The opinion of the court was delivered by: DUSEN
The defendant, Joseph Anderson Schofield, 3rd (hereinafter called 'remainderman'), who is the son of the decedent and whose remainder interest
in the land vested in possession on July 3, 1955, and his guardians have filed a motion for summary judgment, alleging that plaintiff is entitled to no relief since the remainderman has been confined in institutions since 1943, was adjudicated an incompetent in September 1955, and had nothing whatever to do with these improvements.
Defendant, personal representative of the deceased debtor's estate, has filed a motion to dismiss on the grounds stated in the motion for summary judgment and on the additional ground that the complaint fails to seek any remedy or relief against him.
By will and codicils probated shortly after her death on October 15, 1929, Sarah P. Anderson conveyed her entire interest in the improved farm land involved in this case to the decedent, as executor and trustee for Caroline Anderson, for life. Upon the death of Caroline Anderson (which occurred April 17, 1934), this improved farm land was conveyed to the decedent 'for and during the term of his natural life, and at his death then to Joseph Anderson Schofield 3rd * * * and his heirs and assigns forever provided' he survived the decedent. Decedent had 'possession of all and every part' of this improved farm land from October 15, 1929, until his death on July 3, 1955.
The prayers for relief in the complaint are broad and include a prayer for relief 'that is just, proper and equitable in the circumstances.'
I. Application of Uniform Fraudulent Conveyances Act (39 P.S. §§ 351-363).
At least part of the relief sought by plaintiff falls within the rights granted to a creditor, such as plaintiff, if the improvements made by the decedent constituted a fraudulent conveyance under the Act's terms. See 39 P.S. § 359(1).
The allegations of paragraphs 10 to 12 of the complaint
are sufficient to constitute the making of the alleged improvements fraudulent under this language of § 4 of the Act (39 P.S. § 354):
'Every conveyance made * * * by a person who is or will be thereby rendered insolvent, is fraudulent as to creditors, without regard to his actual intent, if the conveyance is made or the obligation is incurred without a fair consideration.'
It has been consistently held that a conveyance of assets by an insolvent grantor under conditions providing that it shall be held, directly or indirectly, for his own use is fraudulent as to creditors. See Commonwealth v. Smith, 1942, 344 Pa. 381, 384-385, 25 A.2d 694; Commonwealth Trust Co. of Pittsburgh v. Cirigliano, 1945, 352 Pa. 108, 111, 41 A.2d 863; Toff v. Vlahakis, 1955, 380 Pa. 512, 518, 112 A.2d 340; Clark v. Beltz, 1955, 179 Pa.Super. 456, 460, 116 A.2d 85; Glenn, 'Fraudulent Conveyances and Preferences' (Rev.Ed.), § 277, p. 474.
As Professor Glenn has stated, at page 474 ( § 276) of the above-mentioned treatise, 'When a debtor expends money in exchange for benefits conferred upon a third person, it should be asked whether the debtor's relations with the third person are such, by way of contract or property interest, that the transaction will increase the estate of the debtor rather than diminish it, or at least will leave the debtor's estate substantially as it was.' Although defendants contend that the spending of over $ 136,500 on the life estate converting money into improvements was a substitution of assets which 'were fully as available to his creditors as had been the money with which he paid for the improvements,'
it is clear from the authorities discussed under II below that the decedent's interest in the sum of $ 136,500 was reduced from an absolute interest in cash to a life interest in improvements,
which reduction was a substantial diminution of the decedent-debtor's estate.
II. Right of plaintiff to seek relief after death of decedent.
Defendants contend that, since the owner of an estate for life cannot voluntarily improve the land in which he has only a limited interest and charge part of the expense against the future interest in land,
any right which decedent's creditors, including plaintiff, had in the improvements was completely extinguished by his death.
However, this legal principle is subject to the well-recognized right of creditors to reach any interest conveyed by a decedent for his own benefit,
particularly at the time he was insolvent, if the exercise of such right does not interfere with the existing rights of others, such as the defendant remainderman, in the property. See Mackason's Appeal, 1862, 42 Pa. 330; In re Mogridge's Estate, 1941, 342 Pa. 308, 311-312, 20 A.2d 307; In re Bowers' Trust Estate, 1943, 346 Pa. 85, 89, 29 A.2d 519.