Missouri Revised Statutes

Chapter 428
Fraudulent Conveyances and Liens

August 28, 2013




Short title.

428.005. Sections 428.005 to 428.059 may be cited as the "Uniform Fraudulent Transfer Act".

(L. 1992 S.B. 448)



Definitions.

428.009. As used in sections 428.005 to 428.059, the following terms mean:

(1) "Affiliate":

(a) A person who directly or indirectly owns, controls, or holds with power to vote, twenty percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities,

(i) As a fiduciary or agent without sole discretionary power to vote the securities; or

(ii) Solely to secure a debt, if the person has not exercised the power to vote;

(b) A corporation twenty percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor or a person who directly or indirectly owns, controls, or holds, with power to vote, twenty percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities,

(i) As fiduciary or agent without sole power to vote the securities; or

(ii) Solely to secure a debt, if the person has not in fact exercised the power to vote;

(c) A person whose business is operated by the debtor under a lease or other agreement, or a person substantially all of whose assets are controlled by the debtor; or

(d) A person who operates the debtor's business under a lease or other agreement or controls substantially all of the debtor's assets.

(2) "Asset", property of a debtor, but the term does not include:

(a) Property to the extent it is encumbered by a valid lien;

(b) Property to the extent it is generally exempt under nonbankruptcy law; or

(c) An interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant.

(3) "Claim", a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.

(4) "Creditor", a person who has a claim.

(5) "Debt", liability on a claim.

(6) "Debtor", a person who is liable on a claim.

(7) "Insider" includes:

(a) If the debtor is an individual,

a. A relative of the debtor or of a general partner of the debtor;

b. A partnership in which the debtor is a general partner;

c. A general partner in a partnership described in subparagraph b; or

d. A corporation of which the debtor is a director, officer, or person in control;

(b) If the debtor is a corporation,

a. A director of the debtor;

b. An officer of the debtor;

c. A person in control of the debtor;

d. A partnership in which the debtor is a general partner;

e. A general partner in a partnership described in subparagraph d; or

f. A relative of a general partner, director, officer, or person in control of the debtor;

(c) If the debtor is a partnership,

a. A general partner in the debtor;

b. A relative of a general partner in, a general partner of, or a person in control of the debtor;

c. Another partnership in which the debtor is a general partner;

d. A general partner in a partnership described in subparagraph c; or

e. A person in control of the debtor;

(d) An affiliate, or an insider of an affiliate as if the affiliate were the debtor; and

(e) A managing agent of the debtor.

(8) "Lien", a charge against or an interest in property to secure payment of a debt or performance of an obligation, and includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common-law lien, or a statutory lien.

(9) "Person", an individual, partnership, corporation, association, organization, government or governmental subdivision or agency, business trust, estate, trust, or any other legal or commercial entity.

(10) "Property", anything that may be the subject of ownership.

(11) "Relative", an individual related by consanguinity within the third degree as determined by the common law, a spouse, or an individual related to a spouse within the third degree as so determined, and includes an individual in an adoptive relationship within the third degree.

(12) "Transfer", every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.

(13) "Valid lien", a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings.

(L. 1992 S.B. 448)



Insolvency.

428.014. 1. A debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets at a fair valuation.

2. A debtor who is generally not paying his debts as they become due is presumed to be insolvent.

3. A partnership is insolvent under subsection 1 of this section if the sum of the partnership's debts is greater than the aggregate, at a fair valuation, of all of the partnership's assets and the sum of the excess of the value of each general partner's nonpartnership assets over the partner's nonpartnership debts.

4. Assets under this section do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors or that has been transferred in a manner making the transfer voidable under sections 428.005 to 428.059.

5. Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.

(L. 1992 S.B. 448)



Value.

428.019. 1. Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise made otherwise than in the ordinary course of the promisor's business to furnish support to the debtor or another person.

2. For the purposes of subdivision (2) of subsection 1 of section 428.024 and section 428.029, a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust, or security agreement.

3. A transfer is made for present value if the exchange between the debtor and the transferee is intended by them to be contemporaneous and is in fact substantially contemporaneous.

(L. 1992 S.B. 448)



Transfers fraudulent as to present and future creditors.

428.024. 1. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

(1) With actual intent to hinder, delay, or defraud any creditor of the debtor; or

(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

(a) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or

(b) Intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.

2. In determining actual intent under subdivision (1) of subsection 1 of this section, consideration may be given, among other factors, to whether:

(1) The transfer or obligation was to an insider;

(2) The debtor retained possession or control of the property transferred after the transfer;

(3) The transfer or obligation was disclosed or concealed;

(4) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

(5) The transfer was of substantially all the debtor's assets;

(6) The debtor absconded;

(7) The debtor removed or concealed assets;

(8) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

(9) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(10) The transfer occurred shortly before or shortly after a substantial debt was incurred; and

(11) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

(L. 1992 S.B. 448)

(2004) Failure to specifically plead theory of piercing the corporate veil or alter ego does not preclude creditor from recovering under Uniform Fraudulent Transfer Act. Fischer v. Brancato, 147 S.W.3d 794 (Mo.App.E.D.).



