6 A.2d 270 | Pa. | 1939
Plaintiff, a creditor of Jacob Filderman, filed a bill in equity to set aside as fraudulent the conveyance by Filderman in May, 1934, of four parcels of real estate to himself and his wife as tenants by the entireties. Filderman has since died and his personal representative *587 was substituted on the record. The children of Filderman were also joined as defendants, since decedent and his wife had conveyed the land to them in March, 1935. The chancellor found that the conveyances were not made with an intent to defraud creditors and that they did not render Filderman insolvent, and accordingly dismissed the bill. Plaintiff's exceptions to this adjudication were argued before the court en banc which overruled the conclusions of the chancellor and found that Filderman had made the conveyances with intent to defraud the plaintiff. The court thereupon entered a decree declaring the conveyances to be void as against plaintiff's claim, and from it defendants have appealed.
The Fraudulent Conveyance Act of May 21, 1921, P. L. 1045, Section 7, provides that "every conveyance made . . . with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors." Section 1 of the act defines a "creditor" to be a "person having any claim, whether matured or unmatured, . . . absolute, fixed, or contingent" and a "debt" as any "legal liability . . . liquidated or unliquidated, absolute, fixed, or contingent." There can be no doubt that plaintiff is entitled to the protection of this act, for when the conveyances in the instant case are considered in the light of the circumstances surrounding them, the only reasonable conclusion is that Filderman sought to fraudulently remove his property from the reach of his lawful creditors.
In 1915 Filderman had been appointed guardian of the plaintiff, who was then a minor. In November, 1933, several months after plaintiff had become of age, a citation was issued on Filderman to file his account as guardian, and on February 26, 1934, he complied by filing an account which showed that he had invested the entire estate of the ward in an illegal investment. *588
Accordingly, at the first hearing on the account held on May 7, 1934, plaintiff made a claim for surcharge against Filderman. On August 14, 1934, the Orphans' Court entered a decree surcharging the guardian in the sum of $3,500, and on appeal to this court that decree was affirmed (Iscovitz's Estate,
At the beginning of 1934 Filderman was a man of some wealth. His assets at that time consisted of the four pieces of property here in question, a retail dry goods business, an account in the Philadelphia Savings Fund Society in the amount of $2,000, and another bank account of over $2,000. Beginning shortly after the guardian's account was filed, when it was apparent that he would probably become liable to plaintiff for $3,500, Filderman gradually divested himself of all his real and personal property. In the latter part of April, 1934, he sold his dry goods business to a man who had been employed by him as a clerk in the store. Although the testimony shows that Filderman received $1,600 in cash at the time of the sale, the record is silent as to what became of the money. No corresponding deposit appears in the statements of Filderman's bank accounts which were all offered in evidence. In addition the purchaser's savings fund account which was alleged to be the source of the $1,600 was not produced to show that the amount had actually been withdrawn. The entire testimony relating to this transaction is vague and uncertain, and is consistent with a belief that no real value passed permanently to the vendor and that the sale was a part of a scheme to divest himself of his property for the purpose of defrauding his creditors.
On May 10 and 11, 1934, Filderman conveyed the four parcels of land here in question without consideration to a straw man who in turn conveyed the property to Filderman and his wife as tenants by the entireties. On May 12, 1934, he transferred the savings fund account *589
to himself and his wife. The obvious purpose of these transactions was to place the land and the account beyond the reach of his individual creditors, for if the property were lawfully held by the husband and wife as tenants by the entireties it could not be reached by the creditors of the husband: Gasner v. Pierce,
The chancellor had limited himself to the narrow inquiry as to the state of Filderman's finances on the date of the conveyance, but the court en banc properly examined the entire course of conduct of the grantor and concluded that the evidence showed an intention to defraud the plaintiff. That such is true is too plain for argument. Section 7 of the Act of 1921, supra, requires that the intent to defraud must be actual as distinguished from intent presumed in law. Where the transaction is between husband and wife actual intent does appear where it is shown that there was a deed given for a nominal consideration. This is but a presumption of fact and places on the wife the burden of showing the fairness of the transaction: Queen-Favorite B. L. Assn. v. Burstein,
Each of the transactions in the instant case viewed alone might appear to be an ordinary and proper one, but when considered together the only reasonable conclusion is that Filderman initiated this series of transfers of all his property for the sole purpose of preventing plaintiff from securing payment of his claim. That it was proper for the court below to examine the surrounding circumstances and subsequent events in ascertaining Filderman's intention cannot be doubted. In the usual case involving fraud, the intent cannot be shown by direct testimony, for it would be unusual for one about to defraud his creditors to proclaim his purpose. Hence it must necessarily be proved by facts and circumstances which taken together show the existence of fraud: Montgomery Web Co. v.Dienelt,
Decree affirmed, costs to be paid by appellants.
