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JEFFERSON BANK v. HOWARD DAVIDSON AND GWENDOLYN A. MCCURDY (06/27/86)

SUPERIOR COURT OF PENNSYLVANIA


filed: June 27, 1986.

JEFFERSON BANK, APPELLANT,
v.
HOWARD DAVIDSON AND GWENDOLYN A. MCCURDY, APPELLEES

Appeal from the Order of the Court of Common Pleas of Philadelphia County, Civil, at No. 1332 February Term, 1982.

COUNSEL

Mitchell L. Paul, Philadelphia, for appellant.

Edward J. Hayes, Philadelphia, for appellees.

Montemuro, Hoffman and Cercone, JJ.

Author: Montemuro

[ 354 Pa. Super. Page 516]

This is an appeal from an order dissolving a sheriff's sale of certain real property on the basis that no lien of judgment ever attached to the property against which the execution issued.

In December 1979, appellee Howard Davidson borrowed $20,000 from appellant bank, securing the loan with a 90 day demand note. In February, 1982, appellant entered judgment by confession on the note, and in August, 1983, initiated execution on the judgment, obtaining a writ of execution, and scheduling a sheriff's sale of real property.*fn1 However, the property had from its acquisition been titled in the name of Howard E. Davidson Associates, a general partnership. Not until April 1982, two (2) months after entry of judgment, was the property transferred to Davidson personally. In June 1982, the title passed again, this time to appellee McCurdy, who held title at the time execution was attempted, and on whose petition the sheriff's sale was stayed. The court found, inter alia, that the property was after-acquired, and that there was no valid lien against it since the judgment had not been revived or execution reissued once title had passed from the partnership. The stay was therefore entered, and this appeal followed.

Appellant has presented us with four issues, the first two challenging the legitimacy of the partnership, and the last two questioning whether the court correctly assigned to

[ 354 Pa. Super. Page 517]

    appellee McCurdy the status of a good faith purchaser for value.

The partnership issues are couched in terms of whether the court properly applied the legal standard*fn2 for determining the existence of a partnership, and then whether the evidence to be measured by the statutory test was sufficient. Appellant's thesis, around which these issues are constructed, is that the partnership was a fabrication designed to protect Davidson's property from creditors. The obvious corollary is that given the fictitious nature of the association, the property in fact belonged to Davidson alone when judgment was entered, and was therefore subject to attachment, obviating the necessity for any rejuvenative measures.

As is pointed out by both sides,

It is entrenched in the law of the Commonwealth that the existence of a partnership depends upon the intentions of the parties as to being partners and that no formal or

[ 354 Pa. Super. Page 518]

    written agreement need be executed in order for a valid partnership to exist.

Barbet v. Ostovar, 273 Pa. Super. 256, 265, 417 A.2d 636, 641 (1979). A review of the deposition testimony of Kenneth Aaron, the other partner in Davidson Associates, is most revealing on this point. Aaron, a former law partner of Davidson, had been associated with Davidson previously in another business venture. He was asked by Davidson to participate in the purchase of the real estate involved here as a minute partner, holding .01% interest, solely in order to prevent Davidson's estranged wife from obtaining the property in a divorce contest. Aaron was to be shielded both from liability, and any potential profit which might accrue. The intent of both Aaron and Davidson was that the former should acquiesce in the initiation and operation of an association formed as an accomodation to the latter's domestic difficulties. This is clearly insufficient to fulfill the statutory criteria. Further, while we agree with the trial court that the size of an owner's interest is not necessarily controlling, there is little which argues for the existence of a valid partnership, e.g., no partnership agreement nor any other formal indicium of association has been advanced. In fact, the quantum of (other) evidence necessary to demonstrate "clear mutual assent" of the persons aligned as partners, In re Jackson, 28 B.R. 559 (1983), is conspicuous by its absence. As a result, the property cannot be considered after-acquired, and, as the lien attached, no revival of judgment or reissue of execution was necessary, since title did not pass.

Nevertheless, the bank's claim is overridden by McCurdy's. It is argued that never having pleaded bona fide purchaser status, she cannot assert it now, and that she is not, in any event bona fide, as she took with notice of appellant's claim.

The Fraudulent Conveyances Act, 39 Pa.C.S. ยง 359, reads in pertinent part as follows:

[ 354 Pa. Super. Page 519]

    question been asked. Had a claim of invalidity been made against the partnership by its creditor, no title insurance would have been forthcoming.

Therefore, even though there was a fabrication, appellant apparently had no notion of its character at the time appellee purchased the property, in which case appellee was in no position to discover its existence. If appellant was in fact aware of the fraud at closing, it waited too long to reveal its knowledge, if it wished to impute the same information to appellee. Neither appellee nor her agents is responsible for securing appellant's interests. Appellant cannot now complain, having sat on its rights, that somebody else violated them.

Order affirmed.

Disposition

Order affirmed.


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