The opinion of the court was delivered by: LUONGO
On January 21, 1977, judgment was entered for plaintiff, Massey-Ferguson, Inc., against defendant, Anthony R. Finocchiaro, on a jury verdict in the amount of $ 188,783.34. Massey-Ferguson subsequently initiated efforts to satisfy its judgment. See generally Fed.R.Civ.P. 69(a). In the latter part of August 1979, plaintiff secured a writ of execution against real property that had been held at one time by defendant and his wife Marion as tenants by the entireties, but which had been conveyed to their daughter Marilyn after the entry of judgment in this case. Marilyn Finocchiaro, the record owner and garnishee of the property upon which Massey-Ferguson has levied, now moves to quash the writ of execution.
The garnishee argues that because the property to which she now holds title had been owned by her parents as tenants by the entireties, it was never subject to execution by a judgment creditor of her father individually. She contends that her parents could therefore dispose of the property as they wished, that the transfer to her was proper, and that her father has no present attachable interest in the property. Massey-Ferguson premises its assertion that the levy is proper on two theories. It first invokes the Uniform Fraudulent Conveyance Act, 39 Pa.Stat.Ann. §§ 351-363 (Purdon 1954), arguing that a guaranty executed by Marion Finocchiaro created a contingent liability in her for the debt which Massey-Ferguson seeks to collect; that under the Act the status of the Finocchiaros as judgment and contingent debtors, respectively, renders the transfer to their daughter fraudulent; that Finocchiaro became sole owner of the property on the death of his wife; and that the property may be attached by Massey-Ferguson to satisfy its outstanding judgment. In the alternative, Massey-Ferguson attacks the transfer to the garnishee as a sham.
A hearing was held in this matter on July 2, 1980, to resolve these various issues. After review of the exhibits entered into evidence during the hearing and my handwritten notes of the testimony adduced, and upon consideration of the memoranda and requests for findings submitted by the parties, I conclude that the property is properly subject to execution and that the garnishee's motion to quash the writ must be denied.
I. THE FACTUAL BACKGROUND
The subsidiary facts in this case are largely undisputed, although the parties do vigorously contest the inferences to be drawn therefrom. In early January 1977, defendant's sole proprietorship, Finocchiaro Equipment Company (FECO), became an authorized dealer of industrial and construction machinery manufactured by plaintiff. Stipulation (Doc. No. 63) P 2. On February 6, 1968, defendant and his wife executed a guaranty of FECO's obligations to plaintiff. Plaintiff's Exhibit No. 3. At that time, the Finocchiaros owned four parcels of real estate in Philadelphia. Stipulation (Doc. No. 63) P 13.
FECO subsequently entered into a distributorship agreement with Massey-Ferguson, which became effective on October 15, 1970. Plaintiff's Exhibit No. 5. Shortly after FECO undertook the distribution of Massey-Ferguson construction machinery, defendant incorporated his business, transferring all assets and liabilities of FECO to Finocchiaro Equipment Company, Inc. (FECO, Inc.). Plaintiff's Exhibit No. 9 (Complaint P 11). Mrs. Finocchiaro's apprehension about the broadened scope of the business resulting from the distributorship undertaking provided the impetus for incorporation. Defendant was the president and sole shareholder of FECO, Inc.
FECO, Inc., then entered into an industrial machinery dealer sales agreement with Massey-Ferguson, which became effective on March 31, 1971. Plaintiff's Exhibit No. 6. On April 9, 1974, defendant executed a document personally guaranteeing all obligations of FECO, Inc., to Massey-Ferguson. Plaintiff's Exhibit No. 7. On April 10, 1974, FECO, Inc., entered into an industrial machinery dealer sales agreement with an effective date of April 15, 1974, and signed a rental fleet financing and security agreement. Plaintiff's Exhibit No. 9 (original complaint with attached exhibits). During the period from October 30, 1970, to May 3, 1974, Massey-Ferguson's invoices reflect the sale of machinery to FECO, rather than FECO, Inc. Plaintiff's Exhibits Nos. 2, 4. The first invoice directed to FECO, Inc., bears the date July 31, 1974. Plaintiff's Exhibit No. 2, Invoice # 403279.
