Insurance
Manuma v. Continental Insurance
Opinion of the Court
On motion to invalidate deed:
In 1984 plaintiff Te’o Manuma obtained a judgment for $90,000 against defendant Anita Tedrow for the wrongful death of Te’o’s son. The judgment was upheld on appeal. Since that time Te’o has tried without success to satisfy the judgment. He now asserts a right to the proceeds from the sale of a tract of land and attached house allegedly owned by Mrs. Tedrow.
In April of 1981 Afatasi Burke agreed to buy this tract of land from the trustee for Douglas Craddick. In August 1983 Afatasi Burke assigned her interest in that agreement to Mrs. Tedrow. The judgment against Mrs. Tedrow arose after that assignment. The payments due the Craddick trust under the agreement were paid by Mrs. Tedrow’s husband, who also constructed on the land a house which has been used as the Tedrows’ family dwelling. In September 1986 Mr. Tedrow completed
Plaintiff asks that the conveyance to .the children be set aside as a fraudulent one designed to defeat his rights as a creditor of Mrs. Tedrow. We believe plaintiff’s contention to be well founded.
Courts have a duty to scrutinize closely intra-family transfers of property that hinder creditors of the transferring individual. See Flesher v. Carter, 467 S.W.2d 276, 279 (Mo. App. 1971). Such scrutiny should include consideration of whether the transaction was attended by certain "badges of fraud": indebtedness of the transferor, lack of consideration for the transfer, a close •family relationship between the parties to the transfer, the pendency or threat of litigation, reduction or depletion of the transferor’s estate, and retention of the transferred property by whoever possessed it before the transfer. Smith v. Popham, 513 P.2d 1172, 1175 (Or. 1973); see generally 37 Am. Jur. 2d, Fraudulent Conveyances ii 10-14. The transfer of legal title of this land to the Tedrow children was festooned with such badges.
When Afatasi Burke assigned her rights under the land sale contract to Anita Tedrow, Mrs. Tedrow became the “Buyer" under the contract and acquired equitable title to the property.- Though the seller retained legal title, it held such title only as trustee for the purchaser. Mrs. Tedrow alone held the ownership interest in the property and the benefits of the land . sale agreement. See Fellmer v. Gruber, 261 N.W.2d 173, 174 (Iowa 1978); 77 Am. Jur. 2d, Vendor & Purchaser §§ 317, 319. Her status as equitable titleholder existed at the time the High Court rendered judgment against her in 1984.
The record teems with evidence that Mrs. Tedrow had legal title placed in her children’s names in 1986 solely in order to avoid leaving the property vulnerable to her judgment creditor. A
Defendant contends, however, that even if she did own the land its proceeds cannot be seized because they are subject to a "homestead exemption." The authority cited for this proposition, however, applies only where such an exemption is provided by statute. A homestead exemption can exist only if created • by the legislature. In re Doody’s Estate, 210 Or. 658, 313 P.2d 444 (1957). The Fono has not enacted such a law.
Defendant'argues that A.S.C.A. i 43.1528(a), which provides that "[n]o real property of a Samoan may be subject to sale under a writ of a court to satisfy any judgment," is the local equivalent of a homestead exemption and should be construed to exempt from seizure not only real, property but also proceeds derived from the sale of such property. We decline, however, to read into the statute a broad new meaning apparently uncontemplated by the Fono. Homestead exemption statutes in the United States and the land exemption in American Samoa are different kinds of laws enacted for broadly similar but far from identical purposes. The former, which typically exempt from seizure a specified dollar amount of the value of a single residence, protect the interest of an individual and his family in having a place to live and a modicum of financial stability. See Walker v. Hayes, 248 Ala. 472, 28 So. 2d 413, 415 (1946). A.S.C.A. § 43.1528, on the other hand, was enacted to buttress the protection of the traditional Samoan land ownership system that underlay the Treaties of Cession. In the United States a creditor can seize all of a debtor’s land with the single exception of a modest family residence, and.this very limited exemption has become a kind of property that is in some circumstances transferable. A Samoan, on the other
There is, however, another layer of equity beneath the "legal ownership" and the "equitable ownership" of the Tedrow land.. Mr. Tedrow, the wage earner of the Tedrow family and- a person against whom plaintiff has no judgment, actually made the payments on the land. He also paid for the house which, in the absence of a separation agreement, the law regards as a part of the land. Speaking equitably rather than in terms of legal title, Mr. Tedrow earned these wages and made these payments on behalf of his family unit. As is common with families in which only one spouse is Samoan, the Tedrows originally planned to place the land in the name of Mrs. Tedrow in order to avoid the restrictions on ownership of land by non-Samoans. If plaintiff had invoked some strictly legal right rather than a remedy that is within the Court’s equitable powers, we might be forced to conclude that it was simply the Tedrows’ bad luck that they had chosen to place title to the land in the name of the spouse who happened later to become a judgment debtor. It is within our discretion, however, to mitigate what would otherwise be the harsh effects of an equitable remedy such as setting aside a fraudulent conveyance.
Accordingly, we set aside this conveyance on condition that plaintiff receive only half the proceeds of the resale. This will allow the Tedrows, a family with two adult members only one of whom is a judgment debtor, to retain half the benefits of a series' of transactions in which the interests and efforts of both were thoroughly involved.
The Court Had jurisdiction to issue its orders in this case and in PR No. 22-87 directing that no funds received' in connection with the land or the house are to be removed from the Territory. At this time we reiterate that order and further order counsel for defendant, in that capacity and in his capacity as the petitioner in PR No. 22-87, to deposit any such funds in the registry of the Court where they will be held' pending the resolution of any further motions by plaintiff, defendant, Mr. Reardon in his. capacity as petitioner in PR No. 22-87, or any other proper party. It hardly seems necessary .to add that participation or collusion by any person within this Court!s jurisdiction in any effort to evade the effects of this order by removing assets from the Territory will be a violation of the order whether or not such person should be in physical or constructive possession of such assets.
No further transactions. with - regard to the
Counsel for plaintiff is strongly urged to serve writs of. garnishment upon any persons other than Mrs. Tedrow who might be in or come into possession of assets relevant to this case. This action should have been taken long ago.
It is so ordered.
Contrary to a suggestion made by defendants’ counsel, this solution has nothing to do with "dower rights" or with a judgment
Case-law data current through December 31, 2025. Source: CourtListener bulk data.