Ark. Code Ann. § 4-59-204 (2026)

Research References

ALR.

Purchase of Annuity by Debtor as Fraud on Creditors. 74 A.L.R.6th 549.

Ark. L. Rev.

Note: Middleton v. Lockhart: Rule 41(b), a Fraudulent Transfer, a Homestead, and a Homicide — Did This Hard Case Make Bad Law?, 56 Ark. L. Rev. 113.

U. Ark. Little Rock L.J.

Note, Bankruptcy — A Fraudulent Conveyance Action and a Lis Pendens May Create a Lien Which Survives a Bankruptcy Discharge, 15 U. Ark. Little Rock L.J. 319.

Case Notes

In General.

Conveyances or legal actions to defraud creditors. Davis v. Cramer, 133 Ark. 224, 202 S.W. 239 (1918); Scrape v. Robinson, 202 Ark. 264, 149 S.W.2d 943 (1941); Spitzer v. Barnhill, 237 Ark. 525, 374 S.W.2d 811 (1964); United States v. Johnston, 245 F. Supp. 433 (W.D. Ark. 1965); Rees v. Craighead Inv. Co., 251 Ark. 336, 472 S.W.2d 92 (1971); Udey v. District Dir., I.R.S., 534 F. Supp. 219 (W.D. Ark. 1982); In re Locke, 50 B.R. 443 (Bankr. E.D. Ark. 1985) (preceding decisions under prior law).

Applicability.

Former statute, concerning gifts and conveyances in trust to use of person making, held might not apply to creditors of a stockholder in a corporation. A.H. Scoggin & Co. v. City Nat'l Bank, 175 Ark. 461, 299 S.W. 1033 (1927) (decision under prior law).

Assignments.

The assignee in a fraudulent assignment is chargeable with notice of its contents. Hunt v. Weiner, 39 Ark. 70 (1882) (decision under prior law).

Bankruptcy Proceedings.

If transfers by bankrupt were in fraud of any of the bankrupt's creditors and avoidable as to them, the trustee in bankruptcy would be entitled to judgment against transferee for property wrongfully transferred. Schneider v. O'Neal, 243 F.2d 914 (8th Cir. 1957) (decision under prior law).

The open conversion of nonexempt assets into exempt assets was not considered fraudulent as this practice has been long permitted under the bankruptcy code. Federal Sav. & Loan Ins. Corp. v. Holt, 97 B.R. 997 (W.D. Ark. 1988), aff'd, 894 F.2d 1005 (8th Cir. 1990) (decision under prior law).

To prove a fraudulent transfer under this section, the trustee must show that the debtor received less than reasonably equivalent value for the property and that he was insolvent on the date of the transfer or became insolvent as a result of the transfer. Williams v. Marlar, 246 B.R. 606 (Bankr. W.D. Ark. 2000), aff'd, Williams v. Marlar (In re Marlar), 252 B.R. 743 (B.A.P. 8th Cir. 2000).

Where corporation gave a promissory note to a trust in exchange for a physician's interest in his practice (the physician previously transferred his interest to the trust), the debtor's payments on the note were fraudulent transfers because the debtor received no value for the payments and the corporation never transferred the physician's interest to the debtor. Meeks v. Healthcorp of Tenn., Inc. (In re Southern Health Care of Ark.), 299 B.R. 918 (Bankr. E.D. Ark. 2003), aff'd, Meeks v. Don Howard Charitable Remainder Trust (In re S. Health Care of Ark., Inc.), 309 B.R. 314 (B.A.P. 8th Cir. 2004).

Chapter 7 debtor was not entitled to a homestead exemption under Ark. Const. Art. IX, § 3 on a house she owned because she committed fraud, in violation of this section and § 4-59-205, when she transferred money out of a trust she managed and used the money to buy the house while the trust was indebted to a bank, and because the debtor was not entitled to a homestead exemption in the house, the bank's judgment lien on the house did not impair the debtor's interest in the house and the debtor's claim seeking an order avoiding the bank's lien under 11 U.S.C. § 522(f) had to be denied. In re Gaddy, No. 5:12-bk-72648, 2013 Bankr. LEXIS 2326 (Bankr. W.D. Ark. June 7, 2013).

Debtor fraudulently transferred and concealed his true interest by titling property in other people's names in order to place it beyond his creditors' reach and thus, transfers were avoided and property was returned to his estate under various provisions of the Bankruptcy Code and this subchapter. Despite serpentine chain of title, debtor continuously possessed and exercised uninterrupted control over property. Jacoway v. Svetc (In re Svetc), 521 B.R. 892 (Bankr. W.D. Ark. 2014).

Divorce Proceedings.

Transfer held fraudulent as to creditor bank, where debtor husband, after transferring business assets to his ex-wife, retained considerably less assets than he transferred to the wife, and thus did not receive the reasonably equivalent value for the transferred property. FDIC v. Bell, 106 F.3d 258 (8th Cir. 1997), cert. denied, 523 U.S. 1022, 118 S. Ct. 1304, 140 L. Ed. 2d 470 (1998).

Divorce Property Settlement.