In December 1975, plaintiff's counsel advised defendant of Massey-Ferguson's intention to institute legal action to recover the balance owed on outstanding invoices from plaintiff to FECO and FECO, Inc. Plaintiff's Exhibit No. 8. Plaintiff filed suit against Finocchiaro and FECO, Inc., on February 5, 1976, and on January 27, 1977, obtained a judgment against Finocchiaro in the amount of $ 188,783.34. Plaintiff's Exhibits Nos. 9, 10 (copies of complaint and judgment order). After unsuccessful attempts to refinance the Torresdale Avenue properties both prior to and after the entry of judgment in this action, see Plaintiff's Exhibit No. 12, defendant filed a voluntary petition in bankruptcy on July 21, 1977, in which he sought to discharge the debt to Massey-Ferguson. Plaintiff's Exhibit No. 11. While the bankruptcy proceeding was pending, defendant and his wife conveyed their four Philadelphia properties to the garnishee, who recorded her deed on March 21, 1978. Stipulation (Doc. No. 63) PP 13, 14. The conveyance was without consideration. See note 3 infra. Approximately two months later, on May 25, 1978, defendant's wife died. Stipulation (Doc. No. 63) P 15. Defendant again attempted to refinance the Torresdale Avenue properties in mid-1978, but was refused because he did not hold title. Plaintiff's Exhibit No. 12. On November 27, 1978, the bankruptcy court entered an order, on stipulation by the parties, that defendant's debt to Massey-Ferguson was nondischargeable. Plaintiff's Exhibits Nos. 15, 16 (copies of stipulation and order). In early 1979, plaintiff stepped up its efforts to satisfy the judgment, and in October 1979, served upon the garnishee the writ of execution that she now moves to quash. Doc. Nos. 50, 54.
II. THE VALIDITY OF THE WRIT
As I have already noted, plaintiff advances essentially two arguments in justification of the writ. First, Massey-Ferguson contends that the transfer of the properties is a fraudulent conveyance. Second, plaintiff suggests that the transfer was a sham and that defendant is, in fact, the owner of the property.
The second theory, which was raised only in plaintiff's concluding argument at the hearing on this matter and which is not specifically addressed in plaintiff's post-hearing submissions, merits just a brief mention. Massey-Ferguson pegs its argument that defendant is the true owner of the parcels on defendant's attempt to refinance the property subsequent to the conveyance to the garnishee. I cannot accept plaintiff's argument. In my view, the inference urged by Massey-Ferguson requires too great a leap from fact to conclusion. Certainly, defendant's action would be consistent with ownership of the properties, but that is not the only conclusion to be drawn under the circumstances of this case. It is equally plausible to conclude that the garnishee may have been willing to permit the refinancing of the properties to help her father out of a difficult situation and that defendant's inquiries were preliminary to that scheme. Moreover, and even more to the point, plaintiff has produced no other evidence that would be conclusive of or consistent with defendant's control over the properties. There is nothing in the record to show, for example, how the rental income from the properties is distributed or who bears responsibility for maintenance, improvements, assessments, and mortgage payments. In the absence of any such evidence, I am simply unable to conclude that the transfer was a sham.
B. A Fraudulent Conveyance
In her motion to quash the writ, the garnishee disputes the validity of the 1968 guaranty to the underlying debt and the existence of any contingent liability therefor in Marion Finocchiaro. The garnishee argues that the 1968 guaranty pertained to debts incurred by FECO, the sole proprietorship, and did not extend to the obligations of FECO, Inc., the corporation which superseded the sole proprietorship and with whom Massey-Ferguson had dealt since March 1971. She relies on the general principle of suretyship and guaranty law that a material change in the terms of the contract of guaranty, including a change in the principal debtor or obligor, releases the guarantor in the absence of an express assent to the change. See, e.g., Teledyne Mid-America Corp. v. HOH Corp., 486 F.2d 987, 990-91 (9th Cir. ...