No. 32 Pittsburgh, 1981, Appeal from the Order of the Court of Common Pleas, Civil Division, of Indiana County at No. 50 E.Q. 1978, in Equity.
J. M. Maurizi, Pittsburgh, for appellants.
David C. Serene, Indiana, for appellee.
Cercone, President Judge, and Montgomery and Van der Voort, JJ.
[ 292 Pa. Super. Page 124]
The Defendant-Appellants file this appeal from a final order of the lower court which dismissed defense exceptions to a Decree Nisi, and granted equitable relief to the Plaintiff-Appellee. That relief ordered the Appellants to account for certain income received by the husband Appellant, including income which might be traced into the value of a residential property owned by Appellants in a tenancy by the entireties. Further, the order appealed from directed that a writ of execution be issued against that property and that Appellants not convey or otherwise dispose of the property or encumber it. On this appeal, the Appellants contend that the lower court erred in finding that deposits of the husband's income into a joint account shared with his wife, from 1966 to the present, constituted fraudulent conveyances
[ 292 Pa. Super. Page 125]
within the meaning of the Uniform Fraudulent Conveyance Act.*fn1
A review of the record reveals the following pertinent facts: In 1963, the Plaintiff-Appellee, Robert B. Corbett, loaned the sum of $25,000 to an entity known as the Hunter Corporation. He received a promissory note in return. At that time the Appellant, Frederick H. Hunter, was the Corporation's chief officer. On September 15, 1965, at the suggestion of Mr. Hunter, 1250 shares of the stock of the Corporation were conveyed to Corbett in exchange for the promissory note. On or about the same date, Mr. Hunter orally agreed to personally repurchase the shares, for $25,000, and promised that the repurchase would be carried out within a few months thereafter. The promise was not fulfilled. On December 31, 1966, the parties drew up a written agreement which repeated the Appellant's promise to repurchase the stock, and established a time schedule for payments toward that purchase. The written agreement was never complied with by Hunter, and in 1969, Corbett initiated suit to recover the payments due. In 1975, the suit resulted in the entry of a judgment against Mr. Hunter, which was never satisfied.
Corbett initiated the present action requesting that the Court order a reconveyance of a condominium owned by Mr. and Mrs. Hunter to the husband alone, order that the judgment be a lien on that property, and order other relief, including an accounting and an order to prevent the Appellants from transferring or encumbering the property. The Plaintiff's request for such relief was grounded upon the theory that Mr. Hunter had engaged in fraudulent conveyances, prohibited by the Act referred to earlier. Plaintiff contended that these occurred when Mr. Hunter deposited his individual income into joint accounts with his wife, which account assets were used to buy entireties properties at
[ 292 Pa. Super. Page 126]
times when Hunter was insolvent relative to his debts to creditors. Of course, the Plaintiff was a significant creditor.
The lower court, as noted earlier, found that in 1967, while Mr. Hunter had unpaid debt to the Plaintiff in connection with the stock repurchase agreement, the Appellants purchased a residence in Bear Rocks, which was titled as a tenancy by the entireties. The mortgage payments were paid from the Appellants' joint bank account. Thereafter, in 1975, the Bear Rocks residence was sold, and the net proceeds used to purchase a condominium in Country Club Estates in Indiana County. Again monthly mortgage payments were made from the Appellants' joint accounts. At all times material, it was demonstrated that Mr. Hunter's individual income provided all of the funds in such accounts. The lower court held, in such circumstances, that since deposits were made into the accounts at a time when Mr. Hunter was insolvent as a result of his unpaid debts, both Appellants had to account to the Plaintiff for the value of Mr. Hunter's ...