Transfers fraudulent as to present creditors.

428.029. 1. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

2. A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent.

(L. 1992 S.B. 448)



When transfer is made or obligation is incurred.

428.034. For the purposes of sections 428.005 to 428.059:

(1) A transfer is made:

(a) With respect to an asset that is real property other than a fixture, but including the interest of a seller or purchaser under a contract for the sale of the asset, when the transfer is so far perfected that a good-faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee; and

(b) With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than under sections 428.005 to 428.059 that is superior to the interest of the transferee;

(2) If applicable law permits the transfer to be perfected as provided in subdivision (1) of this section and the transfer is not so perfected before the commencement of an action for relief under sections 428.005 to 428.059, the transfer is deemed made immediately before the commencement of the action;

(3) If applicable law does not permit the transfer to be perfected as provided in subdivision (1) of this section, the transfer is made when it becomes effective between the debtor and the transferee;

(4) A transfer is not made until the debtor has acquired rights in the asset transferred;

(5) An obligation is incurred:

(a) If oral, when it becomes effective between the parties; or

(b) If evidenced by a writing, when the writing executed by the obligor is delivered to or for the benefit of the obligee.

(L. 1992 S.B. 448)



Remedies of creditors.

428.039. 1. In an action for relief against a transfer or obligation under sections 428.005 to 428.059, a creditor, subject to the limitations in section 428.044, may obtain:

(1) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim;

(2) An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by applicable laws of this state;

(3) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure,

(a) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;

(b) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or

(c) Any other relief the circumstances may require.

2. If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.

(L. 1992 S.B. 448)



Defenses, liability, and protection of transferee.

428.044. 1. A transfer or obligation is not voidable under subdivision (1) of subsection 1 of section 428.024 against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.

2. Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under subdivision (1) of subsection 1 of section 428.039, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection 3 of this section or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against:

(1) The first transferee of the asset or the person for whose benefit the transfer was made; or

(2) Any subsequent transferee other than a good-faith transferee who took for value or from any subsequent transferee.

3. If the judgment under subsection 2 of this section is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.

4. Notwithstanding voidability of a transfer or an obligation under sections 428.005 to 428.059, a good-faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to:

(1) A lien on or a right to retain any interest in the asset transferred;

(2) Enforcement of any obligation incurred; or

(3) A reduction in the amount of the liability on the judgment.

5. A transfer is not voidable under subdivision (2) of subsection 1 of section 428.024 or section 428.029 if the transfer results from:

(1) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or

(2) Enforcement of a security interest in compliance with sections 400.9-101 to 400.9-507.

6. A transfer is not voidable under subsection 2 of section 428.029:

(1) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made unless the new value was secured by a valid lien;

(2) If made in the ordinary course of business or financial affairs of the debtor and the insider; or

(3) If made pursuant to a good-faith effort to rehabilitate the debtor and the transfer secured present value given for that purpose as well as an antecedent debt of the debtor.

(L. 1992 S.B. 448)



Extinguishment of claim for relief or cause of action.

428.049. A claim for relief or cause of action with respect to a fraudulent transfer or obligation under sections 428.005 to 428.059 is extinguished unless action is brought:

(1) Under subdivision (1) of subsection 1 of section 428.024, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;

(2) Under subdivision (2) of subsection 1 of section 428.024 or subsection 1 of section 428.029, within four years after the transfer was made or the obligation was incurred; or

(3) Under subsection 2 of section 428.029, within one year after the transfer was made or the obligation was incurred.

(L. 1992 S.B. 448)



Supplementary provisions.

428.054. Unless displaced by the provisions of sections 428.005 to 428.059, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement its provisions.

(L. 1992 S.B. 448)



Uniformity of applications and construction.

428.059. Sections 428.005 to 428.059 shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of sections 428.005 to 428.059 among states enacting it.

(L. 1992 S.B. 448)



Definitions.

428.105. 1. For the purposes of sections 428.105 to 428.135:

(1) "Court" is the United States Supreme Court, Federal Courts of Appeal, Federal District Courts, Federal Magistrates, Federal Administrative Courts, Missouri supreme court, Missouri courts of appeal, Missouri circuit courts, and Missouri associate circuit courts but shall not include municipal courts;

(2) "Filing officer" is the secretary of state, the recorder of deeds of any county, the circuit clerk of any county or any public official or authorized employee required by law to accept for filing and keep as a public record any lien, deed, instrument, judgment or other document, whether in paper, electronic or other form, required to be filed or recorded under the laws of this state;

(3) "Nonconsensual common law lien" is a document that purports to assert a lien against the assets, real or personal, of any person and that, regardless of any self-description:

(a) Is not expressly provided for by a specific state or federal statute;

(b) Does not depend upon the consent of the owner of the property affected or the existence of a contract for its existence; and

(c) Is not an equitable or constructive lien imposed by a state or federal court of competent jurisdiction.