In a federal diversity action by a judgment creditor to recover fraudulently transferred assets, the district court was under no obligation to consider that a state court approved a property settlement agreement as equally dividing the divorcing parties' assets. FDIC v. Bell, 106 F.3d 258 (8th Cir. 1997), cert. denied, 523 U.S. 1022, 118 S. Ct. 1304, 140 L. Ed. 2d 470 (1998).

Estoppel.

Where a wife permitted her husband to retain title to her land knowing that his creditors were dealing with him under the belief that it belonged to him, she was estopped as to them to claim it as hers, and a conveyance by the husband to the wife to prevent its seizure by his creditors was fraudulent and void. Cowling v. Hill, 69 Ark. 350, 63 S.W. 800 (1901) (decision under prior law).

Evidence sufficient to find that creditor was estopped from maintaining that the transfer of the property was fraudulent. A.H. Scoggin & Co. v. City Nat'l Bank, 175 Ark. 461, 299 S.W. 1033 (1927) (decision under prior law).

Exemptions.

Creditors cannot set aside as fraudulent a conveyance by their debtor of his homestead. Stanley v. Snyder, 43 Ark. 429 (1884); Carmack v. Lovett, 44 Ark. 180 (1884); Gray v. Patterson, 65 Ark. 373, 46 S.W. 730 (1898); White Sewing-Machine Co. v. Wooster, 66 Ark. 382, 50 S.W. 1000 (1899); Sieb's Hatcheries, Inc. v. Lindley, 111 F. Supp. 705 (W.D. Ark. 1953), aff'd, 209 F.2d 674 (8th Cir. 1954) (preceding decisions under prior law).

Creditors cannot set aside as fraudulent a conveyance of the debtor's personal property less than the value that he could claim as exempt. Sannoner v. King, 49 Ark. 299, 5 S.W. 327 (1887); Simms v. Phillips, 54 Ark. 193, 15 S.W. 461 (1891) (preceding decisions under prior law).

In a suit by creditors of an insolvent debtor to subject land which he had fraudulently procured to be conveyed to his wife, it was no defense that the consideration for the land was the exchange of the debtor's homestead. Reeves v. Slade, 71 Ark. 611, 77 S.W. 54 (1903) (decision under prior law).

Federal Law.

Federal courts use the same factors as Arkansas courts to determine whether transfers were made with fraudulent intent. United States Fid. & Guar. Co. v. Hogan, 208 B.R. 459 (Bankr. E.D. Ark. 1997).

Fraudulent Intent.

United States' request to set aside a conveyance of real property by a taxpayer and his wife to their private trust was granted because the conveyance was fraudulent under subdivision (a)(1) of this section: (1) the conveyance was made shortly after the taxpayer received his first notice of assessment from the Internal Revenue Service; (2) the $10 that the trust purportedly paid for the property was grossly disproportionate to its value; (3) the taxpayer and his wife continued to live on the property without the benefit of a lease and without paying any rent to the trust; and (4) the taxpayer and his wife continued to pay all of the expenses connected with the property, including mortgage and property tax payments. United States v. Tolbert, 2007 U.S. Dist. LEXIS 68041 (W.D. Ark. Sept. 13, 2007), aff'd, 326 Fed. Appx. 412 (8th Cir. 2009).

Taxpayer fraudulently transferred his acreage and his home to his sons and other purchasers under subdivision (a)(1) of this section for inadequate consideration of $1 and $10 after becoming aware of his tax liability because the properties were transferred to entities controlled by the taxpayer and consisted of substantially all of his assets, the taxpayer never moved out of his home, and the purchasers did not believe that they owned the home, did not finish paying for it, and had no knowledge that they conveyed it to a foundation that was an alter ego of the taxpayer who controlled its bank account. United States v. Muncy, 2008 U.S. Dist. LEXIS 37343 (E.D. Ark. May 7, 2008).

—In General.

Intent that makes a conveyance fraudulent as to creditors must be participated in by both parties, grantor and grantee. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Indicia of fraudulent intent include insolvency or indebtedness of the transferor, inadequate or fictitious consideration, retention by the debtor of the property, pendency or threat of litigation, secrecy or concealment, and fact that disputed transactions were conducted in a manner differing from the usual business practice. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963); Tipp v. United Bank, 23 Ark. App. 176, 745 S.W.2d 141 (1988) (preceding decisions under prior law); Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358 (1992) (decision under prior law).

Fraudulent intent was necessary to bring a conveyance within the purview of former statute. Tipp v. United Bank, 23 Ark. App. 176, 745 S.W.2d 141 (1988) (decision under prior law); Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358 (1992) (decision under prior law).

Both vendor and vendee must act with fraudulent intent before conveyance will be regarded as fraudulent. Tipp v. United Bank, 23 Ark. App. 176, 745 S.W.2d 141 (1988).

—Adequacy of Consideration.

Where a debtor conveyed his property to his son and to a family-owned corporation, there was a presumption of fraud casting upon him the burden of showing a consideration, and the deed's recitals were not competent to show a consideration. Leonhard v. Flood, 68 Ark. 162, 56 S.W. 781 (1900) (decision under prior law).

