sold at county tax sale, these companies would be stripped of their most valuable assets and their creditors would be left without any possibility of payment. Nonetheless, we are not convinced that the intentional fraud provisions in the Uniform Fraudulent Conveyances Act cover situations where persons act to hinder the collection efforts of creditors of third practice. Furthermore, in our view, IIT and Pagnotti Enterprises simply took advantage of the Pennsylvania law relating to the effect of county tax sales. While the liens of other creditors were purportedly discharged from Raymond Colliery's lands by the 1976 Lackawanna County tax sale and while Raymond Colliery was impoverished to the detriment of its many creditors, neither IIT nor Pagnotti Enterprises had any obligation to protect other creditors by enjoining the tax sales or failing to participate in the Lackawanna County sale. David Oil Co. v. Fogle, 354 Pa. 150, 153-4, 47 A.2d 209, 210 (1946).
The United States has cited several cases which indicate that use of a tax sale to commit a fraud on one's creditors is an intentional fraud within the meaning of the Uniform Fraudulent Conveyance Act. See Smart v. Baroni, 360 Pa. 296, 61 A.2d 860 (1948); Pepe v. Mildred Bean, 14 Fay. Leg. 133 (1951); Roeting v. County of Lancaster, 42 Pa. Commw. 315, 401 A.2d 580 (1979). However, all cases cited by the United States involve situations where the debtor itself conspired with another party to use a foreclosure sale or tax sale to sell the property and discharge other liens. In this case, while there was some hint in the evidence that Pagnotti Enterprises was conspiring with Hyman Green to use the Luzerne and Lackawanna tax sales to put the lands of Raymond Colliery and Blue Coal in the hands of Pagnotti Enterprises at a bargain price, and while it is extremely odd that Green did not appear at the tax sale and simply vanished without any payment, the existence of this conspiracy has not been proven by clear and convincing evidence. Finberg v. Burkhardt, 239 Pa. 519, 86 A. 1062 (1913). Cloud v. Markle, 186 Pa. 614, 40 A. 811 (1898); Miners Savings Bank of Pittston v. United States, 110 F. Supp. 563, 568 (M.D. Pa. 1953). We therefore decline to determine that the actions of Pagnotti Enterprises relating to the December 15, 1976 mortgage sale contract constitute intentional fraud within the meaning of section 357 of the Act.
IV. Conclusions of Law.
1. The Lackawanna and Luzerne County real estate taxes which pre-dated the November 26, 1973 IIT mortgages constituted a prior lien on the lands of the Raymond Group.
2. Pagnotti Enterprises, on January 26, 1977, was not a purchaser for fair consideration without knowledge that the IIT mortgages were fraudulent conveyances under 39 Pa. Cons. Stat. §§ 354 and 355.
3. The Lackawanna County tax sale of lands of Raymond Colliery on December 17, 1976 and the subsequent tax deed was wholly defective and did not transfer title to said lands to Tabor Court Realty.
4. The Lackawanna County tax sale of the lands of Raymond Colliery on December 16, 1980 and the subsequent tax deed was wholly defective and did not transfer title to said lands to Gleneagles Investment Co., Inc.
An appropriate order in accordance with this opinion will be entered in due course after the conclusion of the trial.
© 1992-2004 VersusLaw Inc.