This case involves the transfers of farming assets among family members in an attempt to defeat a creditor’s interest. Specifically, in 2004, the plaintiff attempted to collect a money judgment against a farmer. The plaintiff claimed that the farmer had fraudulently transferred the 2004 crop proceeds to his wife and his father, and that the plaintiff was entitled to the proceeds of the 2004 crop. In addition, after transferring the crop proceeds to his wife, the wife loaned the money to her father-in-law. The plaintiff claimed that its interest in the farming proceeds was senior to the father’s interest, and the court agreed.
The only remaining issue for trial was the status of the transfer of the proceeds of the 2004 crop from the farmer to his wife. The court ruled at trial that the transaction was fraudulent and the plaintiff was entitled to the proceeds from the farmer’s 2004 crop. The court found that the farmer’s father was the “mastermind” behind the fraudulent scheme in order to place the farming operation outside the reach of creditors. While the plaintiff seized the crops and prepared to sell them, the family appealed the trial court’s ruling.
The father claimed that he had a perfected security interest in the 2004 crop proceeds and that he was a “protected transferee” under Iowa law. The father’s claims were dismissed and the appellate court affirmed, cautioning the father that he filed an inappropriate action in order to stall the proceedings. Cargill v. Mitchell, No. 8-515/07-0778 (Iowa Ct. App. Oct. 29, 2008).