The assignment by an embarassed debtor to his brother-in-law of his interest under his uncle's will, although it expressed a consideration, was void as to existing creditors where there was no evidence offered that the stated consideration was, in fact, paid. Wasson v. Greig, 194 Ark. 420, 108 S.W.2d 463 (1937) (decision under prior law).

Transactions between husband and wife are closely scrutinized for fraud, but when made in good faith for a fair consideration they are upheld the same as transactions between strangers. Sieb's Hatcheries, Inc. v. Lindley, 111 F. Supp. 705 (W.D. Ark. 1953), aff'd, 209 F.2d 674 (8th Cir. 1954) (decision under prior law).

Where the husband conveys to the wife certain property without consideration, such transaction will be deemed fraudulent as to a prior creditor, though no actual fraud was intended. Sieb's Hatcheries, Inc. v. Lindley, 111 F. Supp. 705 (W.D. Ark. 1953), aff'd, 209 F.2d 674 (8th Cir. 1954) (decision under prior law).

In determining whether the consideration in an alleged fraudulent transfer of property is adequate, inadequate or grossly inadequate, conveyance by a debtor to a third party of mortgaged property is supported by adequate consideration if the third party grantee agrees to pay debts owed by grantor which are secured by the property. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Under the evidence, in action to set aside alleged fraudulent transfer of property, consideration for the conveyance as a matter of law appeared adequate, and, if there was any disparity at all between consideration and value received by transferee, it was slight and far from being “grossly inadequate.” Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

In determining fraudulent intent on the part of the parties to a transaction, mere inadequacy of price for consideration is insufficient; it is only when the inadequacy of price is so gross that it shocks the conscience, and furnishes satisfactory and decisive evidence of fraud, that it will be sufficient proof that the purchase is not bona fide. Ouachita Elec. Coop. Corp. v. Evans-St. Clair, 12 Ark. App. 171, 672 S.W.2d 660 (1984) (decision under prior law).

For a transfer to withstand attack as fraudulent, it must be for adequate consideration and made in good faith. In re Baugh, 60 B.R. 102 (Bankr. E.D. Ark. 1986) (decision under prior law).

—Debtor's Retention of Property.

A mortgage of articles of merchandise left in possession of mortgagor with power to sell in ordinary course of business was void except as between the parties. Lund v. Fletcher, 39 Ark. 325 (1882); Martin v. Ogden, 41 Ark. 186 (1883); Fink v. Ehrman Bros., 44 Ark. 310 (1884); Gauss Sons v. Doyle & Co., 46 Ark. 122 (1885); Collins v. Lightle, 50 Ark. 97, 6 S.W. 596 (1887); Felner v. Wilson, 55 Ark. 77, 17 S.W. 587 (1891); Adler-Goldman Comm'n Co. v. Phillips, 63 Ark. 40, 37 S.W. 297 (1896) (preceding decisions under prior law).

Where certain goods were sold to customer but not separated from other goods in store although entered on its books and thereafter entire stock of store was mortgaged to another, such sale was invalid as against subsequent purchasers and attaching creditors. Davis v. Meyer, 47 Ark. 210, 1 S.W. 95 (1886) (decision under prior law).

The continuance of the vendor in the possession of the goods after the sale was prima facie evidence of a secret trust, fraudulent as to creditors, and the burden of proof was upon the vendee to overcome the presumption of fraud arising from such possession by proving the payment of a sufficient consideration to support the sale. Valley Distilling Co. v. Atkins, 50 Ark. 289, 7 S.W. 137 (1887) (decision under prior law).

Failure to make actual delivery raises only a rebuttable presumption of fraud. Shaul v. Harrington, 54 Ark. 305, 15 S.W. 835 (1891) (decision under prior law).

Where there is a completed contract of sale and an agreement by the vendor to hold as bailee for the vendee in lieu of actual delivery, the sale is valid against the vendor's creditors if it is not otherwise fraudulent. Shaul v. Harrington, 54 Ark. 305, 15 S.W. 835 (1891) (decision under prior law).

Where mortgagors hold possession of goods and make sales as agents of mortgagees, the mortgage is valid. Felner v. Wilson, 55 Ark. 77, 17 S.W. 587 (1891); Adler-Goldman Comm'n Co. v. Phillips, 63 Ark. 40, 37 S.W. 297 (1896) (preceding decisions under prior law).

Where vendors, charged with fraudulent transfer, remained on the premises as managers of tourist accommodations on the land did not affect the transaction, since their corporate employer could terminate their position at any time. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Evidence that debtor continued in possession of transferred property was sufficient to set aside the transfer as fraudulent. Weatherly v. Massey-Ferguson, Inc., 245 Ark. 317, 432 S.W.2d 18 (1968) (decision under prior law).

Debtors, who gave their daughter a 1986 Pontiac as a high school graduation present, but maintained, for insurance reasons, title and insurance in the father's name, recovery under the fraudulent transfer statutes must fail because the transfer of value was made to the daughter in 1986 when the debtors gave her the 1986 Pontiac. At that time, although the debtor retained legal title to the vehicle, the equitable interest in the vehicle was given to daughter, so that a subsequent change in nominal title did not constitute a “transfer of interest.” Luker v. McCall, 188 B.R. 402 (Bankr. E.D. Ark. 1995).

