Appeal from decree of Court of Common Pleas of Lancaster County, Equity Docket No. 13, of 1967, in case of The First National Bank of Marietta v. Paul E. Hoffines and Mary E. Hoffines.
Allen H. Smith, with him Charles V. Snyder, Jr., for appellants.
Henry J. Rutherford, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Justice Roberts concurs in the result. Mr. Chief Justice Bell dissents.
The principal issue on this appeal is whether, under § 4 of the Fraudulent Conveyance Act,*fn1 two separate conveyances of realty, seven months apart, by the endorser of a demand note to his wife and himself as tenants by the entireties are deemed fraudulent as to the holder of such note.*fn2
One William Coller, between 1954 and April 1959, owned a gasoline service station in Marietta, Lancaster County, and, during that period, made various loans at the First National Bank of Marietta (Bank) upon demand notes wherein Paul Hoffines (Hoffines), Coller's brother-in-law, was the endorser. In April 1959, Coller, still indebted to the Bank, sold the station to one Leonard Reisinger. To effectuate such purchase, Reisinger was obliged to borrow $6,800 from the Bank and a portion of the proceeds of that loan was to be paid in liquidation of Coller's indebtedness to the Bank. To that end, Reisinger, on April 30, 1959, executed a demand note for $6,800 and Hoffines endorsed this note.*fn3
On April 18, 1959 -- twelve days before Hoffines endorsed Reisinger's note at the Bank -- Hoffines conveyed, for a stated consideration of $1.00, four tracts of land located in East Donegal Township, Lancaster County, -- which he had owned for nine and one-half years in his own name -- to Mrs. Hoffines and himself as tenants by the entireties. The Bank's complaint in the instant action averred and Hoffines and Mrs. Hoffines, in their answer, admitted that, on April 18, 1959, -- the date of the conveyance -- Hoffines was solvent and the Bank introduced these portions of the pleadings in evidence. The court below found as a fact that Hoffines was then solvent.*fn4 Therefore, on the date of this conveyance, it is established that this conveyance was made for a nominal consideration, that Hoffines was then solvent and that the obligation upon which the Bank claims a creditor status did not arise until twelve days after the conveyance.
On November 5, 1959 -- six months subsequent to the April 30, 1959 note and over two years prior to the December 15, 1961 note, -- Hoffines' mother having died in 1958, the Orphans' Court of Lancaster County awarded to Hoffines two tracts of land located in East
Donegal Township, Lancaster County, which had been owned by Hoffines' mother at the time of her death. On December 11, 1959, Hoffines conveyed this realty to Mrs. Hoffines and himself as tenants by the entireties. The court below, as to this conveyance, found as a fact that, by reason of this conveyance and the conveyance of April 18, 1959, Hoffines "became insolvent" and that such conveyances "rendered [Hoffines] insolvent."*fn5 The court below did not find that, on December 11, 1959, Hoffines was then insolvent.
Moreover, the court below, in the entry of its decree, relied solely upon § 4 of the statute. If the court below had relied upon § 7 of the statute which requires proof of actual intent to defraud, as opposed to the presumption of such intent under § 4, it must be noted that the court made no finding of an "actual intent to defraud" except that which might arise, by implication, from the court's finding that, when the ...