283 F. 552 | E.D. Mich. | 1922
This is a motion to dismiss the bill of complaint, which bill was filed by Jay E. McMullen, trustee in bankruptcy of the estate of the defendant Bernard Zabawski, against the said bankrupt and his wife, defendant Stella Zabawski, to set aside an alleged fraudulent transfer of property by said bankrupt. The bill is filed pursuant to the authority vested in such trustee by section 70e of the Bankruptcy Act (Comp. St. § 9654), which provides as follows:
“The trustee may avoid any transfer by tbe bankrupt of his property which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have received it, except a bona fide holder for value. For the purpose of such recovery any court of bankruptcy as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy bad not intervened, shall have concurrent jurisdiction.”
The bill alleges in substance that on July 21, 1919, the defendant Bernard Zabawski filed a voluntary petition in bankruptcy in this court, and was thereupon duly adjudicated a bankrupt, and the plaintiff was therefter elected and qualified as trustee, and still continues in the per
The defendants have filed a motion to dismiss the bill on the grounds (1) that the said bankrupt was granted a final discharge in bankruptcy on October 4, 1920, prior to the filing of said bill, and no motion to vacate said discharge has been made; (2) that the property involved was held by the defendants as tenants by the entirety, and therefore no interest .¡therein vested in the plaintiff as trustee in bankruptcy; and (3) that the bill is not properly verified.
1. No authority has been cited by counsel nor discovered by the court, and no reason assigned, in support of the contention that the granting of the unrevoked discharge to a bankrupt can affect the right of his trustee in bankruptcy to set aside, under section 70e, hereinbefore quoted, fraudulent transfers made by the bankrupt before the filing of the bankruptcy petition. In addition to the rights conferred on the trustee by said section 70e, it is provided by section 70a (4) of the Bankruptcy Act that — ■
“The trustee of the estate of a bankrupt, upon his appointment and qualification * * * shall * * * be vested by operation of law with the title of the bankrupt, as of the date he was adjudged bankrupt, * * * to all * * * property transferred by him in fraud of his creditors.”
2. Defendants invoke the familiar rule that neither of the owners of property held by them as tenants by the entirety has a separate interest therein, which can be disposed of by either one of such tenants or seized by his creditors or pass to his trustee in bankruptcy. In re Berry (D. C.) 247 Fed. 700. This result does not, as defendants ap^pear to suppose, arise from any theory or rule of exemption, as property held by the entireties is often, as here, not “exempt” in any true legal sense, as is, for example, a homestead; but the title itself to the property held by such an estate is not capable of division into separate interests, undivided or otherwise, but is one “entirety,” entirely owned by each tenant. There is, therefore, in such a tenancy, no title owned by one of such tenants, and no “property which prior to the filing of the petition he could by any means have transferred, or which might have been levied upon and sold under judicial process against him,” and consequently no interest therein which is “vested by operation of law,” in the trustee under section 70a (5) of the Bankruptcy Act. If, then, the premise of the defendants, that the property here involved is owned by the bankrupt and his wife as tenants by the entirety, were correct, the conclusion based thereon, that no part of such property can be reached by the plaintiff trustee, would be well founded.
Plaintiff trustee, however, relies upon the language of section 70e already hereinbefore quoted, providing that the “trustee may avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided.” - The right of a trustee in bankruptcy to avoid such a transfer of property depends upon the law of the state in which such property is located. Klinger v. Hyman (C. C. A. 2) 223 Fed. 257, 138 C. C. A. 499; Irwin v. Maple (C. C. A. 6) 252 Fed. 10, 164 C. C. A. 122. The property here involved being located in the state of Michigan, the law of such state relative to the rights of creditors of a person to avoid fraudulent transfers of property by such person controls the present case. It is well settled in Michigan by the decisions of the Supreme Court of that state that where one invests money, which he is equitably bound to keep for payment of his debts, in the purchase of property, the title to which is taken in the names of his wife and himself as tenants by the entirety, with intent to hinder, delay, or defraud his creditors, the transaction constitutes a fraudulent transfer, voidable by such creditors, and the latter may, by a proper bill in equity, reach the interest of such debtor in such property. Newlove v. Callaghan, 86 Mich. 297, 48 N. W. 1096, 24 Am. St. Rep. 123; Michigan Beef & Provision Co. v. Coll, 116 Mich. 261, 74 N. W. 475; Hackett v. Kenning, 170 Mich. 583, 136 N. W. 349; Lipp v. Jacobs, 198 Mich. 357, 164 N. W. 478; First State Bank v. Wallace, 201 Mich. 673, 167 N. W. 887.
As, therefore, all well-pleaded allegations of fact in the bill must, for the purposes of a motion to dismiss, be treated as true, the contention of the defendants that any interest of the bankrupt in the property involved is beyond the reach of his creditors, and therefore of his trustee in bankruptcy, cannot be sustained, at least at the present stage of this suit.
3. It is contended by counsel for defendants that “the bill of complaint does not comply with the United States general equity rules and that the same was not properly sworn to.” This is based solely upon the statement that the jurat attached to said bill “is not complete, in that it does not give the date upon which the bill of complaint was sworn to, or the full name of the affiant.” It is true that the said jurat, which was signed by the notary, contained no date, and referred therein to the affiant as “J. F. McMullen,” instead of “Jay F. McMullen.” Not only is it elementary law that pleadings are not insufficient (at least in the absence, as here, of a statute or rule to that effect) merely because the initials, instead of the full Christian name, of the parties thereto, are used therein, but the plaintiff signed his full name “Jay F. McMullen,” to his bill. The jurat recites that “he has read the * * * bill of complaint by him subscribed,” so there can be no claim that there is any doubt or uncertainty as to the name of the plaintiff. The carelessness in pleading which omitted the date from the jurat is not to be commended; however, the jurat recites that the bill was sworn to by the plaintiff, and the exact date on which the oath was taken is not here material nor necessary.
The motion to dismiss the bill must be denied; and it is so ordered-