—Indebtedness or Insolvency.

When an embarrassed debtor makes a voluntary conveyance of his property, his indebtedness raises a presumption of fraud against existing creditors, and such presumption becomes conclusive upon insolvency; but a voluntary conveyance by a person in debt is not per se fraudulent as to subsequent creditors, and to impeach it, they must prove actual or intentional fraud. Driggs & Co.'s Bank v. Norwood, 50 Ark. 42, 6 S.W. 323 (1887) (decision under prior law).

A voluntary conveyance by one who is indebted raises a prima facie presumption of fraud which becomes conclusive if evidence fails to show that he had other property. Stix v. Chaytor, 55 Ark. 116, 17 S.W. 707 (1891) (decision under prior law).

A voluntary conveyance of property by insolvent debtor is fraudulent as to subsequent as well as existing creditors if debtor reasonably had in contemplation the contracting of such future debt at time conveyance was made. Rudy v. Austin, 56 Ark. 73, 19 S.W. 111 (1892); May v. State Nat'l Bank, 59 Ark. 614, 28 S.W. 431 (1894); Semmes v. Underwood, 64 Ark. 415, 42 S.W. 1069 (1897); Slayden-Kirksey Woolen Mills v. Anderson, 66 Ark. 419, 50 S.W. 994 (1899); Buchanan v. Williams, 110 Ark. 335, 160 S.W. 190 (1913); Renn v. Renn, 207 Ark. 147, 179 S.W.2d 657 (1944) (preceding decisions under prior law).

Where grantor in voluntary conveyance was not insolvent, fact that he was in debt raised no presumption of fraud as to subsequent creditors. Crampton v. Schaap, 56 Ark. 253, 19 S.W. 669 (1892) (decision under prior law).

Where land was purchased and paid for by the embarrassed husband who subsequently became insolvent and title taken in the name of his wife with the actual intent to hinder and delay his creditors, the land was subject to debts of his creditors both prior and subsequent. Slayden-Kirksey Woolen Mills v. Anderson, 66 Ark. 419, 50 S.W. 994 (1899) (decision under prior law).

Where a husband, owning the reversionary estate in lands of which his wife owned a life estate, conveyed his interest to her, thereby depriving himself of the means of paying his debts, his conveyance was a fraud upon the rights of his creditors. Morris v. Fletcher, 67 Ark. 105, 56 S.W. 1072 (1899) (decision under prior law).

It is error to instruct the jury that a transfer of property by an embarrassed debtor to a member of his family is to be looked at with suspicion; such an instruction is upon the weight of the evidence. Smith v. Jackson, 133 Ark. 334, 202 S.W. 227 (1918) (decision under prior law).

Where debtor was indebted for an attorney's fee, and being insolvent sold a piece of property which he had acquired thereby rendering the fee uncollectable, the sale was fraudulent and was properly set aside. Fromholtz v. Trimble, 140 Ark. 282, 215 S.W. 623 (1919) (decision under prior law).

A voluntary transfer of property to near relatives is presumptively fraudulent as to existing creditors, and if made by one who at the time is embarrassed, it is looked upon with suspicion and scrutinized with care. Crill v. Trites, 186 Ark. 354, 53 S.W.2d 577 (1932) (decision under prior law).

A gift of property to his child by his father who is largely indebted places the burden on the father to show that his intentions were innocent and that he had at the time ample means to pay his debts. Crill v. Trites, 186 Ark. 354, 53 S.W.2d 577 (1932) (decision under prior law).

While conveyances from an insolvent debtor to near relatives are not sufficient of themselves to establish fraud, yet, when added to other suspicious circumstances, they may be sufficient evidence of fraud to justify the court in setting them aside. Wasson v. Lightle, 188 Ark. 440, 66 S.W.2d 652 (1933); Parrish v. Parrish, 191 Ark. 443, 86 S.W.2d 557 (1935) (preceding decisions under prior law).

Although fraud is never presumed against existing creditors, when an embarrassed debtor conveys property to a near relative, the conveyance must be scrutinized closely, and if found voluntary, it is prima facie fraudulent; where the debtor becomes insolvent the presumption becomes conclusive. Rice v. Rice, 125 F. Supp. 900 (W.D. Ark. 1954) (decision under prior law) Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358 (1992) (decision under prior law).

Under definition of insolvency as a lack of means to pay one's debts, or that if assets were made immediately they would be insufficient to discharge the liabilities, it appeared from the evidence that, at time of alleged fraudulent transfer, the debtor was solvent. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Before presumption of fraud on part of grantor may be found, there must be clear distinction made between actual insolvency and mere indebtedness on his part, as mere circumstances of indebtedness is no evidence of fraud. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Where plaintiff failed to prove insolvency of defendants at time of the transaction, court could not assume that there were insufficient nonexempt assets of defendants which plaintiff was able to attach to satisfy the judgment. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Former statute was not applicable where husband's indebtedness did not exist at the time of conveyance to his wife, nor was it contracted shortly afterwards, and there was no evidence that quitclaiming his interest in the property caused him to be insolvent at that time, nor was he insolvent at the time he contracted with the creditor. Hanna v. Miller, 9 Ark. App. 255, 657 S.W.2d 563 (1983) (decision under prior law).