2. Nothing in sections 428.105 to 428.135 shall be construed to create a lien or interest in property not otherwise existing under state or federal law.

3. Nothing in sections 428.105 to 428.135 shall be construed to permit a municipal court to create a lien or interest in property not otherwise existing under state or federal law.

(L. 1996 S.B. 869 D-1)



Filing officer may reject lien, exceptions--filing officer to accept notice of invalid lien, when.

428.110. 1. Any filing officer may reject for filing or recording any nonconsensual common law lien. This section shall not be construed to permit rejection of a document that is shown to be authorized by contract, lease or statute or imposed by a state or federal court of competent jurisdiction or filed by a licensed attorney, a financial institution including, but not limited to, any commercial bank, savings and loan association or credit union or a Missouri state licensed mortgage company or mortgage broker.

2. If a nonconsensual common law lien has been accepted for filing, the filing officer shall accept for filing a sworn notice of invalid lien on a form provided by the filing officer signed and submitted by the person against whom such lien was filed or such person's attorney. The form shall be captioned "Notice of Invalid Lien" and shall state the name and address of the person on whose behalf such notice is filed, the name and address of the lien claimant and a clear reference to the document or documents the person believes constitute a nonconsensual common law lien. A copy of the notice of invalid lien shall be mailed by the filing officer to the lien claimant at the lien claimant's last known address within one business day. No filing officer, county or the state shall be liable for the acceptance for filing of a nonconsensual common law lien, nor for the acceptance for filing of a sworn notice of invalid lien pursuant to this subsection.

(L. 1996 S.B. 869 D-2)



Lien claimant may petition court, procedure.

428.115. Any person who attempts to file a lien against real or personal property that is rejected pursuant to subsection 1 of section 428.110 may petition the circuit court of the county of the filing officer that rejected such lien for an order, which may be granted ex parte, directing the filing officer to file or record the lien pending a hearing on whether the lien constitutes a nonconsensual common law lien. The lien claimant shall appear before the court as the petitioner within ten business days following the date of service of the petition and order on the filing officer, and show cause, if any, why the lien should not be declared void and other relief provided for by section 428.125 should not be granted. The petition shall state the grounds upon which relief is requested, and shall be supported by the affidavit of the petitioner or the petitioner's attorney setting forth a concise statement of the facts upon which the claim for relief is based.

(L. 1996 S.B. 869 D-3)



Petition to declare lien invalid, procedure.

428.120. Any person who has real or personal property or an interest therein, which is subject to a recorded nonconsensual common law lien, who believes such lien is invalid, may petition the circuit court of the county in which the lien has been recorded or filed for an order, which may be granted ex parte, directing the lien claimant to appear before the court within ten business days following the date of service of the petition and order on the lien claimant, and show cause, if any, why the claim of lien should not be declared void and other relief provided for by section 428.125 should not be granted. The petition shall state the grounds upon which relief is requested, and shall be supported by the affidavit of the petitioner or the petitioner's attorney setting forth a concise statement of the facts upon which the claim for relief is based.

(L. 1996 S.B. 869 D-4)



Contents of order--remedies--copy of order to be filed.

428.125. 1. Any order rendered pursuant to section 428.115 or 428.120 shall clearly state that if the lien claimant fails to appear at the time and place noted, the claim of lien shall be declared void ab initio and released and that the lien claimant shall be ordered to pay the costs incurred by any other party to the proceeding, including reasonable attorney's fees.

2. If, following a hearing on the matter, the court determines that the document at issue is a nonconsensual common law lien, the court shall issue an order declaring the lien void ab initio, releasing the lien and awarding costs and reasonable attorney's fees to the prevailing party.

3. If the court determines that the claim of lien is valid, the court shall issue an order so stating and may award costs and reasonable attorney's fees to the prevailing party.

4. A certified copy of any order rendered pursuant to this section shall be filed by the circuit clerk in the office of the appropriate filing officer.

(L. 1996 S.B. 869 D-5)



Filing officers not liable.

428.130. Filing officers and any employees thereof, acting in the scope of employment, shall not be liable for damages pursuant to sections 428.105 to 428.125 and, except as otherwise provided by law, shall not be required to defend decisions to accept or reject any documents.

(L. 1996 S.B. 869 D-6)



Liability for filing or recording certain documents.

428.135. Any person who records or files in the office of a filing officer:

(1) Any document purporting to create a nonconsensual common law lien against real or personal property; or

(2) A notice of invalid lien pursuant to subsection 2 of section 428.110 with respect to a valid lien and which the filer knew to be false at the time of filing; shall be liable to the damaged party for actual damages or five thousand dollars, whichever is greater plus costs and reasonable attorney's fees.

(L. 1996 S.B. 869 D-7)

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