and it had been able to meet its fixed liabilities, and its financial condition had been stable for about eight years.
17. In the only transaction involving Rosslyn Realty Company, Robert P. Stoudt loaned Robert N. St. Mary $1,000.00 on September 18, 1968, taking the 50 percent interest of Taxpayer as collateral security for the loan. At the present time, a half-interest in the corporation has a market value of between $15,000.00 and $20,000.00.
18. On or about May 20, 1966, Taxpayer furnished a revenue officer with a financial statement which indicated that his liabilities were substantially in excess of his assets.
19. In July of 1967 Margaret E. St. Mary formally divorced the Taxpayer.
20. In August, 1967, Taxpayer married Mrs. Lucille Schmuldt.
21. On February 15, 1968, Taxpayer pledged the stock of Lehigh Valley Development Company for an $11,500.00 loan from H. E. Stoudt & Sons, Inc. with the consent of Lucille Schmuldt St. Mary.
22. On September 18, 1968, Taxpayer pledged his interest in Rosslyn Realty Company as collateral for a guarantee by Robert P. Stoudt of a loan which Taxpayer obtained from a local bank.
23. The transfer of June 6, 1965, by Robert N. St. Mary to Lucille S. St. Mary, was a transfer of a valuable asset.
23(a). The transfer of June 6, 1965, was made while the liabilities of the Taxpayer were greatly in excess of his assets.
24. The transfer of June 6, 1965, by Taxpayer to the second Mrs. St. Mary was not supported by adequate or fair consideration.
25. The transfer of June 6, 1965, was intended to hinder and delay creditors of Robert N. St. Mary, including the United States of America.
26. The transfer of June 6, 1965, was made in contemplation of death and the subsequent exercise of dominion and control over his shares of stock in Lehigh Valley Development Company and Rosslyn Realty Company indicated that Robert N. St. Mary treated the stock as his own and in fact revoked the previous transfers to Lucille Schmuldt.
The Court feels compelled to discuss four major areas of contention before entering its conclusions of law. The questions are whether or not the conveyance by Taxpayer to his second wife was fraudulent as to the Government; if not, was the conveyance revoked by Taxpayer; whether or not under the Pennsylvania "Dean Man's Rule" the testimony of the first three witnesses for the Government was competent and admissible; and whether a tape recording of Robert N. St. Mary's voice was admissible to show consideration and intent. In discussing these areas of law, the Court is indebted to counsel for both the Government and Mrs. St. Mary for their extraordinarily well-written briefs.
We find that the conveyance made by the Taxpayer may be set aside under Pennsylvania law as fraudulent. 39 P.S. § 354 provides
Every conveyance made and every obligation incurred 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.