Steven A. Rosen, N. Johelson, Philadelphia, for appellants.
McTighe, Brown, Weiss, Bonner & Stewart, P. C., Desmond J. McTighe, Norristown, for appellee.
Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ.
[ 242 Pa. Super. Page 373]
This is an appeal to our Court from a Decree dated September 4, 1975, finalizing the Decree Nisi of November 29, 1974. Appellee has sought in its equity action a reconveyance of certain real estate from appellants Halvorsen to appellants Marcus. Continental Bank is a judgment
[ 242 Pa. Super. Page 374]
creditor of the Marcuses and alleged a fraudulent conveyance to defeat its creditor rights.
From 1969 to 1971, appellant Jerome Marcus served as president of Tobaccoland, Inc., a business engaged in owning and franchising tobacco shops. On September 15, 1969, appellants Marcus individually both executed an "unlimited surety agreement" in favor of appellee, on the strength of which agreement appellee loaned money to Marcus' business.*fn1 The total loan was partially secured by notes of Tobaccoland's franchises over to the franchisor, and partially by stock which was not readily transferable. With the loan in default and the bank's efforts at selling the stock failing,*fn2 the bank took judgment on May 3, 1971, for $173,197.21, an amount not presently in dispute. Although the loan agreement between these parties provides that demand in the event of default is waived, counsel for the bank, on April 19, 1971, made demand.
On April 12, 1971, the Marcuses transferred the real property where they resided to the Halvorsens, their daughter and son-in-law, for the nominal consideration of $1.00.*fn3 The conveyance was made under and subject "to the payment of a contained mortgage debt or principal sum of thirty five thousand ($35,000.00) dollars, cents (sic) reduced by payments on account of principal together with interest thereon as the same may accure (sic)". The fair market value of the property at the time of the conveyance was $39,000.00.*fn4
Concurrently with the transfer to the Halvorsens the Marcuses leased the property back from them, obligating themselves for a term of five years at a total cash rental
[ 242 Pa. Super. Page 375]
of $18,780.00, or $313.00 per month, this monthly rental being the exact amount of the mortgage monthly payments.*fn5 The Marcuses continued to be bound to the mortgage, and they made the rental payments directly to the mortgagee, as the lease provided. Further, under the lease, it was the obligation of the Marcuses, for the stated term, to pay any water and sewer rents, insurance, and applicable taxes.
Appellee's complaint sought, inter alia, a reconveyance of the property to the Marcuses, arguing that the transaction was fraudulent as to the appellee, a creditor. Following trial, and in support of the Decree Nisi, Chancellor TREDINNICK, J., found, as a matter of fact, that the personal assets of the Marcuses immediately prior to the conveyance were $16,000.00. He further found as fact that the amount of appellee's judgment was $173,197.21, which judgment included at the time of the trial (August 6, 1974) the sum of $84,266.35 owed primarily by Tobaccoland, Inc. The lower court concluded that the conveyance violated the "Uniform Fraudulent Conveyance Act", Act of 1921, May 21, P.L. 1045, No. 379, 39 P.S. § 351 et seq. (hereinafter referred to as "the Act"). The Decree Nisi declared the deed fraudulent and void, ordered a reconveyance to the Marcuses, and forbade the Halvorsens from conveying the ...