The question of a debtor's solvency for purposes of determining fraudulent intent is not the ultimate question but is simply a matter for consideration in determining whether a conveyance was made with intent to delay, hinder, or defraud creditors. Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358 (1992).

Debtors did not commit actual fraud, but, given the circumstances at the time of the transfer, specifically a lack of consideration for the transfer to a family member and the balance sheet insolvency of the debtors, the transfer was constructively fraudulent under 11 U.S.C.S. § 548(a)(1)(B) and subdivision (a)(2) of this section. Luker v. Eubanks (In re Eubanks), 444 B.R. 415 (Bankr. E.D. Ark. 2010).

In creditor's action to set aside an alleged fraudulent conveyance arising from a transfer-on-death (TOD) beneficiary designation, summary judgment was improperly granted to the beneficiary as there was a factual issue as to whether the decedent “reasonably should have believed that she would incur debts beyond her ability to pay as they became due”; this section does not require the creditor to demonstrate the debtor's actual intent. Heritage Props. Ltd. P'ship v. Walt & Lee Keenihan Found., Inc., 2019 Ark. 371, 584 S.W.3d 685 (2019) (decided under pre-2017 version of § 4-59-201 et seq.).

In creditor's action to set aside an alleged fraudulent conveyance arising from a transfer-on-death (TOD) beneficiary designation, summary judgment for the transferee beneficiary was reversed where the creditor presented proof that the IRS had a claim for tax deficiencies dating back several years, that the decedent had multiple creditors, and that her estate was likely insolvent. Heritage Props. Ltd. P'ship v. Walt & Lee Keenihan Found., Inc., 2019 Ark. 371, 584 S.W.3d 685 (2019) (decided under pre-2017 version of § 4-59-201 et seq.).

—Pendency or Threat of Litigation.

Conveyance by judgment debtor of all his property to wife after service of summons will be viewed with suspicion, and the burden is upon the wife to show that the conveyance was not executed for a fraudulent purpose. Papan v. Nahay, 106 Ark. 230, 152 S.W. 107 (1913) (decision under prior law).

Transfer pending, or under threat of, litigation held fraudulent. Robinson v. Bigger, 199 Ark. 1152, 137 S.W.2d 738 (1940); Murphy v. Marshall, 203 Ark. 986, 159 S.W.2d 741 (1942) (preceding decisions under prior law).

Transfer pending, or under threat of, litigation held not fraudulent. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963); Ralston Purina Co. v. Davis, 256 Ark. 972, 511 S.W.2d 482 (1974) (preceding decisions under prior law).

Generally, intent to defraud or knowledge on part of purchaser that vendor has committed fraud may be established by fact of pendency of litigation, and trier of facts may properly consider this circumstance in determining whether purchaser bought with notice; however, such knowledge of purchaser does not of itself establish fraudulent intent on his part, and adverse evidentiary effect thereof may be overcome in good faith, paying a valuable consideration. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

Intent to defraud on the part of the vendor may be established by evidence of the pendency of litigation against the vendor. In re Baugh, 60 B.R. 102 (Bankr. E.D. Ark. 1986) (decision under prior law).

—Proof.

Fraud is never presumed. Toney v. McGehee, 38 Ark. 419 (1882) (decision under prior law).

A voluntary postnuptial settlement upon a wife is presumptively fraudulent against existing creditors and casts upon those holding under it the onus of proving the entire good faith of the transaction. Adams v. Edgerton, 48 Ark. 419, 3 S.W. 628 (1886) (decision under prior law).

Where a conveyance is made under such circumstances that the result must necessarily be to hinder and delay creditors, it will be presumed that such was the intent of the transferor. Evans v. Cheatham, 183 Ark. 82, 34 S.W.2d 1076 (1931); Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (preceding decisions under prior law).

Fraud is never presumed, but must be affirmatively proved by a clear preponderance of the evidence by the party who alleges and relies on it. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963); Ouachita Elec. Coop. Corp. v. Evans-St. Clair, 12 Ark. App. 171, 672 S.W.2d 660 (1984) (preceding decisions under prior law).

In an action by a creditor to set aside as fraudulent real estate conveyance by the debtor to his wife, there was not burden upon the creditor to show by evidence that the debtor had equity in the properties conveyed. Allis v. Jones, 403 F.2d 707 (8th Cir. 1968) (decision under prior law).

An intent to defraud a subsequent creditor must be shown before a voluntary conveyance will be avoided; such a subsequent creditor must prove fraudulent intent by evidence which is clear, cogent, and convincing. Hanna v. Miller, 9 Ark. App. 255, 657 S.W.2d 563 (1983) (decision under prior law).

In a suit to set aside a fraudulent conveyance, the allegation of fraud must be shown by a preponderance of the evidence, and while fraud may be established by circumstantial evidence, the circumstances must be so strong and well connected as to clearly show fraud. Ouachita Elec. Coop. Corp. v. Evans-St. Clair, 12 Ark. App. 171, 672 S.W.2d 660 (1984); Tipp v. United Bank, 23 Ark. App. 176, 745 S.W.2d 141 (1988) (preceding decisions under prior law).

The creditor who seeks to set aside a conveyance as fraudulent must show that his debtor has disposed of property that might otherwise have been subjected to the satisfaction of his debt. Ouachita Elec. Coop. Corp. v. Evans-St. Clair, 12 Ark. App. 171, 672 S.W.2d 660 (1984) (decision under prior law).

The questions of whether the debtor must be solvent and whether the date to use in determining intent is when the conveyance is executed or when it is filed for record are not ultimate questions but are simply matters for consideration in making the determination of whether the conveyance was made with intent to delay, hinder, or defraud creditors. Lessman v. Dawson, 14 Ark. App. 285, 687 S.W.2d 860 (1985) (decision under prior law).

The burden of proof is on the party alleging a fraudulent conveyance, and the fraud must be proved by clear and convincing evidence. In re Baugh, 60 B.R. 102 (Bankr. E.D. Ark. 1986) (decision under prior law).

Factors typically attendant to a fraudulent conveyance are the insolvency of the transferor, inadequate or fictitious consideration, retention by the debtor of the property transferred, secrecy or concealment, and the fact that the disputed transaction was conducted in a manner differing from the usual transaction. In re Baugh, 60 B.R. 102 (Bankr. E.D. Ark. 1986) (decision under prior law).

The party who alleges and relies upon fraud bears the burden of proving fraud by a preponderance of the evidence. Tipp v. United Bank, 23 Ark. App. 176, 745 S.W.2d 141 (1988) (decision under prior law); Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358 (1992) (decision under prior law).

A conveyance to a trust was determined to be fraudulent where: 1) On the date of the conveyance, the defendants were without sufficient liquid assets to make payments to the plaintiff; 2) the consideration was nominal; 3) the trust agreement allowed defendants to retain certain incidents of ownership over the property; and 4) the conveyance at issue was made after the plaintiff made demands on the defendants and advised them that their obligations were under-collateralized. Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358 (1992).

Gambling Debt.

Arkansas public policy does not necessarily preclude enforcement of valid and legal gambling debts incurred in another state. In re Armstrong, 217 B.R. 569 (Bankr. E.D. Ark. 1998).

Good-Faith Purchasers.

Purchaser's good faith must exist both at the time of the purchase and at the time the consideration is paid. Purchasers would not be treated as good-faith purchasers where, although there was no evidence that they had notice of the debtor's financial difficulties or the pendency of litigation at the time that they entered into a land-sale contract, there was evidence that they had such notice at the time the consideration was paid. Tipp v. United Bank, 23 Ark. App. 176, 745 S.W.2d 141 (1988) (decision under prior law).

Leases.

Unacknowledged long term lease, given by a husband to his mother for a nominal consideration and which was intended to prevent the wife from recovering her statutory interest in the land subsequent to a divorce, was not valid against purchasers who had no actual knowledge of the lease and could not be charged with constructive notice; accordingly lease was properly cancelled. George v. George, 267 Ark. 823, 591 S.W.2d 655 (Ct. App. 1979) (decision under prior law).

Miscellaneous Transfers.

Purchase of assets of corporation by director is voidable at instance of creditor. Jones, McDowell & Co. v. Arkansas Mechanical & Agric. Co., 38 Ark. 17 (1881) (decision under prior law).

There is no fraud in taking goods in satisfaction of a mortgage on a homestead. Flask, Preston & Co. v. Tindall, 39 Ark. 571 (1882) (decision under prior law).

A voluntary settlement by a husband of all his property upon his wife is absolutely void, not only as to existing creditors but also as to subsequent purchasers without notice. Adams v. Edgerton, 48 Ark. 419, 3 S.W. 628 (1886) (decision under prior law).

Transfers held fraudulent. Catchings v. Harcrow, 49 Ark. 20, 3 S.W. 884 (1886); Alkire Grocery Co. v. Jackson, 66 Ark. 455, 51 S.W. 459 (1899); Sumpter v. Arkansas Nat'l Bank, 69 Ark. 224, 62 S.W. 577 (1901); McTighe v. McKee, 70 Ark. 293, 67 S.W. 754 (1902); Reeves v. Slade, 71 Ark. 611, 77 S.W. 54 (1903); Robinson v. Bigger, 199 Ark. 1152, 137 S.W.2d 738 (1940); Renn v. Renn, 207 Ark. 147, 179 S.W.2d 657 (1944); Harris v. Shaw, 224 Ark. 150, 272 S.W.2d 53 (1954); Kelker v. Hendricks, 228 Ark. 222, 306 S.W.2d 691 (1957); Connelly v. Thomas, 234 Ark. 1024, 356 S.W.2d 430 (1962); Lessman v. Dawson, 14 Ark. App. 285, 687 S.W.2d 860 (1985); Pults v. City of Springdale, 23 Ark. App. 182, 745 S.W.2d 144 (1988) (preceding decisions under prior law).

Transfers held not fraudulent. Davis v. Arkansas Fire Ins. Co., 63 Ark. 412, 39 S.W. 258 (1897); Crill v. Trites, 186 Ark. 354, 53 S.W.2d 577 (1932); Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963); American Insurers' Life Ins. Co. v. First Nat'l Bank, 236 Ark. 361, 367 S.W.2d 97 (1963); Saunders v. Adcock, 249 Ark. 856, 462 S.W.2d 219 (1971); Ralston Purina Co. v. Davis, 256 Ark. 972, 511 S.W.2d 482 (1974) (preceding decisions under prior law).

No formal assignment of a contract to build is necessary in order to constitute a fraudulent transfer where the other elements of a fraudulent transfer of property are present. Southern Lumber Co. v. Riley, 224 Ark. 298, 273 S.W.2d 848 (1954) (decision under prior law).

An assignment of an oral contract to build made to near relatives and members of the household is scrutinized with care where the assignor continues the work, and when the assignment is voluntary it is prima facie fraudulent; if the assignor becomes insolvent, it is conclusively presumed fraudulent regardless of the motive behind the transfer. Southern Lumber Co. v. Riley, 224 Ark. 298, 273 S.W.2d 848 (1954) (decision under prior law).

Where evidence has shown that circumstances surrounding the original conveyance by judgment debtor were innocent and not fraudulent, succeeding transfer of lands, fixtures, etc., to final grantee could not be attacked by judgment creditor as to fraudulent conveyance. Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (decision under prior law).

A preference of one creditor over another does not in itself make the transfer to the preferred creditor void or voidable as a fraudulent conveyance. Nicklaus v. Peoples Bank & Trust Co., 258 F. Supp. 482 (E.D. Ark. 1965), aff'd, 369 F.2d 683 (8th Cir. 1966); Ouachita Elec. Coop. Corp. v. Evans-St. Clair, 12 Ark. App. 171, 672 S.W.2d 660 (1984) (preceding decisions under prior law).

Payment of an antecedent debt accepted by a bank in good faith is not a fraudulent conveyance. Nicklaus v. Peoples Bank & Trust Co., 369 F.2d 683 (8th Cir. 1966) (decision under prior law).

Although fraud is never presumed, where it is shown that the debtor, while insolvent, voluntarily conveyed property to a near relative, such conveyance is prima facie evidence of a fraudulent conveyance; the burden of coming forward with the evidence to show that the transfer was not fraudulent shifts to the debtor. In re Baugh, 60 B.R. 102 (Bankr. E.D. Ark. 1986) (decision under prior law).

Although the debtor's father had previously given the debtor over $100,000, the debtor's transfer of $86,000 to his father was a fraudulent conveyance where there was no evidence that the previous payments were loans or that the father ever intended that he be paid back, the money was removed from the reach of the debtor's creditors, and the transfer allowed the debtor the use of the money as he needed it while he was insolvent. In re Baugh, 60 B.R. 102 (Bankr. E.D. Ark. 1986).

Transfer of real estate from the debtor to her parents set aside. Schieffler v. Beshears, 182 B.R. 235 (Bankr. E.D. Ark. 1995).

Federal government and a judgment creditor were entitled to set aside debtors' transfer of certain real estate into trusts because the trust transfers were made with the intent to defraud creditors, including the government, which had a tax assessment against the creditors, and the judgment creditor, since the trusts were shams, used to shelter assets from creditors as they lacked adequate consideration, rendered the debtors insolvent, and the debtors retained the use and enjoyment of the real estate and were the beneficial owners of the real estate. United States v. Neal, 255 F.R.D. 638 (W.D. Ark. 2008), aff'd, 391 Fed. Appx. 569 (8th Cir. 2010).

Defendant's presentencing conveyance of 120 acres of real property to defendant's daughters, with a reservation of a life estate for defendant and his wife, was a fraudulent conveyance under this section. The evidence showed that defendant was trying to divest himself of the property to that it would be unavailable to pay a criminal fine, and the quitclaim deed recited nominal consideration and stated that the transfer was by gift. United States v. Fincher, 593 F.3d 702 (8th Cir. 2010).

In a case under this subchapter, there were genuine issues of material fact regarding whether a debtor received a reasonably equivalent value as a result of a transfer to her attorney; at the time of the transfer, the debtor believed or reasonably should have believed that she was incurring debts beyond her ability to pay as they became due. Druyvestein v. Gean, 2014 Ark. App. 559, 445 S.W.3d 529 (2014).

Parol Evidence.

A mortgage may be shown by parol to have been executed for fraudulent purposes. Stephens v. Stephens, 66 Ark. 356, 50 S.W. 874 (1899) (decision under prior law).

Protected Parties.

The law will not relieve either party from an executed contract, or aid either to enforce an executory contract, made to defraud creditors. Payne v. Bruton, 10 Ark. 53 (1849) (decision under prior law).

One who is not a creditor is not in position to ask chancery to set aside an alleged fraudulent conveyance. King v. Clay, 34 Ark. 291 (1879); Townsly-Myrick Dry Goods Co. v. Fuller, 58 Ark. 181, 24 S.W. 108 (1893) (preceding decisions under prior law).

If creditors condone fraud, conveyance will stand against all comers. Millington v. Hill, 47 Ark. 301, 1 S.W. 547 (1886) (decision under prior law).

A party bargaining with debtor with fraudulent intent does so at peril of having that which he receives taken from him by creditors of debtors, without having any remedy to recover what he parts with in carrying out bargain. Millington v. Hill, 47 Ark. 301, 1 S.W. 547 (1886) (decision under prior law).

A conveyance to defraud creditors is good between the parties and against all persons except creditors of the grantor who are in a position to assail it. Knight v. Glasscock, 51 Ark. 390, 11 S.W. 580 (1888); Bell v. Wilson, 52 Ark. 173, 12 S.W. 1135 (1889); Doster v. Manistee Nat'l Bank, 67 Ark. 325, 55 S.W. 137 (1900) (preceding decisions under prior law).

A widow has no dowable interest in lands bought by her husband when he takes title in the name of a third party in order to defraud creditors for the reason that he had no estate of inheritance in the same. Johnson v. Johnson, 106 Ark. 9, 152 S.W. 1017 (1912) (decision under prior law).

A conveyance in fraud of creditors is void only at the instance of the injured creditor, and where transferor conveyed a note of the debtor could not defeat payment, in a suit by the transferee, on the ground that transferor made the transfer to the transferee in order to defraud the debtor's creditors. Segraves v. Brooks, 123 Ark. 261, 185 S.W. 260 (1916) (decision under prior law).

Former statute protected both prior and subsequent creditors. Home Life & Accident Co. v. Schichtl, 172 Ark. 31, 287 S.W. 769 (1926) (decision under prior law).

A wife obtaining a decree for divorce, alimony, maintenance, and dower was a creditor of the husband from the time the decree was rendered and entitled to interest in land which the husband fraudulently allowed to be sold for taxes and conveyed to his brother. Renn v. Renn, 207 Ark. 147, 179 S.W.2d 657 (1944) (decision under prior law).

Before a creditor can complain of a conveyance by a debtor, he must show that he was injured by the conveyance. Sieb's Hatcheries, Inc. v. Lindley, 111 F. Supp. 705 (W.D. Ark. 1953), aff'd, 209 F.2d 674 (8th Cir. 1954); Bank of Sun Prairie v. Hovig, 218 F. Supp. 769 (W.D. Ark. 1963) (preceding decisions under prior law).

A conveyance by one tenant by the entirety, or an execution against such tenant, cannot in any manner affect the interest of the other tenant. Sieb's Hatcheries, Inc. v. Lindley, 111 F. Supp. 705 (W.D. Ark. 1953), aff'd, 209 F.2d 674 (8th Cir. 1954) (decision under prior law).

Purchasers.

A mortgagee was a purchaser within former statute. Adams v. Edgerton, 48 Ark. 419, 3 S.W. 628 (1886) (decision under prior law).

Remedies.

Where voluntary conveyance was made in fraud of prior creditors, subsequent creditors whose means were used to pay off prior debts will be subrogated to rights of prior creditors. Rudy v. Austin, 56 Ark. 73, 19 S.W. 111 (1892) (decision under prior law).

Where endorser of a note without consideration transferred stock in corporation to another, payee could follow such stock and subject it to endorser's debts. A.H. Scoggin & Co. v. City Nat'l Bank, 175 Ark. 461, 299 S.W. 1033 (1927) (decision under prior law).

Garnishment is available against the payments due on a contract which is fraudulently assigned to defraud creditors where the action is in equity and all interested parties are before the court. Southern Lumber Co. v. Riley, 224 Ark. 298, 273 S.W.2d 848 (1954) (decision under prior law).

Spouses.

The sale of diamonds by the plaintiff's wife to a jeweler did not constitute a fraudulent conveyance since the plaintiff was not a creditor of his wife. McAdams v. Ellington, 333 Ark. 362, 970 S.W.2d 203 (1998).

Motion for judgment notwithstanding the verdict was denied in a case involving fraudulent transfers to a wife, as an insider, by a judgment debtor under § 4-59-204(a)(1) because the debtor and the wife were unable to substantiate the claim that wife purchased the stocks with money won at a horse race or that a transfer was due to the debtor's poor health. Laird v. Weigh Sys. South II, Inc., 98 Ark. App. 393, 255 S.W.3d 900 (2007).

Transfer to Creditors.

An embarrassed debtor may convey his property to a creditor in satisfaction of a debt, even though the effect of the transfer would defeat the rest of his creditors, but such transfer must be in good faith and for a valid debt. Sieb's Hatcheries, Inc. v. Lindley, 111 F. Supp. 705 (W.D. Ark. 1953), aff'd, 209 F.2d 674 (8th Cir. 1954) (preceding decisions under prior law).

Value.

In determining that the ex-husband did not receive a reasonably equivalent value for business assets transferred to his ex-wife, the trial court did not err in failing to diminish the net value of assets transferred to the wife by a contingent liability associated with the business assets where the wife never submitted any evidence regarding the likelihood that the contingent liability would materialize. FDIC v. Bell, 106 F.3d 258 (8th Cir. 1997), cert. denied, 523 U.S. 1022, 118 S. Ct. 1304, 140 L. Ed. 2d 470 (1998).

Cited: Roberts v. Feltman, 55 Ark. App. 142, 932 S.W.2d 781 (1996); Brown v. Brown, 265 B.R. 167 (Bankr. E.D. Ark. 2001).